Good morning. My name is Denise, and I will be your conference operator today. At this time, I'd like to welcome everyone to the SandRidge Energy Q1 2018 Earnings Conference Call. [Operator Instructions] Thank you. Johna Robinson, Investor Relation Analyst, you may begin your conference.

Thank you, Operator, and welcome everyone to the conference call. With me today are Bill Griffin, President and Chief Executive Officer; and Mike Johnson, Chief Financial Officer. We would like to remind you that in conjunction with our earnings release and conference call, we have posted slides on our Web site under the Investor Relations tab that we'll be referencing during the call. Keep in mind today's call contains forward-looking statements and assumptions which are subject to risk and uncertainty, and actual results may differ materially from those projected in these forward-looking statements. We will also make reference to adjusted G&A, and other non-GAAP financial measures. Reconciliations of these measures can be found on our Web site. Finally, you will see us file our 10-Q later this afternoon. Now, let me turn the call over to Bill.

Good morning, and thank you, Johna. Thank you for everyone for joining us today for this discussion of SandRidge Energy's first quarter 2018 performance results and our go-forward outlook. John Suter, our Chief Operating Officer is unable to join us today, so I will be also addressing the operational update. Our Chief Financial Officer, Mike Johnson will speak to our financial highlights later in the call. So, if you could please turn to slide three. A lot has transpired since the beginning of the year when the company made a decision to initiate changes in senior management, in conjunction with a broader strategic shift in direction and focus. The results of these and other actions by our Board of Directors has driven an accelerated transition to a much leaner margin-focused company with meaningful upside and the broad spectrum of potential new opportunities. I'm proud of our demonstrated ability to adapt and remain focused on delivering solid operating and financial results. SandRidge employees have been able to look past the recent disruptive advance and quickly adapt to not only the organizational changes, but their expanded individual responsibilities and priorities. This is best demonstrated by the fact that we executed solidly on our first quarter capital program, along with taking necessary steps to ensure realization of non-labor operating efficiency improvements. Our current delivery to date along with reaffirmation of 2018 guidance is consistent with our prior year performance and will remain a go-forward standard that this company will deliver predictable results. SandRidge began this transition process with decisive action to meaningfully reduce go-forward cash cost better positioning us for profitable growth and market value recognition. Cost reduction efforts have been effective as we have already realized labor and non-labor cost savings that put us right on track to exit 2018 with a…

Thank you, Bill, and good morning to everybody on the call. I'd like to address where we stand from the financial standpoint and reduce some of our key performance results this quarter that Bill did already cover. What is clear from our first quarter results is that our controllable cost structure is being driven down in all areas as we continue our efforts to be a low cost operator. Slide 11 of our investor presentation offers the recap of our financial highlights and cost reductions during the period. In the first quarter, our production expenses G&A and adjusted G&A all came in at or under budget and each of these cost categories are down considerably year-over-year and sequentially compared to the fourth quarter. This gives us the confidence to reaffirm our full year guidance that we disclosed back in February, production expenses were 24.7 million in the current quarter or $7.71 per BOE compared to 25 million or $6.28 per BOE in the first quarter of 2017 and $25.7 million in the fourth quarter of 2017 or 729 per BOE. The current quarter results suggest that we are likely to end the year at or below the midpoint of guidance. Adjusted G&A, which excludes stock-based compensation and certain non-recurring items, were $11 million or $3.46 per BOE in the current quarter. This represents a $2.6 million reduction year-over-year or 19% from the $13.7 million or $3.43 per BOE incurred in the first quarter of 2017 and a $2.7 million reduction sequentially. As a reminder of the commitment made to our shareholders in the February 8 letter from our board during the first quarter, we implemented changes to our organizational structure. Included in the company's first quarter results is $31.6 million an employee termination charges in connection with these changes, of…

Thank you, Mike. While we all share disappointment with recent stock price performance. I would like to reiterate a few important reasons for optimism going forward. First is the organization's demonstrated ability to focus on results and our continued commitment to delivering solid operational and financial performance on a daily basis. We have also moved decisively to improve margins while continuing to create asset value growth as shown with increased net present value of proved reserves. I'm confident that a continued focus on lower costs and the demonstrated achievement of profitable, organic growth through the drill bit our key components to ultimately unlocking our full market value. Our strong balance sheet remains a key consideration as we advance the formal process announced in March to assess strategic options to generate meaningful incremental value. Our ongoing efforts will be governed by the understanding that any process outcome should be complimentary to the objectives of returning value to the shareholders and providing a platform and clear go forward strategy for future value creation. Combining these initiatives for improvement and change with the strong financial position and operational capabilities will result in a company that is compelling to a broad base of and potential new investors. I appreciate your time today and your interest in SandRidge and turn it back to the operator for questions.

[Operator Instructions] Your first question comes from John Aschenbach with Seaport Global. Your line is open.

