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Filed Pursuant to Rule 424(b)(1)
Registration No. 333-174492

PROSPECTUS

        30,000,000 Common Units

SandRidge Permian Trust

Representing Beneficial Interests



This is an initial public offering of common units representing beneficial interests in SandRidge Permian Trust. The trust is selling all of the units offered hereby. SandRidge Energy, Inc. ("SandRidge") will convey to the trust certain royalty interests in exchange for the net proceeds of this offering, as well as common and subordinated units collectively representing a 43% beneficial interest in the trust (without giving effect to the exercise of the underwriters' over-allotment option).



The common units representing beneficial interests have been approved for listing on the New York Stock Exchange under the symbol "PER."



The Trust Units.    Trust units, consisting of the common and subordinated units, are units representing beneficial interests in the trust and represent undivided beneficial interests in the property of the trust. They do not represent any interest in SandRidge.

The Trust.    The trust will own term and perpetual royalty interests in certain of SandRidge's properties in the Permian Basin in Andrews County, Texas. These royalty interests will entitle the trust to receive, after the deduction of certain costs, (a) 80% of the proceeds attributable to SandRidge's net revenue interest in the sale of production from 509 producing wells and (b) 70% of the proceeds attributable to SandRidge's net revenue interest in the sale of production from 888 development wells to be drilled on drilling locations included within an area of mutual interest consisting of approximately 16,800 gross acres (15,900 net acres) held by SandRidge. The trust will not be responsible for any costs related to the drilling of the development wells. The trust will be treated as a partnership for U.S. federal income tax purposes.

The Trust Unitholders.    As a trust unitholder, you will receive quarterly distributions of cash from the proceeds that the trust receives from SandRidge's sale of oil, natural gas and natural gas liquids subject to the royalty interests to be held by the trust. The distributions will also reflect hedges entered into pursuant to a derivatives agreement between the trust and SandRidge, as well as hedges entered into by the trust directly with unaffiliated hedge counterparties. For information on target distributions and related matters pertinent to trust unitholders, please see "Target Distributions and Subordination and Incentive Thresholds."



Investing in the common units involves risks. See "Risk Factors" beginning on page 18.

These risks include the following:

Drilling risks could delay the anticipated drilling schedule for the development wells to be drilled by SandRidge, which could adversely affect future production and decrease distribution to unitholders.

Oil and natural gas price fluctuations could reduce proceeds to the trust and cash distributions to unitholders.

Actual reserves and future production may be less than current estimates.

Estimates of target distributions to unitholders are based on assumptions that are inherently subjective and are subject to significant risks and uncertainties.

The hedging arrangements will cover only a portion of the expected production attributable to the trust, and such arrangements will limit the trust's ability to benefit from commodity price increases for hedged volumes above the corresponding hedge price.

If the trust were treated as a corporation for U.S. federal income tax purposes, then its cash available for distribution to unitholders would be substantially reduced.

If the IRS contests the tax positions the trust takes, the value of the trust units may be adversely affected, the cost of any IRS contest will reduce the trust's cash available for distribution and income, gain, loss and deduction may be reallocated among trust unitholders.

The tax treatment of an investment in trust units could be affected by potential legislative changes, possibly on a retroactive basis.



PRICE $18.00 A COMMON UNIT



 
  Price to
Public
  Underwriting
Discounts and
Commissions(1)
  Proceeds to
Trust(2)
Per Common Unit   $18.00   $1.08   $16.92
Total   $540,000,000   $32,400,000   $507,600,000


(1)
Excludes a structuring fee equal to 0.50% of the gross proceeds of this offering, or approximately $2.7 million, payable to Morgan Stanley & Co. LLC.

(2)
The trust will deliver all of the proceeds it receives in this offering to one or more SandRidge subsidiaries. See "Use of Proceeds."

The trust has granted the underwriters the right to purchase up to an additional 4,500,000 common units to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the common units to purchasers on August 16, 2011.



MORGAN STANLEY   RAYMOND JAMES   RBC CAPITAL MARKETS   WELLS FARGO SECURITIES
Deutsche Bank Securities   Goldman, Sachs & Co.   J.P. Morgan
Baird   Oppenheimer & Co.   Morgan Keegan   Sanders Morris Harris Inc.
Wunderlich Securities   SunTrust Robinson Humphrey   Johnson Rice & Company L.L.C.   Tuohy Brothers

August 10, 2011


Table of Contents

GRAPHIC



TABLE OF CONTENTS

 
  Page  

IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS

    i  

SUMMARY

    1  

RISK FACTORS

    18  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    40  

USE OF PROCEEDS

    41  

SANDRIDGE ENERGY, INC. 

    42  

THE TRUST

    44  

TARGET DISTRIBUTIONS AND SUBORDINATION AND INCENTIVE THRESHOLDS

    50  

SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

    62  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    65  

THE UNDERLYING PROPERTIES

    72  

DESCRIPTION OF THE ROYALTY INTERESTS

    87  

DESCRIPTION OF THE TRUST AGREEMENT

    91  

DESCRIPTION OF THE TRUST UNITS

    97  

TRUST UNITS ELIGIBLE FOR FUTURE SALE

    101  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

    103  

STATE TAX CONSIDERATIONS

    119  

ERISA CONSIDERATIONS

    120  

UNDERWRITERS

    121  

LEGAL MATTERS

    127  

EXPERTS

    127  

WHERE YOU CAN FIND MORE INFORMATION

    128  

GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS AND TERMS RELATED TO THE TRUST

    129  

INDEX TO FINANCIAL STATEMENTS

    F-1  

ANNEX A: SUMMARY RESERVE REPORTS

    A-1  

ANNEX B: CALCULATION OF TARGET DISTRIBUTIONS

    B-1  



IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS

        You should rely only on the information contained in this prospectus or in any free writing prospectus the trust may authorize to be delivered to you. Until September 4, 2011 (25 days after the date of this prospectus), federal securities laws may require all dealers that effect transactions in the common units, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        The trust and SandRidge have not, and the underwriters have not, authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell or a solicitation of an offer to buy the common units in any jurisdiction where such offer and sale would be unlawful. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this document. The trust's and SandRidge's business, financial condition, results of operations and prospects may have changed since such date.

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SUMMARY

        This summary provides a brief overview of information contained elsewhere in this prospectus. To understand this offering fully, you should read the entire prospectus carefully, including the risk factors and the financial statements and notes to those statements. Definitions for terms relating to the oil and natural gas business can be found in "Glossary of Certain Oil and Natural Gas Terms and Terms Related to the Trust." Netherland, Sewell & Associates, Inc., referred to in this prospectus as "Netherland Sewell," an independent engineering firm, provided the estimates of proved oil, natural gas and natural gas liquids reserves as of March 31, 2011 included in this prospectus. These estimates are contained in summaries prepared by Netherland Sewell of their reserve reports for (1) the Underlying Properties held by SandRidge, dated May 23, 2011, and (2) the royalty interests to be held by the trust, dated May 24, 2011. These summaries are included as Annex A to this prospectus and are referred to in this prospectus as the "reserve report."

        References to "SandRidge" in this prospectus are to SandRidge Energy, Inc. and, where the context requires, its subsidiaries. The term "Arena Properties" refers to all of the oil and natural gas properties owned by Arena Resources, Inc. ("Arena") at the time of its acquisition by SandRidge in July 2010. The term "Underlying Properties" means the portion of the Arena Properties from which SandRidge will convey the royalty interests to the trust. The royalty interests to be conveyed to the trust are sometimes referred to as the "trust properties."

        Unless otherwise indicated, all information in this prospectus assumes no exercise of the underwriters' over-allotment option.

SandRidge Permian Trust

        SandRidge Permian Trust is a Delaware statutory trust formed to own royalty interests to be conveyed to the trust by SandRidge in (a) 509 producing wells, including 13 wells currently awaiting completion (the "Producing Wells"), and (b) 888 development wells to be drilled (the "Development Wells") within an "Area of Mutual Interest," or "AMI." The AMI consists of the Grayburg/San Andres formation in the Permian Basin in Andrews County, Texas on the acreage identified on the inside front cover of this prospectus. SandRidge presently holds approximately 16,800 gross acres (15,900 net acres) in the AMI. SandRidge is obligated to drill, or cause to be drilled, the Development Wells from drilling locations in the AMI on or before March 31, 2016. Except in limited circumstances, until SandRidge has satisfied its drilling obligation to the trust, it will not be permitted to drill and complete any wells for its own account within the AMI. See "The Trust—Development Agreement and Drilling Support Lien—Additional Provisions."

        SandRidge acquired the Underlying Properties in July 2010 and expects to operate substantially all of the Underlying Properties. The royalty interest in the Producing Wells (the "PDP Royalty Interest") entitles the trust to receive 80% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of production of oil, natural gas and natural gas liquids attributable to SandRidge's net revenue interest in the Producing Wells. The royalty interest in the Development Wells (the "Development Royalty Interest") entitles the trust to receive 70% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Development Wells.

        As of March 31, 2011 and after giving effect to the conveyance of the PDP Royalty Interest and the Development Royalty Interest to the trust, the total reserves estimated to be attributable to the trust were 21.8 million barrels of oil equivalent ("MMBoe"). This amount includes 5.8 MMBoe attributable to the PDP Royalty Interest and 16.0 MMBoe attributable to the Development Royalty Interest. The reserves consist of 96% liquids (87% oil and 9% natural gas liquids) and 4% natural gas.

        The percentage of production proceeds to be received by the trust with respect to a well will equal the product of (a) the percentage of proceeds to which the trust is entitled under the terms of the conveyances

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(80% for the Producing Wells and 70% for the Development Wells) multiplied by (b) SandRidge's net revenue interest in the well. SandRidge on average owns a 73.0% net revenue interest in the Producing Wells. Therefore, the trust will have an average 58.4% net revenue interest in the Producing Wells. SandRidge on average owns a 69.3% net revenue interest in the properties in the AMI on which the Development Wells will be drilled, and based on this net revenue interest, the trust would have an average 48.5% net revenue interest in the Development Wells. SandRidge's actual net revenue interest in any particular Development Well may differ from this average.

        The trust will not be responsible for any costs related to the drilling of the Development Wells or any other operating and capital costs, except for certain taxes and other post-production costs. The trust's cash receipts in respect of the trust properties will be determined after deducting post-production costs and any applicable taxes associated with the PDP Royalty Interest and the Development Royalty Interest. Post-production costs and applicable taxes will generally consist of production and severance taxes and costs incurred to gather, store, compress, transport, process, treat, dehydrate and market the oil, natural gas and natural gas liquids produced. Cash distributions to unitholders will reflect hedging arrangements, as well as trust general and administrative expenses.

        Hedging arrangements covering a portion of expected production will be implemented in two ways. First, SandRidge will enter into a derivatives agreement with the trust to provide the trust with the effect of specified hedge contracts entered into between SandRidge and third parties. Under the derivatives agreement, SandRidge will pay the trust amounts it receives from its hedge counterparties, and the trust will pay SandRidge any amounts that SandRidge is required to pay such counterparties. Second, the trust will enter into hedge contracts directly with unaffiliated hedge counterparties. As a party to these contracts, the trust will receive payments directly from its counterparties, and be required to pay any amounts owed directly to its counterparties. Under the combined hedging arrangements, approximately 73% of the expected production and 79% of the expected revenues upon which the target distributions are based from August 1, 2011 through March 31, 2015 will be hedged. Under the derivatives agreement, as Development Wells are drilled, SandRidge will have the right to assign or novate to the trust any of the SandRidge-provided hedges in certain circumstances. Please see "The Trust—Hedging Arrangements" and "Target Distributions and Subordination and Incentive Thresholds."

        The trust will make quarterly cash distributions of substantially all of its cash receipts, after deducting the trust's administrative expenses, on or about 60 days following the completion of each quarter through (and including) the quarter ending March 31, 2031. The first distribution, which will cover the second and third quarters of 2011 (consisting of proceeds attributable to five months of production), is expected to be made on or about November 30, 2011 to record unitholders as of November 15, 2011. The trustee intends to withhold $1.0 million from the first distribution to establish a cash reserve available for trust administrative expenses. The trust will dissolve and begin to liquidate on March 31, 2031 (the "Termination Date") and will soon thereafter wind up its affairs and terminate. At the Termination Date, 50% of the PDP Royalty Interest and 50% of the Development Royalty Interest will revert automatically to SandRidge. The remaining 50% of each of the PDP Royalty Interest and the Development Royalty Interest will be retained by the trust at the Termination Date and thereafter sold, and the net proceeds of the sale, as well as any remaining trust cash reserves, will be distributed to the unitholders in accordance with their interests. SandRidge will have a right of first refusal to purchase the royalty interests retained by the trust at the Termination Date.

        SandRidge will retain 20% of the proceeds from the sale of oil, natural gas and natural gas liquids attributable to its net revenue interest in the Producing Wells, as well as 30% of the proceeds from the sale of future production attributable to its net revenue interest in the Development Wells. SandRidge initially will own 43% of the trust units (without giving effect to the exercise of the underwriters' over-allotment option). By virtue of SandRidge's retained interest in the Producing Wells and the Development Wells, as well as its ownership of 43% of the trust units, it will have an effective average net revenue interest of 39.6% in the Producing Wells and 41.6% in the Development Wells, compared with an effective average

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net revenue interest for the holders of trust units other than SandRidge of 33.4% in the Producing Wells and 27.7% in the Development Wells.

        SandRidge operates all of the Producing Wells. SandRidge owns a majority working interest in substantially all of the drilling locations on which it expects to drill the Development Wells, and expects to operate such wells during the subordination period described herein. In addition, for those wells it operates, SandRidge has agreed to operate the properties and cause to be marketed oil, natural gas and natural gas liquids produced from these properties in the same manner it would if such properties were not burdened by the royalty interests.

        The business and affairs of the trust will be managed by The Bank of New York Mellon Trust Company, N.A., as trustee. The trustee will have no ability to manage or influence the operation of the Underlying Properties. SandRidge expects to operate substantially all of the Underlying Properties, but will have no ability to manage or influence the management of the trust except through its limited voting rights as a holder of trust units and its limited ability to manage the hedging program. Please see "The Trust—Hedging Arrangements," "The Trust—Administrative Services Agreement" and "Description of the Trust Units—Voting Rights of Trust Unitholders."

The Development Wells

        Pursuant to a development agreement with the trust, SandRidge is obligated to drill, or cause to be drilled, 888 Development Wells in the AMI on or before March 31, 2015. In the event of delays, SandRidge will have until March 31, 2016 to fulfill its drilling obligation. SandRidge will be credited for drilling one full Development Well if the well is drilled and completed in the Grayburg/San Andres formation and SandRidge's net revenue interest in the well is equal to 69.3%. For wells in which SandRidge has a net revenue interest greater than or less than 69.3%, SandRidge will receive credit for such well in the proportion that its net revenue interest in the well bears to 69.3%. As a result, SandRidge may be required to drill more or less than 888 wells in order to fulfill its drilling obligation. In addition, in certain circumstances, SandRidge may receive additional Development Well credit for drilling horizontal wells. See "The Trust—Development Agreement and Drilling Support Lien."

        SandRidge is required to adhere to a reasonably prudent operator standard, which requires that it act with respect to the Underlying Properties as it would act with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. Accordingly, SandRidge expects that the drilling and completion techniques used for the Development Wells will be generally consistent with those used for the Producing Wells within the AMI and other producing wells outside of the AMI that have targeted the Grayburg/San Andres formation. The proved undeveloped reserves reflected in the reserve report assume that SandRidge will drill and complete the 888 Development Wells with the same completion technique, and bearing the same capital and other costs, as the 509 Producing Wells.

        SandRidge Exploration and Production, LLC ("SandRidge E&P"), a wholly owned subsidiary of SandRidge, will grant to the trust a lien on its interest in the AMI (except the Producing Wells and any other wells which are already producing and not subject to the royalty interests) in order to secure the estimated amount of the drilling costs for the trust's interests in the Development Wells (the "Drilling Support Lien"). The amount obtained by the trust pursuant to the Drilling Support Lien may not exceed approximately $295 million. As SandRidge fulfills its drilling obligation over time, the total dollar amount that may be recovered will be proportionately reduced and the drilled Development Wells will be released from the lien. After SandRidge has satisfied its drilling obligation under the development agreement, it may sell, without the consent or approval of the trust unitholders, all or any part of its interest in the Underlying Properties, as long as such sale is subject to and burdened by the royalty interests.

        As of the date of this prospectus, SandRidge's drilling activity with respect to the Development Wells is consistent with the drilling schedule contemplated by the development agreement.

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Underlying Properties

        The Underlying Properties are located in the greater Fuhrman-Mascho field area, a region in Andrews County, Texas that primarily produces oil from the Grayburg/San Andres formation within the Permian Basin. SandRidge currently operates three drilling rigs within the AMI and, as of March 31, 2011, had drilled 101 wells since acquiring the properties in July 2010. Within the AMI, SandRidge operates 509 wells and has 888 proven undeveloped locations as of March 31, 2011. These 888 proven locations are a combination of 5-acre, 10-acre and 20-acre infill spacing locations. As of March 31, 2011, average daily production from the Underlying Properties was approximately 3,400 Boe/d.

        Permian Basin.    The Permian Basin extends throughout southwest Texas and southeast New Mexico over an area approximately 250 miles wide and 300 miles long. It is one of the largest, most active and longest-producing oil basins in the United States. In 2010, production from the Permian Basin accounted for approximately 17% of total U.S. crude oil production, making this basin the second largest oil producing area after the Gulf of Mexico. The Permian Basin has been producing oil for over 80 years resulting in cumulative production of approximately 29 billion barrels.

        SandRidge currently operates approximately 2,600 gross producing wells in the Permian Basin, with an average working interest of 94%. SandRidge's average daily net production for the month of March 2011 in the Permian Basin was approximately 28,800 Boe/d. SandRidge was operating 16 rigs in the basin as of March 2011. SandRidge drilled 484 wells in this area in 2010 and expects to drill over 800 wells in 2011.

        Fuhrman-Mascho Field.    The Fuhrman-Mascho field is located near the center of the Central Basin Platform in the Permian Basin. The field produces from the Grayburg/San Andres formation from average depths of approximately 4,000 to 5,000 feet. The Fuhrman-Mascho field is the fifth largest producing field in the Permian Basin and since its discovery in 1930, the field has produced approximately 142 MMBoe. SandRidge currently operates eight drilling rigs in the area and has drilled 307 wells as of March 31, 2011 since acquiring the properties in July 2010.

Target Distributions and Subordination and Incentive Thresholds

        SandRidge has calculated quarterly target levels of cash distributions to unitholders for the life of the trust as set forth on Annex B to this prospectus. The amount of actual quarterly distributions may fluctuate from quarter to quarter, depending on the proceeds received by the trust, payments under the hedge arrangements, the trust's administrative expenses and other factors. Annex B reflects that while target distributions initially increase as SandRidge completes its drilling obligation and production increases, over time target distributions decline as a result of the depletion of the reserves in the Underlying Properties. While these target distributions do not represent the actual distributions you will receive with respect to your common units, they were used to calculate the subordination and incentive thresholds described in more detail below. The target distributions were derived by assuming that oil, natural gas and natural gas liquids production from the trust properties will equal the volumes reflected in the reserve report attached as Annex A to this prospectus, adjusted for actual volumes realized in April, May and June 2011, and that prices received for such production will be consistent with settled NYMEX pricing for April through June 2011, monthly NYMEX forward pricing as of July 15, 2011 for the remainder of the period ending March 31, 2014, and assumed price increases after March 31, 2014 of 2.5% annually, capped at $120.00 per Bbl of oil and $7.00 per MMBtu of natural gas. Using these assumptions, the price of oil would reach the $120.00 per Bbl cap in 2023, and the price of natural gas would reach the $7.00 per MMBtu cap in 2022. The target distributions also give effect to estimated post-production expenses and assumed trust general and administrative expenses.

        In order to provide support for cash distributions on the common units, SandRidge has agreed to subordinate 13,125,000 of the trust units it will retain following this offering, which will constitute 25% of the total trust units outstanding. The subordinated units will be entitled to receive pro rata distributions

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from the trust each quarter if and to the extent there is sufficient cash to provide a cash distribution on the common units that is no less than the applicable quarterly subordination threshold. If there is not sufficient cash to fund such a distribution on all of the common units, the distribution to be made with respect to the subordinated units will be reduced or eliminated for such quarter in order to make a distribution, to the extent possible, of up to the subordination threshold amount on all the common units, including the common units held by SandRidge. Each quarterly subordination threshold is 20% below the target distribution level for the corresponding quarter (each, a "subordination threshold").

        In exchange for agreeing to subordinate a majority of its trust units, and in order to provide additional financial incentive to SandRidge to satisfy its drilling obligation and perform operations on the Underlying Properties in an efficient and cost-effective manner, SandRidge will be entitled to receive incentive distributions equal to 50% of the amount by which the cash available for distribution on all of the trust units in any quarter is 20% greater than the target distribution for such quarter (each, an "incentive threshold"). The remaining 50% of cash available for distribution in excess of the incentive thresholds will be paid to trust unitholders, including SandRidge, on a pro rata basis.

        By way of example, if the target distribution per unit for a particular quarterly period is $.55, then the subordination threshold would be $.44 and the incentive threshold would be $.66 for such quarter. This means that if the cash available for distribution to all holders for that quarter would result in a per unit distribution below $.44, the distribution to be made with respect to subordinated units will be reduced or eliminated in order to make a distribution, to the extent possible, up to the amount of the subordination threshold, on the common units. If, on the other hand, the cash available for distribution to all holders would result in a per unit distribution above $.66, then SandRidge would receive 50% of the amount by which the cash available for distribution on all the trust units exceeds $.66, with all trust unitholders (including SandRidge on a pro rata basis) sharing in the other 50% of such excess amount. See "Target Distributions and Subordination and Incentive Thresholds."

        At the end of the fourth full calendar quarter following SandRidge's satisfaction of its drilling obligation with respect to the Development Wells, the subordinated units will automatically convert into common units on a one-for-one basis and SandRidge's right to receive incentive distributions will terminate. After such time, the common units will no longer have the protection of the subordination threshold, and all trust unitholders will share on a pro rata basis in the trust's distributions. SandRidge currently expects that it will complete its drilling obligation on or before March 31, 2015 and that, accordingly, the subordinated units will convert into common units on or before March 31, 2016. In the event of delays, SandRidge will have until March 31, 2016 under its contractual obligation to drill all the Development Wells, in which event the subordinated units would convert into common units on or before March 31, 2017. The period during which the subordinated units are outstanding is referred to as the "subordination period."

