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SandRidge Mississippian Trust I (SDTTU)·Q4 2020 Earnings Summary

Executive Summary

  • Q4 2020 revenues were $0.732M with distributable income per unit of $0.0029; the Trust declared a ~$0.1M distribution expected by Feb 26, 2021, reflecting increased gas/NGL prices but slightly lower volumes .
  • Sequential improvement: revenues rose ~18% q/q ($0.732M vs $0.619M) while expenses were roughly flat; however, YoY revenues fell sharply vs Q4 2019 ($1.136M) and per‑unit distribution declined to $0.0029 from $0.0163 .
  • The Trust commenced dissolution after four consecutive quarters of cumulative cash available for distribution totaled ~$0.815M (<$1.0M threshold); Trustee engaged a third‑party advisor and expects asset sale completion and unit cancellation by Q3 2021, with sale process costs reducing distributions during wind‑up .
  • The Trustee withheld ~$96K to reach targeted cash reserves, reducing distributable income available to unitholders to $80K; note later disclosure (April 2021) indicates a $425K target was fully funded, highlighting a reserve target discrepancy to monitor .
  • No earnings call transcript was filed; Wall Street consensus estimates via S&P Global were unavailable for SDTTU (no CIQ mapping), so no beat/miss analysis is possible for EPS or revenue.

What Went Well and What Went Wrong

What Went Well

  • Improved commodity pricing: “average natural gas and natural gas liquids (NGL) prices increased compared to the three‑month period ended August 31, 2020” (supporting sequential revenue recovery) .
  • Sequential revenue and cash generation: revenues increased to $732K (from $619K in Q3), with expenses contained (~$556K vs $564K), producing positive distributable income before reserve withholding .
  • Continued distribution amid wind‑up: ~$0.1M declared for Q4, demonstrating ongoing cash generation and disciplined reserve funding before sale completion .

What Went Wrong

  • Volumes declined slightly q/q (combined MBoe 54 vs 56), consistent with expected decline given no further development drilling .
  • YoY deterioration: revenues down ~$404K (64K MBoe/stronger prices in Q4 2019 vs 54 MBoe/weaker prices in Q4 2020), per‑unit distribution fell to $0.0029 from $0.0163, driven by lower commodity prices and declines in underlying production .
  • Dissolution triggered and sale costs/reserve withholding reduce cash to unitholders; management cautioned COVID‑19 and Saudi/Russia actions materially impacted prices and could lead to periods of no distributions .

Financial Results

Metric (USD Thousands unless noted)Q4 2019Q2 2020Q3 2020Q4 2020
Revenues$1,136 $483 $619 $732
Expenses$645 $570 $564 $556
Distributable Income$491 $(87) $55 $176
Additional Cash Reserve Withheld$35 $0 $55 $96
Distributable Income Available$456 $0 $0 $80
Distributable Income per Unit ($)$0.0163 $— $— $0.0029

KPIs (Volumes and Pricing):

KPIQ4 2019Q2 2020Q3 2020Q4 2020
Oil (MBbl)9 7 5 5
NGL (MBbl)15 21 18 17
Natural Gas (MMcf)261 221 199 186
Combined (MBoe)68 64 56 54
Avg Oil Price ($/Bbl)$54.68 $21.38 $38.32 $38.06
Avg NGL Price ($/Bbl)$16.83 $4.94 $10.19 $10.62
Avg Gas Price ($/Mcf)$1.52 $1.08 $1.19 $1.83
Gas Price incl. Post‑Prod ($/Mcf)$0.79 $0.32 $0.47 $1.15

Notes:

  • Period ordering is chronological (oldest → newest).
  • Distributable income and per‑unit figures reflect press release disclosures for each period .

Guidance Changes

Metric/TopicPeriodPrevious GuidanceCurrent Guidance (Q4 2020)Change
Dissolution trigger and wind‑upOngoingPotential early termination if four consecutive quarters’ cumulative cash < $1.0M (warned Q2); expected sale and distribution of net proceeds by Q3 2021 Dissolution commenced Nov 13, 2020; Trustee engaged advisor; sale expected by Q3 2021; distributions continue to extent of available cash, reduced by sale costs/reserves; units expected to be canceled shortly thereafter Maintained timeline; formalized dissolution and sale process
Quarterly distributionsQ4 2020None in Aug (Q2) and Nov (Q3) due to costs/reserves; distributions possible if cash after expenses/reserves ~$0.1M declared; $0.0029 per unit for Q4; reserve withholding increased to ~$96K Reinstated distribution; higher reserve withholding
Cash reserve targetOngoingWithhold greater of $35K or 3.5% each quarter to reach targeted cash reserves (Q4 press release references ~$1,425,000 target) Trustee withheld ~$96K in Q4 to reach targeted cash reserve Reserve target later disclosed as $425K and fully funded by Q1 2021 (subsequent)
Post‑Q4 subsequent update2021Expected sale by Q3 2021 Sale closed Apr 22, 2021; effective Apr 1, 2021; no further regular quarterly distributions due to revenues accruing to buyer; net sale proceeds distribution timing subject to litigation reserve Raised clarity; distributions cease post‑effective date

