As a result of the steady drop in natural gas prices, SandRidge Energy Inc., Oklahoma City, (NYSE: SD) has cut its 2009 capex budget in half, from $2 billion to $1 billion.

SandRidge chief executive officer Tom Ward says the company has opened a data room to evaluate the potential sale of its East Texas and North Louisiana Cotton Valley and Haynesville assets. He says a decision will be made in the fourth quarter on the sale.

Ward says that if the company chooses not to sell these assets, it plans to fund its 2009 capital expenditure program with internally generated cash flow and its existing $1.1 billion revolving credit facility.

Because of the spending cut, production guidance for 2009 has also been lowered to 120 billion cubic feet equivalent from 135 billion cubic feet equivalent, Ward says. He adds that the reduced production forecast still anticipates a 20% growth over the expected 2008 production of 100 billion cubic feet equivalent.

Ward says the company is maintaining its production guidance for 2008 due to a strong drilling performance in the West Texas Overthrust.

He says the company entered the third quarter with 25 million cubic feet equivalent per day shut in because of the Grey Ranch Plant fire and well work on the Gulf Coast. During the quarter, the company was also affected by hurricanes Gustav and Ike.

Overall, he says, the company experienced about 3.5 billion cubic feet equivalent of shut-ins during the third quarter and production in the quarter is expected to be about as much as in the second quarter. The Grey Ranch Plant in Pecos County, Texas, is expected to be back in service in November.

SandRidge’s E&P activities are in West Texas, the Cotton Valley Trend in East Texas, the Gulf Coast, the Midcontinent and the Gulf of Mexico. JAS