        SandRidge's management has prepared the prospective financial information set forth below to present the target distributions to the holders of the trust units based on the estimates and assumptions described under "Target Distributions and Subordination and Incentive Thresholds." The accompanying prospective financial information was not prepared with a view toward complying with the guidelines of the U.S. Securities and Exchange Commission ("SEC") or the guidelines established by the American Institute of Certified Public Accountants with respect to preparation and presentation of prospective financial information. More specifically, such information omits items that are not relevant to the trust. SandRidge's management believes the prospective financial information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of the royalty interests. However, this information is based on estimates and judgments, and readers of this prospectus are cautioned not to place undue reliance on the prospective financial information.

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        The prospective financial information included in this prospectus has been prepared by, and is the responsibility of, SandRidge's management. Neither PricewaterhouseCoopers LLP, the trust's and SandRidge's independent registered public accountant, nor Hansen Barnett & Maxwell, P.C., Arena Resources, Inc.'s independent registered public accountant, has examined, compiled or performed any procedures with respect to the accompanying prospective financial information and, accordingly, neither PricewaterhouseCoopers LLP nor Hansen Barnett & Maxwell, P.C. expresses an opinion or any other form of assurance with respect thereto. The reports of PricewaterhouseCoopers LLP included in this prospectus relate to the Statement of Assets and Trust Corpus of the trust and the historical Statements of Revenues and Direct Operating Expenses of the Arena Properties, and the report of Hansen Barnett & Maxwell, P.C. included in this prospectus relates to the historical consolidated financial statements of Arena Resources, Inc. The foregoing reports do not extend to the prospective financial information and should not be read to do so.

        The following table sets forth the target distributions and subordination and incentive thresholds for each calendar quarter through the first quarter of 2017. The effective date of the conveyance of the royalty interests is April 1, 2011, which means that the trust will be credited with the proceeds of production attributable to the royalty interests from that date even though the trust properties will not be conveyed to the trust until the closing of this offering. Please see "—Calculation of Target Distributions" below. The first distribution, which will cover the second and third quarters of 2011, is expected to be made on or about November 30, 2011 to record unitholders as of November 15, 2011. Due to the timing of the payment of production proceeds to the trust, the trust expects that the first distribution will include sales for oil, natural gas and natural gas liquids for five months. Thereafter, quarterly distributions will generally include royalties attributable to sales of oil, natural gas and natural gas liquids for three months, including

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one month of the prior quarter. The trustee intends to withhold $1.0 million from the first distribution to establish a cash reserve available for trust administrative expenses.

Period
  Subordination
Threshold(1)
  Target
Distribution
  Incentive
Threshold(1)
 
 
  (per unit)
 

2011:

                   

Second and Third Quarters(2)

  $ .53   $ .66   $ .79  

Fourth Quarter

    .39     .49     .59  

2012:

                   

First Quarter

    .42     .53     .63  

Second Quarter

    .44     .55     .66  

Third Quarter

    .47     .58     .70  

Fourth Quarter

    .49     .62     .74  

2013:

                   

First Quarter

    .51     .64     .77  

Second Quarter

    .53     .66     .80  

Third Quarter

    .56     .70     .84  

Fourth Quarter

    .58     .73     .87  

2014:

                   

First Quarter

    .61     .76     .91  

Second Quarter

    .63     .79     .95  

Third Quarter

    .65     .82     .98  

Fourth Quarter

    .66     .82     .98  

2015:

                   

First Quarter

    .64     .80     .96  

Second Quarter

    .61     .77     .92  

Third Quarter

    .56     .70     .85  

Fourth Quarter

    .54     .68     .81  

2016:

                   

First Quarter

    .53     .67     .80  

Second Quarter

    .52     .65     .78  

Third Quarter

    .51     .64     .77  

Fourth Quarter

    .50     .63     .75  

2017:

                   

First Quarter

    .49     .61     .74  

(1)
The subordination and incentive thresholds terminate after the fourth full calendar quarter following SandRidge's completion of its drilling obligation.

(2)
Includes proceeds attributable to the first five months of production from April 1, 2011 to August 31, 2011, and gives effect to $1.0 million of reserves for general and administrative expenses withheld by the trustee and additional administrative costs relating to the formation of the trust.

        For additional information with respect to the subordination and incentive thresholds, please see "Target Distributions and Subordination and Incentive Thresholds" and "Description of the Royalty Interests."

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Calculation of Target Distributions

        The following table presents the calculation of the target distributions for each quarter through and including the quarter ending June 30, 2012. The target distributions were prepared by SandRidge based on assumptions of production volumes, pricing and other factors. The production forecasts used to calculate target distributions are based on estimates by Netherland Sewell. Payments to unitholders will generally be made 60 days following each calendar quarter. SandRidge will make payments to the trust that will include cash from production from the first two months of the quarter just ended as well as the last month of the immediately preceding quarter. Actual cash distributions to the trust unitholders will fluctuate quarterly based on the quantity of oil, natural gas and natural gas liquids produced from the Underlying Properties, the prices received for oil, natural gas and natural gas liquids production, when SandRidge receives payment for such production and other factors. Please read "Target Distributions and Subordination and Incentive Thresholds—Significant Assumptions Used to Calculate the Target Distributions."

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        On a pro forma basis, the trust's distributable income was $60.7 million ($1.16 per unit) for the year ended December 31, 2010, and $19.7 million ($0.37 per unit) for the three months ended March 31, 2011. See "Unaudited Pro Forma Financial Information."

 
  September 30,
2011(1)
  December 31,
2011
  March 31,
2012
  June 30,
2012
 
 
  (In thousands, except volumetric and per unit data)
 

Estimated production from trust properties

                         
 

Oil sales volumes (MBbl)

    384     278     294     306  
 

Natural gas sales volumes (MMcf)

    107     74     78     80  
 

Natural gas liquids volumes (MBbl)

    40     29     30     32  
 

Total sales volumes (MBoe)

   
441
   
319
   
337
   
351
 
   

% Proved developed producing (PDP) sales volumes

    88 %   57 %   48 %   42 %
   

% Proved undeveloped (PUD) sales volumes

    12 %   43 %   52 %   58 %
   

% Oil volumes

   
87

%
 
87

%
 
87

%
 
87

%
   

% Natural gas volumes

    4 %   4 %   4 %   4 %
   

% Natural gas liquids volumes

    9 %   9 %   9 %   9 %

Commodity price and derivative contract positions

                         
 

NYMEX futures price(2)

                         
   

Oil ($/Bbl)

  $ 99.33   $ 98.03   $ 99.48   $ 100.70  
   

Natural gas ($/MMBtu)

  $ 4.40   $ 4.57   $ 4.88   $ 4.81  
   

Natural gas liquids ($/Bbl)

  $ 49.61   $ 49.01   $ 49.74   $ 50.35  
 

Assumed realized weighted unhedged price(3)

                         
   

Oil ($/Bbl)

  $ 95.97   $ 93.76   $ 95.21   $ 96.43  
   

Natural gas ($/Mcf)

    3.17     3.29     3.51     3.46  
   

Natural gas liquids ($/Bbl)

    47.97     47.40     48.10     48.69  
 

Assumed realized weighted hedged price

                         
   

Oil ($/Bbl)

    96.53     95.34     97.04     97.85  
   

Natural gas ($/Mcf)

    3.17     3.29     3.51     3.46  
 

Percent of oil volumes hedged

    98 %(4)   89 %   93 %   95 %
 

Oil hedged price ($/Bbl)

    99.80     99.80     101.46     102.20  
 

Percent of natural gas volumes hedged

    0 %   0 %   0 %   0 %
 

Natural gas hedged price ($/MMBtu)

                 

Estimated cash available for distribution

                         
 

Oil sales revenues

  $ 36,814   $ 26,067   $ 27,982   $ 29,552  
 

Natural gas sales revenues

    338     243     273     279  
 

Natural gas liquids sales revenue

    1,916     1,374     1,463     1,536  
 

Realized gains (losses) from derivative contracts

    215     441     539     436  
   

Operating revenues and realized gains (losses) from derivative contracts

  $ 39,283   $ 28,125   $ 30,257   $ 31,803  
 

Production taxes

    (1,862 )   (1,320 )   (1,417 )   (1,496 )
 

Ad valorem taxes

    (977 )   (692 )   (743 )   (784 )
 

Franchise taxes

    (137 )   (98 )   (106 )   (111 )
 

Trust administrative expenses

    (1,750 )(5)   (325 )   (325 )   (325 )
                   
   

Total trust expenses

    (4,727 )   (2,436 )   (2,591 )   (2,716 )
                   
 

Cash available for distribution

 
$

34,556
 
$

25,689
 
$

27,666
 
$

29,087
 
                   
 

Trust units outstanding

   
52,500
   
52,500
   
52,500
   
52,500
 
 

Target distribution per trust unit

  $ .66   $ .49   $ .53   $ .55  
                   
 

Subordination threshold per trust unit

 
$

.53
 
$

.39
 
$

.42
 
$

.44
 
                   
 

Incentive threshold per trust unit

 
$

.79
 
$

.59
 
$

.63
 
$

.66
 
                   

                                    

                         

(1)
Includes proceeds attributable to the first five months of production from April 1, 2011 to August 31, 2011.

(2)
Average NYMEX futures prices, as reported July 15, 2011. For a description of the effect of lower NYMEX prices on target distributions, please read "Target Distributions and Subordination and Incentive Thresholds—Sensitivity of Target Distributions to Changes in Oil, Natural Gas and Natural Gas Liquids Prices and Volumes."

(3)
Sales price net of forecasted quality, Btu content, transportation costs, and marketing costs. For information about the estimates and assumptions made in preparing the table above, see "Target Distributions and Subordination and Incentive Thresholds—Significant Assumptions Used to Calculate the Target Distributions."

(4)
Hedging percentage excludes production from April 1, 2011 to July 31, 2011.

(5)
Includes trustee cash reserve of $1.0 million and additional administrative costs relating to the formation of the trust.

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SandRidge Energy, Inc.

        SandRidge is a publicly traded, independent oil and natural gas company concentrating on development and production activities related to the exploitation of its significant holdings in West Texas and the Mid-Continent area of Oklahoma and Kansas. As of July 28, 2011, its market capitalization was approximately $4.8 billion, and as of December 31, 2010 it had total estimated net proved reserves of 545.9 MMBoe. SandRidge has approximately 210,000 net acres in the Permian Basin. SandRidge also owns and operates other interests in the Mississippian Formation, Mid-Continent, Cotton Valley Trend in East Texas, Gulf Coast and Gulf of Mexico. SandRidge also owns and operates gas gathering and processing facilities, CO2 treating and transportation facilities, and drilling rig, oil field service and oil and gas marketing businesses.

        SandRidge's principal executive offices are located at 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102 and its telephone number is (405) 429-5500. Its website is http://www.sandridgeenergy.com. The principal offices of the trust are located at 919 Congress Avenue, Suite 500, Austin, Texas 78701, and its telephone number is (512) 236-6599.

    The trust units do not represent interests in or obligations of SandRidge.

Key Investment Considerations

        The following are some key investment considerations related to the Underlying Properties, the royalty interests and the common units:

    Well established production history in the region.  The Underlying Properties are located in the greater Fuhrman-Mascho field area in the Permian Basin. The Fuhrman-Mascho field is the 34th largest U.S. oil field based on U.S. Energy Information Association estimates of 2009 proved reserves. The field was discovered in 1930 and produced approximately 4.1 MMBbls in 2009, up 24% from 2007 production of 3.3 MMBbls. Since acquiring Arena in July 2010, SandRidge has drilled 101 wells and currently operates 496 producing wells in the AMI.

    Royalty interests not burdened by operating or capital costs.  The trust will not be responsible for any operating or capital costs associated with the Underlying Properties, including the costs to drill the Development Wells. The trust will bear post-production costs, certain taxes and trust administrative expenses.

    Exposure to oil price volatility mitigated through March 31, 2015.  Hedging arrangements covering a portion of expected production will be implemented both pursuant to a derivatives agreement between the trust and SandRidge and hedges entered into by the trust directly with unaffiliated hedge counterparties. Under the combined hedging arrangements, approximately 73% of the expected production and approximately 79% of the expected revenues upon which the target distributions are based from August 1, 2011 through March 31, 2015 will be hedged. These hedging arrangements should reduce commodity price risk inherent in holding interests in oil through March 31, 2015.

    Potential for initial depletion to be offset by results of development drilling.  SandRidge is obligated to drill the Development Wells by March 31, 2015 or, in the event of delays, March 31, 2016. Based on the anticipated drilling schedule, the average daily production net to the trust is expected to increase from 2,700 Boe/d for March 2011 to 5,700 Boe/d for July 2014, after which time production will decline until the termination of the trust.

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    Alignment of interests between SandRidge and the trust unitholders.  SandRidge has significant incentives to complete its drilling obligation and increase production from the Underlying Properties as a result of the following factors:

    By virtue of SandRidge's 20% retained interest in the Producing Wells and its 30% retained interest in the Development Wells, as well as its ownership of 43% of the trust units, it will have an effective average net revenue interest of 39.6% in the Producing Wells and 41.6% in the Development Wells, compared with an effective average net revenue interest for the holders of trust units other than SandRidge of 33.4% in the Producing Wells and 27.7% in the Development Wells.

    A majority of the trust units that SandRidge will own, constituting 25% of the total trust units outstanding, will be subordinated units that will not be entitled to receive distributions unless there is sufficient cash to pay the amount of the subordination threshold to the common units. These subordinated units will only convert into common units at the end of the fourth full calendar quarter following SandRidge's satisfaction of its drilling obligation to the trust.

    To the extent that the trust has cash available for distribution in excess of the incentive thresholds during the subordination period, SandRidge will be entitled to receive 50% of such cash as incentive distributions, plus its pro rata share of the remaining 50% of such cash by virtue of its ownership of 22,500,000 trust units.

    Except in limited circumstances, SandRidge will not be permitted to drill and complete any wells for its own account within the AMI or sell the Underlying Properties until it has satisfied its drilling obligation.

    SandRidge's experience as an operator in the Permian Basin.  Since 2009, SandRidge has drilled, as operator, 315 wells targeting the Grayburg/San Andres formation in the Permian Basin. The majority of the wells drilled in the Grayburg/San Andres formation have been drilled in Andrews County, the location of the Underlying Properties. SandRidge operates all of the Producing Wells. SandRidge owns a majority working interest in substantially all of the locations on which it expects to drill the Development Wells, and it expects to operate such wells during the subordination period, allowing SandRidge to control the timing and amount of discretionary expenditures for operational and development activities with respect to substantially all of the Development Wells.

    Rigs and services readily available to allow timely drilling and completion of wells.  As of March 31, 2011, SandRidge had eight rigs operating in the greater Fuhrman-Mascho field area and plans to drill more than 450 wells targeting the Grayburg/San Andres formations in 2011, some of which are in the AMI. SandRidge estimates that only three rigs will be required to complete its drilling obligation within its contractual commitment to the trust. SandRidge owns and operates drilling rigs and a related oil field services business that provides pulling units, trucking, rental tools, location and road construction and roustabout services. As of March 31, 2011, SandRidge owned 31 drilling rigs, which it uses to drill wells for its own account as well as that of other oil and natural gas companies. SandRidge will use a combination of its own rigs and oil field services business and third party rigs and services to drill and complete the Development Wells. SandRidge's direct access to drilling rigs and related oil field services should substantially mitigate any potential shortage of drilling and completion equipment and enable SandRidge to achieve its projected drilling schedule.

    Recognized sponsor with a successful track record and experienced management.  SandRidge has a history of active and successful drilling. From the beginning of 2007 through December 31, 2010, SandRidge drilled 1,542 gross (1,404 net) oil and gas wells, investing $4.5 billion in exploration and production activity. During this same period, SandRidge produced over 65 MMBoe of oil and gas. SandRidge currently operates approximately 5,000 wells. SandRidge's executive management team averages over 25 years of experience in the oil and gas industry, and SandRidge's field personnel have extensive operational experience.

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Proved Reserves

        Proved Reserves of Underlying Properties and Royalty Interests.    The following table sets forth certain estimated proved reserves and the PV-10 value as of March 31, 2011 attributable to the Underlying Properties, the PDP Royalty Interest and the Development Royalty Interest, in each case derived from the reserve report. The reserve report was prepared by Netherland Sewell in accordance with criteria established by the SEC.

        Proved reserve quantities attributable to the royalty interests are calculated by multiplying the gross reserves for each property attributable to SandRidge's interest by the royalty interest assigned to the trust in each property. The reserves related to the Underlying Properties include all proved reserves expected to be economically produced during the life of the properties. The reserves and revenues attributable to the trust's interests include only the reserves attributable to the Underlying Properties that are expected to be produced within the 20-year period in which the trust owns the term royalty interest as well as the residual interest in the reserves that the trust will own on the Termination Date. A summary of the reserve report is included as Annex A to this prospectus.

 
  Proved Reserves(1)    
 
 
  Oil
(MBbl)(2)
  Natural Gas
(MMcf)
  Total
(MBoe)
  PV-10
Value(3)
 
 
   
   
   
  (Dollars in millions)
 

Underlying Properties

    30,644     7,215     31,847   $ 580.8  

Royalty Interests:

                         
 

PDP Royalty Interests (80%)(4)

    5,577     1,375     5,806   $ 213.7  
 

Development Royalty Interests (70%)

    15,401     3,570     15,996   $ 555.8  
                   
   

Total

    20,977     4,945     21,802   $ 769.5  
                   

(1)
The proved reserves were determined using a 12-month unweighted arithmetic average of the first-day-of-the-month prices for oil and natural gas for the period from April 1, 2010 through March 1, 2011, without giving effect to derivative transactions, and were held constant for the life of the properties. The prices used in the reserve report, as well as SandRidge's internal reports, yield weighted average prices at the wellhead, which are based on first-day-of-the-month reference prices and adjusted for transportation and regional price differentials. The reference prices and the equivalent weighted average wellhead prices are both presented in the table below.

 
  Reference prices   Weighted average wellhead prices  
 
  Oil
(per Bbl)
  Natural gas
(per Mcf)
  Oil
(per Bbl)
  Natural gas
(per Mcf)
 

March 31, 2011

  $ 80.04   $ 4.102   $ 75.58   $ 3.003  
(2)
Includes natural gas liquids.

(3)
PV-10 is the present value of estimated future net revenue to be generated from the production of proved reserves, discounted using an annual discount rate of 10%, calculated without deducting future income taxes. PV-10 is a non-GAAP financial measure and generally differs from standardized measure of discounted net cash flows, or Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Because the historical financial information related to the Underlying Properties consists solely of revenues and direct operating expenses and does not include the effect of income taxes, we expect the PV-10 and Standardized Measure attributable to the Underlying Properties for each period to be equivalent. Because the trust will not bear federal income tax expense, we also expect the PV-10 and Standardized Measure attributable to the royalty interests for each period to be

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    equivalent. Neither PV-10 nor Standardized Measure represents an estimate of the fair market value of the Underlying Properties or the royalty interests. We and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities.

(4)
Includes reserves associated with wells in the process of being completed.

        Annual Production Attributable to Royalty Interests.    The following bar graph shows estimated annual production from the Producing Wells and the Development Wells based on the pricing and other assumptions set forth in the reserve report. The production estimates include the impact of additional production that is expected as a result of the drilling of the Development Wells.

GRAPH

Key Risk Factors

        Below is a summary of certain key risk factors related to the Underlying Properties, the royalty interests and the common units. This list is not exhaustive. Please also read carefully the full discussion of these risks and other risks described under "Risk Factors" beginning on page 18.

    Drilling for and producing oil, natural gas and natural gas liquids on the Underlying Properties are high risk activities with many uncertainties that could delay the anticipated drilling schedule for the Development Wells and adversely affect future production from the Underlying Properties. Any such delays or reductions in production could decrease future revenues that are available for distribution to unitholders.

    Oil, natural gas and natural gas liquids prices fluctuate due to a number of factors that are beyond the control of the trust and SandRidge, and lower prices could reduce proceeds to the trust and cash distributions to unitholders.

    Actual reserves and future production may be less than current estimates, which could reduce cash distributions by the trust and the value of the trust units.

    In certain circumstances the trust may have to make cash payments under the hedging arrangements and these payments could be significant.

    Estimates of target distributions to unitholders, subordination thresholds and incentive thresholds are based on assumptions that are inherently subjective and are subject to significant business,

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      economic, financial, legal, regulatory and competitive risks and uncertainties that could cause actual cash distributions to differ materially from those estimated.

    The subordination of certain trust units held by SandRidge does not assure that you will in fact receive any specified return on your investment in the trust.

    The hedging arrangements will cover only a portion of the expected production attributable to the trust, and such contracts limit the trust's ability to benefit from commodity price increases for hedged volumes above the corresponding hedge price. In addition, the trust may be required to pay its counterparties under the hedging arrangements. Following this offering, the trust will not have the ability to enter into additional hedges on its own, except in the limited circumstances involving the restructuring of an existing hedge.

    Conflicts of interest could arise between SandRidge and the trust unitholders.

    The trust's tax treatment depends on its status as a partnership for U.S. federal income tax purposes. If the U.S. Internal Revenue Service ("IRS") were to treat the trust as a corporation for U.S. federal income tax purposes, then its cash available for distribution to unitholders would be substantially reduced.

    The tax treatment of an investment in trust units could be affected by recent and potential legislative changes, possibly on a retroactive basis.

    The trust will adopt positions that may not conform to all aspects of existing Treasury Regulations. If the IRS contests the tax positions the trust takes, the value of the trust units may be adversely affected, the cost of any IRS contest will reduce the trust's cash available for distribution and income, gain, loss and deduction may be reallocated among trust unitholders.

Structure of the Trust

        The following chart shows the relationship of SandRidge, the trust and the public unitholders (without giving effect to the exercise of the underwriters' over-allotment option).

CHART


*
SandRidge will have an effective average net revenue interest of 39.6% in the Producing Wells and 41.6% in the Development Wells. Public unitholders (that is, holders of trust units other than SandRidge) will have an effective average net revenue interest of 33.4% in the Producing Wells and 27.7% in the Development Wells.

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THE OFFERING

Common units offered to public

  30,000,000 common units (34,500,000 common units, if the underwriters exercise their over-allotment option in full)

Trust units owned by SandRidge after the offering

  9,375,000 common units and 13,125,000 subordinated units

  (4,875,000 common units and 13,125,000 subordinated units, if the underwriters exercise their over-allotment option in full)

  See "The Trust—Formation Transactions."

Total units outstanding after the offering

  52,500,000 trust units, consisting of 39,375,000 common units and 13,125,000 subordinated units

Over-allotment option

  4,500,000 common units will be issued and retained by the trust at the initial closing, to be used to satisfy (if necessary) the over-allotment option granted to the underwriters. If the over-allotment option is exercised, the trust will sell to the underwriters such number of the retained units as is necessary to satisfy the over-allotment option, and will then deliver the net proceeds of such sale, together with any remaining unsold units, to SandRidge (or a SandRidge subsidiary) as partial consideration for the conveyance of the perpetual royalty interests. If the over-allotment option is not exercised by the underwriters, the retained units will be delivered to SandRidge (or a SandRidge subsidiary), as partial consideration for the conveyance of the perpetual royalty interests, promptly following the 30th day after the initial closing.

