The new CEO of SandRidge Energy Inc. pledged March 5 that the company will operate with a "sense of urgency" but also announced expected production declines for 2019, shaking investor confidence.

The company has adjusted its business model in recent months and plans to emphasize efficiency over growth, Paul McKinney, SandRidge's president and CEO since January, said during the company's fourth-quarter 2018 earnings call March 5.

"We will be defined by our operational excellence and sense of urgency, delivering low-cost, consistent and efficient execution of our drilling programs and operations," McKinney said. "We will prioritize and allocate our resources to projects that deliver high margins and returns knowing full well that this will be the defining aspect of our future profitable growth. We also intend to reduce the breakeven costs of our portfolio of investment opportunities through accretive acquisitions, mergers and dispositions because we know that this is key to properly growing on a sustainable basis."

SandRidge posted fourth-quarter 2018 net income of $54 million, compared to a net loss of $19 million in the fourth quarter of 2017. The fourth-quarter earnings included $43 million of gains on derivatives. The earnings improvement did not comfort investors, however, and SandRidge shares were down more than 5.3% to $7.86 in late-morning trading on the New York Stock Exchange on March 5.

SandRidge projected an overall production decline to 11.5 million barrels of oil equivalent to 12 MMBoe for 2019, from 12.3 MMBoe in 2018. That, as well as company official's concerns about the cost of operating in the Mississippian Lime and the STACK play of Oklahoma, appears to have cut into investors' confidence.

Even with additional northwest STACK and Mississippian Lime locations to drill, the region's economics are "not as compelling at today's prices as we'd like," McKinney said during the call, highlighting commodity price volatility. "The marketplace needs to offer more confidence to where product prices are going before we're going to ramp up those programs."

The prohibitive cost to operate in the Mississippian Lime would likely cause SandRidge's production to drop 5% to 6% as the company will not attempt to prevent normal declines, McKinney said.

"The capital program measure to arrest this decline and grow our production in 2019 would need to appreciably exceed our estimates of operating cash flow. And we are just not going to do that," McKinney said.

Moving away from its previous focus on the Mississippian Lime and the STACK play, SandRidge is now targeting the North Park play of Colorado as its primary moneymaker. McKinney said the company will spend about 80% of its 2019 operating cash flow to expand its operations in the region, even as oil and gas production remains a hot-button topic in the state.

"This capital program is the primary reason our oil production is estimated to grow 9% year-over-year, allowing oil to make up approximately 32% of our total production," McKinney said. "We believe North Park offers good risk-adjusted rates of return, and the upside could be very compelling for a company our size."

SandRidge had a bumpy 2018 as the company saw its board of directors taken over by activist investor Carl Icahn and failed to find a suitable buyer when it put itself on the market. When it decided to continue to operate independently in September 2018, it said the offers it had received "significantly undervalue" the company's asset base.