Earnings Call Themes & Trends

No earnings call transcript was filed for SDTTU during Q4 2020.

Press‑release‑derived themes across recent quarters:

TopicQ2 2020 (Prior‑2)Q3 2020 (Prior‑1)Q4 2020 (Current)Trend
Commodity pricesSignificant decrease vs prior period; drove negative distributable income Increases in oil/gas/NGL vs prior period Gas/NGL prices increased vs prior period Recovering sequentially from 2020 trough
VolumesSlight decrease vs prior period Slight decrease vs prior period Slight decrease vs prior period Gradual decline (no new drilling)
DistributionsNone (costs > revenues) None (revenues ≈ costs + reserve) ~$0.1M declared; $0.0029/unit Resumed modestly; constrained by reserves/costs
Structural statusPotential early termination discussed Dissolution trigger communicated; sale plan outlined Dissolution commenced; advisor engaged; sale expected by Q3 2021 Formal wind‑up underway
Macro/cautionaryCOVID‑19, Saudi actions pressure prices COVID‑19, Saudi actions pressure prices COVID‑19 pandemic and Saudi production increases noted; sustained price risks Persistent macro headwinds
Legal/regulatory——Winding‑up provisions; reserves for liabilities; Delaware Statutory Trust Act guidance Elevated reserve needs tied to litigation (subsequent)

Management Commentary

  • “As… cash available for distribution for the four consecutive quarters ended September 30, 2020… totaled approximately $815,000, the Trust was required to dissolve and commence winding up beginning as of the close of business on November 13, 2020… the Trustee is required to sell all of the Trust’s assets… and distribute the net proceeds…” (Q4 press release) .
  • “During the three‑month production period ended November 30, 2020, average natural gas and natural gas liquids (NGL) prices increased… Combined sales volumes slightly decreased… As no additional development wells will be drilled, the Trust’s production is expected to decline each quarter…” .
  • “The Trustee has elected to withhold approximately $96,000, the remaining amount needed to reach its targeted cash reserve.” (Q4 reserve action) .
  • Forward‑looking caution: commodity prices “declined sharply since the beginning of 2020 in response to the economic effects of the COVID‑19 pandemic and the announcement in March 2020 of planned production increases by Saudi Arabia and could remain low…” .

Q&A Highlights

  • No earnings call or Q&A session was filed for Q4 2020; thus, there were no analyst questions or management clarifications to report.

Estimates Context

  • S&P Global/Capital IQ consensus estimates for EPS and revenue were unavailable for SDTTU due to missing CIQ mapping, preventing an estimates‑based beat/miss analysis for Q4 2020. We attempted to fetch S&P Global estimates but could not retrieve them due to missing company mapping.

Key Takeaways for Investors

  • Sequential improvement was driven by better gas/NGL pricing, but volumes continue to decline and YoY comparables remain weak; per‑unit distribution fell to $0.0029 vs $0.0163 in Q4 2019 .
  • Dissolution and asset sale are the dominant narrative; expect distributions to be limited/irregular and reduced by sale process costs and reserve funding through wind‑up; units expected to be canceled post completion .
  • Elevated reserve withholding directly reduces cash to unitholders; monitor reserve targets and litigation provisions (later disclosures suggest $425K target funded) .
  • No earnings call and lack of sell‑side estimates limit near‑term catalysts; subsequent sale closure (Apr 22, 2021) ended regular distributions, redirecting focus to timing/size of net sale proceeds after reserves .
  • Macro sensitivity remains high; management cites COVID‑19 and OPEC/Russia dynamics as key drivers of commodity price volatility that can impact cash available for distribution .
  • Trading implications: near‑term price moves likely tied to developments in sale proceeds distribution timing and litigation reserve needs rather than operating trends; medium‑term thesis centers on final liquidation value to unitholders vs current pricing and reserve sufficiency .