History
A trust formed in 2012 to pass on SandRidge oil and gas royalties was delisted in 2019, then sold its royalty interests back to SandRidge in 2020.
2012: Launch of the Trust
SandRidge Mississippian Trust II was created to hold royalty interests in oil and gas properties in northern Oklahoma and southern Kansas, passing their income to unit holders. The New York Stock Exchange cleared its units for trading on April 16, 2012. On April 17 the Trust and SandRidge Energy agreed terms to sell 26,000,000 common units to the public at $21.00 each, with underwriters holding an option on 3,900,000 more.
The offering closed on April 23 with 29,900,000 common units sold. In return for the royalty interests, the Trust gave two SandRidge subsidiaries, SandRidge E&P and Mistmada, 7,393,750 common units, 12,431,250 subordinated units and about $590 million of net offering proceeds. Subordinated units rank behind common units and convert into common units one-for-one after SandRidge finishes its drilling obligation. SandRidge also agreed to a $300,000-a-year administrative services fee, to drill wells under a Development Agreement, and to provide hedges, which are contracts that lock in oil prices. Part of the hedged volumes, at $107 a barrel for 2012, $104 for 2013 and $99 for 2014, was transferred to the Trust and secured by liens on its royalty interests.
2018-2019: Falling below the listing line
The record is quiet between 2012 and 2018. In January 2018 the NYSE warned that the units had averaged below $1.00 over 30 trading days, starting a six-month cure period. The Trust and trustee said they did not intend to try a reverse split or other action to lift the price. A second notice followed at the end of 2018, and a third in May 2019, each with a new six-month cure period.
The price did not recover. When the cure period ended on November 10, 2019, the NYSE suspended trading after the close on November 11 and began delisting proceedings. The units were expected to move to the OTC Pink market as 'SDRMU' from November 12, a more limited market that may be less liquid. On November 26 the exchange filed to remove the securities from listing.
2020: Sale of the royalties
In February 2020 the administrative services agreement was amended to run until the Trust is liquidated. On September 10, 2020, the Trust sold all of its overriding royalty interests to SandRidge Exploration and Production, a wholly owned subsidiary of its original sponsor, for $5,250,000, effective July 1, 2020. Because the buyer is a related party, the sale was between the Trust and its sponsor's own subsidiary.
As of September 14, 2020, the Trust had no remaining assets as far as the filing showed, and would receive no further production proceeds or make regular quarterly distributions. The trustee was to distribute the net sale proceeds, after expenses, to unitholders in November 2020. The filing gave no date or terms for winding up the Trust. In December 2020 the Trust ended the registration of a class of its securities, ending its reporting obligation for them.
Written from the 10 story beats below (2012 to 16 Dec 2020), which come from the company's own announcements and filings.