SEC Company Response from SANDRIDGE ENERGY INC (SD) (CIK 0001349436) (SD) — Oct 23, 2007
SANDRIDGE ENERGY INC (SD) (CIK 0001349436)
Date: Oct. 23, 2007 · CIK: 0001349436 · Accession: 0000950129-07-005017
AI Filing Summary & Sentiment
File numbers found in text: 333-102778, 333-124320, 333-144004
Referenced dates: October 19, 2007
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[Letterhead of SandRidge Energy, Inc.]
October 23, 2007
Via EDGAR and Federal Express
Mr. H. Roger Schwall
Assistant Director
United States Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 7010
Washington, D.C. 20549
Re:
SandRidge
Energy, Inc.
Amendment No. 3 to Registration Statement on Form S-1
Filed October 4, 2007
File No. 333-144004
Dear Mr. Schwall:
Set forth below are the responses of SandRidge Energy, Inc., a Delaware corporation (“we,”
“us” or “our”), to comments received from the staff of the Division of Corporation Finance (the
“Staff”) of the United States Securities and Exchange Commission (the “Commission”) by letter dated
October 19, 2007, with respect to the review of Amendment No. 3 to the Company’s Form S-1 filed
with the Commission on October 4, 2007, File No. 333-144004 (the “Registration Statement”). For
your convenience, each response is prefaced by the exact text of the Staff’s corresponding comment.
We have filed through EDGAR and enclosed herewith five courtesy copies of Amendment No. 4
(“Amendment No. 4”) to the Registration Statement.
General
1.
Eliminate the new cover page reference to “joint book-running managers.”
Response: We have eliminated the reference to “joint book-running managers” on the front cover page and back cover page.
U.S. Securities and Exchange Commission
October 23, 2007
Page 2
2.
We note the new disclosure regarding the sale of shares to Mr. Ward, your CEO and largest
shareholder. Explain to us why you believe you can register the issuance of these shares with
this registration statement. We may have additional comments.
Response: We respectfully submit that our proposed treatment of the concurrent
public offering of shares to an entity controlled by Mr. Ward is consistent with the
provisions and principles of the Securities Act of 1933. We further respectfully submit
that this treatment is much more consistent with the facts than a deemed completed private
placement. The concurrent offering is being made directly by us to Mr. Ward. While Mr. Ward
has orally indicated his desire to purchase such shares, he is under no legal obligation to
do so. In addition, the price at which he may purchase such shares is the public offering
price, which has not yet been determined. We submit that this is similar to any public
offeree who, prior to effectiveness, orally indicates an interest in purchasing securities
in a public offering, including participants in the disclosed directed share program. To
recharacterize this offer and indication of interest by Mr. Ward as a completed private
transaction would be inconsistent with the facts and would serve little statutory or
regulatory purpose. This approach is consistent with prior transactions involving a
concurrent public offering of shares to senior officers or their affiliates. Please see the
registration statements for the Enterprise GP Holdings L.P. initial public offering
(Registration No. 333-124320 filed August 24, 2005) and Enterprise Products Partners, L.P.
follow-on offering (Registration No. 333-102778 filed August 2, 2004). Accordingly, we
believe it is appropriate to register these shares with the Registration Statement. We have revised our disclosure on the
cover page and page 134 of Amendment No. 4 to clarify that Mr. Ward has no current obligation to
purchase such shares.
3.
Make clear whether the amount per share Mr. Ward will pay in the offering will be adjusted in any way to give effect to the absence of an underwriting discount.
Response: As previously disclosed in the Registration Statement, Mr. Ward will pay
the public offering price per share for any shares he purchases directly from us. No
adjustment will be made to give effect to the lack of an underwriting discount with respect
to these shares. Please see page 134 and the cover page of Amendment No. 4.
4.
The purpose of the proposed artwork as it appears on the inside cover page is not apparent.
If you intend to retain it, please provide us with an explanation and include appropriate text
as necessary to place it in proper context.
Response: We have included additional disclosure on the inside cover page of
Amendment No. 4 to place the illustration in its proper context. The artwork on the inside
cover page is intended to illustrate the complex structural geology of the West Texas
Overthrust, the geological formation in our primary area of operation. The illustration
depicts a north/south cross section across the leading edge of the western most portion of
the West Texas Overthrust. The well-bores depicted in the illustration are based on actual
producing wells that we operate. The illustration is not to scale, but is based on
subsurface well logs, 2-D seismic profiles and published geological papers.
