Condensed Consolidating Financial Information

The Company provides condensed consolidating financial information for its subsidiaries that are guarantors of its registered debt. As of September 30, 2016, the subsidiary guarantors, which are 100% owned by the Company, have jointly and severally guaranteed, on a full, unconditional and unsecured basis, the Company’s Senior Unsecured Notes. The subsidiary guarantees (i) rank equally in right of payment with all of the existing and future senior debt of the subsidiary guarantors; (ii) rank senior to all of the existing and future subordinated debt of the subsidiary guarantors; (iii) are effectively subordinated in right of payment to any existing or future secured obligations of the subsidiary guarantors to the extent of the value of the assets securing such obligations; (iv) are structurally subordinated to all debt and other obligations of the subsidiaries of the guarantors who are not themselves subsidiary guarantors; and (v) are only released under certain customary circumstances. The Company’s subsidiary guarantors guarantee payments of principal and interest under the Company’s registered notes.

The following condensed consolidating financial information represents the financial information of SandRidge Energy, Inc., its wholly owned subsidiary guarantors and its non-guarantor subsidiaries, as debtors-in-possession, prepared on the equity basis of accounting. The non-guarantor subsidiaries, including the Company’s proportionate share of the Royalty Trusts, majority-owned subsidiaries and certain immaterial wholly owned subsidiaries, are included in the non-guarantors column in the tables below. The financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the subsidiary guarantors operated as independent entities.

Condensed Consolidating Balance Sheets

(Debtor-In-Possession)



	September 30, 2016
	Parent			Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	654,392		$	—	$	2,045	$	(3,757	)	$	652,680
Accounts receivable, net	103			60,052		1,616		(325		)	61,446
Intercompany accounts receivable	1,314,523			1,304,412		9,276		(2,628,211		)	—
Derivative contracts	—			10,192		—		—			10,192
Prepaid expenses	—			12,514		—		—			12,514
Other current assets	—			1,003		—		—			1,003
Total current assets	1,969,018			1,388,173		12,937		(2,632,293		)	737,835
Property, plant and equipment, net	—			1,102,310		33,752		—			1,136,062
Investment in subsidiaries	2,240,102			20,933		—		(2,261,035		)	—
Derivative contracts	—			70		—		—			70
Other assets	—			18,439		—		(5,902		)	12,537
Total assets	$	4,209,120		$	2,529,925	$	46,689	$	(4,899,230	)	$	1,886,504
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued expenses	$	66,948		$	81,086	$	13	$	(7,599	)	$	140,448
Intercompany accounts payable	1,322,947			1,269,972		31,775		(2,624,694		)	—
Derivative contracts	—			2,982		—		—			2,982
Asset retirement obligations	—			8,573		—		—			8,573
Total current liabilities	1,389,895			1,362,613		31,788		(2,632,293		)	152,003
Investment in subsidiaries	1,269,192			7,631		—		(1,276,823		)	—
Long-term debt	5,902			—		—		(5,902		)	—
Derivative contracts	—			935		—		—			935
Asset retirement obligations	—			62,896		—		—			62,896
Other long-term obligations	—			3		—		—			3
Liabilities subject to compromise	4,219,631			124,937		1,620		—			4,346,188
Total liabilities	6,884,620			1,559,015		33,408		(3,915,018		)	4,562,025
Stockholders’ (deficit) equity
SandRidge Energy, Inc. stockholders’ (deficit) equity	(2,675,500		)	970,910		13,281		(984,191		)	(2,675,500		)
Noncontrolling interest	—			—		—		(21		)	(21		)
Total stockholders’ (deficit) equity	(2,675,500		)	970,910		13,281		(984,212		)	(2,675,521		)
Total liabilities and stockholders’ (deficit) equity	$	4,209,120		$	2,529,925	$	46,689	$	(4,899,230	)	$	1,886,504



