SandRidge Permian Trust Announces Distribution of $0.603032 Per Unit
January 31 2013 - 4:15PM
Business Wire
SANDRIDGE PERMIAN TRUST (NYSE: PER) today announced a quarterly
distribution for the three-month period ended December 31, 2012
(which primarily relates to production attributable to the Trust’s
interests from September 1, 2012 through November 30, 2012) of
$31.7 million, or $0.603032 per 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
March 1, 2013 to holders of record as of the close of business
on February 14, 2013.
During the three-month production period ended November 30,
2012, total sales volumes decreased 7% from the previous
three-month period. The lower volume was primarily due to bringing
fewer wells on production versus the previous period. This was
mainly driven by a reduction in rig count: four to five drilling
rigs were utilized in the previous period versus an average of
three rigs in this period. In addition, the number of development
wells awaiting completion increased by 9.3 wells from the previous
period. It is anticipated that this inventory will return to its
previous levels in the upcoming distribution periods. The lower
production was partly offset by higher realized prices. The
realized oil price, including the impact of hedges and natural gas
liquids, was 2% higher compared to the previous period. The
realized gas price increased 15% over the previous period. Overall,
the period’s results generated a 3% lower distribution per unit
than the target.
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 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 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 announced distribution exceeded the Subordination
Threshold, but not the Incentive 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) 374 Gas (MMcf) 95
Combined (MBoe) 390
Average Price Oil (per Bbl) (1) $ 81.13
Gas (per Mcf) $ 2.49
Average Price - including impact of
derivative settlements and post-production expenses Oil (per
Bbl) (1) $ 90.26 Gas (per Mcf) $ 2.26
Revenues Royalty
income $ 30,605 Derivative settlements 3,415
Expenses
2,361
Distributable income available to unitholders $ 31,659
Distributable income per unit (52,500,000 units issued and
outstanding) $ 0.603032 (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 888 development
wells, determined by reference to SandRidge’s net revenue interest
in a well, in an area of mutual interest on or before
March 31, 2016.
During the three-month production period ended November 30,
2012, three drilling rigs were utilized to drill development wells
for the Trust. Currently, three rigs are drilling Trust development
wells, and the present plan is to continue the three rig program
through 2013. To date, equivalent development wells producing, or
drilled and perforated for completion, during production periods
upon which distributions are based are as follows:
As of Equivalent Producing
Additional Drilled Total Development
Development Wells Development Wells* Wells
8/31/2011 85.2 20.7 105.9 11/30/2011 159.7 18.8 178.5 2/29/2012
219.3 16.2 235.5 5/31/2012 300.9 18.3 319.2 8/31/2012 381.5 20.2
401.7 11/30/2012 424.5 29.5 454.0
*Equivalent development wells that are not producing at the ‘As
of’ date but have been drilled and perforated for completion.
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, 2011, 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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