Yes, good morning, and thanks for taking my questions. My first question here is just regarding the reassessment of the company's drilling inventory. Two-part question, I guess first, approximately how long do you expect the process to take? And then secondly, once you've completed the assessment should we expect some type of larger update to be communicated to investors in terms of your inventory debts, the type curves and associated economics across your three major plays. Thanks.

Thank you, John. The assessment is something that was initiated shortly after my stepping into this role. We felt that it was probably prudent to re-look at the entire inventory and how we were projecting to spin capital to develop that. And in particular the Northwest STACK being as young as it was and still being under delineation required a little more thought and analysis. And so we're -- this is a critical component of the strategic process that we currently have underway is a full and confident understanding of the underlying net asset value of the company. And so we're very, very close to wrapping it up. And with that, because this will really provide the foundation for all the decisions and analysis that we'll perform during the strategic process. The additional benefit and outcome of this is, as mentioned, is the opportunity to look at reallocating capital with changes in these commodity prices. And so all of this is leading to more disclosure and more transparency that I would expect to be discussed in our next quarter's call.

Okay, perfect. That was great color, appreciate that. And then my second one here is just to follow-up on the potential acceleration options that you're considering now, again two-part question. First, is there any one plan in particular that you'd be more inclined to accelerate in? And then secondly, is the plan here to fully finance the acceleration internally or are you also potentially considering an expansion of your current JV or perhaps finding another JV partner?

Well, I'll answer the second question first. I think part of the strategic process would be to explore potential joint venture opportunities. In particular, I think North Park would lend itself to a joint venture partner. And that'll be something that we look at as an option as we move forward. With regard to any particular play, I think it's premature. There's pros and cons with each one. The North Park Basin is already consuming a significant amount of capital. The stipulations and other things have some impact on timing and our ability to accelerate or not. And we don't want to move too fast out there until we have the ability to better mange our gas flaring and keep that at a manageable level. The Northwest STACK, as I mentioned, I think is appropriate still at this point in time to continue with the existing drilling participation agreement and further delineate, but we would look at possibly doing some incremental drilling later in the year as we continue to gain confidence, this with our results there. And then the Mississippi line, we just have a really broad spectrum of fairly low reserve to fairly high reserve undeveloped opportunities, that obviously the four we selected for 2018 are going to be some of our better oiler opportunities, and therefore on the higher end of the return spectrum. And we just have to be prudent, not overrun ourselves out there. So it's a little bit of a challenge. And probably in reality would be somewhat of a mix of all of the above if we choose to deploy additional drilling capital.

Okay, great. That's it for me. Appreciate the time, thank you.

Thanks, John.

[Operator Instructions] Your next question comes from David Beard with Coker Palmer. Your line is open.

Hey, good morning gentlemen.

Good morning, David.

My question kind of follows on your deployment of capital relative to how much outspend you would tolerate or can handle, because obviously your balance sheet is in great shape. Can you kind of bracket where you'd be uncomfortable outspending and what makes sense?

Well, I would say right now our current outspend level is where we want to stay until we bring some conclusion to this process. And the status quo more or less is the best option for us until we make some decisions as far as other strategic options as we move forward. The part of this reserve reassessment is a rebuilding of our reserve development plan and the associated capital with that. And until we finalize that process and have a good reserve development profile, I think that's the key for us making some decisions about outspending as we try to move this thing toward an organic growth profile in a standalone basis. And I guess the short answer is as our current outspend is appropriate, but oil prices and increasing returns will be compelling to start looking at trying to do some additional work, and we certainly have the capacity to increase our outspending, but again, just waiting on more resolution of the process.

Okay, just as a follow-up to that, when you look at the larger question of maximizing shareholder value it would seem that resuming Mississippi Lime, was there sort of a shorter-term stopgap measure saying, look, we can get some very high return oily wells but we're still evaluating the bigger picture. Is that a fair characterization or am I missing something there?

Well, no. As I mentioned, we had a situation on the timing in our North Park fourth quarter completion program that shifted some capital into 2019. And we just felt it was prudent to adjust and reallocate that capital. And as I've been in here and we've looked at the Miss Lime there are some very viable opportunities, these are four of them. So it was just more redeployment of capital into an area that, to be frank, needed a little jolt. And so I think this sends a good positive message that the Miss Lime is still there and it's alive and kicking. And that was the biggest driver in making that decision…

Yes. No, I understand. Appreciate the time, and thanks for all the color.

Thank you, David.

And there are no further questions at this time. I'll turn the call back over to Bill Griffin.

Thank you. And once again, I appreciate everybody's time. And I hope that this provided some insight and some color on our go-forward plans. I remain excited about the opportunities at SandRidge, and look forward to potentially some significant major changes as we move through our evaluation of these strategic options. Thank you and have a good day.

This concludes today's conference call. You may now disconnect.