SandRidge Energy Inc. (OTC: SDOC) is an oil and natural gas exploration company primarily engaging in domestic onshore oil exploration and production activities in northern Oklahoma and southern Kansas, where the company owns 1.85 million acres of leasehold. SandRidge made its initial public offering (IPO) of over 28 million stocks in November 2007 at about $26 per share. Like its other competitors, SandRidge has suffered a steep decline over the succeeding years. Its fourth-quarter report for 2015 indicated a $653.7 million loss, but the company has survived in the industry longer than predicted by competitors and analysts. By contrast, over 40 energy companies entered bankruptcy in 2015.

The first half of 2014 was a good year for SandRidge despite a stock crash in the third quarter of the same year. The company had an adjusted full-year net income of $149.9 million at the time, which was a $46 million increase from the previous year. Its resilience could very well be an indication of its profitability. The following are three of SandRidge’s most profitable lines of business.

Oil Production

SandRidge’s bread and butter, oil production, has historically been its consistently profitable line of business. Between 2006 and 2011, the company’s annual average revenue growth rate reached 29.52%; the year-over-year (YOY) growth rate was 51.89% for 2011 alone. A record 4.6 million barrels of oil and a total of 8.2 MMBOE (million barrels of oil equivalents) was produced by second quarter 2012.

Niobrara Shale Position

The Niobrara Shale position is located in North Park Basin in Jackson County, Colorado. SandRidge gained a material, de-risked position with its acquisition of EE3 LLC for $190 million. Niobrara Shale is distinguished by its numerous stacked pay reservoirs, a proven production history, long-lived reserves and more than 10 years of repeated drilling success. The acquired acreage is largely concentrated in rural North Central Colorado.

At first glance, this acquisition appears ill-timed given the company’s fragile financial situation. However, with 1 MBOEPD (thousand barrels of oil equivalents per day) being produced from 16 horizontal wells, and an estimated 27 MMBOE, the acquisition is a sign the company is finally diversifying and may prove profitable for investors. The new location gives SandRidge a new basket in which to place its proverbial eggs.

Royalty Trusts

Royalty trusts are corporations that buy the rights to royalties on the production and sale of natural resource companies; in this case, oil and gas production. SandRidge owns three: SandRidge Permian Trust, SandRidge Mississippian Trust I and SandRidge Mississippian Trust II. All three own royalty interests in the areas where SandRidge does its oil production operations. Investing in royalty trusts can give investors access to oil and gas but with unique tax benefits and high yield. Royalty trusts are pass-through entities, meaning they are exempt from corporate taxes. Distribution yields are very high; SandRidge Mississippian Trust II’s yield peaked at 28.5% in 2014.

Before investing in royalty trusts, remember these are not stocks but more like a specific type of bond. While royalty trusts are indeed profitable, they have a finite life. Their value slowly declines over time until the oil supply in a well is depleted, or until it is not cost-effective. The lifespan profitability may not be long term, but it is profitable nonetheless.

James Bennett, president and CEO of SandRidge, stated the Oklahoma City-based company will be cutting down capital spending by around 60% in 2016 compared to 2015 to ensure liquidity while advancing operations. Much has been written about SandRidge’s declining stock price and precarious finances; recent developments could lead to a complete reversal in the coming months.

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