SandRidge CEO Sells Shares Days After Truce With Activist Investor

HOUSTON - SandRidge Energy Inc. Chief Executive Tom Ward sold about 13.5% of his SandRidge stock days after the company reached a truce with an activist investor that could lead to the executive's departure.

Mr. Ward sold 3.7 million shares of SandRidge in two transactions Friday and Monday, netting about $21 million, according to a filing with the Securities and Exchange Commission. He still owns nearly 23.5 million shares, or close to 5% of SandRidge's shares according to figures from the company's website.

The move came in the wake of the partial success last week of a months-long campaign by hedge fund TPG-Axon Capital Management, which sought to replace SandRidge's board, including Mr. Ward. The campaign ended in a settlement, under which four of the fund's nominees would join the board.

Under the deal, Mr. Ward will keep his position as chief executive and board chairman for the time being, but the board will have to decide his fate by June 30. If it keeps him in place, three current SandRidge board members will have to leave and an additional nominee by TPG-Axon will join, giving the activist investor a majority of the seats on the board.

If Mr. Ward is terminated, current chief financial officer James Bennett will become interim chief executive and the board will conduct a search for a successor.

A spokesman for SandRidge did not immediately respond to a request for comment.

The board's decision will come after a review of the company's strategy and costs, including an independent firm's review of land deals the company entered with entities controlled by relatives of Mr. Ward, according to the settlement announced last week.

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SandRidge CEO Sells Shares Days After Truce With Activist Investor

HOUSTON - SandRidge Energy Inc. Chief Executive Tom Ward sold about 13.5% of his SandRidge stock days after the company reached a truce with an activist investor that could lead to the executive's departure.

Mr. Ward sold 3.7 million shares of SandRidge in two transactions Friday and Monday, netting about $21 million, according to a filing with the Securities and Exchange Commission. He still owns nearly 23.5 million shares, or close to 5% of SandRidge's shares according to figures from the company's website.

The move came in the wake of the partial success last week of a months-long campaign by hedge fund TPG-Axon Capital Management, which sought to replace SandRidge's board, including Mr. Ward. The campaign ended in a settlement, under which four of the fund's nominees would join the board.

Under the deal, Mr. Ward will keep his position as chief executive and board chairman for the time being, but the board will have to decide his fate by June 30. If it keeps him in place, three current SandRidge board members will have to leave and an additional nominee by TPG-Axon will join, giving the activist investor a majority of the seats on the board.

If Mr. Ward is terminated, current chief financial officer James Bennett will become interim chief executive and the board will conduct a search for a successor.

A spokesman for SandRidge did not immediately respond to a request for comment.

The board's decision will come after a review of the company's strategy and costs, including an independent firm's review of land deals the company entered with entities controlled by relatives of Mr. Ward, according to the settlement announced last week.

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SandRidge Agrees to Either Fire CEO or Give TPG-Axon Control of Board

SandRidge Energy Inc. agreed to fire its chief executive or give control of its board to an activist shareholder, settling a closely watched proxy battle amid an outbreak of investor unrest in the oil patch.

SandRidge, an oil-and-gas producer with a stock-market value of about $3 billion, immediately appointed four directors to its board who were nominated by hedge fund TPG-Axon Capital Management LP, which owns 7.3% of its shares.

The company, which is based in Oklahoma City, Okla., said Wednesday that it would review its strategy, costs and certain transactions with entities controlled by relatives of Tom Ward, its chairman and chief executive. The company also cut directors' annual pay to $250,000 from $375,000.

Mr. Ward's prospects of retaining his job appeared to dim. SandRidge said it would decide whether to fire him by the end of June; if he remains, three incumbent directors would resign and TPG-Axon would get another seat on the board, giving the hedge fund, which has repeatedly called for Mr. Ward's ouster, majority representation.

"We believe these actions open a new chapter for SandRidge," its lead independent director, Jeffrey Serota, said in a statement.

A SandRidge spokesman said Mr. Ward had no comment.

In what SandRidge said was a separate development, Matthew Grubb, its president and chief operating officer, said he would resign.

The company's shares jumped sharply late Wednesday afternoon, but ended 4 p.m. EDT trading on the New York Stock Exchange little changed at $5.85, up two cents.

Dinakar Singh, TPG-Axon's founder, said, "We all believe that SandRidge has tremendous asset value, and we expect that the company will relentlessly focus on growing and realizing that value through a particular focus on execution and efficiency."

