By Claudia Assis

SandRidge Energy Corp. SandRidge Energy oil tank battery near Alva, Oklahoma.

SandRidge Energy Inc. /quotes/zigman/473744 /quotes/nls/sd SD has struck a deal with hedge fund TPG-Axon Capital that will likely lead to the dismissal of Chief Executive Tom Ward and represents a significant win for shareholder activism.

The company will launch a review of its strategy and costs as well as company transactions with entities owned by Ward and Wards family members.

Shares of SandRidge in the past 12 months.

SandRidge has been under pressure from TPG-Axon and another hedge fund, Mount Kellet Capital Management LP, since last year. TPG-Axon owns 7.3% of the company.

In addition to allegations of mismanagement and inefficiencies, TPG-Axon alleged Ward and SandRidges board have allowed a company run by Wards son to acquire rights to drill for oil and gas near SandRidge operations.

Ward co-founded Chesapeake Energy Corp. with Aubrey McClendon, and left to start SandRidge in 2006. Chesapeake has also been under fire from activist shareholders, and McClendon has agreed to retire in April.

Four TPG-Axon Capital nominees will be added to the board effectively immediately, the company said in a statement late Wednesday. SandRidge said it expects results of the review no later than June 15.

Ward is to remain CEO during the review process, but the board will decide by June 30 whether to fire him. If Ward stays, three board directors will resign and one TPG-Axon nominee will be elected, resulting in a board composed mostly of TPG-Axon.

If Ward is fired, vice president and chief financial officer James Bennett will be appointed interim CEO and a search will be conducted, the company said.

The board will also conduct a comprehensive review of the companys strategy and costs, particular focus on reducing corporate overhead and optimizing capital expenditures, SandRidge said.

As a symbol of its commitment to improving efficiency, the Board has reduced compensation for directors, effective immediately, from$375,000 to $250,000 per year, SandRidge said.

Shares of SandRidge declined 1.9% in early trading Thursday. Analysts at Simmons & Co. said the moves could drive a material near-term uptick in shares, but it simply the beginning of some heavy lifting for the company, which has to reduce costs, ease its debt burden, and sell assets to improve cash flow.

While this may be a positive step forward, it is not immediately clear how this will be done and could lead to a period of tempered performance until the new Board and management can articulate, implement and show forward progress regarding their plan to unlock trapped value within [SandRidge], the firm said.

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