Uh oh, Tom Ward and SandRidge Energy are getting the Reuters treatment…

10:15 AM EST on February 8, 2013

Lost in all the news and hoopla surrounding the fall of Aubrey McClendon and Chesapeake Energy have been the struggles of fellow fracking giant SandRidge Energy.

The company is currently led by Chesapeake co-founder and former C.O.O. Tom Ward. Although SandRidge is much smaller than Chesapeake, Ward's new company is eerily similar to the one he co-founded with Aubrey McClendon in the 1980s. Both companies made their mark in natural gas, both have a very large presence in Oklahoma City, and both muddle their books with complicated accounting methods that Commander Data couldn't comprehend.

Unfortunately for SandRidge, that's not where the Chesapeake similarities end. Over the past few months, disgruntled shareholders and activist investors have accused Tom Ward of engaging in shady land deals. But don't worry. The SandRidge board of directors released a statement in late January letting us know that everything is fine.

Via Reuters:

SandRidge Energy Inc's board said Friday it had reviewed land deals involving entities controlled by Chief Executive Tom Ward and his family and found no sign of wrongdoing.
The company said in a statement its independent directors would consider requests from investors to hire outside investigators to look into the charges.
Hedge fund TPG-Axon, one of SandRidge's top investors, had alleged that WCT Resources, an Oklahoma company run by Ward's son Trent, had run ahead of the company to acquire land, later flipping that land to SandRidge or other oil and gas companies.
Another top shareholder, Mount Kellett Capital Management, joined TPG-Axon in urging the board to further investigate the land deals.

Here's some good news and bad news for SandRidge. The good news is that they may not have to request that investigation. The bad news is the pesky team of reporters at Reuters — the same ones who effectively brought down Lord McClendon at Chesapeake — did it for them.

Here's a snippet of an exclusive Reuters report claiming that Tom Ward was involved in potentially shady land dealings that put his own personal interests over that of his company, including it's shareholders, 2,200 employees and the ad agency they hired to make all those terrible Tree of Life commercials. It was filed by Michael Erman and Colonel Angus and Brian Grow and Anna Driver. Just kidding about Colonel Angus. I just felt like throwing it in there:

SandRidge Energy Corp is giving its chief executive wide latitude to profit from personal oil-and-gas deals in ways that pose potential conflicts of interest with the company, according to a review of employment contracts and recent transactions.
SandRidge has lifted most restrictions on CEO Tom Ward's ability to sell mineral rights or drill wells, through little-noticed changes to his employment agreement in 2011. (See Factbox.)
Before the changes, Ward was permitted to receive royalties from SandRidge, or jointly own wells with it, on land he had owned before joining the company in 2006. The 2011 agreement allows him to do deals with SandRidge competitors in the oil and gas business, and to do business with SandRidge on any land that he owns or acquires.
Ward started the independent energy producer in 2006 after leaving Chesapeake Energy Corp, which he co-founded with Chesapeake CEO Aubrey McClendon. At the two companies, both based in Oklahoma City, the CEOs have entwined their own finances with those of the publicly traded corporations they run. Last week, McClendon announced his resignation from Chesapeake after a year marked by a cash crunch and civil and criminal probes into his personal finances and other matters.
The new language in Ward's employment contract allows "participation in outside operated oil and gas drilling" in areas not being pursued by the company. It also allows his "participation as a working interest owner in properties operated by the company" on land owned by Ward-related entities.
Taken together, the two privileges give Ward greater leeway to profit on private dealings.
According to land records reviewed by Reuters, a Ward-linked entity named 192 Investments LLC acquired mineral rights on thousands of acres in late 2011 in the Mississippi Lime shale formation in Kansas. The Ward-related company bought those mineral rights just months before SandRidge leased property in adjacent plots, the Kansas land records show.
Such deals could pose a potential conflict of interest. Buying personal mineral rights in land adjacent to acreage later bought by SandRidge could allow Ward to profit if SandRidge's purchases help drive up values, for instance. SandRidge doesn't disclose when its chief executive acquires new mineral rights in areas where it drills.
In 2012, the year after the employment contract was revised, royalties paid by SandRidge to TLW Land & Cattle - an entity in which Ward holds an ownership stake - rose by some $500,000 from the previous year to $1.4 million. TLW stands for Tom L. Ward.
It is unclear why the TLW royalties rose last year. Energy production simply could have increased at wells on land owned by TLW, increasing the royalties as well. The 2011 changes in Ward's contract could also have enabled him to sell more mineral rights to the company.

It was nice knowing you Mr. Ward. Thank you for buying SandRidge Energy and moving it to Oklahoma City. Hopefully the company will succeed and prosper and stay in Oklahoma City after you step down as the CEO. I wish you and Aubrey all the success in your future oil and natural gas dealings.

Seriously, with this news breaking you can't think Tom Ward's going to be the CEO of SandRidge for too much longer. His actions may not have been illegal, but they were certainly sketchy. I'm not a business reporter, so this may be an incorrect analogy, but it would be like the CEO of McDonalds creating a huge sale on the McRib, but before doing so, having his son buy a bunch of hog farms in advance because he knows the farms will bring in extra revenue and, as a result, go up in value. Wait, that's probably a bad analogy. Nobody's really sure what goes inside a McRib. My mistake. I told you that I wasn't a business guy.

Anyway, couple other questions/thoughts:

- How much longer do you think Tom Ward will be the CEO of Sandridge? Will he be able to fight through? I don't think so. If angry shareholder were able to get rid of McClendon, you'd think ousting Ward would be an easier task. I'm going to start prepping my list of 11 new occupation for Tom Ward list very soon. It will give me a chance to make some OKC Grand Prix jokes.

- Isn't it about time Reuters starts picking on some other city's major industry and employers? We get it. You all are awesome at what you do and helped expose some borderline corruption in this town. We'll be happy for you when you get your Pulitzer Prize. Now it's time to go expose some other industry in some other town. Just like how there's a holding penalty on every play in football, there's probably some CEO at every corporation doing stupid things for personal gain and profit. It doesn't matter if they're running a hedge fund, misusing a company jet, or just getting their lazy nephew a job in the warehouse. It happens all the time.

Hey, that was an okay analogy. It kind of makes me want a McRib.

Patrick @okcpatrick

Patrick is the founder, editor and publisher of The Lost Ogle.