Sandridge Mississippian Trust Ii Announces Quarterly Distribution
The following excerpt is from the company's SEC filing
AUSTIN, Texas April 24, 2014 SANDRIDGE MISSISSIPPIAN TRUST II (NYSE: SDR) today announced a quarterly distribution for the three-month period ended March 31, 2014 (which primarily relates to production attributable to the Trusts interests from December 1, 2013 through February 28, 2014) of $20.8 million, or $0.559 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 end
ed February 28, 2014, total sales volumes were lower than initial Trust estimates and lower than the previous period. This was primarily related to well performance, fewer development wells brought on production during the period, and intervals of reduced production due to severe winter weather conditions. The lower oil production resulted in quarterly income available for distribution of $0.559 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, Grant, Kay, Noble, and Woods counties in northern Oklahoma and Barber, Comanche, Harper and Sumner counties in southern Kansas and is entitled to receive proceeds from the sale of production attributable to the royalty interests. As described in the Trusts 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 Trusts 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 Trusts 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 Trusts quarterly income available for distribution to the Common Units is below the Subordination Threshold of $0.576 per Common Unit for the quarter, no quarterly distribution will be paid to the Subordinated Units.
(1) Includes natural gas liquids which comprised approximately 7.3% 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, pursuant to a development agreement with the Trust, is obligated to drill, or cause to be drilled, the equivalent of 206 development wells, determined by reference to SandRidges net revenue interest in a well and the perforated length of the well, in an area of mutual interest by December 31, 2016.
To date, equivalent development wells producing, or drilled and perforated for completion, during production periods upon which distributions are based are as follows:
Equivalent Producing Development Wells
Additional Drilled Development Wells*
Total Development Wells
*Equivalent development wells that are not producing at the As of date but have been drilled and perforated for completion.
At the end of the fourth full calendar quarter following SandRidges satisfaction of its drilling obligation with respect to the 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 Trusts distributions.
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 II 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 II is subject to the risks described in the Trusts Annual Report on Form 10-K for the
year ended December 31, 2013, and all of its other filings with the SEC. The Trusts quarterly and other filed reports are or will be available over the Internet at the SECs web site at http://www.sec.gov.
SandRidge Mississippian Trust II
The Bank of New York Mellon Trust Company, N.A., as Trustee
919 Congress Avenue, Austin, TX 78701
The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. SandRidge Mississippian Trust II next reports earnings on May 07, 2014.
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Other recent filings from the company include the following:
Quarterly report [Sections 13 or 15(d)] - Nov. 7, 2014
Sandridge Mississippian Trust Ii Announces Quarterly Distribution - Oct. 30, 2014