"Score one for the activists," said Mark Hanson, a Morningstar Inc. analyst.

TPG-Axon and another large shareholder, Mount Kellett Capital Management LP, have questioned SandRidge's transactions with entities controlled by Mr. Ward and his family. SandRidge said Wednesday that a board review of the transactions hadn't found any improper conduct by Mr. Ward, but that it would examine the issue further with the help of a law firm.

The proxy battle is the latest case of a shareholder shaking up the board of an energy-industry company, as activists demand better stock performance and more-generous dividends from laggards. In January, Chesapeake Energy Corp. Chief Executive Aubrey McClendon agreed to step down by April after the company's biggest shareholders took control of the board.

Hess Corp. is tussling with hedge fund Elliott Management Corp., which is opposing the company-backed directors who are up for election with its own slate.

Investor Carl Icahn, who agitated for change at Chesapeake, is now demanding that offshore driller Transocean Ltd. increase its dividend to $4 a share, up from the $2.24 the company plans to pay.

TPG-Axon took aim at SandRidge in November, pointing to poor stock performance and rich executive pay. It also demanded the ouster of Mr. Ward, who founded the company in 2006 after leaving Chesapeake, which he co-founded with Mr. McClendon in 1989.

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SandRidge Agrees to Either Fire CEO or Give TPG-Axon Control of Board

SandRidge Energy Inc. agreed to fire its chief executive or give control of its board to an activist shareholder, settling a closely watched proxy battle amid an outbreak of investor unrest in the oil patch.

SandRidge, an oil-and-gas producer with a stock-market value of about $3 billion, immediately appointed four directors to its board who were nominated by hedge fund TPG-Axon Capital Management LP, which owns 7.3% of its shares.

The company, which is based in Oklahoma City, Okla., said Wednesday that it would review its strategy, costs and certain transactions with entities controlled by relatives of Tom Ward, its chairman and chief executive. The company also cut directors' annual pay to $250,000 from $375,000.

Mr. Ward's prospects of retaining his job appeared to dim. SandRidge said it would decide whether to fire him by the end of June; if he remains, three incumbent directors would resign and TPG-Axon would get another seat on the board, giving the hedge fund, which has repeatedly called for Mr. Ward's ouster, majority representation.

"We believe these actions open a new chapter for SandRidge," its lead independent director, Jeffrey Serota, said in a statement.

A SandRidge spokesman said Mr. Ward had no comment.

In what SandRidge said was a separate development, Matthew Grubb, its president and chief operating officer, said he would resign.

The company's shares jumped sharply late Wednesday afternoon, but ended 4 p.m. EDT trading on the New York Stock Exchange little changed at $5.85, up two cents.

Dinakar Singh, TPG-Axon's founder, said, "We all believe that SandRidge has tremendous asset value, and we expect that the company will relentlessly focus on growing and realizing that value through a particular focus on execution and efficiency."

"Score one for the activists," said Mark Hanson, a Morningstar Inc. analyst.

TPG-Axon and another large shareholder, Mount Kellett Capital Management LP, have questioned SandRidge's transactions with entities controlled by Mr. Ward and his family. SandRidge said Wednesday that a board review of the transactions hadn't found any improper conduct by Mr. Ward, but that it would examine the issue further with the help of a law firm.

The proxy battle is the latest case of a shareholder shaking up the board of an energy-industry company, as activists demand better stock performance and more-generous dividends from laggards. In January, Chesapeake Energy Corp. Chief Executive Aubrey McClendon agreed to step down by April after the company's biggest shareholders took control of the board.

Hess Corp. is tussling with hedge fund Elliott Management Corp., which is opposing the company-backed directors who are up for election with its own slate.

Investor Carl Icahn, who agitated for change at Chesapeake, is now demanding that offshore driller Transocean Ltd. increase its dividend to $4 a share, up from the $2.24 the company plans to pay.

TPG-Axon took aim at SandRidge in November, pointing to poor stock performance and rich executive pay. It also demanded the ouster of Mr. Ward, who founded the company in 2006 after leaving Chesapeake, which he co-founded with Mr. McClendon in 1989.

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SandRidge Approves TPG-Axon Board Candidates

SandRidge Energy Inc. – which has faced criticism over its financial decisions and calls for CEO Tom Ward to resign and the board to be replaced – has approved the direct candidates proposed by investment firm TPG-Axon, the company reported Tuesday in a U.S. Securities and Exchange Commission filing.

