SandRidge Mississippian Trust II Announces Quarterly Distribution

  SandRidge Mississippian Trust II Announces Quarterly Distribution

Business Wire

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 Trust’s interests from December1,
2013 through February28, 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
May30, 2014 to holders of record as of the close of business on May 15, 2014.

During the three-month production period ended February28, 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 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 $0.576 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)                                                          174
Gas (MMcf)                                                              1,500
Combined (MBoe)                                                         424
Average Price
Oil (per Bbl) (1)                                                     $ 84.87
Gas (per Mcf)                                                         $ 4.64
Average Price - including impact of derivative settlements and
post-production expenses
Oil (per Bbl) (1)                                                     $ 89.02
Gas (per Mcf)                                                         $ 4.15
Revenues
Royalty income                                                        $ 21,691
Derivative settlements                                                  721
Expenses                                                               1,563
Distributable income available to unitholders                         $ 20,849
Distributable income per Common Unit (37,293,750 units issued and     $ 0.559
outstanding)
Distributable income per Subordinated Unit (12,431,250 units          $ 0.000
issued and outstanding)
                                                                        

(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
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
11/30/2013     176.6                   2.7                   179.3
2/28/2014      183.5                   7.1                   190.6
                                                             

*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 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
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.

Contact:

SandRidge Mississippian Trust II
The Bank of New York Mellon Trust Company, N.A., as Trustee
Sarah Newell, 1-512-236-6531
 
Press spacebar to pause and continue. Press esc to stop.