24 Apr 2012capital raising announcement● NeutralMajor
The Trust closed its initial public offering of 29,900,000 common units on April 23, 2012. In return for royalty interests in oil and gas properties in northern Oklahoma and southern Kansas, it gave SandRidge E&P and Mistmada (SandRidge subsidiaries) 7,393,750 common units, 12,431,250 subordinated units and about $590 million of net offering proceeds. SandRidge also agreed to a $300,000-a-year administrative services fee, to drill wells under a Development Agreement (secured by mortgages), and to provide hedges. Part of the hedged oil volumes (458,494 barrels at $107 in 2012, 446,118 at $104 in 2013, 338,243 at $99 in 2014) was transferred to the Trust, secured by liens on its royalty interests. The subordinated units convert to common units one-for-one at the end of the fourth full calendar quarter after SandRidge completes its drilling obligation.