Recent Transactions

12 Months Ended

Dec. 31, 2017

In the third quarter of 2017, the Company entered into a $200.0 million drilling participation agreement with a Counterparty to jointly develop new horizontal wells on a wellbore only basis within certain dedicated sections of its undeveloped leasehold acreage within the Meramec formation in Major and Woodward Counties in Oklahoma (the “NW STACK”). Under this agreement, the Counterparty is paying 90% of the net exploration and development costs, up to $100.0 million in the first tranche, in exchange for an initial 80% net working interest in each new well, subject to certain reversionary hurdles, as shown in the table below. As a result, the Company is receiving a 20% net working interest after funding 10% of the exploration and development costs related to the subject wells. This will allow the Company to spend minimal additional capital while accelerating the delineation of its position in the NW STACK, realizing further efficiencies and holding additional acreage by production, potentially adding reserves. The Company operates all of the wells developed under this agreement and will retain sole discretion as to the number, location and schedule of wells drilled. The Counterparty will also have the option to fund a second $100.0 million tranche, subject to mutual agreement.

Development Costs and Working Interest (“WI”) Structure



	Counterparty	SandRidge
Development Costs	90% of Costs	10% of Costs
Initial Working Interest	80% of WI	20% of WI
Reversion If Counterparty Achieves 10% IRR	35% of WI	65% of WI
Reversion If Counterparty Achieves 15% IRR	11% of WI	89% of WI