1 

# OCTOBER 

# 28 , 20 15 

# US SHALE PLAYS

Produced Water Management 20152 SandRidgeEnergy.com 

### 2 

# DISCLAIMER

This presentation includes "forward

- looking statements" within the meaning of Section 27 A of the Securities Act of 1933

, as amended, and Section 21 E of the Securities

Exchange Act of 1934

, as amended

. These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future

events or outcomes

. The forward

- looking statements include statements about the FRPSDQ\·V future operations, development plans and appraisal programs, drilling

inventory and locations, reserves, acreage positions, corporate strategies, rates of return, projected capital expenditures and other costs, liquidity, debt maturities, price

realizations and hedging strategies

. We have based these forward

- looking statements on our current expectations and assumptions and analyses made by us in light of

our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under

the circumstances

. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and

uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, and developing oil and natural gas reserves, the availability and

terms of capital, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, regulatory changes and other

factors, many of which are beyond our control

. We refer you to the discussion of risk factors in Part I, Item 1 A

2  ́5LVN )DFWRUVμ of our amended Annual Report on Form

10

- K/A for the year ended December 31

, 2013 and in comparable  ́5LVN )DFWRUVμ sections of our Quarterly Reports on Form 10

- Q filed after the date of this

presentation

. All of the forward

- looking statements made in this presentation are qualified by these cautionary statements

. The actual results or developments

anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our company or our business or

operations

. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward

looking statements

. We undertake no obligation to update or revise any forward

- looking statements

.

The SEC permits oil and natural gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves, as each is defined by the

SEC

. At times we use the term "EUR" (estimated ultimate recovery) and refer to their location and potential to provide estimates that the 6(&·V guidelines

prohibit us from including in filings with the SEC

. These estimates are by their nature more speculative than estimates of proved, probable or possible reserves

and, accordingly, are subject to substantially greater risk of being actually realized by the company

. For a discussion of the FRPSDQ\·V proved reserves, as

calculated under current SEC rules, we refer you to the FRPSDQ\·V amended Annual Report on Form 10

- K/A referenced above, which is available on our website at

www

. sandridgeenergy

. com and at the 6(&·V website at www

. sec

. gov

.

Regulation G Disclosure : This presentation includes certain non

- GAAP financial measures as defined under SEC Regulation G

. A reconciliation of those

measures to the most directly comparable GAAP measures is available on our website at www

. sandridgeenergy

. com

.3 SandRidgeEnergy.com 

### 3 

# SANDRIDGE HAS A LEADING U.S. MIDCONTINENT OIL & GAS POSITION

WE ARE SKILLED, LARGE SCALE DEVELOPERS OF OIL AND GAS RESOURCES

 Over 1600 wells drilled, over $5B invested since 2010 (&1.6B in 2014)

 3URGXFLQJ0%RHSGLQ4·ODUJHVWZDWHUJDWKHULQJV\VWHPLQ86RYHU00%ZSG

 Expert at horizontal redevelopment of legacy vertical oil and gas plays



## TRANSFERABLE SKILLSETS TO OTHER PLAYS

 Drilling: ran 30+ rigs in 2014, currently targeting $2.3MM cost per horizontal lateral



###  Infrastructure and logistics: optimizing extensive water and electrical systems

 Production: Mid

- &RQWLQHQWSURGXFWLRQJUHZ\HDURYHU\HDUWR0%RHSGLQ4·

 Engineering and geology: growing multi

- year inventory of drilling locations



## INNOVATION AND CONTINUOUS IMPROVEMENT ARE PART OF OUR CULTURE

 Premier operator of the Mississippian Limestone in Oklahoma and Kansas

 Developing stacked pays such as Chester and Woodford

 Sole operator drilling multilateral wells

 Cost leaders: well costs, production expense



## BUSINESS MINDED CULTURE

 Management background includes oil majors, independents, midstream and Wall Street

 We efficiently accelerate value creation with large scale activity levels more typical of

larger companies4 SandRidgeEnergy.com 

### 4 

# MISSISSIPIAN'LIME

Water Curve

 Mississippian Lime production displays a high water cut relative to other horizontal plays

 Water cuts average 20:1 (BOE)

 Non

- water drive reservoir, so water cut remains constant throughout the life of the well

 A verage maturity of producing wells disposing into an SWD system is critical to determining

