SANDRIDGE PERMIAN TRUST (NYSE: PER) today announced a quarterly
distribution for the three-month period ended September 30, 2015 (which
primarily relates to production attributable to the Trust’s interests
from June 1, 2015 through August 31, 2015) of $9.9 million, or $0.250
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 27, 2015 to holders of record as
of the close of business on November 13, 2015.
During the three-month production period ended August 31, 2015, total
sales volumes were lower than initial Trust estimates and oil, natural
gas and natural gas liquids (“NGL”) experienced continued depressed
pricing. The previous period’s low commodity prices were partially
offset by net cash settlements received under the derivatives agreement,
whereas no such arrangements were in place for the three-month
production period ended August 31, 2015. Additionally, as no additional
development wells will be drilled, the Trust’s production is expected to
decline each quarter during the remainder of its life.
The Trust owns royalty interests in oil and natural gas properties in
the Central Basin Platform of the Permian Basin in Andrews County, Texas
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, NGL 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 are
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. The Trust’s quarterly income available for
distribution to the Common Units is below the Subordination Threshold of
$0.560 per Common Unit for the quarter, and 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)
|
|
|
|
216
|
NGLs (MBbl)
|
|
|
|
29
|
Natural Gas (MMcf)
|
|
|
|
85
|
Combined (MBoe)
|
|
|
|
259
|
Average Price
|
|
|
|
Oil (per Bbl)
|
|
|
$
|
50.18
|
NGLs (per Bbl)
|
|
|
$
|
14.41
|
Natural Gas (per Mcf)
|
|
|
$
|
2.11
|
Average Price - including impact of derivative settlements and
post-production expenses
|
|
|
|
Oil (per Bbl)
|
|
|
$
|
50.18
|
NGLs (per Bbl)
|
|
|
$
|
14.41
|
Natural gas (per Mcf)
|
|
|
$
|
1.89
|
Revenues
|
|
|
|
Royalty income
|
|
|
$
|
11,436
|
Expenses
|
|
|
|
1,580
|
Distributable income available to unitholders
|
|
|
$
|
9,856
|
Distributable income per Common Unit (39,375,000 units issued and
outstanding)
|
|
|
$
|
0.250
|
Distributable income per Subordinated Unit (13,125,000 units
issued and outstanding)
|
|
|
$
|
0.000
|
|
|
|
|
On January 1, 2016, the day following the end of the fourth full
calendar quarter subsequent to SandRidge’s satisfaction of its drilling
obligation with respect to the development wells, which occurred in the
fourth quarter of 2014, the Subordinated Units will automatically
convert into Common Units on a one-for-one basis. Distributions made on
Common Units in respect of subsequent periods will no longer have the
benefit of the Subordination Threshold, nor will the Common Units be
subject to the Incentive 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 Permian Trust 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 Permian Trust is subject to the risks
described in the Trust’s Annual Report on Form 10-K for the year ended
December 31, 2014, 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.
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