HOUSTON, December 03, 2021--(BUSINESS WIRE)--SANDRIDGE PERMIAN TRUST (OTC: PERS) today announced a distribution of approximately $2.5 million, or $0.047 per unit, reflecting the release of approximately $2.5 million of the remaining cash reserves previously withheld by the Trustee for the payment of future known, anticipated or contingent expenses or liabilities of the Trust. The distribution is expected to occur on or before December 20, 2021 to holders of record as of the close of business on December 13, 2021 and will be the final distribution to be made to the Trust unitholders.
As of the date of this press release, 99.9% of the Trust’s total 52,500,000 units outstanding were held by Cede & Co. (The Depository Trust Company’s nominee) as the official unitholder of record. The record date of December 13, 2021 for the final distribution is only applicable to unitholders of record such as Cede & Co., and the ex-date, as set by The Financial Industry Regulatory Authority, Inc., or FINRA, actually determines which street name holders will be eligible to receive this distribution. The ex-date for the final distribution has not been set. FINRA will set the ex-date after the Trust issues this press release. The Trustee does not set the ex-date, and therefore, investors should contact their broker with any questions about the ex-date for this distribution.
The Trust units will be removed from trading and cancelled following the payment of the final distribution. The Trust will remain in existence until the filing of a certificate of cancellation with the Secretary of State of the State of Delaware following the completion of the winding up process, which is expected to occur before the end of the year.
The Trust owned Royalty Interests in oil and natural gas properties and was entitled to receive proceeds from the sale of production attributable to the Royalty Interests up to June 1, 2021. As described in the Trust’s filings with the SEC, the amount of the quarterly distributions fluctuated 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.
Distributable income was calculated as follows (in thousands, except for unit and per unit amounts):
Cash reserves following August 2021 distribution to Trust unitholders
Tax credit from Avalon Energy, LLC
Interest earned (Sept. – Nov.)
Winding-up expenses of the Trust (Sept. – Nov.)
Reserved for remaining winding-up expenses of the Trust
Distributable income available to unitholders
Distributable income per unit (52,500,000 units issued and outstanding)
Pursuant to Internal Revenue Code Section 1446, withholding tax on income effectively connected to a United States trade or business allocated to non-U.S. persons ("ECI") should be made at the highest marginal rate. Under Section 1441, withholding tax on fixed, determinable, annual, periodic income from United States sources allocated to non-U.S. persons should be made at a 30% rate unless the rate is reduced by treaty. This is intended to be a qualified notice by SandRidge Permian Trust to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b), and while specific relief is not specified for Section 1441 income, this disclosure is intended to suffice. Nominees and brokers should withhold at the highest marginal rate on the distribution made to non-U.S. persons. The Tax Cuts and Jobs Act (the "TCJA") enacted in December 2017 treats a non-U.S. holder’s gain on the sale of Trust units as ECI to the extent such holder would have had ECI if the Trust had sold all of its assets at fair market value on the date of the sale of such Trust units. The TCJA also requires a transferee of Trust units to withhold 10% of the amount realized on the sale or exchange of such units (generally, the purchase price) unless the transferor certifies that it is not a non-resident alien individual or foreign corporation or another exception is available. Pursuant to final Treasury Regulations issued on October 7, 2020, this new withholding obligation will become applicable to transfers of units in publicly traded partnerships such as the Trust (which is classified as a partnership for federal and state income tax purposes) occurring on or after January 1, 2022.
This press release contains statements that are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release, other than statements of historical facts, are "forward-looking statements" for purposes of this provision. These forward-looking statements include the amount and date of any anticipated distribution to unitholders; the amount and date of any future distributions to unitholders of the Trust; expectations regarding the timing of the winding up of the Trust, including the cancellation of the Trust units; and statements regarding the possibility of future distributions to unitholders during the winding up period. Statements made in this press release are qualified by the cautionary statements made above. Neither Avalon nor the Trustee intends, and neither assumes any obligation, to update any of the statements included in this press release. An investment in common units issued by the Trust is subject to the risks described in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2020, and all of its other filings with the SEC. The Trust’s annual, quarterly and other filed reports are or will be available over the Internet at the SEC’s website at http://www.sec.gov.
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SandRidge Permian Trust
The Bank of New York Mellon Trust Company, N.A., as Trustee