SANDRIDGE MISSISSIPPIAN TRUST II (NYSE: SDR) today announced a quarterly distribution for the three-month period ended September 30, 2013 (which primarily relates to production attributable to the Trust’s interests from June 1, 2013 through August 31, 2013) of $26.4 million, or $0.536 per Common Unit and $0.514 per Subordinated 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 November 29, 2013 to holders of record as of the close of business on November 14, 2013.
During the three-month production period ended August 31, 2013, total sales volumes were lower than initial Trust estimates. This was due to lower oil volumes but was partially offset by higher natural gas production during the period. The decline in production from the previous period was mainly driven by well performance and fewer development wells brought on production during the period. The lower oil production and lower realized gas prices resulted in quarterly income available for distribution of $0.530 per unit, which is $0.006 below the subordination threshold. As a result, the distribution per common unit is the subordination threshold of $0.536 for the period.
The Trust owns royalty interests created from interests held by SandRidge Energy, Inc. (“SandRidge”) and its subsidiaries 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 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. 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. The Trust’s quarterly income available for distribution to all Trust units was $0.530 per unit, which was below the Subordination Threshold for the Common Units of $0.536 per unit for the quarter. As a result, the distribution to the Subordinated Units was decreased to $0.514 per unit in order to permit a distribution per Common Unit equal to the Subordination Threshold for the quarter.