SandRidge Mississippian Trust I Announces There Will Be No Quarterly Distribution in November 2020 and Trust Dissolution Trigger Date
SANDRIDGE MISSISSIPPIAN TRUST I (OTC: SDTTU) today announced that there will be no distribution paid for the three-month period ended September 30, 2020 (which primarily relates to production attributable to the Trust’s interests from June 1, 2020 to August 31, 2020) as costs, charges and expenses attributable to the properties in which the Trust holds royalty interests (the “Underlying Properties”), plus funds added to the Trust’s cash reserve, equaled the revenue received from the sale of oil, natural gas and other hydrocarbons produced from such properties, as reported by SandRidge Energy, Inc. (“SandRidge”).
During the three-month production period ended August 31, 2020, average oil, natural gas and natural gas liquids (“NGL”) prices increased compared to the three-month period ended May 31, 2020. Combined sales volumes slightly decreased compared to 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.
As described in the Trust’s annual and quarterly reports filed with the Securities and Exchange Commission (the “SEC”), the trust agreement governing the Trust requires the Trust to dissolve and commence winding up of its business and affairs if cash available for distribution for any four consecutive quarters, on a cumulative basis, is less than $1.0 million. As cash available for distribution for the four consecutive quarters ended September 30, 2020, on a cumulative basis, will total approximately $815,000, the Trust will be required to dissolve and commence winding up beginning as of the close of business on November 13, 2020 (the “dissolution trigger date”). Accordingly, the Trustee will be required to sell all of the Trust’s assets, either by private sale or public auction, and distribute the net proceeds of the sale to the Trust unitholders after payment, or reasonable provision for payment, of all Trust liabilities, which is expected to include the establishment of cash reserves in such amounts as the Trustee in its discretion deems appropriate for the purpose of making reasonable provision for all claims and obligations of the Trust, including any contingent, conditional or unmatured claims and obligations, in accordance with the Delaware Statutory Trust Act. The sale process will involve costs that will reduce the amounts of any distributions to unitholders during the winding up period. As required by the trust agreement, within 30 days after the dissolution trigger date the Trustee plans to engage a third-party advisor to assist with the marketing and sale of the Trust’s assets. As provided in the trust agreement, SandRidge has a right of first refusal with respect to any sale of assets to a third party. The Trustee expects to complete the sale of the Trust’s assets and distribute the net proceeds of the sale to the Trust unitholders by the third quarter of 2021, and the Trust units are expected to be canceled shortly thereafter. Pending the sale or sales of the royalty interests, the Trust anticipates that it will continue to receive income from the royalty interests and will continue to make quarterly distributions to unitholders to the extent there is available cash after payment of Trust expenses and additions to cash reserves. The Trust will remain in existence until the filing of a certificate of cancellation with the Secretary of State of the State of Delaware following the completion of the winding up process.