Directed unit program

  The underwriters have reserved up to 5% of the common units being offered by this prospectus for sale to SandRidge's directors, officers, and certain other persons associated with SandRidge, at the initial public offering price. The sales will be made by Morgan Stanley & Co. LLC through a directed unit program. See "Underwriters—Directed Unit Program."

Use of proceeds

  The trust is offering the common units to be sold in this offering. Assuming no exercise of the underwriters' over-allotment option, the estimated net proceeds of this offering will be approximately $502.6 million, after deducting underwriting discounts and commissions and offering expenses. The trust will deliver the net proceeds to one or more wholly-owned subsidiaries of SandRidge as full consideration for the conveyance of the term royalty interests and, if applicable, as partial consideration for the conveyance of the perpetual royalty interests.

  SandRidge intends to use the offering proceeds, including proceeds from any exercise of the underwriters' over-allotment option, to repay borrowings under its credit facility and for general corporate purposes, which may include the funding of the drilling obligation.

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  Affiliates of Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC, RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC are lenders under the SandRidge credit facility being repaid with the offering proceeds being paid to SandRidge and will therefore receive a portion of the proceeds of the offering. See "Use of Proceeds" and "Underwriters."

NYSE symbol

  "PER"

Trustee

  The Bank of New York Mellon Trust Company, N.A.

Quarterly cash distributions

  Quarterly cash distributions during the term of the trust will be made by the trustee on or about the 60th day following the end of each calendar quarter to unitholders of record on or about the 45th day following each calendar quarter. The first distribution, which will cover the second and third quarters of 2011, is expected to be made on or about November 30, 2011 to record unitholders as of November 15, 2011. Due to the timing of the payment of production proceeds to the trust, the trust expects that the first distribution will include sales for oil, natural gas and natural gas liquids for five months. The trustee intends to withhold $1.0 million from the first distribution to establish a cash reserve available for trust administrative expenses.

  Actual cash distributions to the trust unitholders will fluctuate quarterly based on the quantity of oil, natural gas and natural gas liquids produced from the Underlying Properties, the prices received for oil, natural gas and natural gas liquids production and other factors. Because payments to the trust will be generated by depleting assets and production from the Underlying Properties will diminish over time, a portion of each distribution will represent a return of your original investment. Given that the production from the Underlying Properties is expected to initially increase and then subsequently decline over time, the target distributions are also expected to initially increase before declining over time.

Voting rights in the trust

  Matters voted on by trust unitholders will generally be subject to approval by holders of a majority of the common units (excluding common units owned by SandRidge and its affiliates) and holders of a majority of the trust units, in each case voting in person or by proxy at a meeting of such holders at which a quorum is present. SandRidge will not be entitled to vote on the removal of the trustee or appointment of a successor trustee. However, at any time SandRidge and its affiliates own less than 10% of the total trust units outstanding, matters voted on by trust unitholders will be subject to approval by a majority of the trust units, including units owned by SandRidge, voting in person or by proxy at a meeting of such holders at which a quorum is present.

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Termination of the trust

  The trust will dissolve and begin to liquidate on the Termination Date, which is March 31, 2031, and will soon thereafter wind up its affairs and terminate. At the Termination Date, 50% of the PDP Royalty Interest and 50% of the Development Royalty Interest will revert automatically to SandRidge. The remaining 50% of each of the PDP Royalty Interest and the Development Royalty Interest will be retained by the trust at the Termination Date and thereafter sold, and the net proceeds of the sale, as well as any remaining trust cash reserves, will be distributed to the unitholders in accordance with their interests. SandRidge will have a right of first refusal to purchase the royalty interests retained by the trust at the Termination Date.

U.S. federal income tax considerations

  The trust will be treated as a partnership for U.S. federal income tax purposes. Consequently, the trust will not incur any U.S. federal income tax liability. Instead, trust unitholders will be allocated an amount of the trust's income, gain, loss or deductions corresponding to their interest in the trust, which amounts may differ in timing or amount from actual distributions.

  The Term PDP Royalty will, and the Term Development Royalty should, be treated as debt instruments for U.S. federal income tax purposes. The trust will be required to treat a portion of each payment it receives with respect to each such royalty interests as interest income in accordance with the "noncontingent bond method" under the original issue discount rules contained in the Internal Revenue Code of 1986, as amended, and the corresponding IRS regulations.

  The Perpetual PDP Royalty and the Perpetual Development Royalty will be granted on a perpetual basis. The Perpetual PDP Royalty will and the Perpetual Development Royalty should be treated as mineral royalty interests for U.S. federal income tax purposes, generating ordinary income subject to depletion.

  Please read "U.S. Federal Income Tax Considerations" for more information.

Estimated ratio of taxable income to distributions

  SandRidge estimates that if you own the units you purchase in this offering through the record date for distributions for the period ending December 31, 2013, you will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be approximately 60% of the cash distributed to you with respect to that period. For example, if you receive an annual distribution of $1.00 per unit, the trust estimates that your average allocable federal taxable income per year will be approximately $.60 per unit.

  Please read "U.S. Federal Income Tax Considerations" for more information.

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RISK FACTORS

        You should carefully consider the risks described below before making an investment decision. The trust's cash available for distribution could be materially adversely affected by any of these risks. The trading price of the common units could decline due to any of these risks, or you may lose all or part of your investment.

Risks Related to the Units

         Drilling for and producing oil, natural gas and natural gas liquids on the Underlying Properties are high risk activities with many uncertainties that could delay the anticipated drilling schedule for the Development Wells and adversely affect future production from the Underlying Properties. Any such delays or reductions in production could decrease future revenues that are available for distribution to unitholders.

        The drilling and completion of the Development Wells are subject to numerous risks beyond SandRidge's and the trust's control, including risks that could delay the current drilling schedule for the Development Wells and the risk that drilling will not result in commercially viable oil, natural gas and natural gas liquids production. Drilling for oil, natural gas and natural gas liquids can be unprofitable if dry wells are drilled and if productive wells do not produce sufficient revenues to return a profit. SandRidge's and third-party operators' decisions to develop or otherwise exploit certain areas within the AMI will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations. The costs of drilling, completing and operating wells are often uncertain before drilling commences. Overruns in budgeted expenditures are common risks that can make a particular project uneconomical. There can be no assurance that a Development Well that is successfully completed will pay out the capital costs spent to drill it. Drilling and production operations on the Underlying Properties may be curtailed, delayed or canceled as a result of various factors, including the following:

    delays imposed by or resulting from compliance with regulatory requirements including permitting;

    unusual or unexpected geological formations and miscalculations;

    shortages of or delays in obtaining equipment and qualified personnel;

    equipment malfunctions, failures or accidents;

    lack of available gathering facilities or delays in construction of gathering facilities;

    lack of available capacity on interconnecting transmission pipelines;

    lack of adequate electrical infrastructure;

    unexpected operational events and drilling conditions;

    pipe or cement failures and casing collapses;

    pressures, fires, blowouts, and explosions;

    lost or damaged drilling and service tools;

    loss of drilling fluid circulation;

    uncontrollable flows of oil, natural gas and natural gas liquids water or drilling fluids;

    natural disasters;

    environmental hazards, such as oil, natural gas and natural gas liquids leaks, pipeline ruptures and discharges of toxic gases or fluids;

    adverse weather conditions such as extreme cold, fires caused by extreme heat or lack of rain, and severe storms or tornadoes;

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    reductions in oil, natural gas and natural gas liquids prices;

    oil and natural gas property title problems; and

    market limitations for oil, natural gas and natural gas liquids.

        In the event that drilling of Development Wells is delayed or the Producing Wells or Development Wells have lower than anticipated production due to one of the factors above or for any other reason, cash distributions to unitholders may be reduced. In addition, wells drilled in the Permian Basin in the AMI typically produce a large volume of water, which requires the drilling of saltwater disposal wells. SandRidge's inability to drill these wells or otherwise dispose of the water produced from the Producing Wells and Development Wells in an efficient manner could delay production and therefore the trust's receipt of proceeds from the royalty interests.

         Oil, natural gas and natural gas liquids prices fluctuate due to a number of factors that are beyond the control of the trust and SandRidge, and lower prices could reduce proceeds to the trust and cash distributions to unitholders.

        The trust's reserves and quarterly cash distributions are highly dependent upon the prices realized from the sale of oil, natural gas and natural gas liquids. The markets for these commodities are very volatile. Oil, natural gas and natural gas liquids prices can fluctuate widely in response to a variety of factors that are beyond the control of the trust and SandRidge. These factors include, among others:

    regional, domestic and foreign supply, and perceptions of supply, of oil, natural gas and natural gas liquids;

    the price of foreign imports;

    U.S. and worldwide political and economic conditions;

    the level of demand, and perceptions of demand, for oil, natural gas and natural gas liquids;

    weather conditions and seasonal trends;

    anticipated future prices of oil, natural gas and natural gas liquids, alternative fuels and other commodities;

    technological advances affecting energy consumption and energy supply;

    the proximity, capacity, cost and availability of pipeline infrastructure, treating, transportation and refining capacity;

    acts of force majeure;

    domestic and foreign governmental regulations and taxation;

    energy conservation and environmental measures; and

    the price and availability of alternative fuels.

        For oil, from 2007 through 2010, the highest monthly NYMEX settled price was $140.00 per Bbl and the lowest was $41.68 per Bbl. For natural gas, from 2007 through 2010, the highest monthly NYMEX settled price was $13.35 per MMBtu and the lowest was $2.98 per MMBtu. In addition, the market price of oil and natural gas is generally higher in the winter months than during other months of the year due to increased demand for oil and natural gas for heating purposes during the winter season.

        Lower oil, natural gas and natural gas liquids prices will reduce proceeds to which the trust is entitled and may ultimately reduce the amount of oil, natural gas and natural gas liquids that is economic to produce from the Underlying Properties. As a result, SandRidge or any third-party operator of any of the Underlying Properties could determine during periods of low oil, natural gas and natural gas liquids prices to shut in or curtail production from wells on the Underlying Properties. In addition, the operator of the

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Underlying Properties could determine during periods of low oil and natural gas prices to plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices. Specifically, SandRidge or any third party operator may abandon any well or property if it reasonably believes that the well or property can no longer produce oil, natural gas and natural gas liquids in commercially economic quantities. This could result in termination of the portion of the royalty interest relating to the abandoned well or property, and SandRidge would have no obligation to drill a replacement well. The volatility of oil, natural gas and natural gas liquids prices also reduces the accuracy of target distributions to trust unitholders. For a discussion of certain risks related to the trust's hedging arrangements, see "—The hedging arrangements for the trust will cover only a portion of the production attributable to the trust, and such arrangements will limit the trust's ability to benefit from commodity price increases for hedged volumes above the corresponding hedge price."

         Actual reserves and future production may be less than current estimates, which could reduce cash distributions by the trust and the value of the trust units.

        The value of the trust units and the amount of future cash distributions to the trust unitholders will depend upon, among other things, the accuracy of the future production estimated to be attributable to the trust's royalty interests. See "The Underlying Properties—Oil, Natural Gas and Natural Gas Liquids Reserves" for a discussion of the method of allocating proved reserves to the trust. It is not possible to measure underground accumulations of oil, natural gas and natural gas liquids in an exact way, and estimating reserves is inherently uncertain. Ultimately, actual production and revenues for the Underlying Properties could be materially less than estimated amounts. Petroleum engineers are required to make subjective estimates of underground accumulations of oil, natural gas and natural gas liquids based on factors and assumptions that include:

    historical production from the area compared with production rates from other producing areas;

    oil, natural gas and natural gas liquids prices, production levels, Btu content, production expenses, transportation costs, severance and excise taxes and capital expenditures; and

    the assumed effect of governmental regulation.

        Changes in these assumptions or actual production costs incurred and results of actual development could materially decrease reserve estimates. As with all drilling programs, there is a risk that the quality of the target reservoir is less than that assumed for purposes of the reserve report. As a result, you may not receive the benefit of the total amount of proved undeveloped reserves reflected in the reserve report, notwithstanding the fact that SandRidge has satisfied its drilling obligation. See "Summary—The Development Wells."

         In certain circumstances the trust may have to make cash payments under the hedging arrangements and these payments could be significant.

        If actual production is below the amounts forecast in the reserve report and oil or natural gas prices rise, the hedging arrangements entered into by the trust may result in the trust having to make cash payments under the hedging arrangements which could, in certain circumstances, be significant. Swap contracts underlying the derivatives agreement between SandRidge and the trust and swap contracts entered into between the trust and unaffiliated hedge counterparties provide the trust with the right to receive from SandRidge or the hedge counterparties, as applicable, the excess of the fixed price specified in the hedge contract over a floating market price, multiplied by the volume of production hedged. If the floating market price exceeds the specified fixed price, the trust must pay SandRidge or its hedge counterparties, as applicable, this difference in price multiplied by the volume of production hedged, even if the production attributable to the trust's royalty interests is insufficient to cover the volume of production specified in the applicable hedge contracts. Accordingly, if the production attributable to the trust's royalty interests is less than the volume hedged and the floating market price exceeds the specified

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fixed price, the trust will have to make payments against which it will have insufficient offsetting cash receipts from the sale of production attributable to its royalty interests. Furthermore, if one or more of the purchasers of the production attributable to the Underlying Properties defaults on a payment obligation, the trust may have insufficient cash receipts to make payments under the hedging arrangements. If these payments become too large, the trust's liquidity and cash available for distribution may be adversely affected. In addition, the trust's obligations to the counterparties under its direct hedge contracts will be secured by a first priority lien on the trust's existing and future royalty interests in the Underlying Properties. If the trust fails to make any required payments to its unaffiliated hedge counterparties, these counterparties will have a right to foreclose on the trust's royalty interests and may sell the trust's royalty interests in order to satisfy the trust's payment obligations. Please see "The Trust—Hedging Arrangements" for more details on the prices and production volumes associated with the trust's hedging arrangements.

         Estimates of the target distributions to unitholders, subordination thresholds and incentive thresholds are based on assumptions that are inherently subjective and are subject to significant business, economic, financial, legal, regulatory and competitive risks and uncertainties that could cause actual cash distributions to differ materially from those estimated.

        The estimates of target distributions to unitholders, subordination thresholds and incentive thresholds, as set forth in this prospectus, are based on SandRidge's calculations, and SandRidge has not received an opinion or report on such calculations from any independent accountants, financial advisers, or engineers. Such calculations are based on assumptions about drilling, production, oil, natural gas and natural gas liquids prices, hedging activities, capital expenditures, expenses, tax rates and production tax credits under state law and other matters that are inherently uncertain and are subject to significant business, economic, financial, legal, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those estimated. For example, these estimates have assumed that oil, natural gas and natural gas liquids production is sold at prices consistent with settled NYMEX pricing for April through June 2011, monthly NYMEX forward pricing as of July 15, 2011 for the remainder of the period ending March 31, 2014, and assumed price increases after March 31, 2014 of 2.5% annually, capped at $120.00 per Bbl of oil in 2023 and $7.00 per MMBtu of natural gas in 2022; however, actual sales prices may be significantly lower. Additionally, these estimates assume that the Development Wells will be drilled on SandRidge's current anticipated schedule and the related Underlying Properties will achieve production volumes set forth in the reserve report; however, the drilling of the Development Wells may be delayed and actual production volumes may be significantly lower. Further, after wells are completed, production operations may be curtailed, delayed or terminated as a result of a variety of risks and uncertainties, including those described above under "—Drilling for and producing oil, natural gas and natural gas liquids on the Underlying Properties are high risk activities with many uncertainties that could delay the anticipated drilling schedule for the Development Wells and adversely affect future production from the Underlying Properties. Any such delays or reductions in production could decrease future revenues that are available for distribution to unitholders."

        Furthermore, neither the target distribution nor the subordination threshold for each quarter during the subordination period necessarily represents the actual cash distributions you will receive. To the extent actual production volumes or sales prices of oil, natural gas and natural gas liquids differ from the assumptions used to generate the target distributions, the actual distributions you receive may be lower than the target distribution and the subordination threshold for the applicable quarter. A cash distribution to trust unitholders below the target distribution amount or the subordination threshold may materially adversely affect the market price of the trust units.

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         The subordination of certain trust units held by SandRidge does not assure that you will in fact receive any specified return on your investment in the trust.

        Although SandRidge will not be entitled to receive any distribution on its subordinated units unless there is enough cash for all of the common units to receive a distribution equal to the subordination threshold for such quarter (which is 20% below the target distribution level for the corresponding quarter), the subordinated units constitute only a 25% interest in the trust, and this feature does not guarantee that common units will receive a distribution equal to the subordination threshold, or any distribution at all. Additionally, the subordination period will terminate and the subordinated units will convert into common units at the end of the fourth full calendar quarter following SandRidge's completion of its drilling obligation. Depending on the prices at which SandRidge is able to sell volumes attributable to the trust, the common units may receive a distribution that is below the subordination threshold.

        Quarterly cash distributions will be made by the trust based on the proceeds received by the trust pursuant to the royalty interests for the preceding calendar quarter. If a quarterly cash distribution is lower than the target distribution amount or subordination threshold set forth in this prospectus for any quarter, the common units will not be entitled to receive any additional distributions nor will the units be entitled to arrearages in any future quarter.

         The historical and pro forma financial information included in this prospectus may not be representative of the trust's future distributable income.

        The historical financial information included in this prospectus is derived from Arena's and SandRidge's historical financial statements for periods prior to the trust's initial public offering. The historical statements of revenues and direct operating expenses of the Arena Properties included in this prospectus do not give effect to the terms and conditions of the royalty interests and, as a result, do not reflect what the trust's distributable income will be in the future. Further, the historical results of the Arena Properties and the historical results of operations of Arena Resources, Inc. reflect a substantially larger asset base than the Underlying Properties. In addition, for periods prior to 2010 the historical results of operations of Arena Resources, Inc. are presented and discussed on a consolidated basis and include all items of income and expense presented in a consolidated statement of operations, whereas the pro forma statements of revenues and direct operating expense for the portion of the Underlying Properties attributable to the royalty interests to be held by the trust exclude a number of items of income and expense applicable to consolidated statements of operations, such as general and administrative expenses, interest expense, depreciation, depletion and amortization, income taxes, and hedging items. For more information, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting the Comparability of the Historical Financial Results of the Arena Properties or Arena Resources, Inc. to the Future Results of the Trust."

        In preparing the pro forma statements of distributable income included in this prospectus, SandRidge has made adjustments to the historical pro forma financial information for the Underlying Properties based upon currently available information and upon assumptions that SandRidge and the trust believe are reasonable in order to reflect, on a pro forma basis, the impact of the conveyance of the royalty interests to the trust and the other items discussed in the unaudited pro forma financial statements and related notes. The estimates and assumptions used in the calculation of the pro forma financial information in this prospectus may be materially different from the trust's actual experience. Accordingly, the pro forma financial information included in this prospectus does not purport to represent what the trust's distributable income would actually have been had it been in operation during the periods presented or what the trust's distributable income will be in the future, nor does the pro forma financial information give effect to any events other than those discussed in the unaudited pro forma financial statements and related notes.

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         Shortages or increases in costs of equipment, services and qualified personnel could delay the drilling of the Development Wells and result in a reduction in the amount of cash available for distribution.

        The demand for qualified and experienced personnel to conduct field operations, geologists, geophysicists, engineers and other professionals in the oil and natural gas industry can fluctuate significantly, often in correlation with oil, natural gas and natural gas liquids prices, causing periodic shortages. Historically, there have been shortages of drilling rigs and other equipment as demand for rigs and equipment has increased along with the number of wells being drilled. These factors also cause significant increases in costs for equipment, services and personnel. Higher oil, natural gas and natural gas liquids prices generally stimulate demand and result in increased prices for drilling rigs, crews and associated supplies, equipment and services. Shortages of field personnel and equipment or price increases could significantly hinder SandRidge's ability to perform the drilling obligation and delay completion of the Development Wells, which would reduce future distributions to trust unitholders.

         Due to the trust's lack of industry and geographic diversification, adverse developments in the trust's existing area of operation could adversely impact its financial condition, results of operations and cash flows and reduce its ability to make distributions to the unitholders.

        The Underlying Properties will be operated for oil, natural gas and natural gas liquids production only and are focused exclusively in the Permian Basin in Andrews County, Texas. This concentration could disproportionately expose the trust's interests to operational and regulatory risk in that area. Due to the lack of diversification in industry type and location of the trust's interests, adverse developments in the oil, natural gas and natural gas liquids market or the area of the Underlying Properties, including, for example, transportation or treatment capacity constraints, curtailment of production or treatment plan closures for scheduled maintenance, could have a significantly greater impact on the trust's financial condition, results of operations and cash flows than if the trust's royalty interests were more diversified.

         The generation of proceeds for distribution by the trust depends in part on access to and the operation of gathering, transportation and processing facilities. Any limitation in the availability of those facilities could interfere with sales of oil, natural gas and natural gas liquids production from the Underlying Properties.

        The amount of oil, natural gas and natural gas liquids that may be produced and sold from any well to which the Underlying Properties relate is subject to curtailment in certain circumstances, such as by reason of weather conditions, pipeline interruptions due to scheduled and unscheduled maintenance, failure of tendered oil, natural gas and natural gas liquids to meet quality specifications of gathering lines or downstream transporters, excessive line pressure which prevents delivery, physical damage to the gathering system or transportation system or lack of contracted capacity on such systems. The curtailments may vary from a few days to several months. In many cases, SandRidge is provided limited notice, if any, as to when production will be curtailed and the duration of such curtailments. If SandRidge is forced to reduce production due to such a curtailment, the revenues of the trust and the amount of cash distributions to the trust unitholders would similarly be reduced due to the reduction of proceeds from the sale of production. Although SandRidge currently does not have any material production shut-in and does not shut-in production on a routine basis as a result of lack of accessibility to transportation or lack of processing facilities, there can be no assurance this will be the case in the future.

        Some of the Development Wells on the Underlying Properties may be drilled in locations that currently are not serviced by natural gas gathering and transportation pipelines or locations in which existing gathering and transportation pipelines do not have sufficient capacity to transport additional production. As a result, SandRidge may not be able to sell the natural gas production from certain Development Wells until the necessary gathering systems and/or transportation pipelines are constructed or until the necessary transportation capacity on an interstate pipeline is obtained. In particular, the system SandRidge intends to use to compress and process the natural gas produced from certain of the Underlying Properties could be near its capacity and may not be able to process all of SandRidge's gas.

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Any delay in the expansion of such system or the construction or expansion of any other natural gas gathering systems beyond the currently estimated construction schedules, or a delay in the procurement of additional transportation capacity would delay the receipt of any proceeds that may be associated with the natural gas production from the Development Wells.

         The trust units may lose value as a result of title deficiencies with respect to the Underlying Properties.