The decision was made in response to Delaware Chancery Court Judge Leo E. Strine Jr.'s ruling that SandRidge's board of directors had violated its fiduciary duty to shareholders by refusing to approve TPG-Axon's slate of director nominees, and barred SandRidge from soliciting consent revocations until TPG-Axon's director nominees were approved.

"This is just the latest in a pattern of this board of putting their own interests ahead of the shareholders – this board simply has no shame," TGP-Axon Founder Dinakar Singh commented in a statement. "This is the second time during out solicitation that this Board has chosen to waste the Company's resources in a useless court battle in a desperate attempt to entrench themselves."

In early February, SandRidge's board decided it would hold off on approving TPG-Axon's director candidates, saying it believed that any change of control event under the Indentures, or legal document issued to lenders describing key terms of a bond offering, during current market conditions was not likely to have material consequences for SandRidge and its stockholders.

When SandRidge's board of directors initially reviewed the potential consequences of TPG-Axon's proposals to replace SandRidge's board of directors, certain potentially significant consequences were identified that could occur under SandRidge's indentures governing its senior notes, the company said in the filing. The company's board found that a change of control would require SandRidge to offer to repurchase its outstanding senior notes under the Indentures, in the absence of advance approval by the incumbent directors of the director candidates proposed by TPG-Axon group.

"The Board continues to oppose the election of the director candidates proposed by TPG-Axon group, believes their election is not in the best interest of the company's stockholders, and recommends that stockholders support the company's existing experienced board of directors," SandRidge said in the filing.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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SandRidge Approves TPG-Axon Board Candidates

SandRidge Energy Inc. – which has faced criticism over its financial decisions and calls for CEO Tom Ward to resign and the board to be replaced – has approved the direct candidates proposed by investment firm TPG-Axon, the company reported Tuesday in a U.S. Securities and Exchange Commission filing.

The decision was made in response to Delaware Chancery Court Judge Leo E. Strine Jr.'s ruling that SandRidge's board of directors had violated its fiduciary duty to shareholders by refusing to approve TPG-Axon's slate of director nominees, and barred SandRidge from soliciting consent revocations until TPG-Axon's director nominees were approved.

"This is just the latest in a pattern of this board of putting their own interests ahead of the shareholders – this board simply has no shame," TGP-Axon Founder Dinakar Singh commented in a statement. "This is the second time during out solicitation that this Board has chosen to waste the Company's resources in a useless court battle in a desperate attempt to entrench themselves."

In early February, SandRidge's board decided it would hold off on approving TPG-Axon's director candidates, saying it believed that any change of control event under the Indentures, or legal document issued to lenders describing key terms of a bond offering, during current market conditions was not likely to have material consequences for SandRidge and its stockholders.

When SandRidge's board of directors initially reviewed the potential consequences of TPG-Axon's proposals to replace SandRidge's board of directors, certain potentially significant consequences were identified that could occur under SandRidge's indentures governing its senior notes, the company said in the filing. The company's board found that a change of control would require SandRidge to offer to repurchase its outstanding senior notes under the Indentures, in the absence of advance approval by the incumbent directors of the director candidates proposed by TPG-Axon group.

"The Board continues to oppose the election of the director candidates proposed by TPG-Axon group, believes their election is not in the best interest of the company's stockholders, and recommends that stockholders support the company's existing experienced board of directors," SandRidge said in the filing.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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SandRidge Approves TPG-Axon Board Candidates

SandRidge Energy Inc. – which has faced criticism over its financial decisions and calls for CEO Tom Ward to resign and the board to be replaced – has approved the direct candidates proposed by investment firm TPG-Axon, the company reported Tuesday in a U.S. Securities and Exchange Commission filing.

The decision was made in response to Delaware Chancery Court Judge Leo E. Strine Jr.'s ruling that SandRidge's board of directors had violated its fiduciary duty to shareholders by refusing to approve TPG-Axon's slate of director nominees, and barred SandRidge from soliciting consent revocations until TPG-Axon's director nominees were approved.

"This is just the latest in a pattern of this board of putting their own interests ahead of the shareholders – this board simply has no shame," TGP-Axon Founder Dinakar Singh commented in a statement. "This is the second time during out solicitation that this Board has chosen to waste the Company's resources in a useless court battle in a desperate attempt to entrench themselves."

