SANDRIDGE MISSISSIPPIAN TRUST I (NYSE: SDT) 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 $12.7 million, or $0.6029 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 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 the completion of the drilling obligation which occurred in 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. Although the gas production came in higher than projected, the additional production was offset by lower realized gas prices than initial estimates. The combination of lower oil production and lower realized gas prices resulted in quarterly income available for distribution below the amount needed to distribute the Subordination Threshold to the Common Units. As a result, the Subordinated Units will not receive a distribution.
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, Garfield, Grant, Major 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. 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 was $0.6029 per Common Unit, which was below the Subordination Threshold of $0.6128 per Common Unit for the quarter, no quarterly distribution will be paid to the Subordinated Units.