DV\VWHP·VVXLWDELOLW\DVDQ0/3DVVHW

# of Days5 SandRidgeEnergy.com 

### 5 

# LARGEST SALTWATER GATHERING SYSTEM IN THE NATION

Pipeline Footprint Resembles Typical Gathering System

 Over 1.0 MMBwpd current volumes

 >200 SWG wells

 1,100 miles of installed pipelines

 Advanced hydraulic simulation

 Resembles hydrocarbon gathering

and processing system

 Design based on actual type curves

 Engineered design and construction

 New assets, built since 20086 SandRidgeEnergy.com 

### 6 

# SALTWATER GATHERING & DISPOSAL (SWG)

Most Efficient SWG Operator in the Mid

- Continent

 Average capacity of 15,000 Bw/d per well

2 Low pressure pumps at most locations

2 Various tubing sizes based on needed

capacity

2 Open hole Arbuckle completion

 Arbuckle has been taking produced water for

~80 years

 Pressure and volume continuously monitored

 Frac flowback is 1% of total



##  Gathering system is interconnected

2 maximizing system flexibility 

## PRODUCE

 Over 1.0 million barrels of water gathered and

GLVSRVHGSHUGD\GXULQJ4¶LQWKH0LG

- Continent

and Permian Basin



## GATHER & PROCESS

 Produced water is transported to disposal location

through SD owned pipeline system

 7\SLFDOO\3RO\HWK\OHQHSLSHμWRμGLDPHWHU

connected to producing wells, buried under ground

 Water is cleaned and treated at disposal location



## INJECT

 > 200 SWG wells in Mid

- Continent and Permian Basin

 Many take water on a vacuum (hydrostatic pressure



### is adequate to achieve disposal) 

# 99%

OF WATER



# IS PIPED

(VS. TRUCKED) 

## $

~ 

## 600MM ,19(67('7+528*+4·7 SandRidgeEnergy.com 

### 7 

# RE

- USE AND RECYCLE8 SandRidgeEnergy.com 

### 8 

# RE

- USE OF PRODUCED WATER

Produced Water Use in E&P Operations

Drilling

 >1.4 MM Bbl of produced water used in

2014 for drilling



# Fracking

 >745,000 Bbl of produced water used in

2014 for fracking



# Enhanced Oil Recovery

 >1.6 MM Bbl of produced water used for

EOR 

# Pros

 Environmentally preferred over fresh water



##  Heavier brine assists in pressure control at the surface

 Conducive to Miss Lime requiring no chemical

preparation



# Challenges

 220k ppm average total dissolved solids (TDS)



##  150k ppm average sodium chloride

 Environmental impacts if leak occurs in the

impoundment

 Limited transportation options

 Grant and Garfield counties prohibit the use of

surface pipeline transportation



# SandRidge utilizes produced water when conditions allow.9 SandRidgeEnergy.com 

### 9 

# INJECTION ALTERNATIVES $/Bbl

Removal of TDS is required to eliminate injection

Oil

Separation TSS Bacteria 

## TDS

(<75000) 

## TDS

(>75000) 

## Crystalliza

tion Cost/BW 

## Outlet

Stream Treatment



## Process ~ Capex

/ Bbl /Day ~ Opex

/ Bbl Total

$/Bbl Outlet

Stream Alternate to

Disposal

HYDROCYCLONE/

MECHANICAL

RECOVERY 

# $926 $0.93 $1.20 40% Recovered Water

60% Injection

(Super Brine) Injection volumes

reduced but not

eliminated



### HYDROCYCLONE/

THERMALRECOVERY

WITH CRYSTALLIZER 

# $4,475 $3.01 $4.25 100% Recovered

Water Crystalline

Solids (Salt) No Injection



### EVAPORATION 

# $3,646 $1.37 $2.40 100% Recovered

Water Crystalline

Solids (Salt) No Injection



### MECHANICAL

ASSISTED

EVAPORATION 

# $2,006 $1.37 $2.00 0% Water Recovery

Solid Disposal

Required No Injection



###  Cost does not include transportation to/from treating facility, nor regular maintenance cost

 Calculation of cost/Bbl is best case estimate of internal review assuming 100% load factor of the facility for a ten year ter m



# Best alternative to injection is >$2.00/Bbl of produced water.10 SandRidgeEnergy.com 

### 10 

# ALTERNATIVE TECHNOLOGIES VS. DISPOSAL ($/BOE)

Basin Comparison

Technology Cost / BOE Basin Comparison

Cost Eagle



### Ford Bakken Marcellus Niobrara SCOOP Mississippi



### Lime

Water / BOE 2.2:1 3.1:1 2.5:1 1.7:1 6.0:1 20:1

Technology Cost* $2.00 $2.00 $2.00 $2.00 $2.00 $2.00

Gathering Cost $1.00 $3.00 $3.00 $1.00 $0.60 $0.60

Total Cost / BOE $6.60 $15.50 $12.50 $5.10 $15.60 $52.00



## Disposal Cost / BOE Basin Comparison

Transport + Disposal * $1.25 $1.75 $6.00 $1.50 $1.30 $.75

Disposal / BOE $2.75 $5.42 $15.00 $2.55 $7.80 $15.00



## Disposal Cost vs Technology Comparison

Difference ($3.85) ($10.08) $2.50 ($2.55) ($7.80) ($37.00)

Facility cost not corrected for location differences.