In early February, SandRidge's board decided it would hold off on approving TPG-Axon's director candidates, saying it believed that any change of control event under the Indentures, or legal document issued to lenders describing key terms of a bond offering, during current market conditions was not likely to have material consequences for SandRidge and its stockholders.

When SandRidge's board of directors initially reviewed the potential consequences of TPG-Axon's proposals to replace SandRidge's board of directors, certain potentially significant consequences were identified that could occur under SandRidge's indentures governing its senior notes, the company said in the filing. The company's board found that a change of control would require SandRidge to offer to repurchase its outstanding senior notes under the Indentures, in the absence of advance approval by the incumbent directors of the director candidates proposed by TPG-Axon group.

"The Board continues to oppose the election of the director candidates proposed by TPG-Axon group, believes their election is not in the best interest of the company's stockholders, and recommends that stockholders support the company's existing experienced board of directors," SandRidge said in the filing.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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SandRidge Shareholder Questions Related-Party Transactions

WCT Resources, a company owned and controlled by trusts established by SandRidge Energy CEO Tom Ward to benefit his children, controls approximately 475,000 acres adjacent to SandRidge in the Mississippi Lime play, TPG-Axon Capital reported Tuesday.

Investment firm TPG-Axon, which owns 7 percent of SandRidge's outstanding shares and is seeking to replace the company's current board of directors and change the company's bylaws, made the finding in a review conducted of 22 counties in Oklahoma and Kansas, saying in a Feb. 19 presentation that it had found an "undeniable pattern" of conflicted related-party transactions of large proportions with entities related to Ward and his family.

WCT's acreage position in the Mississippi Lime would make WCT the fifth largest exploration and production company in the Mississippian play, behind only SandRidge, Chesapeake Energy, Royal Dutch Shell plc and Devon Energy Corp., a direct competitor of SandRidge, TPG-Axon said in a statement.

"TPG-Axon is concerned not only by the scale of WCT Resources' involvement in the Mississippian, but by the suspicious timing of the company's purchases," TPG-Axon commented, noting that it had discovered that, in many instances, WCT and SandRidge actively acquired acreage within weeks and months of each other.

"Contrary to SandRidge's claims, based on the data TPG-Axon has reviewed, this pattern of activity is not rare; it is now clear that the degree of overlap and competition is truly massive," TPG-Axon noted.

TPG-Axon has previously stated it believes SandRidge stockholders may have been disadvantaged by the actions of entities related to Ward or his immediate family members. The company is asking shareholders to vote in favor of amending SandRidge's bylaws and replacing its entire board of directors.

SandRidge's current management received a vote of confidence from independent proxy advisory firm Egan-Jones Proxy Services, which recommended shareholders back the company's current board in connection with TPG-Axon's current proxy fight.

"We believe that voting to revoke consents to the TPG-Axon's consent solicitation is merited and in the best interest of the company and its shareholders," Egan-Jones said in a statement.

The firm reached its decision to back SandRidge's current board based in part on its belief that TPG-Axon has provided no specific plans and no substantive new ideas or valid reasons to change the company's strategic direction that will enhance the company's stockholder value.

Egan-Jones also does not believe TPG-Axon's proposed board of directors would work to the benefit of shareholders, the firm said in a statement.

SandRidge officials praised Egan-Jones recommendation.

"Our highly qualified and independent board has taken decisive steps over the last few years to transition SandRidge to an oil focused producer with a leading position in the Mississippian play," the company said in a statement.

While SandRidge believes its current board has the right skills, experience and expertise to oversee continued execution of its strategic plan, TPG-Axon's nominees are not familiar with the company's operations, and SandRidge officials believe they do not have the needed qualifications to serve on the SandRidge board.

TPG-Axon's nominees for SandRidge's board include Stephen C. Beasley, who previously served as president of El Paso Corporation's Eastern Pipeline Group. Beasley is the founder and CEO of Houston-based executive leadership and strategic investment firm Eaton Group.

Other nominees include Edward W. Moneypenny, who retired as senior vice president of finance and chief financial officer from 7-Eleven in 2006 and was chief financial officer of Florida Progress Corporation, now Duke Energy Corporation, and Oryx Energy Corporation.

Fredric G. Reynolds, who served as executive vice president and chief financial officer of CBS Corporation from January 2006 through August 2009 and as president and chief executive officer of Viacom Television Stations Group, is also among TPG-Axon's nominees.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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SandRidge Shareholder Questions Related-Party Transactions

WCT Resources, a company owned and controlled by trusts established by SandRidge Energy CEO Tom Ward to benefit his children, controls approximately 475,000 acres adjacent to SandRidge in the Mississippi Lime play, TPG-Axon Capital reported Tuesday.

