A group of SandRidge Energy Inc. (NYSE: SD) shareholders are accusing the oil and gas producer of grossly understating its value, threatening to derail a prepackaged bankruptcy agreement with its lenders.
The shareholder's court filing late on Aug. 31 comes before a hearing scheduled for the week of Sept. 5, during which the Oklahoma City-based company will ask a judge to approve its reorganization plan.
Shareholders are hoping to prove SandRidge could be the rare bankruptcy in which a company's assets are valuable enough to repay creditors and have money left over for stockholders, according to their filing with the U.S. Bankruptcy Court in Houston.
SandRidge filed the prepackaged bankruptcy pact in May to restructure roughly $4 billion of debt, joining a long list of oil and gas producers hit by a deep crash in U.S. energy prices.
The company's financial adviser, Houlihan Lokey, estimated the reorganized company's enterprise value--generally, a measure of market capitalization plus debt minus cash--to be between $1 billion and $1.3 billion. The shareholders said an analysis by energy consultant SSR put the value at almost 3x that amount.
Neither SandRidge, which was founded in 2006 by former Chesapeake Energy Corp. (NYSE: CHK) executive Tom Ward, nor Houlihan Lokey immediately responded to requests for comment.
SSR could not provide a full report on its evaluation because it was running against an Aug. 31 deadline with insufficient information from SandRidge, the shareholders said.
SandRidge had estimated its assets were worth $7 billion as of March 31, according to its Chapter 11 filing in May.
In a court filing, shareholder Sunil Gupta said he was aware of a Securities and Exchange Commission investigation of a former SandRidge employee who was fired for protesting the company's improper reporting of its reserve values. Gupta said he tracked down the SandRidge whistleblower, a former director of reservoir engineering, and shareholders want to depose him.
Shares of SandRidge have generally traded below 2 cents in recent months. They had dropped to about 6 cents the day before the company filed for bankruptcy from more than $7 when commodity prices began falling in mid-2014.
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