SandRidge Mississippian Trust II
August 21, 2013
Mr. H. Roger Schwall
Assistant Director
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-3628
Re: | SandRidge Mississippian Trust II |
Form 10-K for the Fiscal Year Ended December 31, 2012
Filed March 15, 2013
File No. 001-35508
Dear Mr. Schwall:
SandRidge Mississippian Trust II (the “Trust”) hereby submits this letter in response to the written comments of the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”), dated July 30, 2013 (the “Comment Letter”), with respect to the Form 10-K for the fiscal year ended December 31, 2012 filed by the Trust with the Commission on March 15, 2013 (the“Form 10-K”).
Set forth below is the heading and text of each comment set forth in the Comment Letter, followed by our response thereto. Capitalized terms used but not otherwise defined herein have the respective meanings ascribed to them in the Form 10-K.
Form 10-K for the Fiscal Year ended December 31, 2012
Item 1: Business, page 1
Proved Undeveloped Reserves, page 9
1. Item 1203(b) of Regulation S-K requests that registrants “[d]isclose material changes in proved undeveloped reserves that occurred during the year, including proved undeveloped reserves converted into proved developed reserves.” Please expand your disclosure on page 9 relating to the 2012 revisions of previous estimates to provide the net quantities associated with a change in economic factors separately from the changes resulting from new information obtained from development drilling and well performance.
Response
We acknowledge the Staff’s comment and note that the referenced paragraph contains a description of all material changes in the net quantities of the Trust’s proved undeveloped reserves for the period ended December 31, 2012. We are not aware of a specific requirement within Item 1203(b) to provide separately revisions associated with changes in economic factors from revisions resulting from new information obtained from development drilling and well performance. Accordingly, the Trust submits that its current disclosures are accurate and compliant with applicable guidance.
Production and Price History, page 9
2. Your disclosure of the production and average sales price on page 10 and elsewhere in Form 10-K excludes separate disclosure of information relating to natural gas liquids. As Items 1204(a) and 1204(b)(1) of Regulation S-K require separate disclosure by final product sold or produced, please advise or revise your disclosure to provide separate disclosure relating to natural gas liquids.
Response
The natural gas liquids production attributable to the Trust was 1.1% of total production for the period ended December 31, 2012. The definition of significant oil and gas producing activities found in FASB ASC 932-235-20 states that an entity is regarded as having significant oil and gas producing activities if (a) revenues from, (b) results of operations for or (c) identifiable assets of oil and gas producing activities are 10% or more of the entity’s total respective revenue, results of operations or identifiable assets. The Trust applied the 10% “significance” criteria from FASB ASC 932-235-20 to determine the significance of natural gas liquids production to the Trust’s total production, and concluded that natural gas liquids production for the period ended December 31, 2012 was not significant based on the percentage it constituted of total production and was therefore not separately disclosed.
Developed and Undeveloped Acreage, page 10
3. We note from the disclosure on page 11 that a significant percentage of the Company’s net undeveloped acreage will expire in 2013 and 2014. Please tell us the net amounts by product of your December 31, 2012 proved undeveloped reserves assigned to locations on acreage scheduled to expire in 2013 and in 2014. Also tell us if all such proved undeveloped locations are included in a development plan adopted by management as of December 31, 2012 indicating these locations are scheduled to be drilled prior to lease expiration.
Response
None of the Trust’s proved undeveloped reserves at December 31, 2012 were assigned to locations on acreage scheduled to expire in 2013 or 2014.
Notes to Consolidated Financial Statements, page F-6
Note 9 Supplemental Information on Oil and Natural Gas Producing Activities, page F-13
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Oil and Natural Gas Reserve Quantities (Unaudited), page F-15
4. Please refer to the requirements set forth in FASB ASC 932-235-50-5. Revise the narrative disclosure on page F-16 relating to the 2012 revisions of previous estimates to provide the net quantities associated with a change in economic factors separately from the changes resulting from new information obtained from development drilling and well performance.
Response
The Trust acknowledges the Staff’s comment and notes that FASB ASC 932-235-50-5 provides that “Changes resulting from all of the following shall be shown separately with appropriate explanation of significant changes,” with six distinct categories being listed, one of which is as follows:
a. | Revisions of previous estimates. Revisions represent changes in previous estimates of proved reserves, either upward or downward, resulting from new information (except for an increase in proved acreage) normally obtained from development drilling and production history or resulting from a change in economic factors. |
With respect to (a) above, the Trust notes that the requirement to show items separately from one another applies to the six distinct categories and not within a single category. Therefore, the Trust does not believe ASC 932-235-50-5 requires disclosure of separate items within the “Revisions of previous estimates” category. Accordingly, the Trust submits that its current disclosures are accurate and compliant with applicable guidance.
In response to your request, the Trust hereby acknowledges that:
the Trust is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the Trust may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
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If you have any questions or require any additional information, please contact the undersigned at 512-236-6555 or Michael Ulrich at 512-236-6599.
Very truly yours,
SandRidge Mississippian Trust II
By: | The Bank of New York Mellon Trust Company, N.A., as trustee | |||||
By: | /s/ Sarah Newell | |||||
Name: | Sarah Newell | |||||
Title: | Vice President |
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