# $OWHUQDWLYHWHFKQRORJLHVDUHQRWHFRQRPLFLQWRGD\¶VFRPPRGLW\SULFHVWUXFWXUH

Wood Mackenzie Study, September 29, 201411 SandRidgeEnergy.com 

### 11 

# PRODUCED WATER TRUCKING12 SandRidgeEnergy.com 

### 12 

# WATER TRANSPORT COST

Trucking vs. Gathering ($/Bbl)

Distance $/Bbl Commercial

Disposal

Rate/Bbl Total Trucked



## Disposal Cost Pipeline



## Rate/Bbl* LOE



## Savings

1

- 30

Miles $ 

## 1.60 $0.40 $2.00 $0.75 $1.25

31

- 60

Miles 

## $1.85 $0.40 $2.25 $0.75 $1.50 

# Trucking / Pipeline Disposal Cost Comparison (Oklahoma)

Gathering is more efficient than trucking in high volume basins.

* Gathering rates are dependent on capex, volume, term and available capacity.13 SandRidgeEnergy.com 

### 13 

# PRODUCED WATER GATHERING VS. TRUCKING

Benefits

 

# Cost

- Gathering is much more LOE friendly than Trucking

(volume permitting)



#  

# Safety

2 Less trucks on the road, less people at risk



#  

# Community Friendly

2 Fewer trucks minimize noise and

road destruction



#  

# Control

2 Accurate measurement allows for accurate invoice



#  

# Reliable

2 Gathering is more dependable as a steady source

of transport.



# Gathering can be more environmentally friendly and dependable than trucking.14 SandRidgeEnergy.com 

### 1415 SandRidgeEnergy.com 

### 15 

# LARGEST SALTWATER GATHERING SYSTEM IN THE NATION

Efficiencies Resulting in a Robust Gathering System

 Capital efficiency improvements and



## maturing production profiles have

increased producer to disposal well ratio

 Maturing producers make capacity

available for additional connections

 Open system design prototype may lead to



## further ratio increases, and conserve

capital spending



# Efficient use of capital investment.16 SandRidgeEnergy.com 

### 16 

# SWD*SYSTEM* SCHEMATIC

Gathering system takes water on the discharge

side of the transfer pump at producing wells

Water enters pipeline system which is connected

to one or more SWD facilities

Based on available disposal capacity, the

system  ́EDODQFHGμE\YDOYHVWRGLUHFWZDWHU

to systems with available capacity

Hydraulic simulation utilized to optimize

disposal regime

SWD injection volumes and pressures

monitored by well to determine



## maintenance needs and SWD injectivity 

# Optimal Hydraulic Performance



# Optimal water management.17 SandRidgeEnergy.com 

### 17 

# MIDSTREAM GATHERING SYSTEM

6DQG5LGJH·V Midstream Saltwater Gathering Business

PIPELINE & FACILITIES

ENGINEERING & CONSTRUCTION

 Monitoring the system capacity and performance



##  Modeling hydraulic properties for system

optimization

 New well connection modeling and design

 Implementing construction management processes

 Ensuring quality asset installation with construction

supervision

 Eighteen employees comprise this team 

# SWG OPERATIONS

 Patrol and maintain pipeline and facility assets

 Monitoring of SWG operations remotely and with



## on

- site personnel

 Monitoring of measurement and system balancing

operations

 Ensuring that the SCADA (Supervisory Control and



## Data Acquisition) system is updated and

functioning properly

 Operating facilities safely, environmentally friendly

and cost

- effectively

 Thirty

- eight employees comprise this team



# A highly technical engineering team for increased efficiencies.18 SandRidgeEnergy.com 

### 18 

# MIDSTREAM GATHERING SYSTEM

Why Third Party Midstream

 Currently utilizing third party midstream management

2 Natural Gas

2 Crude

2 1*/·V



#  Regional optimization

2 Resulting in lower rate with added volumes



#  Preserve Capital for Core business

2 Capital investment into increased production



# Reserve E&P capital for greater return investments.19 SandRidgeEnergy.com 

### 19 

# CLOSING SUMMARY

Produced Water Gathering Benefits

 6DQG5LGJH¶V efficiencies allow for successful Mississippian Lime

development

 Reduced LOE

 E&P efficiencies

 $2.4MM/lateral, targeting $2.3MM/lateral

 Multilateral wells

 Produced Water Management

 Utilization of produced water when feasible to offset cost

 >3.7MM Bbls of produced water used in 2014

 >99% of Produced water gathered for transport savings



# benefit

 Continued research of produced water re

- use/recycle20 SandRidgeEnergy.com 

### 20 

# Cathy Pocock Director of Marketing, Produced Water 

# Questions?