        The existence of title deficiencies with respect to the Underlying Properties could reduce the value or render properties worthless, thus adversely affecting the distributions to unitholders. SandRidge does not obtain title insurance covering oil, gas and mineral leaseholds. Additionally, undeveloped leasehold acreage has greater risk of title defects than developed acreage.

        SandRidge has not necessarily obtained drilling title opinions on all of the Underlying Properties. Frequently, as a result of title examinations, certain curative work may be required to correct identified title defects, and such curative work entails time and expense. SandRidge's inability or failure to cure title defects could render some locations undrillable or cause SandRidge to lose its rights to some or all production from some of the Underlying Properties, which could result in a reduction in proceeds available for distribution to unitholders and the value of the trust units if a comparable additional location to drill a Development Well cannot be identified.

         The trust is passive in nature and will have no stockholder voting rights in SandRidge, managerial, contractual or other ability to influence SandRidge, or control over the field operations of, sale of oil, natural gas and natural gas liquids from, or development of, the Underlying Properties.

        Trust unitholders have no voting rights with respect to SandRidge and, therefore, will have no managerial, contractual or other ability to influence SandRidge's activities or operations of the Underlying Properties. In addition, some of the Development Wells may be operated by third parties unrelated to SandRidge. Such third party operators may not have the operational expertise of SandRidge within the AMI. Oil, natural gas and natural gas liquids properties are typically managed pursuant to an operating agreement among the working interest owners in the properties. The typical operating agreement contains procedures whereby the owners of the aggregate working interest in the property designate one of the interest owners to be the operator of the property. Under these arrangements, the operator is typically responsible for making all decisions relating to drilling activities, sale of production, compliance with regulatory requirements and other matters that affect the property. Neither the trustee nor the trust unitholders has any contractual ability to influence or control the field operations of, sale of oil, natural gas and natural gas liquids from, or future development of, the Underlying Properties.

         The oil, natural gas and natural gas liquids reserves estimated to be attributable to the Underlying Properties of the trust are depleting assets and production from those reserves will diminish over time. Furthermore, the trust is precluded from acquiring other oil and gas properties or royalty interests to replace the depleting assets and production.

        The proceeds payable to the trust from the royalty interests are derived from the sale of the production of oil, natural gas and natural gas liquids from the Underlying Properties. The oil, natural gas and natural gas liquids reserves attributable to the Underlying Properties are depleting assets, which means that the reserves of oil, natural gas and natural gas liquids attributable to the Underlying Properties will decline over time. As a result, the quantity of oil, natural gas and natural gas liquids produced from the Underlying Properties will decline over time.

        Future maintenance may affect the quantity of proved reserves that can be economically produced from the Underlying Properties to which the wells relate. The timing and size of these projects will depend on, among other factors, the market prices of oil, natural gas and natural gas liquids. With the exception of SandRidge's commitment to drill the Development Wells, SandRidge has no contractual obligation to make capital expenditures on the Underlying Properties in the future. Furthermore, for properties on

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which SandRidge is not designated as the operator, SandRidge has no control over the timing or amount of those capital expenditures. SandRidge also has the right to non-consent and not participate in the capital expenditures on properties for which it is not the operator, in which case SandRidge and the trust will not receive the production resulting from such capital expenditures. If SandRidge or other operators of the wells to which the Underlying Properties relate do not implement maintenance projects when warranted, the future rate of production decline of proved reserves may be higher than the rate currently expected by SandRidge or estimated in the reserve report.

        The trust agreement will provide that the trust's business activities will generally be limited to owning the royalty interests and entering into the hedging arrangements and activities reasonably related thereto, including activities required or permitted by the terms of the conveyances related to the royalty interests. As a result, the trust will not be permitted to acquire other oil and gas properties or royalty interests to replace the depleting assets and production attributable to the trust.

         An increase in the differential between the price realized by SandRidge for oil, natural gas and natural gas liquids produced from the Underlying Properties and the NYMEX or other benchmark price of oil or natural gas could reduce the proceeds to the trust and therefore the cash distributions by the trust and the value of trust units.

        The prices received for SandRidge's oil, natural gas and natural gas liquids production usually fall below benchmark prices such as NYMEX. The difference between the price received and the benchmark price is called a differential. The amount of the differential will depend on a variety of factors, including discounts based on the quality and location of hydrocarbons produced, Btu content and post-production costs. These factors can cause differentials to be volatile from period to period. SandRidge has little or no control over the factors that determine the amount of the differential, and cannot accurately predict natural gas or crude oil differentials. Increases in the differential between the realized price of oil, natural gas and natural gas liquids and the benchmark price for oil, natural gas and natural gas liquids could reduce the proceeds to the trust and therefore the cash distributions by the trust and the value of the trust units. The target distributions were prepared using (a) for natural gas, an assumed negative differential of 28% from NYMEX futures prices for natural gas, (b) for oil, an assumed negative differential of $4.27 from NYMEX futures prices for oil and (c) for natural gas liquids, an assumed negative differential of 51.65% from NYMEX futures prices for oil. For more information on the differentials assumed for purposes of preparing the target distributions, see "Target Distributions and Subordination and Incentive Thresholds—Significant Assumptions Used to Calculate the Target Distributions."

         The amount of cash available for distribution by the trust will be reduced by post-production costs and applicable taxes associated with the trust's royalty interests, trust expenses and incentive distributions payable to SandRidge.

        The royalty interests and the trust will bear certain costs and expenses that will reduce the amount of cash received by or available for distribution by the trust to the holders of the trust units. These costs and expenses include the following:

    the trust's share of the costs incurred by SandRidge to gather, store, compress, transport, process, treat, dehydrate and market the oil and gas;

    the trust's share of applicable taxes on the oil and gas;

    trust administrative expenses, including fees paid to the trustee and the Delaware trustee, the annual administrative services fee payable to SandRidge, tax return and Schedule K-1 preparation and mailing costs, independent auditor fees and registrar and transfer agent fees, and costs associated with annual and quarterly reports to unitholders; and

    the trust's liability for Texas franchise tax.

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        In addition, the amount of funds available for distribution to unitholders will be reduced by the amount of any cash reserves maintained by the trustee in respect of anticipated future trust administrative expenses.

        Further, during the subordination period, SandRidge will be entitled to receive a quarterly incentive distribution from the trust equal to 50% of the amount by which cash available to be paid to all unitholders exceed the incentive threshold for the applicable quarter. See "Target Distributions and Subordination and Incentive Thresholds."

        The amount of costs and expenses borne by the trust may vary materially from quarter-to-quarter. The extent by which the costs and expenses of the trust are higher or lower in any quarter will directly decrease or increase the amount received by the trust and available for distribution to the unitholders. For a further summary of post-production costs and applicable taxes for the producing lives of the Producing Wells and Development Wells, see "The Underlying Properties." Historical post-production costs and taxes, however, may not be indicative of future post-production costs and taxes.

         The hedging arrangements for the trust will cover only a portion of the production attributable to the trust, and such arrangements will limit the trust's ability to benefit from commodity price increases for hedged volumes above the corresponding hedge price.

        The trust will enter into oil hedge contracts with unaffiliated counterparties. Additionally, pursuant to the derivatives agreement, SandRidge will provide the trust with the effect of certain oil hedge contracts that it plans to enter into with third parties. Under the combined hedging arrangements, approximately 73% of the expected production and approximately 79% of the expected revenues upon which the target distributions are based from August 1, 2011 through March 31, 2015 will be hedged. The remaining estimated production of oil during that time, all production of natural gas and natural gas liquids during that time, and all production after such time will not be hedged. With respect to unhedged volumes and periods, the trust will not be protected against the price risks inherent in holding interests in oil, a commodity that is frequently characterized by significant price volatility. Furthermore, while the use of hedging arrangements limits the downside risk of price declines, they may also limit the trust's ability to benefit from increases in oil prices above the hedge price on the portion of the production attributable to the trust's royalty interests that is hedged.

        The trust's receipt of any payments due to it based on the trust's hedge contracts with unaffiliated hedge counterparties and the derivatives agreement with SandRidge depends upon the financial position of the trust's unaffiliated hedging counterparties, SandRidge and SandRidge's hedging counterparties. The trust's counterparties under its hedge contracts with unaffiliated third parties will be institutions with a corporate credit rating of at least A/A2 as rated by Standard & Poor's or Moody's, including Morgan Stanley Capital Group Inc., J. Aron & Company, an affiliate of Goldman, Sachs & Co., and Barclays Bank PLC. The trust's counterparty under the derivatives agreement is SandRidge, whose counterparties will also be institutions with a corporate credit rating of at least A/A2, including Morgan Stanley Capital Group Inc., J. Aron & Company, an affiliate of Goldman, Sachs & Co., and Barclays Bank PLC. In the event that any of the counterparties to the oil and natural gas hedge contracts default on their obligations to make payments under such contracts, the cash distributions to the trust unitholders would likely be materially reduced as the hedge payments are intended to provide additional cash to the trust during periods of lower oil and natural gas prices. SandRidge will not be required to make payments to the trust under the derivatives agreement to the extent of payment defaults by SandRidge's hedge contract counterparties. Following this offering, except in limited circumstances involving the restructuring of an existing hedge, the trust will have no ability to terminate its hedge contracts or enter into additional hedges of its own. See "—SandRidge's ability to satisfy its obligations to the trust depends on its financial position, and in the event of a default by SandRidge in its obligation to drill the Development Wells, or in the event of SandRidge's bankruptcy, it may be expensive and time-consuming for the trust to exercise its remedies."

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         For Development Wells drilled on properties where SandRidge is not the operator, SandRidge will rely on third party operators to drill the Development Wells, and for Development Wells where SandRidge is the operator, SandRidge may rely on third party servicers to conduct the drilling operations.

        SandRidge owns a majority working interest in substantially all of the locations on which it expects to drill the Development Wells, and it expects to operate such wells during the subordination period. For Development Wells drilled on properties where SandRidge is not the operator, however, SandRidge will rely on third party operators to drill the Development Wells. In addition, where SandRidge is the operator of a Development Well, it may rely on third party servicers to perform the necessary drilling operations. The ability of third-party operators to help SandRidge meet the drilling obligation, and the ability of third-party servicers to perform drilling operations for SandRidge, will depend on those operators' future financial condition and economic performance and access to capital, which, in turn, will depend upon the supply and demand for oil, natural gas and natural gas liquids, prevailing economic conditions and financial, business and other factors. The failure of a third-party operator to adequately perform operations could delay drilling or completion of wells, or reduce production from the Underlying Properties and the cash available for distribution to trust unitholders. SandRidge may be provided little or no notice by these operators that they are failing to drill the Development Wells in accordance with pre-existing schedules. If the Development Wells take longer to be drilled and completed than currently anticipated, this may delay revenue earned from the production of oil, natural gas and natural gas liquids by such wells. The revenues distributable to the trust and the amount of cash distributable to the trust unitholders would similarly be delayed.

         Production of oil, natural gas and natural gas liquids on the Underlying Properties could be materially and adversely affected by severe or unseasonable weather.

        Production of oil, natural gas and natural gas liquids on the Underlying Properties could be materially and adversely affected by severe weather. Repercussions of severe weather conditions may include:

    evacuation of personnel and curtailment of operations;

    weather-related damage to drilling rigs or other facilities, resulting in suspension of operations;

    inability to deliver materials to worksites; and

    weather-related damage to pipelines and other transportation facilities.

         The trustee may, under certain circumstances, sell the royalty interests and dissolve the trust. The trust will begin to liquidate following the end of the 20-year period in which the trust is in existence.

        The royalty interests will be sold and the trust will be dissolved upon the occurrence of certain events. For example, the trustee must sell the royalty interests if unitholders approve the sale or vote to dissolve the trust. The trustee must also sell the royalty interests if cash available for distribution for any four consecutive quarters, on a cumulative basis, is less than $5.0 million. The sale of all of the royalty interests will result in the dissolution of the trust. Upon the dissolution of the trust, the net proceeds of any such sale will be distributed to the trust unitholders in accordance with their interests and unitholders will not be entitled to receive any proceeds from the sale of production from the Underlying Properties following such date.

        At the Termination Date, 50% of the PDP Royalty Interest and 50% of the Development Royalty Interest will automatically revert to SandRidge, while the remaining 50% of the PDP Royalty Interest and 50% of the Development Royalty Interest will be sold and the proceeds will be distributed to the unitholders (including SandRidge to the extent of any trust units it owns) at the Termination Date or soon thereafter. The price received by the trust by any purchaser of the remaining royalty interests will depend, among other things, on the prices of oil, natural gas and natural gas liquids at that time. There can be no assurance that the prices of oil, natural gas and natural gas liquids will be at levels such that trust

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unitholders will receive any particular amount of cash in return for the trust's sale of such royalty interests. Moreover, SandRidge will have a right of first refusal to purchase such royalty interests at the Termination Date, which may reduce the inclination of third parties to place a bid, and thereby reduce the value received by the trust in a sale. If the trustee receives a bid from a proposed purchaser other than SandRidge and wants to sell all or part of the remaining royalty interests to such third party, the trustee will be required to give notice to SandRidge and identify the proposed purchaser and proposed sale price, and other terms of the bid. See "The Trust."

         There has been no public market for the common units and no independent appraisal of the value of the royalty interests has been performed.

        The initial public offering price of the common units will be determined by negotiation among SandRidge and the underwriters. Among the factors to be considered in determining the initial public offering price, in addition to prevailing market conditions, will be current and historical oil, natural gas and natural gas liquids prices, current and prospective conditions in the supply and demand for oil, natural gas and natural gas liquids, reserve and production quantities estimated for the royalty interests and the trust's cash distributions prospects. None of SandRidge, the trust or the underwriters will obtain any independent appraisal or other opinion of the value of the royalty interests other than the reserve report prepared by Netherland Sewell.

         The trust is managed by a trustee who cannot be replaced except at a special meeting of trust unitholders.

        The business and affairs of the trust will be managed by the trustee. Your voting rights as a trust unitholder are more limited than those of stockholders of most public corporations. For example, there is no requirement for annual meetings of trust unitholders or for an annual or other periodic re-election of the trustee. The trust agreement provides that the trustee may only be removed and replaced by the holders of a majority of the outstanding trust units, excluding trust units held by SandRidge voting in person or by proxy at a special meeting of trust unitholders at which a quorum is present called by either the trustee or the holders of not less than 10% of the outstanding trust units. As a result, it may be difficult for public unitholders to remove or replace the trustee without the cooperation of holders of a substantial percentage of the outstanding trust units.

         Trust unitholders have limited ability to enforce provisions of the royalty interests, and SandRidge's liability to the trust is limited.

        The trust agreement permits the trustee and the trust to sue SandRidge or any other future owner of the Underlying Properties to enforce the terms of the conveyances creating the PDP Royalty Interest and the Development Royalty Interest. If the trustee does not take appropriate action to enforce provisions of these conveyances, a trust unitholder's recourse would be limited to bringing a lawsuit against the trustee to compel the trustee to take specified actions. The trust agreement expressly limits a trust unitholder's ability to directly sue SandRidge or any other party other than the trustee. As a result, trust unitholders will not be able to sue SandRidge or any future owner of the Underlying Properties to enforce the trust's rights under the conveyances. Furthermore, the royalty interest conveyances provide that, except as set forth in the conveyances, SandRidge will not be liable to the trust for the manner in which it performs its duties in operating the Underlying Properties as long as it acts in good faith and, to the fullest extent permitted by law, will owe no fiduciary duties to the trust or the unitholders.

         Courts outside of Delaware may not recognize the limited liability of the trust unitholders provided under Delaware law.

        Under the Delaware Statutory Trust Act, trust unitholders will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit under the General Corporation Law of the State of Delaware. No assurance can be given, however, that the courts in jurisdictions outside of Delaware will give effect to such limitation.

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         SandRidge may sell trust units in the public or private markets, and such sales could have an adverse impact on the trading price of the common units.

        After the closing of the offering, SandRidge will hold an aggregate of 9,375,000 common units and 13,125,000 subordinated units. All of the subordinated units will automatically convert into common units at the end of the subordination period. SandRidge has agreed not to sell any trust units for a period of 180 days after the date of this prospectus without the consent of Morgan Stanley & Co. LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC and Wells Fargo Securities, LLC, acting as representatives of the several underwriters. See "Trust Units Eligible for Future Sale—SandRidge Lock-up Agreement." After such period, SandRidge may sell trust units in the public or private markets, and any such sales could have an adverse impact on the price of the common units or on any trading market that may develop. The trust has granted registration rights to SandRidge, which, if exercised, would facilitate sales of common units by SandRidge to the public. See "Trust Units Eligible for Future Sale—Registration Rights Agreement."

         Conflicts of interest could arise between SandRidge and the trust unitholders.

        As a working interest owner in the Underlying Properties, SandRidge could have interests that conflict with the interests of the trust and the trust unitholders. For example:

    Notwithstanding its drilling obligation to the trust, SandRidge's interests may conflict with those of the trust and the trust unitholders in situations involving the development, maintenance, operation or abandonment of the Underlying Properties. Additionally, SandRidge may, consistent with its obligation to act as a reasonably prudent operator, abandon a well that is uneconomic, or not generating revenues from production in excess of its operating costs, even though such well is still generating revenue for the trust unitholders. Subsequent to fulfilling its drilling obligation, SandRidge may make decisions with respect to expenditures and decisions to allocate resources on projects in other areas that adversely affect the Underlying Properties, including reducing expenditures on these properties, which could cause oil, natural gas and natural gas liquids production to decline at a faster rate and thereby result in lower cash distributions by the trust in the future.

    SandRidge may sell some or all of the Underlying Properties, subject to its obligation not to sell any property relating to the Development Royalty Interest prior to satisfying its obligation to drill the Development Wells. Such sale may not be in the best interests of the trust unitholders. Any purchaser may lack SandRidge's experience in the Permian Basin or its creditworthiness.

    In connection with the sale by SandRidge of some or all of the Underlying Properties, SandRidge may require the trust to release for sale royalty interests with an aggregate value to the trust of up to $5.0 million during any 12-month period. These releases will be made conditional upon the trust receiving an amount equal to the fair value to the trust of such royalty interests, but will not require the consent of the trust unitholders. See "The Underlying Properties—Sale and Abandonment of the Underlying Properties."

    SandRidge is permitted under the conveyance agreements creating the royalty interests to enter into new processing and transportation contracts without obtaining bids from or otherwise negotiating with any independent third parties, and SandRidge will deduct from the trust's proceeds any charges under such contracts attributable to production from the trust properties. Provisions in the conveyance agreements, however, require that charges under future contracts with affiliates of SandRidge relating to processing or transportation of oil, natural gas and natural gas liquids be comparable to charges prevailing in the area for similar services.

    After expiration of a 180-day lock-up period, SandRidge can sell its units regardless of the effects such sale may have on common unit prices or on the trust itself. Additionally, SandRidge can vote its trust units in its sole discretion.

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        In addition, SandRidge has agreed that, if at any time the trust's cash on hand (including available cash reserves) is not sufficient to pay the trust's ordinary course administrative expenses as they become due, SandRidge will loan funds to the trust necessary to pay such expenses. Any such loan will be on an unsecured basis, and the terms of such loan will be substantially the same as those which would be obtained in an arms' length transaction between SandRidge and an unaffiliated third party. If SandRidge provides such funds to the trust, it would become a creditor of the trust and its interests as a creditor could conflict with the interests of unitholders. Finally, as hedge manager to the trust, SandRidge will have the ability to negotiate the terms of any novation, assignment or transfer of any hedge contract to which it is a party to the trust.

         SandRidge may sell all or a portion of the Underlying Properties, subject to and burdened by the royalty interests, after satisfying its drilling obligation to the trust; any such purchaser could have a weaker financial position and/or be less experienced in oil, natural gas and natural gas liquids development and production than SandRidge.

        You will not be entitled to vote on any sale of the Underlying Properties if the Underlying Properties are sold subject to and burdened by the royalty interests and the trust will not receive any proceeds from any such sale. The purchaser would be responsible for all of SandRidge's obligations relating to the royalty interests on the portion of the Underlying Properties sold, and SandRidge would have no continuing obligation to the trust for those properties. Additionally, SandRidge may enter into farmout or joint venture arrangements with respect to the wells burdened by the trust's royalty interest. Any purchaser, farmout counterparty or joint venture partner could have a weaker financial position and/or be less experienced in oil, natural gas and natural gas liquids development and production than SandRidge.

         SandRidge's ability to satisfy its obligations to the trust depends on its financial position, and in the event of a default by SandRidge in its obligation to drill the Development Wells, or in the event of SandRidge's bankruptcy, it may be expensive and time-consuming for the trust to exercise its remedies.

        Pursuant to the terms of the development agreement, SandRidge will be obligated to drill, or cause to be drilled, the Development Wells at its own expense. SandRidge owns a majority working interest in substantially all of the locations on which it expects to drill the Development Wells, and it expects to operate such wells until completion of its drilling obligation. SandRidge is also the operator of all of the Producing Wells. The conveyances provide that SandRidge will be obligated to market, or cause to be marketed, the oil, natural gas and natural gas liquids production related to the Underlying Properties. Additionally, SandRidge will be the counterparty to the trust's derivatives agreement and will have certain obligations to the trust under the agreement. In the event that SandRidge defaults on its obligation to make payments under the derivatives agreement, the cash distributions to the trust unitholders may be materially reduced as these payments are intended to provide additional cash to the trust during periods of lower oil, natural gas and natural gas liquids prices. Due to the trust's reliance on SandRidge to fulfill these numerous obligations, the value of the trust's royalty interest and its ultimate cash available for distribution will be highly dependent on SandRidge's performance.

        SandRidge's ability to perform these obligations will depend on its future financial condition and economic performance and access to capital, which in turn will depend upon the supply and demand for oil, natural gas and natural gas liquids, prevailing economic conditions and financial, business and other factors, many of which are beyond SandRidge's control. See "SandRidge Energy, Inc." and "Where You Can Find More Information" for additional information relating to SandRidge.

        In the event that SandRidge defaults on its obligation to drill the Development Wells, the trust would be able to foreclose on the Drilling Support Lien to the extent of SandRidge's remaining interests in the undeveloped portions of the AMI. The maximum amount the trust can recover in such a foreclosure action is approximately $295 million, which amount will be reduced proportionately as each Development Well is drilled. There can be no assurance that the value of SandRidge's interests in the undeveloped portions of

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the AMI secured by the Drilling Support Lien will be equal to the amount recoverable at any given time, and such interests may be worth considerably less. The process of foreclosing on such collateral may be expensive and time-consuming and delay the drilling and completion of the Development Wells; such delays and expenses would reduce trust distributions by reducing the amount of proceeds available for distribution. Any amounts actually recovered in a foreclosure action would be applied to completion of SandRidge's drilling obligation, would not result in any distribution to the trust unitholders and may be insufficient to drill the number of wells needed for the trust to realize the full value of the Development Royalty Interest. Furthermore, the trust would have to seek a new party to perform the drilling and operations of the wells. The trust may not be able to find a replacement driller or operator, and it may not be able to enter into a new agreement with such replacement party on favorable terms within a reasonable period of time.