5.
We note your response to our prior comment 2. Please file all remaining exhibits, including
the underwriting agreement and opinion of counsel.
Response: We have filed all remaining exhibits with Amendment No. 4, including the
form of underwriting agreement and opinion of counsel.
U.S. Securities and Exchange Commission
October 23, 2007
Page 3
6.
We note that you have filed a Form of Indemnification Agreement as Exhibit 10.5. Please
describe the material terms of that agreement in the prospectus.
Response: The material terms of the indemnification agreements have been previously
described in the Registration Statement. Please see pages 96 and 97 of Amendment No. 4.
Use of Proceeds, page 26
7.
We note that you intend to use a portion of the proceeds to repay a $50 million note you
intend to incur in connection with a potential acquisition. Please describe the properties to
be acquired and the anticipated terms of the acquisition, if material.
Response: We have described the terms of the acquisition and the properties acquired
on page 69 of Amendment No. 4.
Executive Compensation and Other Information
Summary Compensation, page 105
8.
Please update the status of Mr. Mitchell in footnote 4 to this table.
Response: We have revised the disclosure on page 105 of Amendment No. 4 to update
the status of Mr. Mitchell.
Principal and Selling Stockholders, page 115
9.
You indicated to us that you will not have any selling stockholders. If true, please revise
the heading to this section and the table to eliminate the suggestion that there are selling
shareholders.
Response: We have eliminated all references to selling stockholders in Amendment No. 4.
Related Party Transactions
General, page 117
10.
Once it has been drafted, describe the material terms of your written policy with respect to
reviewing, approving and ratifying related party transactions.
Response: We have described the material terms of our written policy for reviewing,
approving and ratifying related party transactions on page 117 of Amendment No. 4.
U.S. Securities and Exchange Commission
October 23, 2007
Page 4
Other
Transactions with N. Malone Mitchell,
3rd , page 119
11.
We note your response to our prior comment 4. State whether the May 2, 2007 transaction was
on terms similar to those obtainable from third parties and whether the purchase was approved
by disinterested Board members. File the purchase agreement as an exhibit. Further describe
the leasehold acreage purchased from Longfellow.
Response: We have substantially revised the description of the May 2, 2007
transaction on page 120 of Amendment No. 4 to provide a more accurate description of the
transaction and to respond to the requested information. We do not believe any of these oil
and gas leases are required to be filed with the Registration Statement as material
contracts exhibits because (i) the only documentation of the transactions is a series of oil
and gas leases on forms mandated, reviewed and approved by the General Land Office of the
State of Texas, (ii) Mr. Mitchell’s affiliate, Longfellow, is not an actual party to the
leases and is only acting as agent and (iii) the leases are of a type routinely entered into
in the ordinary course of our business.
Other Transactions with Dan Jordan, page 120
Other Transactions with Bill Gilliland, page 120
12.
State whether the June 2007 transaction with Mr. Jordan and the February 2006 transaction
with Mr. Gilliland were on terms similar to those obtainable from third parties and whether
the purchases were approved by disinterested Board members.
Response: We have revised the disclosure on page 121 of Amendment No. 4 to state
that the transactions with Mr. Jordan and Mr. Gilliland were on terms similar to those
obtainable from third parties and that the purchases were approved by disinterested Board
members.
Please direct any questions that you have with respect to the foregoing or with respect to the
Registration Statement or Amendment No. 4 to Bruce Thompson at (405) 753-5603 or Jim Prince at
Vinson & Elkins L.L.P. at (713) 758-3710.
Very truly yours,
By:
/s/ V. Bruce Thompson
V. Bruce Thompson
Senior Vice President — Legal and General Counsel
cc:
Donna Levy, Securities and Exchange Commission
Lily Dang, Securities and Exchange Commission
James Murphy, Securities and Exchange Commission
James M. Prince, Vinson & Elkins L.L.P.
T. Mark Kelly, Vinson & Elkins L.L.P.
Richard D. Truesdell, Jr., Davis Polk & Wardwell