"The boom in natural gas prices has been good for North American producers and their investors, both of which continue to be upbeat on the sector as share prices also keep rising," says Bill Martin.
"Oklahoma City-based SandRidge focuses on the exploration, development, and production of oil and gas in the West Texas Overthrust, East Texas, and Mid-Continent (Oklahoma) regions.
"President, and CEO Tom Ward purchased 460,000 shares at $48.95 on May 19th/20th, which increased his already substantial holdings to nearly 36.95 million shares, or a 25.27% stake.
"It was the first purchase for Ward since he announced in March his attention to buy up to $100 million in stock on the open market this year. His only other open-market purchase came in November 2007, when he took down 4.17 million shares at $26.00 in the company's initial public offering.
"Daniel Jordan, a SandRidge director, also bought 60,000 shares at $48.41 on May 16th/19th, which increased his holdings to 1.1 million shares. It was his third purchase. Several insiders bought into the company's IPO last fall and another director picked up $200,000 in stock in March.
"Ward, a self-made billionaire (and minotirty owner in the Seattle SuperSonics) has been the chairman and CEO of SandRidge since June 2006 and the president since December 2006. He made his billions as the co-founder, former president, and chief operating officer of Chesapeake Energy (NYSE: CHK), one of the largest independent natural gas producers in North America.
"When Ward retired from Chesapeake, he told the Oklahoma City Journal-Record earlier this year, because 'it was just time for me to move back to a smaller company, back to something I could get my arms around operationally.'
"Meanwhile, SandRidge got its start as Riata Energy in 1984 by Malone Mitchell, III. The company grew to become the largest privately held land driller in the U.S., and in early 2006, filed for an initial public offering.
"The IPO was canceled when Mitchell sold more than half of his stake to Ward, who re-named the company and filed once again for an IPO. Mitchell is no longer involved with SandRidge, but he continues to hold a 12.2% stake. Other major shareholders include private equity firm Ares Management and hedge funds Lone Pine Capital and Farallon Capital
"Shares of SandRidge are up more than 37% year to date and nearly 90% from the company's IPO price. The stock closed at $32.00 on its first day out of the gate. The stock fell to a low of $28.50 on January 22nd, but hit a fresh 52-week high of $53 recently.
"SandRidge announced 1Q '08 results on May 8th. The company's operating cash flow rose 204% to $143.3 million and adjusted EBITDA improved 143% to $167.6 million. Revenues grew by 81% to $269.9 million, easily beating the $217.8 million consensus. Natural gas and crude oil production grew 78%.
"When an insider with substantial holdings is buying when the stock price is strong, it indicates he or she thinks the stock has long-term value. When the insider has the track record Ward does, it's a pretty positive long-term signal for the stock."