SandRidge Mississippian Trust II Announces Quarterly Distribution

  SandRidge Mississippian Trust II Announces Quarterly Distribution

Business Wire

AUSTIN, Texas -- October 24, 2013

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
June1, 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.

Volumes, price and distributable income available to unitholders for the
period were (dollars in thousands, except per unit):

Sales Volumes                                                       
Oil (MBbl) (1)                                                          238
Gas (MMcf)                                                              1,818
Combined (MBoe)                                                         541
Average Price
Oil (per Bbl) (1)                                                     $ 89.91
Gas (per Mcf)                                                         $ 3.84
Average Price - including impact of derivative settlements and
post-production expenses
Oil (per Bbl) (1)                                                     $ 91.75
Gas (per Mcf)                                                         $ 3.32
Revenues
Royalty income                                                        $ 28,373
Derivative settlements                                                  437
Expenses                                                               2,433
Distributable income available to unitholders                         $ 26,377
Distributable income per Common Unit (37,293,750 units issued and     $ 0.536
outstanding)
Distributable income per Subordinated Unit (12,431,250 units issued   $ 0.514
and outstanding)

(1)  Includes natural gas liquids.
      

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
SandRidge’s net revenue interest in a well and the perforated length of the
well, in an area of mutual interest by December31, 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              Additional
As of        Producing             Drilled             Total Development
               Development Wells       Development           Wells
                                       Wells*
2/29/2012      4.8                     3.4                   8.2
5/31/2012      37.5                    2.7                   40.2
8/31/2012      67.1                    0.3                   67.4
11/30/2012     95.3                    3.6                   98.9
2/28/2013      118.3                   0.4                   118.7
5/31/2013      145.9                   5.0                   150.9
8/31/2013      165.9                   2.1                   168.0

*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 SandRidge’s
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 Trust’s 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 Section21E 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 unitholders. 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
Trust’s Annual Report on Form 10-K for the year ended December 31, 2012, 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.

Contact:

SandRidge Mississippian Trust II
The Bank of New York Mellon Trust Company, N.A., as Trustee
Sarah Newell, 1-512-236-6531
 
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