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SandRidge Mississippian Trust

January 17, 2012

This article describes the SandRidge Mississippian Trust I, stock symbol SDT.  Royalty trusts typically have a limited lifetime since the wells that are drilled have a finite life and once the oil and gas have been extracted, the income stream will decline.  But they can be very lucrative in the early stages of the trust.

SDT is still early in its life since the IPO took place in April 2011.  However, so far the royalty income has exceeded the initial targets and, as noted in the article, the most recent distribution would imply a forward distribution rate of  10.38%.  As a result the share price has increased over 50% from its IPO price.

Something not mentioned is that SandRidge Energy has announced the formation of a second royalty trust in the Mississippian formation in northern Oklahoma and Kansas, SandRidge Mississippian Trust II.  The royalty interests will entitle the trust to a percentage of the proceeds received by SandRidge from the production of hydrocarbons from currently producing wells and development wells to be drilled by SandRidge on approximately 53,000 net acres in this region.  Currently there is no mention of the expected date for the IPO but you might want to keep alert for the release of the prospectus.


From → Stocks

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