        SandRidge will not be required to maintain a segregated account for proceeds payable to the trust. The proceeds of the royalty interests may be commingled with proceeds of SandRidge's retained interest in the Underlying Properties for the period of time between SandRidge's sale of production attributable to the trust's royalty interests and the quarterly payment to the trust of its share of proceeds. It is possible that the trust may not have adequate facts to trace its entitlement to funds in the commingled pool of funds and that other persons may, in asserting claims against SandRidge's retained interest, be able to assert claims to the proceeds that should be delivered to the trust. If there is an event of default under SandRidge's credit facility, SandRidge must keep its accounts with banks that enter into control agreements with the administrative agent under the credit facility, which would permit the administrative agent to direct payment of funds in such accounts during the pendency of an event of default. In addition, during any bankruptcy of SandRidge, it is possible that payments of the royalties may be delayed or deferred. During the pendency of any SandRidge bankruptcy proceedings, the trust's ability to foreclose on the Drilling Support Lien, and the ability to collect cash payments being held in SandRidge's accounts that are attributable to production from the trust properties, may be stayed by the bankruptcy court. Delay in realizing on the collateral for the Drilling Support Lien is possible, and it cannot be guaranteed that a bankruptcy court would permit such foreclosure. It is possible that the bankruptcy would also delay the execution of a new agreement with another driller or operator. If the trust enters into a new agreement with a drilling or operating partner, the new partner might not achieve the same levels of production or sell oil, natural gas and natural gas liquids at the same prices as SandRidge was able to achieve.

         Oil, natural gas and natural gas liquids wells are subject to operational hazards that can cause substantial losses. SandRidge maintains insurance; however, SandRidge may not be adequately insured for all such hazards.

        There are a variety of operating risks inherent in oil, natural gas and natural gas liquids production and associated activities, such as fires, leaks, explosions, mechanical problems, major equipment failures, blowouts, uncontrollable flow of oil, natural gas and natural gas liquids, water or drilling fluids, casing collapses, abnormally pressurized formations and natural disasters. The occurrence of any of these or similar accidents that temporarily or permanently halt the production and sale of oil, natural gas and natural gas liquids at any of the Underlying Properties will reduce trust distributions by reducing the amount of proceeds available for distribution.

        Additionally, if any of such risks or similar accidents occur, SandRidge could incur substantial losses as a result of injury or loss of life, severe damage or destruction of property, natural resources and equipment, regulatory investigation and penalties and environmental damage and clean-up responsibility. If SandRidge experiences any of these problems, its ability to conduct operations and perform its obligations to the trust could be adversely affected. While SandRidge intends to obtain and maintain insurance coverage it deems appropriate for these risks with respect to the Underlying Properties, SandRidge's operations may result in liabilities exceeding such insurance coverage or liabilities not covered by insurance. If a well is damaged, SandRidge would have no obligation to drill a replacement well or make the trust whole for the loss.

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        For more information on SandRidge's insurance coverage, please see "The Underlying Properties—Insurance."

         SandRidge is subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting its operations or expose SandRidge to significant liabilities.

        SandRidge's oil, natural gas and natural gas liquids exploration, production, transportation and treatment operations are subject to complex and stringent laws and regulations. In order to conduct its operations in compliance with these laws and regulations, SandRidge must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. SandRidge may incur substantial costs in order to maintain compliance with these existing laws and regulations. Further, in light of the explosion and fire on the drilling rig Deepwater Horizon in the Gulf of Mexico, as well as recent incidents involving the release of oil, natural gas and natural gas liquids and fluids as a result of drilling activities in the United States, there has been a variety of regulatory initiatives at the federal and state level to restrict oil, natural gas and natural gas liquids drilling operations in certain locations. Any increased regulation or suspension of oil, natural gas and natural gas liquids exploration and production, or revision or reinterpretation of existing laws and regulations, that arises out of these incidents or otherwise could result in delays and higher operating costs. Such costs or significant delays could have a material adverse effect on SandRidge's business, financial condition and results of operations. SandRidge must also comply with laws and regulations prohibiting fraud and market manipulations in energy markets. To the extent SandRidge is a shipper on interstate pipelines, it must comply with the tariffs of such pipelines and with federal policies related to the use of interstate capacity.

        Laws and regulations governing oil, natural gas and natural gas liquids exploration and production may also affect production levels. SandRidge is required to comply with federal and state laws and regulations governing conservation matters, including provisions related to the unitization or pooling of the oil, natural gas and natural gas liquids properties; the establishment of maximum rates of production from wells; the spacing of wells; and the plugging and abandonment of wells. These and other laws and regulations can limit the amount of oil, natural gas and natural gas liquids SandRidge can produce from its wells, limit the number of wells it can drill, or limit the locations at which it can conduct drilling operations, which in turn could negatively impact trust distributions, estimated and actual future net revenues to the trust and estimates of reserves attributable to the trust's interests.

        New laws or regulations, or changes to existing laws or regulations may unfavorably impact SandRidge, could result in increased operating costs and have a material adverse effect on SandRidge's financial condition and results of operations. For example, Congress is currently considering legislation that, if adopted in its proposed form, would subject companies involved in oil, natural gas and natural gas liquids exploration and production activities to, among other items, additional regulation of and restrictions on hydraulic fracturing of wells, the elimination of most U.S. federal tax incentives and deductions available to oil, natural gas and natural gas liquids exploration and production activities, and the prohibition or additional regulation of private energy commodity derivative and hedging activities.

        Additionally, state and federal regulatory authorities may expand or alter applicable pipeline safety laws and regulations, compliance with which may require increased capital costs on the part of SandRidge and third party downstream oil, natural gas and natural gas liquids transporters. These and other potential regulations could increase SandRidge's operating costs, reduce SandRidge's liquidity, delay SandRidge's operations, increase direct and third party post production costs associated with the trust's interests or otherwise alter the way SandRidge conducts its business, which could have a material adverse effect on SandRidge's financial condition, results of operations and cash flows and which could reduce cash received by or available for distribution, including any amounts paid by SandRidge for transportation on downstream interstate pipelines.

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         The operations of SandRidge are subject to environmental laws and regulations that could adversely affect the cost, manner or feasibility of conducting operations or result in significant costs and liabilities.

        The oil, natural gas and natural gas liquids exploration and production operations of SandRidge in the Permian Basin are subject to stringent and comprehensive federal, state and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may impose numerous obligations that are applicable to SandRidge's operations including the acquisition of a permit before conducting drilling; water withdrawal or waste disposal activities; the restriction of types, quantities and concentration of materials that can be released into the environment; the limitation or prohibition of drilling activities on certain lands lying within wilderness, wetlands and other protected areas; and the imposition of substantial liabilities for pollution resulting from operations. Numerous governmental authorities, such as the U.S. Environmental Protection Agency ("EPA") and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring difficult and costly actions. Failure to comply with these laws and regulations may result in the assessment of administrative, civil or criminal penalties; the imposition of investigatory or remedial obligations; and the issuance of injunctions limiting or preventing some or all of SandRidge's operations.

        There is inherent risk of incurring significant environmental costs and liabilities in the performance of SandRidge's operations due to its handling of petroleum hydrocarbons and wastes, because of air emissions and wastewater discharges related to its operations, and as a result of historical industry operations and waste disposal practices. Under certain environmental laws and regulations, SandRidge could be subject to joint and several strict liability for the removal or remediation of previously released materials or property contamination regardless of whether SandRidge was responsible for the release or contamination or if the operations were in compliance with all applicable laws at the time those actions were taken. Private parties, including the owners of properties upon which SandRidge's wells are drilled and facilities where SandRidge's petroleum hydrocarbons or wastes are taken for reclamation or disposal may also have the right to pursue legal actions to enforce compliance, as well as to seek damages for contamination even in the absence of non-compliance, with environmental laws and regulations or for personal injury or property damage. In addition, the risk of accidental spills or releases could expose SandRidge to significant liabilities that could have a material adverse effect on its financial condition or results of operations. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly construction, drilling, water management, completion, waste handling, storage, transport, disposal or cleanup requirements could require SandRidge to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on its results of operations, competitive position or financial condition. SandRidge may not be able to recover some or any of these costs from insurance. As a result of the increased cost of compliance, SandRidge may decide to discontinue drilling. Additionally, permitting delays may inhibit SandRidge's ability to drill the Development Wells on schedule.

        For more information on the environmental laws and regulations governing SandRidge's operations, please see "The Underlying Properties—Regulation."

         Climate change laws and regulations restricting emissions of "greenhouse gases" could result in increased operating costs and reduced demand for the oil, natural gas and natural gas liquids that SandRidge produces while the physical effects of climate change could disrupt SandRidge's production and cause SandRidge to incur significant costs in preparing for or responding to those effects.

        On December 15, 2009, the EPA published its findings that emissions of carbon dioxide, methane and other greenhouse gases ("GHGs") present a danger to public health and the environment. These findings allow the agency to adopt and implement regulations that restrict emissions of GHGs under existing provisions of the federal Clean Air Act. Accordingly, the EPA has adopted regulations that require a reduction in emissions of GHGs from motor vehicles and also trigger permit review for GHG emissions

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from certain large stationary sources. The EPA's rules relating to emissions of GHGs from large stationary sources of emissions are currently subject to a number of political and legal challenges, but the federal courts have thus far declined to issue any injunctions to prevent EPA from implementing, or requiring state environmental agencies to implement, the rules. In addition, on October 30, 2009, the EPA published a final rule requiring the reporting of GHG emissions from specified large GHG emission sources in the United States, beginning in 2011 for emissions occurring in 2010. On November 30, 2010, the EPA published a final rule that expands its October 2009 final rule on reporting of GHG emissions to require certain owners and operators of onshore oil, natural gas and natural gas liquids production to monitor greenhouse gas emissions beginning in 2011 and to report those emissions beginning in 2012. Both houses of Congress have from time to time considered legislation to reduce emissions of GHGs and almost one-half of the states, either individually or through multi-state regional initiatives, already have begun implementing legal measures to reduce emissions of GHGs. The adoption and implementation of any regulations imposing reporting obligations on, or limiting emissions of GHGs from, SandRidge's equipment and operations could require SandRidge to incur costs to reduce emissions of GHGs associated with its operations or could adversely affect demand for the oil, natural gas and natural gas liquids that it produces. Finally, it should be noted that some scientists have concluded that increasing concentrations of greenhouse gases in the Earth's atmosphere may produce climate change that could have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events; if any such effects were to occur, they could have an adverse effect on SandRidge's assets and operations.

         Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays as well as adversely affect SandRidge's services.

        Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons from tight formations, such as shales. The process involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. The process is typically regulated by state oil and gas commissions. However, the EPA recently asserted federal regulatory authority over certain hydraulic fracturing practices not currently employed by SandRidge in the AMI. At the same time, the EPA has commenced a study of the potential environmental impacts of hydraulic fracturing activities, with initial results of the study anticipated to be available by late 2012 and final results by 2014. Also, for the second consecutive session, legislation has been introduced, but not adopted, in Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the fracturing process. In addition, some states have adopted, and other states are considering adopting, regulations that could restrict hydraulic fracturing in certain circumstances. For instance, in June 2011, Texas adopted a law that requires disclosure to the Railroad Commission of Texas of the additives and other chemicals contained in hydraulic fracturing fluids used in the state, subject to certain trade secret protections. If new laws or regulations that significantly restrict or regulate hydraulic fracturing are adopted, such legal requirements could make it more difficult or costly for SandRidge to perform fracturing to stimulate production from the Permian Basin and thereby affect the determination of whether a well is commercially viable. Restrictions on hydraulic fracturing could also reduce the amount of oil, natural gas and natural gas liquids that SandRidge is ultimately able to produce in commercial quantities from the Underlying Properties.

         The trust will be subject to the requirements of the Sarbanes-Oxley Act of 2002, which may impose cost and operating challenges on it.

        The trust will be subject to certain of the requirements of the Sarbanes-Oxley Act of 2002 which will require, among other things, maintenance by the trust of, and reports regarding the effectiveness of, a system of internal control over financial reporting. Complying with these requirements may pose operational challenges and may cause the trust to incur unanticipated expenses. Any failure by the trust to

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comply with these requirements could lead to a loss of public confidence in the trust's internal controls and in the accuracy of the trust's publicly reported results.

Tax Risks Related to the Units

         The trust's tax treatment depends on its status as a partnership for U.S. federal income tax purposes. If the U.S. Internal Revenue Service ("IRS") were to treat the trust as a corporation for U.S. federal income tax purposes, then its cash available for distribution to unitholders would be substantially reduced.

        The anticipated after-tax economic benefit of an investment in the trust units depends largely on the trust being treated as a partnership for U.S. federal income tax purposes. The trust has not requested, and does not plan to request, a ruling from the Internal Revenue Service, or IRS, on this or any other tax matter affecting it.

        It is possible in certain circumstances for a publicly traded trust otherwise treated as a partnership, such as the trust, to be treated as a corporation for U.S. federal income tax purposes. Although the trust does not believe based upon its current activities that it is so treated, a change in current law could cause it to be treated as a corporation for U.S. federal income tax purposes or otherwise subject it to taxation as an entity.

        If the trust were treated as a corporation for U.S. federal income tax purposes, it would pay federal income tax on its taxable income at the corporate tax rate, which is currently a maximum of 35%. Distributions to you would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits would flow through to you without first being subjected to taxation at the entity level. Because a tax would be imposed upon the trust as a corporation, its cash available for distribution to you would be substantially reduced. Therefore, treatment of the trust as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to the trust unitholders, likely causing a substantial reduction in the value of the trust units.

        The trust agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects the trust to additional amounts of entity-level taxation for state or local income tax purposes, the subordination threshold amounts, incentive threshold amounts and target distribution amounts may be adjusted to reflect the impact of that law on the trust.

         If the trust were subjected to a material amount of additional entity-level taxation by individual states, it would reduce the trust's cash available for distribution to unitholders.

        Changes in current state law may subject the trust to additional entity-level taxation by individual states. Because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. For example, the trust will be required to pay Texas franchise tax each year at a maximum effective rate of .7% of its gross income apportioned to Texas in the prior year. This rate of tax is subject to change by new legislation at any time. Some portion of the revenues will be subject to the Texas franchise tax. Imposition of any similar taxes by any other state may substantially reduce the cash available for distribution to unitholders and, therefore, negatively impact the value of an investment in trust units.

        The trust agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects the trust to additional amounts of entity-level taxation for state or local income tax purposes, the subordination threshold amounts, incentive threshold amounts and target distribution amounts may be adjusted to reflect the impact of that law on the trust.

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         The tax treatment of an investment in trust units could be affected by recent and potential legislative changes, possibly on a retroactive basis.

        The Health Care and Education Reconciliation Act of 2010 includes a provision that, in taxable years beginning after December 31, 2012, subjects an individual having adjusted gross income in excess of $200,000 (or $250,000 for married taxpayers filing joint returns) to an additional "Medicare tax" equal generally to 3.8% of the lesser of such excess or the individual's net investment income, which appears to include interest income and royalty income derived from investments such as the trust units as well as any net gain from the disposition of trust units. In addition, absent new legislation extending the current rates, beginning January 1, 2013, the highest marginal U.S. federal income tax rate applicable to ordinary income and long-term capital gains of individuals will increase to 39.6% and 20%, respectively. Moreover, these rates are subject to change by new legislation at any time.

        Current law may change so as to cause the trust to be treated as a corporation for U.S. federal income tax purposes or otherwise subject the trust to entity-level taxation. Specifically, the present U.S. federal income tax treatment of publicly traded partnerships, including the trust, or an investment in the trust units may be modified by administrative, legislative or judicial interpretation at any time. For example, at the federal level, legislation has been proposed in the past that would have eliminated partnership tax treatment for certain publicly traded partnerships. Although such legislation would not have applied to the trust as it was proposed, it could be reintroduced in a manner that does apply to the trust.

        The trust agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects the trust to taxation as a corporation or otherwise subjects it to entity-level taxation for U.S. federal income tax purposes, the subordination threshold amounts, incentive threshold amounts and target distribution amounts may be adjusted to reflect the impact of that law on the trust.

         The trust will adopt positions that may not conform to all aspects of existing Treasury Regulations. If the IRS contests the tax positions the trust takes, the value of the trust units may be adversely affected, the cost of any IRS contest will reduce the trust's cash available for distribution and income, gain, loss and deduction may be reallocated among trust unitholders.

        If the IRS contests any of the U.S. federal income tax positions the trust takes, the value of the trust units may be adversely affected because the cost of any IRS contest will reduce the trust's cash available for distribution and income, gain, loss and deduction may be reallocated among trust unitholders. For example, the trust will generally prorate its items of income, gain, loss and deduction between transferors and transferees of the trust units each quarter based upon the record ownership of the trust units on the quarterly record date in such quarter instead of on the basis of the date a particular trust unit is transferred. Although simplifying conventions are contemplated by the Internal Revenue Code, and most publicly traded partnerships use similar simplifying conventions, the use of these methods may not be permitted under existing Treasury Regulations.

        The trust has not requested a ruling from the IRS with respect to its treatment as a partnership for U.S. federal income tax purposes or any other matter affecting the trust. The IRS may adopt positions that differ from the conclusions of the trust's counsel expressed in this prospectus or from the positions the trust takes. It may be necessary to resort to administrative or court proceedings to attempt to sustain some or all of the conclusions of the trust's counsel or the positions the trust takes. A court may not agree with some or all of the conclusions of the trust's counsel or positions the trust takes. Any contest with the IRS may materially and adversely impact the market for the trust units and the price at which they trade. In addition, the trust's costs of any contest with the IRS will be borne indirectly by the trust unitholders because the costs will reduce the trust's cash available for distribution.

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         You will be required to pay taxes on your share of the trust's income even if you do not receive any cash distributions from the trust.

        Because the trust unitholders will be treated as partners to whom the trust will allocate taxable income that could be different in amount than the cash the trust distributes, you will be required to pay any federal income taxes and, in some cases, state and local income taxes on your share of the trust's taxable income even if you receive no cash distributions from the trust. You may not receive cash distributions from the trust equal to your share of the trust's taxable income or even equal to the actual tax liability that results from that income.

         Tax gain or loss on the disposition of the trust units could be more or less than expected.

        If you sell your trust units, you will recognize a gain or loss equal to the difference between the amount realized and your tax basis in those trust units. Because distributions in excess of your allocable share of the trust's net taxable income decrease your tax basis in your trust units, the amount, if any, of such prior excess distributions with respect to the trust units you sell will, in effect, become taxable income to you if you sell such trust units at a price greater than your tax basis in those trust units, even if the price you receive is less than your original cost. Furthermore, a substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items, including depletion recapture. Please read "U.S. Federal Income Tax Considerations—Disposition of Trust Units—Recognition of Gain or Loss" for a further discussion of the foregoing.

         The ownership and disposition of trust units by non-U.S. persons may result in adverse tax consequences to them.

        Investment in trust units by non-U.S. persons raises issues unique to them. For example, distributions to non-U.S. persons will be reduced by withholding taxes at the highest applicable effective tax rate, and non-U.S. persons may be required to file U.S. federal income tax returns and pay tax on their share of the trust's taxable income or proceeds from the sale of trust units. If you are a non-U.S. person, you should consult a tax advisor before investing in the trust units.

         The trust will treat each purchaser of trust units as having the same economic attributes without regard to the actual trust units purchased. The IRS may challenge this treatment, which could adversely affect the value of the trust units.

        Due to a number of factors, including the trust's inability to match transferors and transferees of trust units, the trust will adopt positions that may not conform to all aspects of existing Treasury Regulations. A successful IRS challenge to those positions could adversely alter the tax effects of an investment in trust units. It also could affect the timing of tax benefits or the amount of gain from your sale of trust units and could have a negative impact on the value of the trust units or result in audit adjustments to your tax returns. Please read "U.S. Federal Income Tax Considerations—Tax Consequences of Trust Unit Ownership—Section 754 Election."

         The trust will prorate its items of income, gain, loss and deduction between transferors and transferees of the trust units each quarter based upon the record ownership of the trust units on the quarterly record date in such quarter instead of on the basis of the date a particular trust unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among the trust unitholders.

        The trust will generally prorate its items of income, gain, loss and deduction between transferors and transferees of the trust units based upon the record ownership of the trust units on the quarterly record date in such quarter instead of on the basis of the date a particular trust unit is transferred. The use of this proration method may not be permitted under existing Treasury Regulations, and, accordingly, the trust's counsel is unable to opine as to the validity of this method. If the IRS were to challenge the trust's

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proration method, the trust may be required to change its allocation of items of income, gain, loss and deduction among the trust unitholders and the costs to the trust of implementing and reporting under any such changed method may be significant. Please read "U.S. Federal Income Tax Considerations—Disposition of Trust Units—Allocations Between Transferors and Transferees."

         A trust unitholder whose trust units are loaned to a "short seller" to cover a short sale of trust units may be considered as having disposed of those trust units. If so, he would no longer be treated for tax purposes as a partner with respect to those trust units during the period of the loan and may recognize gain or loss from the disposition.

        Because a trust unitholder whose trust units are loaned to a "short seller" to cover a short sale of trust units may be considered as having disposed of the loaned trust units, he may no longer be treated for tax purposes as a partner with respect to those trust units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan to the short seller, any of the trust's income, gain, loss or deduction with respect to those trust units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those trust units could be fully taxable as ordinary income. The trust's counsel has not rendered an opinion regarding the treatment of a unitholder where trust units are loaned to a short seller to cover a short sale of trust units; therefore, trust unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to modify any applicable brokerage account agreements to prohibit their brokers from loaning their trust units.

         The trust will adopt certain valuation methodologies that may affect the income, gain, loss and deduction allocable to the trust unitholders. The IRS may challenge this treatment, which could adversely affect the value of the trust units.

        The U.S. federal income tax consequences of the ownership and disposition of trust units will depend in part on the trust's estimates of the relative fair market values, and the initial tax bases, of the trust's assets. Although the trust may from time to time consult with professional appraisers regarding valuation matters, the trust will make many of the relative fair market value estimates itself. These estimates and determinations of basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value or basis are later found to be incorrect, the character and amount of items of income, gain, loss or deductions previously reported by trust unitholders might change, and trust unitholders might be required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.

         The sale or exchange of 50% or more of the trust's capital and profits interests during any twelve-month period will result in the termination of the trust's partnership status for U.S. federal income tax purposes.