Investment firm TPG-Axon, which owns 7 percent of SandRidge's outstanding shares and is seeking to replace the company's current board of directors and change the company's bylaws, made the finding in a review conducted of 22 counties in Oklahoma and Kansas, saying in a Feb. 19 presentation that it had found an "undeniable pattern" of conflicted related-party transactions of large proportions with entities related to Ward and his family.

WCT's acreage position in the Mississippi Lime would make WCT the fifth largest exploration and production company in the Mississippian play, behind only SandRidge, Chesapeake Energy, Royal Dutch Shell plc and Devon Energy Corp., a direct competitor of SandRidge, TPG-Axon said in a statement.

"TPG-Axon is concerned not only by the scale of WCT Resources' involvement in the Mississippian, but by the suspicious timing of the company's purchases," TPG-Axon commented, noting that it had discovered that, in many instances, WCT and SandRidge actively acquired acreage within weeks and months of each other.

"Contrary to SandRidge's claims, based on the data TPG-Axon has reviewed, this pattern of activity is not rare; it is now clear that the degree of overlap and competition is truly massive," TPG-Axon noted.

TPG-Axon has previously stated it believes SandRidge stockholders may have been disadvantaged by the actions of entities related to Ward or his immediate family members. The company is asking shareholders to vote in favor of amending SandRidge's bylaws and replacing its entire board of directors.

SandRidge's current management received a vote of confidence from independent proxy advisory firm Egan-Jones Proxy Services, which recommended shareholders back the company's current board in connection with TPG-Axon's current proxy fight.

"We believe that voting to revoke consents to the TPG-Axon's consent solicitation is merited and in the best interest of the company and its shareholders," Egan-Jones said in a statement.

The firm reached its decision to back SandRidge's current board based in part on its belief that TPG-Axon has provided no specific plans and no substantive new ideas or valid reasons to change the company's strategic direction that will enhance the company's stockholder value.

Egan-Jones also does not believe TPG-Axon's proposed board of directors would work to the benefit of shareholders, the firm said in a statement.

SandRidge officials praised Egan-Jones recommendation.

"Our highly qualified and independent board has taken decisive steps over the last few years to transition SandRidge to an oil focused producer with a leading position in the Mississippian play," the company said in a statement.

While SandRidge believes its current board has the right skills, experience and expertise to oversee continued execution of its strategic plan, TPG-Axon's nominees are not familiar with the company's operations, and SandRidge officials believe they do not have the needed qualifications to serve on the SandRidge board.

TPG-Axon's nominees for SandRidge's board include Stephen C. Beasley, who previously served as president of El Paso Corporation's Eastern Pipeline Group. Beasley is the founder and CEO of Houston-based executive leadership and strategic investment firm Eaton Group.

Other nominees include Edward W. Moneypenny, who retired as senior vice president of finance and chief financial officer from 7-Eleven in 2006 and was chief financial officer of Florida Progress Corporation, now Duke Energy Corporation, and Oryx Energy Corporation.

Fredric G. Reynolds, who served as executive vice president and chief financial officer of CBS Corporation from January 2006 through August 2009 and as president and chief executive officer of Viacom Television Stations Group, is also among TPG-Axon's nominees.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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SandRidge: No Wrongdoing Found in Corporate Dealings

SandRidge Energy's board of directors found no evidence of wrongdoing in relation to allegations made concerning activities of its Chairman and CEO Tom Ward and the company board's oversight, SandRidge reported Friday.

However, the board will consider requests made by investment firms TPG-Axon and Mount Kellett Capital Management to appoint an independent counsel to conduct an investigation of the matter, the Oklahoma City-based company said in a statement.

Both firms in recent months have called for Ward's resignation and for an overhaul of its board and corporate strategy.

On Tuesday, TPG-Axon, the beneficial owner of 6.7 percent of SandRidge's outstanding shares, started mailing consent solicitation materials to SandRidge stockholders. Among the materials was a letter urging stockholders to support TPG-Axon in its effort to replace the company's CEO and make other changes to maximize shareholder value, including amending the company's bylaws and replacing SandRidge's entire board.

