Revenues:

Oil and natural gas

Drilling and services

Midstream and marketing

Other

Total revenues

Expenses:

Production

Production taxes

Drilling and services

Midstream and marketing

Depreciation and depletion – oil and natural gas

Depreciation, depletion and amortization – other

Impairment

General and administrative

Gain on derivative contracts

Loss on sale of assets

Total expenses

(Loss) income from operations

Other income (expense):

Interest income

Interest expense

Income from equity investments

Other income, net

Total other (expense) income

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

Less: net income attributable to noncontrolling interest

Net (loss) income attributable to SandRidge Energy, Inc.

Preferred stock dividends

(Loss applicable) income available to SandRidge Energy, Inc. common stockholders

Loss per share applicable to SandRidge Energy, Inc. common stockholders:

Basic

Diluted

Weighted average number of SandRidge Energy, Inc. common shares outstanding:

Basic

Diluted

Revenues:

Oil and natural gas

Drilling and services

Midstream and marketing

Other

Total revenues

Expenses:

Production

Production taxes

Drilling and services

Midstream and marketing

Depreciation and depletion – oil and natural gas

Depreciation, depletion and amortization – other

General and administrative

Gain on derivative contracts

Loss on sale of assets

Total expenses

Income from operations

Other income (expense):

Interest income

Interest expense

Other income, net

Total other (expense) income

(Loss) income before income taxes

Income tax (benefit) expense

Net income (loss)

Less: net income attributable to noncontrolling interest

Net income (loss) attributable to SandRidge Energy, Inc.

Preferred stock dividends and accretion

Income available (loss applicable) to SandRidge Energy, Inc. common stockholders

Income (loss) per share available (applicable) to SandRidge Energy, Inc. common stockholders:

Basic

Diluted

Weighted average number of SandRidge Energy, Inc. common shares outstanding:

Basic

Diluted

Adjustment to reverse Arena’s historical income tax provision for the year ended December 31, 2009 and the period from January 1, 2010 through July 16, 2010 and to reverse the release of a portion of the Company’s valuation allowance for the nine months ended September 30, 2010. There was no pro forma income tax provision related to the 2009 Permian Basin Acquisition or the Arena Acquisition due to SandRidge’s net deferred tax asset position and the corresponding full valuation allowance. As noted in (i) ⁽⁴⁾ below, a deferred tax liability resulted from the step-up in basis on the property acquired from Arena. This deferred tax liability was offset with the Company’s existing net deferred tax asset, resulting in the release of $456.4 million of valuation allowance against the Company’s existing net deferred tax asset. The release of the valuation allowance is considered non-recurring and therefore reversed in the pro forma statement for the nine months ending September 30, 2010.

Purchase Price⁽¹⁾:

Shares of SandRidge common stock to be issued to Arena stockholders

SandRidge common stock price

Fair value of common stock issued

Cash consideration to be paid to Arena stockholders⁽²⁾

Arena restricted stock awards attributable to pre-merger service ⁽³⁾

Total purchase price

Estimated Fair Value of Liabilities Assumed:

Current liabilities

Long-term deferred tax liability⁽⁴⁾

Other non-current liabilities

Amount attributable to liabilities assumed

Total purchase price plus liabilities assumed

Estimated Fair Value of Assets Acquired:

Current assets

Oil and natural gas properties⁽⁵⁾

Other property, plant and equipment

Other non-current assets

Long-term deferred tax assets

Amount attributable to assets acquired

Goodwill⁽⁴⁾

Under the terms of the amended merger agreement, consideration paid by SandRidge consisted of 4.7771 shares of SandRidge common stock plus $4.50 cash for each share of Arena common stock outstanding. The total purchase price is based upon the closing price of $6.55 per share of SandRidge common stock on July 16, 2010 (the day of the acquisition). Under the acquisition method of accounting, the actual purchase price was determined based on the total cash paid and the fair value of SandRidge common stock issued in the merger on the acquisition date. Total shares issued consisted of (i) approximately 188.9 million shares issued in exchange for 39.5 million shares of outstanding Arena common stock and (ii) 1.4 million shares issued in exchange for outstanding options to purchase Arena common stock considered in-the-money (based on the closing price of $35.98 per share of Arena common stock on July 16, 2010) that converted into shares of SandRidge common stock in accordance with the merger agreement.

Cash paid to Arena stockholders was funded through a draw on SandRidge’s senior credit facility.

The portion of unvested restricted stock awards assumed under the merger agreement attributable to service provided to Arena prior to the Arena Acquisition was included as consideration.

SandRidge received carryover tax basis in Arena’s assets and liabilities because the merger was not a taxable transaction under the United States Internal Revenue Code. Based upon the preliminary purchase price allocation, a step-up in basis related to the property acquired from Arena resulted in a deferred tax liability of approximately $474.9 million, an increase of $339.4 million to Arena’s existing $135.5 million deferred tax liability. The additional deferred tax liability resulted in an excess of consideration transferred to acquire Arena over the acquisition date estimated fair value of the net assets acquired, or goodwill.

Weighted average commodity prices utilized in the preliminary determination of fair value of oil and natural gas properties were $105.58 per barrel of oil and $8.56 per mcf of natural gas, after adjustment for transportation fees and regional price differentials. The prices used were based upon commodity strip prices for the first four years and escalated for inflation at a rate of 2.5% annually beginning with the fifth year through the end of production, which was in excess of 50 years.

Acquisition costs⁽¹⁾

Stock compensation expense⁽²⁾

Cancelled options⁽³⁾

Total non-recurring expenses

Expenses incurred by both SandRidge and Arena related to the Arena acquisition, including professional fees and employee severance.

Stock compensation expense related to restricted stock awards of Arena common stock granted immediately prior to and in conjunction with the Arena Acquisition that were assumed by SandRidge.

Expense related to out-of-the-money Arena options that vested and cancelled at the time of the merger.

Proved Reserves

As of December 31, 2008

Revisions of previous estimates

Acquisitions of new reserves

Extensions and discoveries

Sales of reserves in place

Production

As of December 31, 2009

Proved developed reserves:

As of December 31, 2008

As of December 31, 2009

Proved undeveloped reserves:

As of December 31, 2008

As of December 31, 2009

Includes NGLs

Future cash inflows from production

Future production costs

Future development costs

Future income tax expenses

Undiscounted future net cash flows

10% annual discount

Standardized measure of discounted future net cash flows

Pro forma adjustments represent elimination of effect of future income taxes due to SandRidge’s deferred tax asset position and the associated full valuation allowance that serves to reduce to zero a tax benefit that otherwise would result from the tax effects of PV-10 at December 31, 2009.

Standardized measure at December 31, 2008

Revenues less production and other costs

Net changes in prices, production and other costs

Net development costs incurred

Net changes in future development costs

Extensions and discoveries

Revisions of previous quantity estimates

Accretion of discount

Net change in income taxes

Purchases of reserves in place

Sales of reserves in place

Timing differences and other

Standardized measure at December 31, 2009

Pro forma adjustments represent elimination of effect of future income taxes due to SandRidge’s deferred tax asset position and the associated full valuation allowance that serves to reduce to zero a tax benefit that otherwise would result from the tax effects of PV-10 at December 31, 2009.