	December 31, 2015
	Parent			Guarantors		Non-Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	426,917		$	847	$	7,824	$	—		$	435,588
Accounts receivable, net	—			122,606		4,781		—			127,387
Intercompany accounts receivable	1,226,994			1,305,573		30,683		(2,563,250		)	—
Derivative contracts	—			84,349		—		—			84,349
Prepaid expenses	—			6,826		7		—			6,833
Other current assets	—			19,931		—		—			19,931
Total current assets	1,653,911			1,540,132		43,295		(2,563,250		)	674,088
Property, plant and equipment, net	—			2,124,532		110,170		—			2,234,702
Investment in subsidiaries	2,749,514			8,531		—		(2,758,045		)	—
Other assets	3,131			16,008		—		(5,902		)	13,237
Total assets	$	4,406,556		$	3,689,203	$	153,465	$	(5,327,197	)	$	2,922,027
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued expenses	$	160,122		$	265,767	$	2,528	$	—		$	428,417
Intercompany accounts payable	1,337,688			1,192,569		32,993		(2,563,250		)	—
Derivative contracts	—			573		—		—			573
Asset retirement obligations	—			8,399		—		—			8,399
Total current liabilities	1,497,810			1,467,308		35,521		(2,563,250		)	437,389
Investment in subsidiaries	1,038,303			400,771		—		(1,439,074		)	—
Long-term debt	3,568,280			—		—		(5,902		)	3,562,378
Asset retirement obligations	—			95,179		—		—			95,179
Other long-term obligations	80			14,734		—		—			14,814
Total liabilities	6,104,473			1,977,992		35,521		(4,008,226		)	4,109,760
Stockholders’ (deficit) equity
SandRidge Energy, Inc. stockholders’ (deficit) equity	(1,697,917		)	1,711,211		117,944		(1,829,155		)	(1,697,917		)
Noncontrolling interest	—			—		—		510,184			510,184
Total stockholders’ (deficit) equity	(1,697,917		)	1,711,211		117,944		(1,318,971		)	(1,187,733		)
Total liabilities and stockholders’ (deficit) equity	$	4,406,556		$	3,689,203	$	153,465	$	(5,327,197	)	$	2,922,027

Condensed Consolidating Statements of Operations

(Debtor-In-Possession)



	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In thousands)
Three Months Ended September 30, 2016
Total revenues	$	—		$	99,879		$	4,177		$	—	$	104,056
Expenses
Direct operating expenses	—			42,078			403			—		42,481
General and administrative	—			28,738			407			—		29,145
Depreciation, depletion, amortization and accretion	—			34,339			900			—		35,239
Impairment	—			349,916			4,535			—		354,451
Gain on derivative contracts	—			(338		)	—			—		(338		)
Loss on sale of assets	—			416			—			—		416
Total expenses	—			455,149			6,245			—		461,394
Loss from operations	—			(355,270		)	(2,068		)	—		(357,338		)
Equity earnings from subsidiaries	(400,537		)	(2,063		)	—			402,600		—
Interest (expense) income	(3,342		)	(2		)	1			—		(3,343		)
Reorganization items, net	(457		)	(42,302		)	5			—		(42,754		)
Other (expense) income, net	(1		)	(900		)	3			—		(898		)
Loss before income taxes	(404,337		)	(400,537		)	(2,059		)	402,600		(404,333		)
Income tax expense	—			—			4			—		4
Net loss	$	(404,337	)	$	(400,537	)	$	(2,063	)	$	402,600	$	(404,337	)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Three Months Ended September 30, 2015
Total revenues	$	—		$	159,502		$	20,650		$	—		$	180,152
Expenses
Direct operating expenses	—			84,577			2,915			—			87,492
General and administrative	48			33,253			932			—			34,233
Depreciation, depletion, amortization and accretion	—			72,384			6,628			—			79,012
Impairment	—			838,331			236,257			—			1,074,588
Gain on derivative contracts	—			(36,761		)	(5,450		)	—			(42,211		)
Loss on sale of assets	—			6,771			—			—			6,771
Total expenses	48			998,555			241,282			—			1,239,885
Loss from operations	(48		)	(839,053		)	(220,632		)	—			(1,059,733		)
Equity earnings from subsidiaries	(904,065		)	(64,546		)	—			968,611			—
Interest expense	(76,998		)	(2		)	—			—			(77,000		)
Gain on extinguishment of debt	340,699			—			—			—			340,699
Other (expense) income, net	—			(464		)	38			—			(426		)
Loss before income taxes	(640,412		)	(904,065		)	(220,594		)	968,611			(796,460		)
Income tax expense	—			—			25			—			25
Net loss	(640,412		)	(904,065		)	(220,619		)	968,611			(796,485		)
Less: net loss attributable to noncontrolling interest	—			—			—			(156,073		)	(156,073		)
Net loss attributable to SandRidge Energy, Inc.	$	(640,412	)	$	(904,065	)	$	(220,619	)	$	1,124,684		$	(640,412	)



