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SandRidge Permian Trust Announces Quarterly Distribution
SANDRIDGE PERMIAN TRUST
The Bank of New York Mellon Trust Company, N.A., Trustee
For Immediate Release
HOUSTON, Texas October 22, 2020 — SANDRIDGE PERMIAN TRUST (OTC Pink: PERS) today announced a quarterly distribution for the three-month period ended September 30, 2020 (which primarily relates to production attributable to the Trust’s royalty interests from June 1, 2020 to August 31, 2020) of approximately $1.7 million, or $0.033 per 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 November 25, 2020 to holders of record as of the close of business on November 13, 2020.
During the three-month production period ended August 31, 2020, combined sales volumes were lower than the previous period while oil prices increased. 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 previously disclosed, commencing with the distribution to unitholders paid in the first quarter of 2019, the Trustee has withheld, and in the future intends to withhold, the greater of $190,000 or 3.5% of the funds otherwise available for distribution each quarter to gradually increase existing cash reserves by a total of approximately $2,275,000. The withholding for this distribution is $190,000. This cash is reserved to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities of the Trust.
As previously disclosed, on October 13, 2020, Avalon Energy, LLC (“Avalon”), the sponsor of the Trust, notified the Trustee that Avalon had entered into a purchase and sale agreement with Montare Resources I, LLC (“Montare”) for the sale of certain wells, the production from which is burdened by overriding royalty interests held by the Trust (the “Overriding Royalty Interests”). As permitted under the Amended and Restated Trust Agreement governing the Trust, the Assets have been sold to Montare unburdened by the Trust’s Overriding Royalty Interests, and the Trust has received approximately $4.9 million for the Royalty Interests released by the Trustee in connection with the sale of the Assets. These proceeds will be distributed by the Trust, less any withholdings as determined by the Trustee, to unitholders with the quarterly distribution, if any, for the three-month period ending December 31, 2020 (which primarily relates to production attributable to the Trust’s royalty interests from September 1, 2020 to November 30, 2020) in accordance with the terms of conveyances granting the Overriding Royalty Interests to the Trust. Such distribution is expected to occur in late February 2021.
The Trust owns Overriding Royalty Interests in specified oil and natural gas wells located on properties situated in the Central Basin Platform of the Permian Basin in Andrews County, Texas (the “Underlying Properties”), and is entitled to receive proceeds from the sale of production attributable to the Overriding 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, natural gas and natural gas liquids prices, and the amount and timing of the Trust’s administrative expenses, among other factors. All Trust unitholders share distributions on a pro rata basis.
As previously reported in the Trust’s Form 8-K filed on April 23, 2020, Avalon informed the Trustee that Avalon would be unable to pay on a timely basis the approximately $4.65 million it owes the Trust, which reflects the quarterly distribution amount for the three-month period ended March 31, 2020 (which primarily relates to production attributable to the Trust’s interests from December 1, 2019 to February 29, 2020) of approximately $3.73 million, or $0.071 per unit, together with approximately $0.73 million of Trust expenses and $0.19 million to be withheld by the Trustee for the Trust’s previously disclosed cash reserve for future known, anticipated or contingent expenses or liabilities of the Trust. Consequently, the Trustee was not able to make the quarterly distribution to unitholders in the second quarter of 2020. In accordance with the terms of the conveyances granting the Trust its Overriding Royalty Interests (the “Conveyances”), the unpaid amount owed the Trust will accrue interest at the rate of interest per annum publicly announced from time to time by The Bank of New York Mellon Trust Company, N.A. at its “prime rate” in effect at its principal office in New York City until paid to the Trust. Avalon has informed the Trustee that Avalon intends to make the payment of the May 2020 distribution to the Trust, with interest in accordance with the Conveyances, when funds are available to do so. The Trustee intends to monitor the situation closely and, if appropriate, may take legal action against Avalon to enforce the Trust’s rights under the Conveyances.
The following information was filed by Sandridge Permian Trust (PERS) on Thursday, October 22, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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