        The trust will be considered to have technically terminated for U.S. federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in its capital and profits within a twelve-month period. For purposes of determining whether the 50% threshold has been met, multiple sales of the same trust unit within any 12 month period will be counted only once. The trust's termination would, among other things, result in the closing of its taxable year for all trust unitholders, which would result in the trust filing two tax returns (and the trust unitholders could receive two Schedules K-1) for one calendar year. The IRS has recently announced a relief procedure whereby if a publicly traded partnership that has technically terminated requests and the IRS grants special relief, among other things, the partnership will be required to provide only a single Schedule K-1 to unitholders for the tax year in which the termination occurs. In the case of a unitholder reporting on a taxable year other than a calendar year ending December 31, the closing of the trust's taxable year may also result in more than 12 months of the trust's taxable income being includable in his taxable income for the year of termination. A technical termination would not affect the trust's classification as a partnership for U.S. federal income tax purposes, but instead, the trust would be treated as a new partnership for tax purposes. If treated as a new partnership, the trust

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must make new tax elections and could be subject to penalties if the trust is unable to determine that a technical termination occurred.

         Certain U.S. federal income tax preferences currently available with respect to oil, natural gas and natural gas liquids production may be eliminated as a result of future legislation.

        Among the proposed changes contained in President Obama's Budget Proposal for Fiscal Year 2012 is the elimination of certain key U.S. federal income tax preferences relating to oil, natural gas and natural gas liquids exploration and production. The President's budget proposes to eliminate certain tax preferences applicable to taxpayers engaged in the exploration or production of natural resources. Specifically, the budget proposes to repeal the deduction for percentage depletion with respect to wells, including perpetual royalty interests in such wells, in which case only cost depletion would be available.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus and the documents incorporated by reference contain forward-looking statements. Such forward-looking statements are based on assumptions and beliefs that the trust and SandRidge believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results can be material, depending upon the circumstances. Where the trust or SandRidge expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. It cannot be assured, however, that the stated expectation or belief will occur or be achieved or accomplished. All statements other than statements of historical facts included or incorporated by reference in this prospectus, including, without limitation, statements regarding the proved oil, natural gas and natural gas liquids reserves associated with the Underlying Properties, the trust's or SandRidge's future financial position, business strategy, budgets, pending acquisitions, recent acquisitions and divestitures, project costs and plans and objectives for future operations, including the information under the heading "Target Distributions and Subordination and Incentive Thresholds," statements pertaining to future development activities and costs, and other statements in this prospectus that are prospective and constitute forward-looking statements are forward-looking statements.

        The words "estimate," "assume," "target," "project," "predict," "believe," "expect," "anticipate," "potential," "could," "may," "foresee," "plan," "goal," "should" and "intend" and similar expressions will generally identify forward-looking statements. Forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany those statements. In addition, neither the trust nor SandRidge undertakes an obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this prospectus.

        With this in mind, you should consider the risks discussed under the heading "Risk Factors" in this prospectus, as well as those contained in SandRidge's Annual Report on Form 10-K for the year ended December 31, 2010 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and other disclosures about SandRidge that are included in or incorporated by reference into this prospectus.

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USE OF PROCEEDS

        The trust is offering all of the common units to be sold in this offering. Assuming no exercise of the underwriters' over-allotment option, the estimated net proceeds of this offering will be approximately $502.6 million, after deducting underwriting discounts and commissions and offering expenses. The trust will deliver all of the net proceeds to one or more of SandRidge's wholly-owned subsidiaries as full consideration for the conveyance of the term royalty interests and, if applicable, as partial consideration for the conveyance of the perpetual royalty interests.

        At the initial closing, 4,500,000 common units will be issued and retained by the trust and will be used to satisfy (if necessary) the over-allotment option granted to the underwriters. If the over-allotment option is exercised, the trust will sell to the underwriters such number of the retained units as is necessary to satisfy the over-allotment option, and will then deliver the net proceeds of such sale, together with any remaining unsold units, to one or more SandRidge subsidiaries as partial consideration for the conveyance of certain of the royalty interests. If the over-allotment option is not exercised by the underwriters, the retained units will be delivered to SandRidge subsidiaries, as partial consideration for the conveyance of certain of the royalty interests, promptly following the 30th day after the initial closing.

        SandRidge intends to use the proceeds received from the offering to repay borrowings under its credit facility and for general corporate purposes, which may include the funding of the drilling obligation. Although SandRidge has no plans to immediately draw down a substantial amount under its credit facility, it expects to draw on the facility from time to time to fund its capital expenditures. As of June 30, 2011, the outstanding balance on SandRidge's credit facility, which matures in 2014, was approximately $80.0 million, and the weighted average interest rate of the credit facility was 2.44%. Borrowings under the credit facility in the past year were incurred by SandRidge for general corporate purposes, including to fund its capital expenditures. Affiliates of Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC, RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC are lenders under the SandRidge credit facility being repaid with the offering proceeds being paid to SandRidge and will therefore receive a portion of the proceeds of the offering.

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SANDRIDGE ENERGY, INC.

        SandRidge is a publicly traded, independent oil and natural gas company concentrating on development and production activities related to the exploitation of its significant holdings in West Texas and the Mid-Continent area of Oklahoma and Kansas. As of July 28, 2011, its market capitalization was approximately $4.8 billion, and as of December 31, 2010 it had total estimated net proved reserves of 545.9 MMBoe. SandRidge has approximately 210,000 net acres in the Permian Basin. SandRidge also owns and operates other interests in the Mississippian Formation, Mid-Continent, Cotton Valley Trend in East Texas, Gulf Coast and Gulf of Mexico. SandRidge also owns and operates gas gathering and processing facilities, CO2 treating and transportation facilities, and drilling rig, oil field service and oil and gas marketing businesses.

        SandRidge's principal executive offices are located at 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102 and its telephone number is (405) 429-5500. Its website is http://www.sandridgeenergy.com.

        The trust units do not represent interests in or obligations of SandRidge.

SandRidge's Experience With Prior Royalty Trusts

        SandRidge has sponsored one prior royalty trust, SandRidge Mississippian Trust I (NYSE: SDT) (the "Mississippian Trust"), a publicly-traded trust that is similar to SandRidge Permian Trust. In connection with the formation of the Mississippian Trust, SandRidge conveyed royalty interests in specified oil and natural gas properties, limited to depths commonly known as the Mississippian formation, located in Alfalfa, Garfield, Grant, Major and Woods Counties in Oklahoma to the Mississippian Trust in exchange for trust units and the net proceeds of the Mississippian Trust's initial public offering. The terms of the royalty interests being conveyed in connection with the formation of SandRidge Permian Trust are similar to those of the royalty interests that were conveyed to the Mississippian Trust.

        The Mississippian Trust completed its initial public offering on April 12, 2011. The net proceeds to the Mississippian Trust, before offering expenses of approximately $2.6 million, were approximately $338.7 million, and were delivered to SandRidge as partial consideration for the conveyance of royalty interests to the Mississippian Trust.

        SandRidge owns 3,750,000 common units and 7,000,000 subordinated units in the Mississippian Trust, together representing an approximately 38.4% beneficial interest in the Mississippian Trust.

        The Mississippian Trust makes quarterly cash distributions of substantially all of its cash receipts, after deducting the trust's administrative expenses, on or about 60 days following the completion of each quarter through (and including) the quarter ending December 31, 2030. On July 22, 2011, the Mississippian Trust declared a cash distribution of approximately $1.07 per unit covering production for the period from January 1, 2011 to May 31, 2011 for record holders as of August 15, 2011. The distribution will be paid on or about August 30, 2011.

        Under a development agreement, SandRidge is obligated to drill, or cause to be drilled, a total of 123 development wells by December 31, 2014, the production from which will be subject to the royalty interests. In the event of delays, SandRidge will have until December 31, 2015 to fulfill its drilling obligation. A wholly owned subsidiary of SandRidge has granted to the Mississippian Trust a lien covering its interest in the area of mutual interest in which the trust underlying properties are located in order to secure the estimated amount of the drilling costs for the Mississippian Trust's interests in the undeveloped underlying properties (the "Drilling Support Lien"). The amount obtained by the Mississippian Trust pursuant to the Drilling Support Lien may not exceed $166.1 million. As SandRidge fulfills its drilling obligation over time, the total amount that may be recovered will be proportionately reduced and the completed development wells will be released from the lien. As of June 30, 2011, seven development wells had been drilled and the maximum amount recoverable under the Drilling Support Lien had been reduced to $156.6 million.

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        Under an administrative services agreement, the Mississippian Trust is required to pay SandRidge an annual administrative services fee of $200,000 for accounting, tax preparation, bookkeeping and informational services to be performed by SandRidge on behalf of the Mississippian Trust. The Mississippian Trust is also party to a derivatives agreement with SandRidge that provides the Mississippian Trust with the benefit of certain oil and natural gas derivative contracts previously entered into by SandRidge with third parties. The underlying commodity derivative contracts cover volumes of oil and natural gas production through December 31, 2015. Under this arrangement, SandRidge will pay the Mississippian Trust amounts it receives from its counterparties in accordance with the underlying contracts, and the Mississippian Trust will pay SandRidge any amounts that SandRidge is required to pay its counterparties under such contracts.

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THE TRUST

        The trust is a statutory trust created under the Delaware Statutory Trust Act in May 2011. The business and affairs of the trust will be managed by The Bank of New York Mellon Trust Company, N.A., as trustee. In addition, the Corporation Trust Company will act as Delaware trustee of the trust. The Delaware trustee will have only minimal rights and duties as are necessary to satisfy the requirements of having a trustee in Delaware who will accept service of process on the trust under the Delaware Statutory Trust Act. Although SandRidge will operate substantially all of the Underlying Properties, SandRidge will have no ability to manage or influence the management of the trust (except through its limited voting rights as a holder of trust units and its limited ability to manage the hedging program) and, to the fullest extent permitted by law, will owe no fiduciary duties to the trust or the unitholders.

        The trustee can authorize the trust to borrow money to pay trust administrative or incidental expenses that exceed cash held by the trust. The trustee may authorize the trust to borrow from the trustee as a lender provided the terms of the loan are fair to the trust unitholders. The trustee may also deposit funds awaiting distribution in an account with itself, if the interest paid to the trust at least equals amounts paid by the trustee on similar deposits, and make other short term investments with the funds distributed to the trust. The trustee may also hold funds awaiting distribution in a non-interest bearing account.

        The trust will be responsible for paying all legal, accounting, tax advisory, engineering, printing costs and other administrative and out-of-pocket expenses incurred by or at the direction of the trustee or the Delaware trustee, including tax return and Schedule K-1 preparation and mailing costs, independent auditor fees and registrar and transfer agent fees. The trust will also be responsible for any payment obligations under the hedging arrangements and expenses incurred as a result of being a publicly traded entity, including costs associated with annual and quarterly reports to unitholders. These trust administrative expenses are anticipated to aggregate approximately $1.3 million per year, although such costs could be greater or less depending on future events that cannot be predicted. Included in the annual estimate is an annual administrative fee of $150,000 for the trustee, which may be adjusted beginning on April 1, 2017 as provided in the trust agreement, an annual administrative fee of $2,400 for the Delaware trustee, an annual fee of $300,000 payable to SandRidge pursuant to the terms of the administrative services agreement and an annual fee of $15,000 payable to the collateral agent under the security instruments in respect of the lien securing the trust's obligations under its direct hedge contracts. The trustee will also receive a one-time acceptance fee of $10,000. These costs will be deducted by the trust before distributions are made to trust unitholders. The trustee intends to withhold $1.0 million from the first distribution to unitholders to establish a cash reserve available to the trustee to pay trust administrative expenses.

Formation Transactions

        At or prior to the closing of the offering, SandRidge will cause to be conveyed to the trust a 80% royalty interest in the Producing Wells and a 70% royalty interest in the Development Wells.

        The 80% royalty interest in the Producing Wells will consist of a term royalty interest entitling the trust to receive 40% of the proceeds from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Producing Wells (after deducting post-production costs and any applicable taxes) for a period of 20 years commencing on April 1, 2011 (the "Term PDP Royalty") and a perpetual royalty interest entitling the trust to receive 40% of the proceeds from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Producing Wells (after deducting post-production costs and any applicable taxes) (the "Perpetual PDP Royalty").

        The 70% royalty interest in the Development Wells will consist of a term royalty interest entitling the trust to receive 35% of the proceeds from the sale of the production of oil, natural gas and natural gas liquids attributable to SandRidge's net revenue interest in the Development Wells (after deducting

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post-production costs and any applicable taxes) for a period of 20 years commencing on April 1, 2011 (the "Term Development Royalty") and a perpetual royalty interest entitling the trust to receive 35% of the proceeds from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Development Wells (after deducting post-production costs and any applicable taxes) (the "Perpetual Development Royalty").

        The Term PDP Royalty and the Term Development Royalty are collectively referred to as the "Term Royalties," while the Perpetual PDP Royalty and the Perpetual Development Royalty are collectively referred to as the "Perpetual Royalties." The Perpetual Royalties will be conveyed directly from SandRidge E&P to the trust. The Term Royalties will be conveyed from SandRidge E&P to another wholly owned subsidiary of SandRidge ("Term Royalty Subsidiary") in exchange for a demand note in a principal amount expected to be a significant portion of the net proceeds of the offering, and then assigned from that subsidiary to the trust. In exchange for the Perpetual Royalties, the trust will issue to SandRidge E&P, 9,375,000 common units and 13,125,000 subordinated units. In exchange for the Term Royalties, the trust will pay a significant portion of the net proceeds of this offering to the Term Royalty Subsidiary, and the Term Royalty Subsidiary will use such proceeds to repay the demand note to SandRidge E&P. Any proceeds not paid to the Term Royalty Subsidiary will be paid to SandRidge E&P, as additional consideration for the conveyance of the Perpetual Royalties. See "Use of Proceeds."

        4,500,000 common units will be issued and retained by the trust at the initial closing, to be used to satisfy (if necessary) the over-allotment option granted to the underwriters. If the over-allotment option is exercised, the trust will sell to the underwriters such number of the retained units as is necessary to satisfy the over-allotment option, and will then deliver the net proceeds of such sale, together with any remaining unsold units, to one or more SandRidge subsidiaries as partial consideration for the conveyance of the Perpetual Royalties. If the over-allotment option is not exercised by the underwriters, the retained units will be delivered to SandRidge subsidiaries, as partial consideration for the conveyance of the Perpetual Royalties, promptly following the 30th day after the initial closing.

        The trust will sell the 30,000,000 common units offered hereby to the public, representing a 57% interest in the trust.

        SandRidge and the trust will enter into several agreements in connection with the conveyance of the royalty interests, including: (1) a development agreement, which sets forth SandRidge's drilling obligation to the trust with respect to the Development Wells, (2) a derivatives agreement, pursuant to which SandRidge will provide the trust with the effect of certain hedge contracts entered into between SandRidge and third parties, (3) an administrative services agreement, which outlines SandRidge's duty to provide administrative services to the trust, (4) the Drilling Support Lien and (5) a registration rights agreement, which is described under "Trust Units Eligible For Resale—Registration Rights Agreement." These agreements are described in more detail below.

Termination Date; Liquidation

        The trust will dissolve and begin to liquidate on the Termination Date, which is March 31, 2031, and will soon thereafter wind up its affairs and terminate. At the Termination Date, the Term Royalties will automatically revert to SandRidge, while the Perpetual Royalties will be sold and the proceeds will be distributed to the unitholders at the Termination Date or soon thereafter, but only after the trust has paid, or made reasonable provision for payment of, all liabilities of the trust. See "Description of the Royalty Interests—Sale of the Perpetual Royalties." Any additional cash held in reserve by the trustee will also be distributed to unitholders.

Development Agreement and Drilling Support Lien

        In connection with the closing of this offering, the trust will enter into a development agreement with SandRidge and SandRidge E&P that will obligate SandRidge to drill, or cause to be drilled, all of the

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Development Wells on or before March 31, 2015. In the event of delays, SandRidge will have until March 31, 2016 to fulfill its drilling obligation. SandRidge may rely on third-party operators to fulfill a portion of its drilling obligation. In order to secure the estimated amount of the drilling costs for the trust's interests in the Development Wells, SandRidge E&P will grant to the trust the Drilling Support Lien, covering SandRidge E&P's interest in the AMI (except the Producing Wells and any other wells that are already producing and not subject to the royalty interests). The amount obtained by the trust pursuant to the Drilling Support Lien may not exceed approximately $295 million. As SandRidge fulfills its drilling obligation over time, the total dollar amount that may be recovered will be proportionately reduced and the completed Development Wells will be released from the lien.

        Under the development agreement, SandRidge will be credited for drilling one full Development Well if the well is drilled and completed in the Grayburg/San Andres formation and SandRidge's net revenue interest in the well is equal to 69.3%. For a well in which SandRidge has a net revenue interest greater than or less than 69.3%, SandRidge will receive credit for such well in the proportion that its net revenue interest in the well bears to 69.3%. For example, if SandRidge drilled a well in which it has a 86.6% net revenue interest, such well would count for purposes of the development agreement as 1.25 Development Wells (i.e., 86.6% / 69.3%).

        Horizontal Wells.    Although SandRidge expects to satisfy its drilling obligation by drilling vertical wells, it may drill horizontal wells in the future, once certain criteria are achieved. Under the development agreement, SandRidge will be able to drill horizontal wells to satisfy its drilling obligation to the trust after five horizontal wells have been, subsequent to this offering, drilled and completed in the Grayburg/San Andres formation in the greater Fuhrman-Mascho field area (whether by SandRidge or any other operators). The initial five horizontal wells are intended to demonstrate the viability of drilling horizontal wells in the AMI, an area in which horizontal drilling and completion techniques have not previously been utilized. None of any such initial five horizontal wells that are drilled by SandRidge would count as Development Wells for purposes of the development agreement. If such initial five horizontal wells have been drilled and completed, SandRidge may, at its option, drill, or cause to be drilled, horizontal wells that will count toward the satisfaction of its drilling obligation to the trust. SandRidge is not required to drill any horizontal wells for the trust. If SandRidge chooses to drill horizontal wells to fulfill its drilling obligation, it will receive credit under the development agreement for horizontal Development Wells based on the proportion that SandRidge's net revenue interest in a horizontal Development Well bears to 69.3% and based on a ratio of capital costs for such horizontal wells compared to historical drilling costs. For the first ten horizontal Development Wells that SandRidge drills and completes in the Grayburg/San Andres formation, this ratio will be calculated using the proportion that the capital cost required to drill and complete such well bears to the average drilling and completion cost per well of the most recent 20 vertical Development Wells. For example, if SandRidge drilled, or caused to be drilled, a horizontal Development Well in which it had a 69.3% net revenue interest, and such well cost $2.0 million to drill and complete relative to an average drilling and completion cost of $.5 million per well for the most recent 20 vertical Development Wells completed at the time the first horizontal Development Well was completed, then such horizontal well would count for purposes of the development agreement as four Development Wells (i.e., (69.3% / 69.3%) × ($2.0 million / $.5 million)).

        After the first ten horizontal Development Wells that SandRidge drills, or causes to be drilled, are completed, this ratio will be fixed for all additional horizontal wells it drills and completes in the Grayburg/San Andres formation based on the costs of the first ten horizontal Development Wells. This fixed ratio (the "CapEx Ratio") will be calculated by dividing (1) the average capital cost spent per well to drill and complete the first ten horizontal Development Wells by (2) the average capital cost spent per well to drill and complete the 20 vertical Development Wells most recently completed at the time the first horizontal Development Well was completed. Credit would be given to SandRidge for each horizontal Development Well completed based on the CapEx Ratio and the proportion that SandRidge's net revenue interest in such well bears to 69.3%. For example, if SandRidge drilled, or caused to be drilled, a horizontal

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Development Well in which it had a 69.3% net revenue interest and the CapEx Ratio was equal to four, such well would count for purposes of the development agreement as four Development Wells (i.e., 4.0 × (69.3% / 69.3%)).

        Additional Provisions.    In drilling and completing the Development Wells, SandRidge is required to adhere to a reasonably prudent operator standard, which requires that it act with respect to the Underlying Properties as it would act with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. For example, SandRidge is required to complete and equip each Development Well that reasonably appears to SandRidge to be capable of producing oil, natural gas and natural gas liquids in quantities sufficient to pay completion, equipping and operating costs.

        The proved undeveloped reserves reflected in the reserve report assume that SandRidge will drill and complete the 888 Development Wells with the same completion technique, and bearing the same capital and other costs, as the 509 Producing Wells, all of which were drilled and completed as vertical wells. The trust will not bear any of the costs of drilling and completing the Development Wells that SandRidge drills or causes to be drilled.

        SandRidge may drill up to five horizontal wells to test the results of horizontal drilling in the AMI, but is not required to do so. The trust would not own any interests in such test horizontal wells and such wells would not count toward SandRidge's drilling obligation. Otherwise, SandRidge will covenant and agree not to drill and complete, and will not permit any other person within its control to drill and complete, any well in the AMI other than a Development Well until such time as SandRidge has met its commitment to drill the Development Wells. Once SandRidge has completed its drilling obligation, the trustee will be required to release the Drilling Support Lien in full. Upon the trustee's release of the Drilling Support Lien, SandRidge will further agree not to drill and complete, and will not permit any other person within its control to drill and complete, any well that will have a perforation that will be within 170 feet of any perforation of any Development Well or Producing Well.

        Given that SandRidge's actual net revenue interest in each Development Well may be greater than or less than 69.3%, and that SandRidge may drill and complete horizontal wells in order to fulfill its drilling obligation, SandRidge may be required to drill more or less than 888 gross wells in order to fulfill its drilling obligation.

Hedging Arrangements

        Hedging arrangements covering a portion of expected production will be implemented by the trust in two ways. First, SandRidge will enter into a derivatives agreement with the trust to provide the trust with the effect of specified hedge contracts entered into between SandRidge and third parties. Under the derivatives agreement, SandRidge will pay the trust amounts it receives from its hedge counterparties, and the trust will pay SandRidge any amounts that SandRidge is required to pay such counterparties. Second, the trust will enter into hedge contracts directly with unaffiliated hedge counterparties. As a party to these contracts, the trust will receive payments directly from its counterparties, and be required to pay any amounts owed directly to its counterparties. Under the derivatives agreement, as Development Wells are drilled, SandRidge will have the right to assign or novate to the trust any of the SandRidge-provided hedges, or to replace them with hedges executed by the trust directly with counterparties, as long as the hedging effects of the assigned or replacement hedges are economically equivalent to the hedging effects of the SandRidge-provided hedges, the counterparties to the assigned or replacement hedges have a corporate credit rating equal to or better than A/A2 as rated by Standard and Poor's or Moody's and the counterparties to the existing hedges approve.