"We believe that SandRidge shares are significantly undervalued, and significant appreciation is realistic in the medium term under the right circumstances," TPG-Axon said in a Jan. 22 statement. "However, we believe change is necessary to achieve this value."

TPG-Axon added that the current depressed stock level reflects the destruction of value under current management, and the failure of the current directors to prevent leakage of value from stockholders.

Mount Kellett on Jan. 17 sent a second letter to SandRidge, reiterating concerns regarding TPG-Axon's allegations of front running and calling for the board to retain an independent law firm and forensic accounting firm to conduct a 'thorough and independent' investigation of these allegations.

Both firms claimed that Ward and WCT Resources, an independent oil and gas company formed in 2002 by irrevocable trusts established in 1989 for Ward's children, have engaged in "front running" and "flipping" leasehold interests to the company.

Front Running is defined as the unethical practice of a broker trading an equity based on information from the analyst department before their clients have been given the information. TPG-Axon has alleged that Ward and his son acquired mineral rights from third parties ahead of the SandRidge, and then 'flipped' them to SandRidge or other oil and gas companies at a profit, often retaining a participating interest in future wells in transactions with SandRidge.

TPG-Axon also noted that WCT actively competes with the company in the Mississippian Lime play. Meanwhile, Mount Kellett has voiced concerns regarding the allegations made by TPG-Axon.

"The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the company and have no access to non-public information concerning the company's land and mineral acquisition programs," SandRidge commented, noting that Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business.

"Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to 'allow' WCT Resources to engage in any business regardless of whether it competes with the company," SandRidge said in a statement. "As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses."

SandRidge noted that transactions between WCT Resources and SandRidge have occurred rarely and involve less than one-quarter of one percent of the acreage leased by the company in the Mississippian play. Furthermore, SandRidge asserted the transactions were reviewed in advance by disinterested board members.

The fact that WCT Resources owns leasehold acreage adjacent to acreage held by the company is an "entirely unremarkable fact," given SandRidge's interests in over 7,500 sections of the Mississippian play that cover nearly five million acres, according to SandRidge officials.

The acreage held by SandRidge in the play were acquired over a long period of time, well before SandRidge was formed, through TLW Land & Cattle, in which Ward holds an ownership interest. TLW has owned ranch land and other acreage in Oklahoma and Kansas, as well as associated mineral rights, for many years, SandRidge concluded.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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SandRidge: No Wrongdoing Found in Corporate Dealings

SandRidge Energy's board of directors found no evidence of wrongdoing in relation to allegations made concerning activities of its Chairman and CEO Tom Ward and the company board's oversight, SandRidge reported Friday.

However, the board will consider requests made by investment firms TPG-Axon and Mount Kellett Capital Management to appoint an independent counsel to conduct an investigation of the matter, the Oklahoma City-based company said in a statement.

Both firms in recent months have called for Ward's resignation and for an overhaul of its board and corporate strategy.

On Tuesday, TPG-Axon, the beneficial owner of 6.7 percent of SandRidge's outstanding shares, started mailing consent solicitation materials to SandRidge stockholders. Among the materials was a letter urging stockholders to support TPG-Axon in its effort to replace the company's CEO and make other changes to maximize shareholder value, including amending the company's bylaws and replacing SandRidge's entire board.

"We believe that SandRidge shares are significantly undervalued, and significant appreciation is realistic in the medium term under the right circumstances," TPG-Axon said in a Jan. 22 statement. "However, we believe change is necessary to achieve this value."

TPG-Axon added that the current depressed stock level reflects the destruction of value under current management, and the failure of the current directors to prevent leakage of value from stockholders.

Mount Kellett on Jan. 17 sent a second letter to SandRidge, reiterating concerns regarding TPG-Axon's allegations of front running and calling for the board to retain an independent law firm and forensic accounting firm to conduct a 'thorough and independent' investigation of these allegations.

Both firms claimed that Ward and WCT Resources, an independent oil and gas company formed in 2002 by irrevocable trusts established in 1989 for Ward's children, have engaged in "front running" and "flipping" leasehold interests to the company.

Front Running is defined as the unethical practice of a broker trading an equity based on information from the analyst department before their clients have been given the information. TPG-Axon has alleged that Ward and his son acquired mineral rights from third parties ahead of the SandRidge, and then 'flipped' them to SandRidge or other oil and gas companies at a profit, often retaining a participating interest in future wells in transactions with SandRidge.

