SANDRIDGE MISSISSIPPIAN TRUST I (NYSE: SDT) today announced a quarterly
distribution for the three-month period ended March 31, 2014 (which
primarily relates to production attributable to the Trust’s interests
from December 1, 2013 through February 28, 2014) of $9.0 million, or
$0.4263 per Common Unit. The Trust makes distributions on a quarterly
basis approximately 60 days after the end of each quarter. The
distribution is expected to occur on or before May 30, 2014 to holders
of record as of the close of business on May 15, 2014.
During the three-month production period ended February 28, 2014, total
sales volumes were lower than initial Trust estimates and lower than the
previous period. As no additional development wells will be drilled, the
Trust’s production is expected to decline each quarter during the
remainder of its life. Additionally, the Trust experienced intervals of
reduced production due to severe winter weather conditions which
negatively impacted the Trust’s results during the period. The lower
production resulted in quarterly income available for distribution of
$0.4263 per Common Unit, which is below the subordination threshold.
The Trust owns royalty interests in oil and natural gas properties in
the Mississippian formation in Alfalfa, Garfield, Grant and Woods
counties in Oklahoma and is entitled to receive proceeds from the sale
of production attributable to the royalty interests. As described in the
Trust’s filings with the Securities and Exchange Commission (the “SEC”),
the amount of the quarterly distributions is expected to fluctuate from
quarter to quarter, depending on the proceeds received by the Trust as a
result of actual production volumes, oil and natural gas prices and the
amount and timing of the Trust’s administrative expenses, among other
factors. Although there is no assurance of any minimum distribution in
any quarterly period, during the subordination period (as described in
the Trust’s filings), holders of Common Units will be entitled to
receive an amount up to the “Subordination Threshold” (which varies from
quarter to quarter) prior to any distribution being made for that
quarter in respect of the Subordinated Units, all of which are held by
SandRidge Energy, Inc. (“SandRidge”). If the amount available for
distribution in any quarterly period is sufficient to distribute an
amount equal to the Subordination Threshold to the holders of all units
(including the Subordinated Units), any additional balance is
distributed to holders of all units pro rata, up to the amount of the
Incentive Threshold for the quarter. Trust units are entitled to receive
50% of any cash available for distribution in excess of the Incentive
Threshold for the quarter. Because the Trust’s quarterly income
available for distribution to the Common Units is below the
Subordination Threshold of $0.6216 per Common Unit for the quarter, no
quarterly distribution will be paid to the Subordinated Units.
Volumes, price and distributable income available to unitholders for the
period were (dollars in thousands, except per unit):
Sales Volumes
|
|
|
|
Oil (MBbl) (1)
|
|
|
|
62
|
Gas (MMcf)
|
|
|
|
801
|
Combined (MBoe)
|
|
|
|
196
|
Average Price
|
|
|
|
Oil (per Bbl) (1)
|
|
|
$
|
88.82
|
Gas (per Mcf)
|
|
|
$
|
4.87
|
Average Price - including impact of derivative settlements and
post-production expenses
|
|
|
|
Oil (per Bbl) (1)
|
|
|
$
|
96.27
|
Gas (per Mcf)
|
|
|
$
|
4.34
|
Revenues
|
|
|
|
Royalty income
|
|
|
$
|
9,432
|
Derivative settlements
|
|
|
|
479
|
Expenses
|
|
|
|
959
|
Distributable income available to unitholders
|
|
|
$
|
8,952
|
Distributable income per Common Unit (21,000,000 units issued and
outstanding)
|
|
|
$
|
0.4263
|
Distributable income per Subordinated Unit (7,000,000 units
issued and outstanding)
|
|
|
$
|
0.0000
|
(1)
|
|
Includes natural gas liquids which comprised approximately 3.2% of
total production.
|
|
|
|
In addition to wells that were producing at the effective date of the
assignment of the royalty interests to the Trust, SandRidge drilled, or
caused to be drilled, 124 development wells within an area of mutual
interest between January 1, 2011 and April 2013.
On June 30, 2014, which is the end of the fourth full calendar quarter
following SandRidge’s satisfaction of its drilling obligation with
respect to the Trust Development Wells, the Subordinated Units will
automatically convert into Common Units, distributions made to Common
Units in respect of subsequent periods will no longer have the
protection of the Subordination Threshold, and all Trust unitholders
will share on a pro rata basis in the Trust’s distributions.
Consequently, the distribution in respect of the second quarter of 2014
will be the last distribution to have the benefit of the Subordination
Threshold.
Pursuant to IRC Section 1446, withholding tax on income effectively
connected to a United States trade or business allocated to foreign
partners should be made at the highest marginal rate. Under Section
1441, withholding tax on fixed, determinable, annual, periodic income
from United States sources allocated to foreign partners should be made
at 30% of gross income unless the rate is reduced by treaty. This is
intended to be a qualified notice by SandRidge Mississippian Trust I to
nominees and brokers as provided for under Treasury Regulation Section
1.1446-4(b), and while specific relief is not specified for Section 1441
income, this disclosure is intended to suffice. Nominees and brokers
should withhold at the highest marginal rate, currently 39.6% for
individuals, on the distribution made to foreign partners.
This press release contains statements that are “forward-looking
statements” within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended. All statements contained in this press release,
other than statements of historical facts, are “forward-looking
statements” for purposes of these provisions. These forward-looking
statements include the amount and date of any anticipated distribution
to unit holders. The anticipated distribution is based, in part, on the
amount of cash received or expected to be received by the Trust from
SandRidge with respect to the relevant period. Any differences in actual
cash receipts by the Trust could affect this distributable amount. Other
important factors that could cause actual results to differ materially
include expenses of the Trust and reserves for anticipated future
expenses. Statements made in this press release are qualified by the
cautionary statements made in this press release. Neither SandRidge nor
the Trustee intends, and neither assumes any obligation, to update any
of the statements included in this press release. An investment in
Common Units issued by SandRidge Mississippian Trust I is subject to the
risks described in the Trust’s Annual Report on Form 10-K for the year
ended December 31, 2013, and all of its other filings with the SEC. The
Trust’s quarterly and other filed reports are or will be available over
the Internet at the SEC’s web site at http://www.sec.gov.
Copyright Business Wire 2014