	Parent			Guarantors			Non-Guarantors			Eliminations		Consolidated
	(In thousands)
Nine Months Ended September 30, 2016
Total revenues	$	—		$	281,851		$	11,958		$	—	$	293,809
Expenses
Direct operating expenses	—			140,883			1,974			—		142,857
General and administrative	187			133,046			1,214			—		134,447
Depreciation, depletion, amortization and accretion	—			109,476			2,825			—		112,301
Impairment	—			700,212			17,982			—		718,194
Loss on derivative contracts	—			4,823			—			—		4,823
Loss on settlement of contract	—			90,184			—			—		90,184
Gain on sale of assets	—			(69		)	(2,725		)	—		(2,794		)
Total expenses	187			1,178,555			21,270			—		1,200,012
Loss from operations	(187		)	(896,704		)	(9,312		)	—		(906,203		)
Equity earnings from subsidiaries	(997,381		)	(9,756		)	—			1,007,137		—
Interest (expense) income	(126,099		)	(3		)	3			—		(126,099		)
Gain on extinguishment of debt	41,179			—			—			—		41,179
Reorganization items, net	(150,985		)	(92,241		)	(446		)	—		(243,672		)
Other (expense) income, net	(1		)	1,323			10			—		1,332
Loss before income taxes	(1,233,474		)	(997,381		)	(9,745		)	1,007,137		(1,233,463		)
Income tax expense	—			—			11			—		11
Net loss	$	(1,233,474	)	$	(997,381	)	$	(9,756	)	$	1,007,137	$	(1,233,474	)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Nine Months Ended September 30, 2015
Total revenues	$	—		$	555,613		$	69,462		$	(8	)	$	625,067
Expenses
Direct operating expenses	—			292,526			8,686			(8		)	301,204
General and administrative	165			105,850			2,749			—			108,764
Depreciation, depletion, amortization and accretion	—			280,653			26,810			—			307,463
Impairment	—			2,906,400			741,445			—			3,647,845
Gain on derivative contracts	—			(51,802		)	(7,232		)	—			(59,034		)
Loss (gain) on sale of assets	—			2,101			(4		)	—			2,097
Total expenses	165			3,535,728			772,454			(8		)	4,308,339
Loss from operations	(165		)	(2,980,115		)	(702,992		)	—			(3,683,272		)
Equity earnings from subsidiaries	(3,188,788		)	(209,713		)	—			3,398,501			—
Interest expense	(213,527		)	(42		)	—			—			(213,569		)
Gain on extinguishment of debt	358,633			—			—			—			358,633
Other income, net	—			1,082			126			—			1,208
Loss before income taxes	(3,043,847		)	(3,188,788		)	(702,866		)	3,398,501			(3,537,000		)
Income tax expense	—			—			90			—			90
Net loss	(3,043,847		)	(3,188,788		)	(702,956		)	3,398,501			(3,537,090		)
Less: net loss attributable to noncontrolling interest	—			—			—			(493,243		)	(493,243		)
Net loss attributable to SandRidge Energy, Inc.	$	(3,043,847	)	$	(3,188,788	)	$	(702,956	)	$	3,891,744		$	(3,043,847	)

Condensed Consolidating Statements of Cash Flows

(Debtor-In-Possession)



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Nine Months Ended September 30, 2016
Net cash (used in) provided by operating activities	$	(133,817	)	$	69,254		$	4,281		$	(3,757	)	$	(64,039	)
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(186,452		)	—			—			(186,452		)
Other	—			24,995			2,980			(9,213		)	18,762
Net cash (used in) provided by investing activities	—			(161,457		)	2,980			(9,213		)	(167,690		)
Cash flows from financing activities
Proceeds from borrowings	489,198			—			—			—			489,198
Intercompany (advances) borrowings, net	(87,529		)	91,356			(3,827		)	—			—
Other	(40,377		)	—			(9,213		)	9,213			(40,377		)
Net cash provided by (used in) financing activities	361,292			91,356			(13,040		)	9,213			448,821
Net increase (decrease) in cash and cash equivalents	227,475			(847		)	(5,779		)	(3,757		)	217,092
Cash and cash equivalents at beginning of year	426,917			847			7,824			—			435,588
Cash and cash equivalents at end of period	$	654,392		$	—		$	2,045		$	(3,757	)	$	652,680



	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
	(In thousands)
Nine Months Ended September 30, 2015
Net cash (used in) provided by operating activities	$	(211,762	)	$	441,661		$	90,579		$	40,408		$	360,886
Cash flows from investing activities
Capital expenditures for property, plant, and equipment	—			(761,905		)	—			—			(761,905		)
Other	—			46,841			6			(14,691		)	32,156
Net cash (used in) provided by investing activities	—			(715,064		)	6			(14,691		)	(729,749		)
Cash flows from financing activities
Proceeds from borrowings	2,190,000			—			—			—			2,190,000
Repayments of borrowings	(1,034,466		)	—			—			—			(1,034,466		)
Distribution to unitholders	—			—			(131,941		)	16,640			(115,301		)
Intercompany (advances) borrowings, net	(270,215		)	272,900			(2,685		)	—			—
Other	(62,481		)	—			42,357			(42,357		)	(62,481		)
Net cash provided by (used in) financing activities	822,838			272,900			(92,269		)	(25,717		)	977,752
Net increase (decrease) in cash and cash equivalents	611,076			(503		)	(1,684		)	—			608,889
Cash and cash equivalents at beginning of year	170,468			1,398			9,387			—			181,253
Cash and cash equivalents at end of period	$	781,544		$	895		$	7,703		$	—		$	790,142