TPG-Axon also noted that WCT actively competes with the company in the Mississippian Lime play. Meanwhile, Mount Kellett has voiced concerns regarding the allegations made by TPG-Axon.

"The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the company and have no access to non-public information concerning the company's land and mineral acquisition programs," SandRidge commented, noting that Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business.

"Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to 'allow' WCT Resources to engage in any business regardless of whether it competes with the company," SandRidge said in a statement. "As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses."

SandRidge noted that transactions between WCT Resources and SandRidge have occurred rarely and involve less than one-quarter of one percent of the acreage leased by the company in the Mississippian play. Furthermore, SandRidge asserted the transactions were reviewed in advance by disinterested board members.

The fact that WCT Resources owns leasehold acreage adjacent to acreage held by the company is an "entirely unremarkable fact," given SandRidge's interests in over 7,500 sections of the Mississippian play that cover nearly five million acres, according to SandRidge officials.

The acreage held by SandRidge in the play were acquired over a long period of time, well before SandRidge was formed, through TLW Land & Cattle, in which Ward holds an ownership interest. TLW has owned ranch land and other acreage in Oklahoma and Kansas, as well as associated mineral rights, for many years, SandRidge concluded.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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SandRidge: No Wrongdoing Found in Corporate Dealings

SandRidge Energy's board of directors found no evidence of wrongdoing in relation to allegations made concerning activities of its Chairman and CEO Tom Ward and the company board's oversight, SandRidge reported Friday.

However, the board will consider requests made by investment firms TPG-Axon and Mount Kellett Capital Management to appoint an independent counsel to conduct an investigation of the matter, the Oklahoma City-based company said in a statement.

Both firms in recent months have called for Ward's resignation and for an overhaul of its board and corporate strategy.

On Tuesday, TPG-Axon, the beneficial owner of 6.7 percent of SandRidge's outstanding shares, started mailing consent solicitation materials to SandRidge stockholders. Among the materials was a letter urging stockholders to support TPG-Axon in its effort to replace the company's CEO and make other changes to maximize shareholder value, including amending the company's bylaws and replacing SandRidge's entire board.

"We believe that SandRidge shares are significantly undervalued, and significant appreciation is realistic in the medium term under the right circumstances," TPG-Axon said in a Jan. 22 statement. "However, we believe change is necessary to achieve this value."

TPG-Axon added that the current depressed stock level reflects the destruction of value under current management, and the failure of the current directors to prevent leakage of value from stockholders.

Mount Kellett on Jan. 17 sent a second letter to SandRidge, reiterating concerns regarding TPG-Axon's allegations of front running and calling for the board to retain an independent law firm and forensic accounting firm to conduct a 'thorough and independent' investigation of these allegations.

Both firms claimed that Ward and WCT Resources, an independent oil and gas company formed in 2002 by irrevocable trusts established in 1989 for Ward's children, have engaged in "front running" and "flipping" leasehold interests to the company.

Front Running is defined as the unethical practice of a broker trading an equity based on information from the analyst department before their clients have been given the information. TPG-Axon has alleged that Ward and his son acquired mineral rights from third parties ahead of the SandRidge, and then 'flipped' them to SandRidge or other oil and gas companies at a profit, often retaining a participating interest in future wells in transactions with SandRidge.

TPG-Axon also noted that WCT actively competes with the company in the Mississippian Lime play. Meanwhile, Mount Kellett has voiced concerns regarding the allegations made by TPG-Axon.

"The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the company and have no access to non-public information concerning the company's land and mineral acquisition programs," SandRidge commented, noting that Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business.

"Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to 'allow' WCT Resources to engage in any business regardless of whether it competes with the company," SandRidge said in a statement. "As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses."

SandRidge noted that transactions between WCT Resources and SandRidge have occurred rarely and involve less than one-quarter of one percent of the acreage leased by the company in the Mississippian play. Furthermore, SandRidge asserted the transactions were reviewed in advance by disinterested board members.

The fact that WCT Resources owns leasehold acreage adjacent to acreage held by the company is an "entirely unremarkable fact," given SandRidge's interests in over 7,500 sections of the Mississippian play that cover nearly five million acres, according to SandRidge officials.

The acreage held by SandRidge in the play were acquired over a long period of time, well before SandRidge was formed, through TLW Land & Cattle, in which Ward holds an ownership interest. TLW has owned ranch land and other acreage in Oklahoma and Kansas, as well as associated mineral rights, for many years, SandRidge concluded.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here