        The trust's counterparty under the derivatives agreement is SandRidge, whose hedge counterparties will be institutions with corporate credit ratings equal to or better than A/A2, including Morgan Stanley Capital Group Inc., J. Aron & Company, an affiliate of Goldman, Sachs & Co., and Barclays Bank PLC. The counterparties to the trust's direct hedging contracts will also be institutions with corporate credit

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ratings of at least A/A2, including Morgan Stanley Capital Group Inc., J. Aron & Company, an affiliate of Goldman, Sachs & Co., and Barclays Bank PLC. In the event that one or more counterparties to the trust's hedging arrangements default on their obligations to make payments under such arrangements, the cash distributions to the trust unitholders could be materially reduced as the hedge payments are intended to provide additional cash to the trust during periods of lower oil and natural gas prices. SandRidge will not be required to pay the trust to the extent of payment defaults by SandRidge's hedge contract counterparties. SandRidge will also have authority, in its role as hedge manager to the trust, to terminate, restructure or otherwise modify a portion of the trust's hedge contracts to the extent that SandRidge reasonably determines that the volumes hedged under such portion of the contracts exceed, or are expected to exceed, estimated production attributable to the trust's royalty interests over the periods hedged. Except in the limited circumstances involving the restructuring of an existing hedge, the trust will not have the ability to enter into additional hedges on its own and, accordingly, after the expiration of the hedging arrangements in March 31, 2015, there will be no hedges going forward. For more information on SandRidge's role as hedge manager for the trust, please see "—Administrative Services Agreement."

        The trust's obligations to the counterparties under its direct hedge contracts will be secured by a first priority lien on the trust's existing and future royalty interest in the Underlying Properties. In addition, the trust's direct hedge contracts will contain a prohibition on the trust granting additional liens on its existing and future royalty interest in the Underlying Properties, other than customary permitted liens and liens in favor of the trustee.

        Under the combined hedging arrangements, approximately 73% of the expected production and 79% of the expected revenues upon which the target distributions are based from August 1, 2011 through March 31, 2015 will be hedged. All of the hedge contracts relate to oil production. Expressed in terms of oil production alone, approximately 84% of the estimated oil production from August 1, 2011 through March 31, 2015, will be hedged. The remaining estimated production of oil during that time, all production of natural gas and natural gas liquids during that time, and all production after such time will not be hedged.

        The following table illustrates the type of contract, notional amount and weighted average fixed price or collar range for the oil hedge contracts that the trust will enter into directly or that SandRidge will pass through to the trust under the derivatives agreement.

Period and Type of Contract
  Notional
Amount
(Bbls/d)
  Weighted
Average
Fixed Price
 

August 1, 2011 to December 31, 2011

    2,714   $ 99.80  

January 1, 2012 to December 31, 2012

    3,151     102.20  

January 1, 2013 to December 31, 2013

    3,530     102.84  

January 1, 2014 to December 31, 2014

    3,867     101.75  

January 1, 2015 to March 31, 2015

    3,373     100.90  

Administrative Services Agreement

        In connection with the closing of this offering, the trust will enter into an administrative services agreement with SandRidge pursuant to which SandRidge will provide the trust with certain accounting, tax preparation, bookkeeping and informational services related to the royalty interests and the registration rights agreement.

        Additionally, the administrative services agreement will designate SandRidge as the trust's hedge manager, pursuant to which SandRidge will have authority to administer the hedge contracts underlying the derivatives agreement, and, on behalf of the trust, to administer the trust's direct hedge contracts. As hedge manager, SandRidge will also have authority, in its discretion, to terminate, restructure or otherwise modify any or all of such hedge contracts to the extent that SandRidge reasonably determines that the volumes hedged under such contracts exceed, or are expected to exceed, estimated production attributable

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to the trust's royalty interests over the periods hedged. SandRidge will be required to use commercially reasonable efforts to effect such modifications to the hedge contracts in a manner that is cash neutral to the trust, for example, by resetting hedge prices and/or allocating a portion of hedged volumes over an extended period. However, in fulfilling its role as hedge manager, SandRidge will not act as a fiduciary for the trust, will have no affirmative duty to modify any of the trust's hedges, and will have no liability to the trust in connection with SandRidge's failure to modify, or any affirmative modification of, any of the trust's hedges. Moreover, SandRidge will be indemnified by the trust for any actions it takes in this regard.

        In return for the services provided by SandRidge to the trust under the administrative services agreement, the trust will pay SandRidge, on a quarterly basis, a total annual fee of $300,000. SandRidge will also be entitled to receive reimbursement for its actual out-of-pocket fees, costs and expenses incurred in connection with the provision of any of the services under the agreement.

        The administrative services agreement will terminate upon the earliest to occur of: (a) the date the trust shall have dissolved and commenced winding up in accordance with the trust agreement, (b) the date that all of the royalty interests have been terminated or are no longer held by the trust, (c) with respect to services to be provided with respect to any Underlying Properties being transferred by SandRidge, the date that either SandRidge or the trustee may designate by delivering 90-days prior written notice, provided that SandRidge's drilling obligation has been completed and the transferee of such Underlying Properties assumes responsibility to perform the services in place of SandRidge and (d) a date mutually agreed by SandRidge and the trustee.

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TARGET DISTRIBUTIONS AND SUBORDINATION AND INCENTIVE THRESHOLDS

        SandRidge will convey to the trust royalty interests in specified oil, natural gas and natural gas liquids properties in the AMI. The PDP Royalty Interest will entitle the trust to receive 80% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Producing Wells for a period of 20 years commencing on April 1, 2011. The Development Royalty Interest will entitle the trust to receive 70% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of future production of oil, natural gas and natural gas liquids attributable to SandRidge's net revenue interest in the Development Wells for a period of 20 years commencing on April 1, 2011.

        The amount of trust revenues and cash distributions to trust unitholders will depend on:

    the timing of initial production from the Development Wells;

    oil, natural gas and natural gas liquids prices received;

    the volume of oil, natural gas and natural gas liquids produced and sold;

    amounts realized and paid under hedging arrangements;

    post-production costs and any applicable taxes; and

    the trust's general and administrative expenses.

        SandRidge has calculated quarterly target levels of cash distributions for the life of the trust. Such target distribution levels are set forth on Annex B to this prospectus. The target distributions were prepared by SandRidge on a cash basis based on assumptions of production volumes, pricing and other assumptions that are described below in "—Significant Assumptions Used to Calculate the Target Distributions." The production forecasts are estimates prepared by Netherland Sewell and have been used to calculate target distributions. Actual cash distributions may vary from those presented. SandRidge will pay to the trust each quarter an amount equal to the trust's royalty interest in the proceeds of production from the Underlying Properties received during the calendar quarter most recently ended (after deducting post-production costs and any applicable taxes). The trust, in turn, will make quarterly cash distributions of substantially all of its quarterly cash receipts, after deduction of fees and expenses for the administration of the trust, to holders of trust units.

        The first distribution, which will cover the second and third quarters of 2011, is expected to be made on or about November 30, 2011 to record unitholders as of November 15, 2011. The trustee intends to withhold $1.0 million from the first distribution to establish a cash reserve available to pay trust administrative expenses. If the trustee uses such cash reserve to pay for trust administrative expenses, the reserve must be replenished before any further quarterly distributions are made to trust unitholders. Due to the timing of the payment of production proceeds to the trust, the trust expects that the first distribution will include sales for oil, natural gas and natural gas liquids for five months. Thereafter, quarterly distributions will generally include royalties on sales of oil, natural gas and natural gas liquids for three months, including the first two months of the quarter just ended as well as the last month of the immediately preceding quarter. Because payments to the trust will be generated by depleting assets and production from the Underlying Properties will diminish over time, a portion of each distribution will represent a return of your original investment.

        In order to provide support for cash distributions on the common units, SandRidge has agreed to subordinate 13,125,000 of the trust units it will retain following this offering, which will constitute 25% of the total trust units outstanding. The subordinated units will be entitled to receive pro rata distributions from the trust if and to the extent there is sufficient cash to provide a cash distribution on the common units that is no less than the applicable quarterly subordination threshold. If there is not sufficient cash to

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fund such a distribution on all trust units, the distribution to be made with respect to the subordinated units will be reduced or eliminated in order to make a distribution, to the extent possible, of up to the subordination threshold amount on the common units. Each applicable quarterly subordination threshold is 20% below the target distribution level for the corresponding quarter, as reflected on Annex B. In exchange for agreeing to subordinate these trust units, and in order to provide additional financial incentive to SandRidge to perform its drilling obligation and operations on the Underlying Properties in an efficient and cost-effective manner, SandRidge will be entitled to receive incentive distributions equal to 50% of the amount by which the cash available for distribution on all of the trust units in any quarter during the subordination period exceeds the target distribution for such quarter by more than 20%. SandRidge's right to receive incentive distributions will terminate upon the expiration of the subordination period.

        The subordinated units will automatically convert into common units on a one-for-one basis and SandRidge's right to receive incentive distributions will terminate at the end of the fourth full calendar quarter following SandRidge's satisfaction of its drilling obligation to the trust. SandRidge currently expects that it will complete its drilling obligation on or before March 31, 2015 and that, accordingly, the subordinated units would convert into common units on or before March 31, 2016. In the event of delays, SandRidge will have until March 31, 2016 under the development agreement to drill all the Development Wells, in which event the subordinated units would convert into common units on or before March 31, 2017.

        SandRidge's management has prepared the prospective financial information set forth below to present the target distributions to the holders of the trust units based on the estimates and assumptions described below. The accompanying prospective financial information was not prepared with a view toward complying with the guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants with respect to preparation and presentation of prospective financial information. More specifically, such information omits items that are not relevant to the trust, such as changes in financial position, an earnings per unit measure and certain non-cash expenses for depreciation, depletion and amortization used to arrive at a GAAP net income measure. SandRidge's management believes the prospective financial information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of the royalty interests. However, this information is based on estimates and judgments, and readers of this prospectus are cautioned not to place undue reliance on the prospective financial information.

        The prospective financial information included in this prospectus has been prepared by, and is the responsibility of, SandRidge's management. Neither PricewaterhouseCoopers LLP, the trust's and SandRidge's independent registered public accountant, nor Hansen Barnett & Maxwell, P.C., Arena Resources, Inc.'s independent registered public accountant, has examined, compiled or performed any procedures with respect to the accompanying prospective financial information and, accordingly, neither PricewaterhouseCoopers LLP nor Hansen Barnett & Maxwell, P.C. expresses an opinion or any other form of assurance with respect thereto. The reports of PricewaterhouseCoopers LLP included in this prospectus relate to the Statement of Assets and Trust Corpus of the trust and the historical Statements of Revenues and Direct Operating Expenses of the Arena Properties, and the report of Hansen Barnett & Maxwell, P.C. included in this prospectus relates to the historical consolidated financial statements of Arena Resources, Inc. The foregoing reports do not extend to the prospective financial information and should not be read to do so.

        The following table sets forth the target distributions and subordination and incentive thresholds for each calendar quarter through the first quarter of 2017. The effective date of the conveyance of the royalty interests is April 1, 2011, which means that the trust will receive credit for the proceeds of production

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attributable to the royalty interests from that date even though the trust properties will not be conveyed to the trust until the closing of this offering.

Period
  Subordination
Threshold(1)
  Target
Distribution
  Incentive
Threshold(1)
 
 
  (per unit)
 

2011:

                   

Second and Third Quarters(2)

  $ .53   $ .66   $ .79  

Fourth Quarter

    .39     .49     .59  

2012:

                   

First Quarter

    .42     .53     .63  

Second Quarter

    .44     .55     .66  

Third Quarter

    .47     .58     .70  

Fourth Quarter

    .49     .62     .74  

2013:

                   

First Quarter

    .51     .64     .77  

Second Quarter

    .53     .66     .80  

Third Quarter

    .56     .70     .84  

Fourth Quarter

    .58     .73     .87  

2014:

                   

First Quarter

    .61     .76     .91  

Second Quarter

    .63     .79     .95  

Third Quarter

    .65     .82     .98  

Fourth Quarter

    .66     .82     .98  

2015:

                   

First Quarter

    .64     .80     .96  

Second Quarter

    .61     .77     .92  

Third Quarter

    .56     .70     .85  

Fourth Quarter

    .54     .68     .81  

2016:

                   

First Quarter

    .53     .67     .80  

Second Quarter

    .52     .65     .78  

Third Quarter

    .51     .64     .77  

Fourth Quarter

    .50     .63     .75  

2017:

                   

First Quarter

    .49     .61     .74  

(1)
The subordination and incentive thresholds terminate after the fourth full calendar quarter following SandRidge's completion of its drilling obligation.

(2)
Includes proceeds attributable to the first five months of production from April 1, 2011 to August 31, 2011, and gives effect to $1.0 million of reserves for general and administrative expenses withheld by the trustee and additional administrative costs relating to the formation of the trust.

        SandRidge has prepared the operational and financial information set forth above and below in order to present the target distributions attributable to the oil, natural gas and natural gas liquids sales volumes reflected in the reserve report attached hereto as Annex A. The target distributions, in the view of SandRidge's management, were prepared on a reasonable basis based on the assumptions outlined in "—Significant Assumptions Used to Calculate the Target Distributions."

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        The operational and financial targets outlined below should not be relied upon as being necessarily indicative of future results. Neither SandRidge nor the trust undertakes any obligation to update the financial forecast to reflect events or circumstances after the date of this prospectus and readers of this prospectus are cautioned not to place undue reliance on this financial information.

        The projections and assumptions on which they are based are subject to significant uncertainties, many of which are beyond the control of SandRidge and the trust. Actual cash distributions to trust unitholders, therefore, could vary significantly based upon events or conditions occurring that are different from the events or conditions assumed to occur for purposes of these operational and financial targets.

        Cash distributions to trust unitholders will be particularly sensitive to fluctuations in oil, natural gas and natural gas liquids prices and production volumes. See "—Sensitivity of Target Distributions to Oil, Natural Gas and Natural Gas Liquids Prices and Volumes," which shows estimated effects to cash distributions through June 30, 2012 from changes in assumed realized oil, natural gas and natural gas liquids prices as well as changes in estimated production volumes. As a result of typical production declines for oil, natural gas and natural gas liquids properties, production estimates generally decrease from year to year. However, the production estimates included in the table below reflect that these declines are expected to be offset by additional production from Development Wells as they are completed and begin to produce. The timing of the completion of, and the amount of production attributable to, the Development Wells are substantially dependent on SandRidge executing its drilling plans with respect to the drilling and completion of the Development Wells in a manner substantially similar to those underlying the assumptions used in establishing these target distributions. In addition, the completion of SandRidge's drilling obligation will depend, in part, on the completion of drilling for certain Development Wells by third parties, over whom SandRidge has no control, in a manner consistent with the assumptions used in establishing these target distributions. Please see "Risk Factors" for risks relating to the timing of drilling and amount of production attributable to the Development Wells. As a result of these factors, the target distributions shown in the tables below are not necessarily indicative of distributions for future years.

        Because payments to the trust will be generated by depleting assets and production from the Underlying Properties will diminish over time, a portion of each distribution will represent a return of your original investment. See "Risk Factors—The oil, natural gas and natural gas liquids reserves estimated to be attributable to the Underlying Properties of the trust are depleting assets and production from those reserves will diminish over time. Furthermore, the trust is precluded from acquiring other oil and gas properties or royalty interests to replace the depleting assets and production."

        The table below presents the calculation of the target distributions for each quarter through and including the quarter ending June 30, 2012. On a pro forma basis, the trust's distributable income was

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$60.7 million ($1.16 per unit) for the year ended December 31, 2010, and $19.7 million ($0.37 per unit) for the three months ended March 31, 2011. See "Unaudited Pro Forma Financial Information."

 
  September 30,
2011(1)
  December 31,
2011
  March 31,
2012
  June 30,
2012
 
 
  (In thousands, except volumetric and per unit data)
 

Estimated production from trust properties

                         
 

Oil sales volumes (MBbl)

    384     278     294     306  
 

Natural gas sales volumes (MMcf)

    107     74     78     80  
 

Natural gas liquids volumes (MBbl)

    40     29     30     32  
 

Total sales volumes (MBoe)

   
441
   
319
   
337
   
351
 
   

% Proved developed producing (PDP) sales volumes

    88 %   57 %   48 %   42 %
   

% Proved undeveloped (PUD) sales volumes

    12 %   43 %   52 %   58 %
   

% Oil volumes

   
87

%
 
87

%
 
87

%
 
87

%
   

% Natural gas volumes

    4 %   4 %   4 %   4 %
   

% Natural gas liquids volumes

    9 %   9 %   9 %   9 %

Commodity price and derivative contract positions

                         
 

NYMEX futures price(2)

                         
   

Oil ($/Bbl)

  $ 99.33   $ 98.03   $ 99.48   $ 100.70  
   

Natural gas ($/MMBtu)

  $ 4.40   $ 4.57   $ 4.88   $ 4.81  
   

Natural gas liquids ($/Bbl)

  $ 49.61   $ 49.01   $ 49.74   $ 50.35  
 

Assumed realized weighted unhedged price(3)

                         
   

Oil ($/Bbl)

  $ 95.97   $ 93.76   $ 95.21   $ 96.43  
   

Natural gas ($/Mcf)

    3.17     3.29     3.51     3.46  
   

Natural gas liquids ($/Bbl)

    47.97     47.40     48.10     48.69  
 

Assumed realized weighted hedged price

                         
   

Oil ($/Bbl)

    96.53     95.34     97.04     97.85  
   

Natural gas ($/Mcf)

    3.17     3.29     3.51     3.46  
 

Percent of oil volumes hedged

    98 %(4)   89 %   93 %   95 %
 

Oil hedged price ($/Bbl)

    99.80     99.80     101.46     102.20  
 

Percent of natural gas volumes hedged

    0 %   0 %   0 %   0 %
 

Natural gas hedged price ($/MMBtu)

                 

Estimated cash available for distribution

                         
 

Oil sales revenues

  $ 36,814   $ 26,067   $ 27,982   $ 29,552  
 

Natural gas sales revenues

    338     243     273     279  
 

Natural gas liquids sales revenue

    1,916     1,374     1,463     1,536  
 

Realized gains (losses) from derivative contracts

    215     441     539     436  
   

Operating revenues and realized gains (losses) from derivative contracts

  $ 39,283   $ 28,125   $ 30,257   $ 31,803  
 

Production taxes

    (1,862 )   (1,320 )   (1,417 )   (1,496 )
 

Ad valorem taxes

    (977 )   (692 )   (743 )   (784 )
 

Franchise taxes

    (137 )   (98 )   (106 )   (111 )
 

Trust administrative expenses

    (1,750 )(5)   (325 )   (325 )   (325 )
                   
   

Total trust expenses

    (4,727 )   (2,436 )   (2,591 )   (2,716 )
                   
 

Cash available for distribution

 
$

34,556
 
$

25,689
 
$

27,666
 
$

29,087
 
                   
 

Trust units outstanding

   
52,500
   
52,500
   
52,500
   
52,500
 
 

Target distribution per trust unit

  $ .66   $ .49   $ .53   $ .55  
                   
 

Subordination threshold per trust unit

 
$

.53
 
$

.39
 
$

.42
 
$

.44
 
                   
 

Incentive threshold per trust unit

 
$

.79
 
$

.59
 
$

.63
 
$

.66
 
                   

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  September 30,
2011(1)
  December 31,
2011
  March 31,
2012
  June 30,
2012
 
 
  (In thousands, except volumetric and per unit data)
 

If actual cash exceeds target by 20%

  $ 41,468   $ 30,827   $ 33,199   $ 34,904  
 

Cash necessary to meet incentive threshold

    41,468     30,827     33,199     34,904  
                   
 

Excess cash available for incentive distributions

                 
   

Distributions to unitholders(6)

                 
   

Incentive distributions to SandRidge

                 

If actual cash available exceeds target by 40%

    48,379     35,965     38,732     40,721  
 

Cash necessary to meet incentive threshold

    41,468     30,827     33,199     34,904  
                   
 

Excess cash available for incentive distributions

    6,911     5,138     5,533     5,817  
   

Distributions to unitholders(6)

    3,456     2,569     2,767     2,909  
                   
   

Incentive distributions to SandRidge

    3,456     2,569     2,767     2,909  
                   

If actual cash available falls short of target by 20%

    27,645     20,551     22,133     23,269  
 

Cash available for distribution to common units

    20,734     15,413     16,600     17,452  
 

Cash necessary to meet common unit subordination threshold

    20,734     15,413     16,600     17,452  
                   
 

Cash short of subordination threshold

                 
 

Reduction in distribution to subordinated units to support subordination threshold

                 
 

Cash distributions to common unitholders

    20,734     15,413     16,660     17,452  
 

Cash distributions to subordinated units

    6,911     5,138     5,533     5,817  

If actual cash available falls short of target by 40%

    20,734     15,413     16,660     17,452  
 

Cash available for distribution to common units

    15,550     11,560     12,450     13,089  
 

Cash necessary to meet common unit subordination threshold

    20,734     15,413     16,600     17,452  
                   
 

Cash short of subordination threshold

    (5,183 )   (3,853 )   (4,150 )   (4,363 )
 

Reduction in distribution to subordinated units to support subordination threshold

    5,183     3,853     4,150     4,363  
 

Cash distributions to common unitholders

  $ 20,734   $ 15,413   $ 16,600   $ 17,452  
                   
 

Cash distributions to subordinated units

                 

(1)
Includes proceeds attributable to the first five months of production from April 1, 2011 to August 31, 2011.

(2)
Average NYMEX futures prices, as reported July 15, 2011. For a description of the effect of lower NYMEX prices on target distributions, please read "—Sensitivity of Target Distributions to Changes in Oil, Natural Gas and Natural Gas Liquids Prices and Volumes."

(3)
Sales price net of forecasted quality, Btu content, transportation costs, and marketing costs. For information about the estimates and assumptions made in preparing the table above, see "—Significant Assumptions Used to Calculate the Target Distributions."

(4)
Hedging percentage excludes production from April 1, 2011 to July 31, 2011.

(5)
Includes trustee cash reserve of $1.0 million and additional administrative costs relating to the formation of the trust.

(6)
Includes distributions to SandRidge on a pro rata basis.

Significant Assumptions Used to Calculate the Target Distributions

        In preparing the target distributions and subordination and incentive threshold tables above and sensitivity tables below, the revenues and expenses of the trust were calculated based on the terms of the conveyances creating the trust's royalty interests using the following assumptions and those set forth above under "Target Distributions and Subordination and Incentive Thresholds." These calculations are described under "Description of the Royalty Interests."

        Production Estimates.    Production estimates for each of the quarters during the life of the trust are based on the reserve report, adjusted for actual volumes realized in April, May and June 2011. The

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estimates of reserves and production relating to the Underlying Properties and the royalty interests included in the reserve report have been made in accordance with the SEC's rules for reserve reporting. Production attributable to the royalty interests from the Underlying Properties for the 12-months ending March 31, 2012 is estimated to be 1,223 MBoe. However, due to the timing of the payment of production proceeds to the trust, the production attributable to the distributions for the 12-months ending March 31, 2012 will be for the 11-months ending February 28, 2012, estimated to be 1,107 MBoe. The estimated production in the forecast period gives effect to the drilling and completion by SandRidge of approximately 888 Development Wells per year during the four-year drilling period, and the completion by SandRidge of its drilling obligation to the trust of 888 Development Wells on or before March 31, 2015. As a reasonably prudent operator, SandRidge is obligated to drill and complete the Development Wells consistent with the drilling and completion techniques used in the Producing Wells to enhance oil, natural gas and natural gas liquids recovery in a cost effective manner. See "—Oil Prices" and "—Natural Gas Prices" below for a description of changes in production due to price variations. Differing levels of production will result in different levels of distributions and cash returns.

