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Sandridge Mississippian Trust II (NYSE:SDR)

Q1 2013 Earnings Conference Call

May 10, 2013; 09:00 a.m. ET

Executives

James Bennett - President & Chief Financial Officer

David Lawler - Chief Operating Officer

Kevin White - Senior Vice President of Business Development

Analysts

Operator

Good day ladies and gentlemen and welcome to the Q1, 2013, Sandridge Mississippian Trust II earnings conference call. My name is Emily and I will be your operator for today.

At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). And as a reminder, this conference call is being recorded for replay purposes.

I’d now like to hand the call over to Mr. Kevin White, Senior Vice President of Business Development for Sandridge Energy. Please proceed.

Kevin White

Thank you Emily. Welcome everyone and thanking you for joining us on the Sandridge Mississippian Trust II conference call. This is Kevin White. Sandridge officers joining me today are James Bennett, President and CFO and David Lawler, COO.

This call is intended to cover SandRidge Mississippian Trust II and not SandRidge Energy or any other trusts and except as otherwise noted, this call will address trust results for the three month period, December 2012 through February 2013. Recall that the trust has no employees or officers and SandRidge Energy as a sponsor of the trust, operates the majority of the trust properties.

Please note that today’s call may contain forward-looking statements and assumptions, which are subject to inherent risks and uncertainties, and actual results may differ materially from those projected in these forward-looking statements. Additional information about risk factors and other factors that could affect the trust and its financial results are included in the trust press release issued April 25, 2013 and in the trust filings with the SEC.

As outlined in the press release, the fourth distribution of approximately $0.56 per unit will be paid on or before May 30 to holders of record as of the close of business on May 15. Payments to unit holders will generally be made 60 days following the end of each calendar quarter and the next distribution covering the period from March through May of 2013 will be paid on or about August 30, 2013. Finally, I would like to point out that the trust will file its quarterly report on Form 10-Q later this morning.

SDR’s fifth period results fell below expectations by missing the target distribution. The performance for the period resulted in a distribution slightly under $0.56 per unit, which is approximately 14% lower than the $0.65 per unit target distribution. The target miss was mainly driven by lower oil sales than what the trust had originally estimated for the period.

Now, I will turn the call over to David Lawler for a review of SDR’s production and drilling results during the period.

David Lawler

Thank you Kevin and welcome everyone. SDR produced approximately 518,000 Boe during the period. The production split for this period was 235,000 barrels of oil and 1.7 bcf of natural gas. Lower than originally estimated oil production was the main driver in missing the target distribution level. Oil production missed the original estimate by roughly 16%, while natural gas production exceeded the original estimate by approximately 7%.

As we discussed in last quarters call and also on the Sandridge Corporate conference calls, we are experiencing a higher GAAP content and fee for oil declines versus our original tight curve.

During the period, Sandridge brought roughly 23 development wells on production and averaged five rigs. This puts the drilling program a little over half way complete as of February 28, which is ahead of the original drilling schedule.

The higher development well count is a result of utilizing additional rigs in the AMI and drilling wells with higher net revenue interest. Additionally, Sandridge plans on averaging four rigs for the trust through the remainder of 2013.

Oil prices for the period were lower than the original estimates, however these lower prices were mitigated by the trust’s oil hedges. Throughout the period the trust was hedged at a price of approximately $105 per barrel. These hedges allow the trust to realize the price of $99.46 per barrel, which was about 15% higher than the well head price and in-line with the assumed realized price of approximately $100 per barrel for the period.

Natural gas prices for the period were slightly below the original estimates. The trust realized the price of $3.18 per Mcf versus the assumed realized price of $3.29 per Mcf for the period.

Oil sales excluding realized hedges made up about 69% of the total revenues, while natural gas sales contributed approximately 21%. The settled oil hedges contributed roughly $3 million and made up around 10% of total revenues for the period.

I will now turn the call over for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Currently we have no questions.

Kevin White

All right, everybody thank you very much for having this call for us; thank you for those who participated and we’ll look forward to talk to you on the next call. Thank you.

Operator

Thank you for your participation in today’s conference call. This concludes the presentation. You may now disconnect. Have a good day.

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