By a News Reporter-Staff News Editor at Energy Weekly News -- SANDRIDGE MISSISSIPPIAN TRUST II (NYSE: SDR) announced a quarterly distribution for the three-month period ended December 31, 2015 (which primarily relates to production attributable to the Trust's interests from September 1, 2015 through November 30, 2015) of $6.8 million, or $0.183 per Common Unit. The Trust makes distributions on a quarterly basis on or about the 60th day following the completion of each quarter. The distribution is expected to occur on or before February 26, 2016 to holders of record as of the close of business on February 12, 2016.
During the three-month production period ended November 30, 2015, total sales volumes were lower than initial Trust estimates and oil, natural gas and natural gas liquids ("NGL") experienced continued depressed pricing. The decrease in revenue caused by lower commodity prices during the period was partially offset by net cash settlements received under the derivatives agreement of approximately $3.1 million. This increased the average price received per barrel of oil, including the effects of the derivatives and post-production expenses, from $41.43 to $101.82, due to the ratio of the oil volumes hedged to the oil volumes produced and substantial declines in the market prices of oil compared to contract prices, and increased the quarterly income available for distribution to $0.183 per Common Unit. Although distributions related to production through December 31, 2015 are supported by hedging arrangements, no such arrangements are in place for production attributable to periods after December 31, 2015 and consequently distributions for production periods beginning January 1, 2016 or later should be expected to be dramatically lower than distributions for recent periods. 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 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, 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
$0.640 per Common Unit for the quarter, and no quarterly distribution will be paid to the Subordinated Units.
Keywords for this news article include: Energy, Oil & Gas, Natural Gas, SandRidge Mississippian Trust II.
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Source: Equities.com News
(February 4, 2016 - 11:39 AM EST)
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