        If oil, natural gas and natural gas liquids prices decline, the operators of producing oil, natural gas and natural gas liquids properties may elect to reduce or completely suspend production. SandRidge is required under the applicable conveyance to act as a reasonably prudent operator with respect to the Underlying Properties under the same or similar circumstances as it would act if it were acting with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. No adjustments have been made to estimated production in the tables above to reflect potential reductions or suspensions of production by SandRidge or third party operators.

        Oil Prices.    The assumed oil prices utilized for purposes of preparing the target distributions are based on settled NYMEX pricing for April through June 2011, monthly NYMEX forward pricing for the remainder of the period ending March 31, 2014 and assumed price increases after March 31, 2014 of 2.5% annually, capped at $120.00 per Bbl. Using these assumptions, the price per Bbl would reach the $120.00 per Bbl cap in 2023. The table below sets forth NYMEX forward pricing as of July 15, 2011 for the period ending March 31, 2014.


Estimated Market Prices for Oil ($/Bbl)
Based on NYMEX Pricing as of July 15, 2011

 
  2011   2012   2013   2014  

January

          99.49     102.99     103.55  

February

          99.94     103.06     103.47  

March

          100.34     103.12     103.40  

April

  $ 109.96 (1)   100.71     103.17        

May

    101.28 (1)   101.04     103.21        

June

    96.25 (1)   101.36     103.25        

July

    93.40     101.66     103.21        

August

    97.24     101.88     103.23        

September

    97.60     102.10     103.26        

October

    97.99     102.33     103.35        

November

    98.46     102.60     103.48        

December

    98.99     102.90     103.64        

(1)
Based on settled NYMEX pricing.

        Natural Gas Prices.    The assumed natural gas prices utilized for purposes of preparing the target distributions are based on NYMEX forward pricing for the remainder of the period ending March 31, 2014 and assumed price increases after March 31, 2014 of 2.5% annually, capped at $7.00 per MMBtu. Using

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these assumptions, the price per MMBtu would reach the $7.00 per MMBtu cap in 2022. The table below sets forth NYMEX forward pricing as of July 15, 2011 for the period ending March 31, 2014.


Estimated Market Prices for Natural Gas ($/MMBtu)
Based on NYMEX Pricing as of July 15, 2011

 
  2011   2012   2013   2014  

January

          4.91     5.40     5.69  

February

          4.91     5.37     5.66  

March

          4.86     5.29     5.57  

April

  $ 4.24 (1)   4.77     5.06        

May

    4.31 (1)   4.79     5.07        

June

    4.54 (1)   4.82     5.10        

July

    4.36     4.86     5.14        

August

    4.55     4.88     5.17        

September

    4.52     4.89     5.18        

October

    4.54     4.93     5.22        

November

    4.64     5.07     5.36        

December

    4.82     5.29     5.57        

(1)
Based on settled NYMEX pricing.

        Natural Gas Liquids Prices.    The assumed natural gas liquids prices utilized for purposes of preparing the target distributions are based on the pricing for oil set forth above the heading "—Oil Prices," as well as a 51.65% negative differential from such prices in each relevant period.

        Hedging.    The trust will enter into hedge contracts directly with unaffiliated counterparties. Additionally, SandRidge will enter into a derivatives agreement with the trust in order to transfer to the trust the effect of the hedge contracts entered into between SandRidge and third parties. Pursuant to these arrangements, approximately 73% of the expected production and 79% of the expected revenues upon which the target distributions are based from August 1, 2011 through March 31, 2015 will be hedged. See "The Trust—Hedging Arrangements."

        Differentials.    Proceeds to the trust will be calculated based on the actual price realized by SandRidge for oil, natural gas and natural gas liquids produced, which will differ from NYMEX prices as a result of:

    discounts based on location,

    quality of oil, natural gas and natural gas liquids produced,

    estimated fuel usage for natural gas, and

    post-production costs (generally consisting of costs incurred to gather, store, compress, transport, process, treat, dehydrate and market the oil, natural gas and natural gas liquids produced).

        These charges are collectively referred to as pricing "differentials" from NYMEX pricing.

        To prepare the target distributions, assumed differentials were subtracted from the NYMEX prices shown in the tables above, based on an analysis by SandRidge of historical realized prices for production from the region. The estimated realized prices for natural gas assume a 28.0% negative differential from the NYMEX futures price for natural gas which accounts for the historical volatility in differentials in the region.

        The estimated realized prices for oil assume a $4.27 per barrel negative differential from the NYMEX futures price for oil based on the stability in recent periods of the differential. A flat dollar differential

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amount has been chosen because the realized oil differential has been stable in recent years for oil produced in the Permian Basin.

        The estimated realized prices for natural gas liquids assume a 51.65% negative differential from the NYMEX futures price for oil based on two separate differentials: (1) a 50% negative differential from NYMEX prices for oil based on an analysis by SandRidge of the historical mix of hydrocarbon liquids that have been produced from its wells in the region and (2) an additional 1.75% negative differential from NYMEX prices for oil associated with fees paid for gathering and processing of the natural gas liquids, consistent with SandRidge's service contracts currently in place.

        There can be no assurance that realized prices in the future will be the same as historical realized prices or the assumed realized prices used to prepare the target distributions.

        Administrative Expense.    Trust administrative expense per year is estimated to be approximately $1.3 million, although such costs could be greater or less depending on future events that cannot be predicted. Included in this annual estimate, among other miscellaneous items, are annual administrative fees of $150,000 for the trustee and $300,000 for SandRidge. It has been assumed that the annual fee to SandRidge will remain flat for the life of the trust, the annual fee to the trustee will escalate at 2.5% after the first quarter of 2017, and the remaining estimated costs ($850,000) will escalate at a rate of 2.5% annually starting in the third quarter of 2013. It has been assumed that the trust will also pay, out of the first cash payment received by the trust, the trustee's and Delaware trustee's legal expenses incurred in forming the trust as well as the trustee's acceptance fee in the amount of $10,000. These costs will be deducted by the trust before distributions are made to trust unitholders.

        Trustee's Cash Reserve.    It has been assumed that the trustee will withhold $1.0 million from the first distribution to unitholders to establish a cash reserve available for potential administrative expenses of the trust. No other cash reserves have been assumed.

        Tax Treatment of Royalty Interests.    For U.S. federal income tax purposes, the Term PDP Royalty will, and the Term Development Royalty should, be treated as debt instruments. Accordingly, the Term Royalties will be subject to the original issue discount, or OID, rules of the Internal Revenue Code, which require that payments made to the trust with respect to the Term Royalties will be treated first as consisting of a payment of interest to the extent of interest deemed accrued under the OID rules at the applicable federal rate and the excess, if any, will be treated as a payment of principal (which is non-taxable). For federal income tax purposes, the Perpetual PDP Royalties will be, and the Perpetual Development Royalties should be, treated as mineral royalty interests, which give rise to ordinary income subject to depletion.

        Timing of Actual Cash Distributions.    Quarterly cash distributions will be made on or about the 60th day following the end of each calendar quarter to unitholders of record on or about the 45th day following each calendar quarter. Due to the timing of SandRidge's receipt of cash for production, it has been assumed that cash distributions for each quarter will include production from the first two months of the quarter just ended as well as the last month of the immediately preceding quarter. The first distribution, which will cover the second and third quarters of 2011, is expected to be made on or about November 30, 2011 to record unitholders as of November 15, 2011, and will include sales for oil, natural gas and natural gas liquids for the months April through August 2011. Thereafter, quarterly distributions will generally relate to production of oil, natural gas and natural gas liquids for a three month period, including one month of the prior quarter.

        Applicable Taxes.    Texas levies a tax on the production of oil and natural gas in the state. For oil production, Texas currently imposes a production tax at 4.6% of the market value of the oil produced. For natural gas, Texas currently imposes a production tax of 7.5% of the market value of the gas. The trust will also be subject to the Texas franchise tax, which is imposed in each year at a maximum effective rate of .7% of the trust's gross income apportioned to Texas in the prior year.

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        Incentive Distributions.    To the extent that the trust has cash available for distribution in excess of the incentive thresholds during the subordination period, SandRidge will be entitled to receive 50% of such cash as incentive distributions. The incentive distributions terminate upon completion of the subordination period.

Sensitivity of Target Distributions to Changes in Oil, Natural Gas and Natural Gas Liquids Prices and Volumes

        The amount of revenues of the trust and cash distributions to the trust unitholders will be directly dependent on the sales price for oil, natural gas and natural gas liquids sold, the volumes of oil, natural gas and natural gas liquids produced and, to some degree, variations in property and production taxes, if any, and post-production costs. The following tables demonstrate the effect that changes in the estimated oil, natural gas and natural gas liquids production for the forecast period ending June 30, 2012 as reflected in the reserve report and the impact that fluctuations in assumed realized oil, natural gas and natural gas liquids prices could have on cash distributions to the trust unitholders.

        These tables set forth the sensitivity of annual cash distributions per trust unit for the forecast period ending June 30, 2012 based upon:

    the assumption that a total of 39,375,000 common trust units and 13,125,000 subordinated units are issued and outstanding after the closing of the offering made hereby;

    an assumed initial public offering price of $20.00 per common unit;

    various realizations of oil, natural gas and natural gas liquids production levels estimated in the reserve report;

    various assumed realized oil, natural gas and natural gas liquids prices;

    assumptions regarding applicable taxes and differentials; and

    other assumptions described above under "—Significant Assumptions Used to Calculate the Target Distributions."

        The tables give effect to the subordination and incentive distribution features that are contained in the terms of the trust. For a description of the way in which those features would impact trust unitholders' distributions, please see "Target Distributions and Subordination and Incentive Thresholds."

        The following tables are not a projection or forecast of the actual or estimated results from an investment in the common units. The purpose of these tables is to illustrate the sensitivity of cash distributions to changes in oil, natural gas and natural gas liquids production levels and the price of oil, natural gas and natural gas liquids. There is no assurance that the assumptions described below will actually occur or that oil, natural gas and natural gas liquids production levels and the prices of oil, natural gas and natural gas liquids will not change by amounts different from those shown in the tables.

        The hedging arrangements for the trust will be in effect only through March 31, 2015, and thus there is likely to be greater fluctuation in cash distributions resulting from fluctuations in realized oil, natural gas and natural gas liquids prices in periods subsequent to such time. See "Risk Factors" for a discussion of various items that could impact production levels and the price of oil, natural gas and natural gas liquids.

        These distributions are sensitized to both assumed NYMEX oil, natural gas and natural gas liquids prices as well as the assumed production from the trust properties. The quarterly distributions in the tables below are based on assumptions outlined in "—Significant Assumptions Used to Calculate the Target Distributions." The tables set forth below provide examples of possible distributions for the quarters ending September 30, 2011, December 31, 2011 and March 31, 2012 and June 30, 2012 based on various NYMEX pricing and production assumptions.

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        For scenarios in these tables that involve lower NYMEX oil or natural gas prices and production volumes, as applicable, the quarterly distribution per unit does not fall below the subordination threshold because the subordinated units support the common distributions.

        For each table, the assumed NYMEX oil price per Bbl or natural gas price per MMBtu, as applicable, used to estimate quarterly distributions is also the assumed NYMEX oil price or gas price for all previous quarters.


Estimated Distribution per Common Unit
for the Quarter Ending September 30, 2011

GRAPHIC


Estimated Distribution per Common Unit
for the Quarter Ending December 31, 2011

GRAPHIC

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Estimated Distribution per Common Unit
for the Quarter Ending March 31, 2012

GRAPHIC


Estimated Distribution per Common Unit
for the Quarter Ending June 30, 2012

GRAPHIC

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SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

        Separate financial statements do not exist for the Underlying Properties due to the manner in which Arena Resources, Inc. accounted for such properties. Accordingly, presented below are selected historical financial and operating data for the Arena Properties for the year ended December 31, 2010 and the three months ended March 31, 2010 and 2011, selected pro forma financial and operating data for the portion of the Underlying Properties attributable to the royalty interests to be held by the trust for the year ended December 31, 2010 and the three months ended March 31, 2011, and selected historical financial data for Arena Resources, Inc., sometimes referred to herein as Arena, for the years ended December 31, 2006, 2007, 2008 and 2009. The Underlying Properties represent approximately 40% of the Arena Properties, on a PV-10 basis, as of December 31, 2010, and have a reserve profile that is substantially consistent with the reserve profile of the Arena Properties.

The Arena Properties and the Underlying Properties

        The following table shows:

    selected historical revenue and direct operating expense data, and production and average sales price data, for the Arena Properties for the year ended December 31, 2010 and the three months ended March 31, 2010 and 2011; and

    selected pro forma revenue and direct operating expense data, and production and average sales price data, for the portion of the Underlying Properties attributable to the royalty interests to be held by the trust for the year ended December 31, 2010 and the three months ended March 31, 2011.

        Due to the factors described in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting the Comparability of the Historical Financial Results of the Arena Properties or Arena Resources, Inc. to the Future Results of the Trust," the historical revenue and direct operating expenses for the Arena Properties may not be comparable to, or indicative of, the trust's future results.

        The selected historical revenue and direct operating expense data for the Arena Properties for the year ended December 31, 2010 are derived from the audited historical statements of revenue and direct operating expenses of the Arena Properties included elsewhere in this prospectus. The selected historical revenue and direct operating expense data for the Arena Properties for the three months ended March 31, 2010 and 2011 are derived from the unaudited historical statements of revenue and direct operating expenses for the Arena Properties included elsewhere in this prospectus.

        The selected pro forma revenue and direct operating expense data for the portion of the Underlying Properties attributable to the royalty interests to be held by the trust for the year ended December 31, 2010 and for the three months ended March 31, 2011 are derived from the unaudited pro forma financial information included elsewhere in this prospectus. The selected pro forma revenue and direct operating expense data for the portion of the Underlying Properties attributable to the royalty interests to be held by the trust reflects the exclusion of an allocated portion of the revenues and direct operating expenses of the Arena Properties corresponding to the portion of such properties that will not comprise part of the Underlying Properties, the exclusion of lease operating expenses that would not have been borne by the trust, as well as the formation of the trust and the conveyance of the PDP Royalty Interest to the trust.

        You should read the following table in conjunction with "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "The Underlying Properties," the historical statements of revenues and direct operating expenses for the Arena Properties, and the unaudited pro forma financial information included elsewhere in this prospectus, as well as the discussion of SandRidge's business and related Management's Discussion and Analysis of Financial Condition and Results of Operations of SandRidge set forth and incorporated by reference in this prospectus. Among

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other things, those historical and unaudited pro forma financial statements include more detailed information regarding the basis of presentation for the following information.

 
  ARENA PROPERTIES   PRO FORMA FOR ROYALTY INTERESTS  
 
   
  Three Months Ended March 31,    
   
 
 
  Year Ended
December 31, 2010
  Year Ended
December 31, 2010
  Three Months Ended
March 31, 2011
 
 
  2010   2011  
 
  (dollars in thousands, except per unit amounts)
 

Oil and natural gas revenue

  $ 226,339   $ 51,798   $ 73,089   $ 65,548   $ 21,166  

Direct operating expenses

                               
 

Lease operating expense

    28,307     4,442     12,485          
 

Production taxes and other post-production expenses

    11,669     2,808     3,729     3,379     1,080  
                       
 

Total direct operating expenses

    39,976     7,250     16,214     3,379     1,080  
                       

Revenue in excess of direct operating expenses

  $ 186,363   $ 44,548   $ 56,875   $ 62,169   $ 20,086  
                       

Production

                               
 

Oil (Bbls)

    2,953,381     631,052     870,594     855,299     252,124  
 

Natural gas (Mcf)

    2,288,175     650,828     387,698     662,655     112,277  
                       
 

Total production (Boe)

    3,334,744     739,523     935,210     965,742     270,837  

Average sales prices

                               
 

Oil (per Bbl)

  $ 72.73   $ 74.84   $ 82.55   $ 72.73   $ 82.55  
 

Natural gas (per Mcf)

  $ 5.04   $ 7.02   $ 3.15   $ 5.04   $ 3.15  

Production costs (per Boe)

  $ 8.49   $ 6.01   $ 13.35   $   $  

Post-production costs and taxes (per Boe)

  $ 3.50   $ 3.80   $ 3.99   $ 3.50   $ 3.99  

Arena Resources, Inc.

        The following table shows selected historical financial data of Arena for the years ended December 31, 2006, 2007, 2008 and 2009. Due to the factors described in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting the Comparability of the Historical Financial Results of the Arena Properties or Arena Resources, Inc. to the Future Results of the Trust," the trust's future results will not be comparable to the historical results of Arena.

        The selected historical financial data as of December 31, 2008 and 2009 and for the years ended December 31, 2008 and 2009 are derived from the audited historical consolidated financial statements of Arena included elsewhere in this prospectus. The selected historical financial data as of December 31, 2006 and 2007 and for the years ended December 31, 2006 and 2007 are derived from audited historical consolidated financial statements of Arena not included herein.

        You should read the following table in conjunction with "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the historical consolidated financial statements of Arena included elsewhere in this prospectus. Among other things, those historical

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financial statements include more detailed information regarding the basis of presentation for the following information.

 
  For the Year Ended December 31,  
 
  2006   2007   2008   2009  
 
  (in thousands, except per share information)
 

Statement of Operations Data:

                         

Revenues

  $ 59,760   $ 100,090   $ 208,859   $ 126,241  

Net income

    23,268     34,442     83,617     42,294  

Basic net income per common share

    0.83     1.07     2.28     1.10  

Diluted net income per common share

    0.77     1.02     2.20     1.09  


 
  As of December 31,  
 
  2006   2007   2008   2009  
 
  (in thousands)
 

Balance Sheet Data:

                         

Total assets

  $ 176,313   $ 350,981   $ 591,685   $ 657,071  

Total long-term liabilities

    41,273     73,953     89,600     115,833  

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        This Management's Discussion and Analysis of Financial Condition and Results of Operations contains the following information:

    a discussion and analysis of the results from the Arena Properties for the year ended December 31, 2010 and the three months ended March 31, 2010 and 2011;

    a discussion and analysis of the financial condition and results of operations, liquidity and capital resources, critical accounting policies and estimates and hedging of Arena Resources, Inc. for the years ended December 31, 2008 and 2009; and

    a discussion of the trust's liquidity and capital resources on a pro forma basis, critical accounting policies and estimates and the effects of inflation and pricing.

        The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the "Selected Historical and Pro Forma Financial and Operating Data" and the accompanying financial statements and related notes included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside SandRidge's and the trust's control. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil, natural gas and natural gas liquids, production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this prospectus, particularly in "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements." In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

Factors Affecting the Comparability of the Historical Financial Results of the Arena Properties or Arena Resources, Inc. to the Future Results of the Trust

        Separate financial statements do not exist for the Underlying Properties due to the manner in which Arena Resources, Inc. accounted for such properties. The Underlying Properties represent approximately 40% of the Arena Properties, on a PV-10 basis, as of December 31, 2010, and have a reserve profile that is substantially consistent with the reserve profile of the Arena Properties. For these reasons, SandRidge believes that the historical results of the Arena Properties for the year ended December 31, 2010 and the three months ended March 31, 2010 and 2011 provide useful information about the trends in performance over time of the Underlying Properties, which are included within the Arena Properties. However, for the reasons described below, the results of the Arena Properties and the results of operations of Arena Resources, Inc. discussed below may not be comparable to, or indicative of, the future results of the Underlying Properties or the trust:

    The historical results of the Arena Properties and the historical results of operations of Arena Resources, Inc. reflect a substantially larger asset base than the Underlying Properties.

    For periods prior to 2010, the historical results of operations of Arena Resources, Inc. are presented and discussed on a consolidated basis and include all items of income and expense presented in a consolidated statement of operations. By contrast, the statements of revenue and direct operating expenses of the Arena Properties for the year ended December 31, 2010 and for the three months ended March 31, 2010 and 2011 and the pro forma statements of revenues and direct operating expense for the portion of the Underlying Properties attributable to the royalty interests to be contributed exclude a number of items of income and expense applicable to consolidated statements of operations, such as general and administrative expenses, interest expense, depreciation, depletion and amortization, income taxes, and hedging items.

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    The historical statements of revenues and direct operating expenses of the Arena Properties included in this prospectus do not give effect to the terms and conditions of the royalty interests and, as a result, do not reflect what the trust's distributable income will be in the future.

The Arena Properties

        Oil and natural gas revenue.    Oil and natural gas revenue attributable to the Arena Properties increased to $73.1 million in the first quarter of 2011 from $51.8 million in the same period of 2010 as a result of increases in oil volumes produced and oil prices received during the 2011 period. Oil production increased to 871 MBbls for the three months ended March 31, 2011 from 631 MBbls in the same period of 2010 due to increased oil drilling activity on the Arena Properties during the second half of 2010 and first quarter of 2011. The average price received for oil production increased to $82.55 per Bbl for the three months ended March 31, 2011 from $74.84 per Bbl in the same period of 2010. The increase in oil revenue was partially offset by decreases in natural gas production and associated prices. Natural gas production decreased to 388 MMcf for the three months ended March 31, 2011 from 651 MMcf in the same period of 2010, while the average price received for natural gas production decreased to $3.15 per Mcf for the three months ended March 31, 2011 from $7.02 per Mcf in the comparable period of 2010.

        Oil and natural gas revenue attributable to the Arena Properties for the year ended December 31, 2010 was $226.3 million. The average prices received during the period for oil and natural gas were $72.73 per Bbl and $5.04 per Mcf, respectively. Oil production was 2,953 MBbls and natural gas production was 2,288 MMcf for the year ended December 31, 2010.

        Lease operating expense.    Lease operating expense attributable to the Arena Properties increased to $12.5 million, or $13.35 per Boe, for the three months ended March 31, 2011 from $4.4 million, or $6.01 per Boe, in the comparable period of 2010. The increase was primarily due to workover activity conducted on the properties after their acquisition by SandRidge in July 2010 as well as increased overall activity associated with the properties during the second half of 2010 and first quarter of 2011.

        Lease operating expense attributable to the Arena Properties for the year ended December 31, 2010 was $28.3 million or $8.49 per Boe.

        Production taxes and other post-production expenses.    Production taxes and other post-production expenses attributable to the Arena Properties increased to $3.7 million, or $3.99 per Boe, for the three months ended March 31, 2011 from $2.8 million, or $3.80 per Boe, for the same period in 2010 due to increased oil and natural gas revenue during the 2011 period.

        Production taxes and other post-production expenses were $11.7 million, or $3.50 per Boe, for the year ended December 31, 2010. Production taxes and other post-production expenses on a per Boe basis were higher during the three months ended March 31, 2011 than the year ended December 31, 2010 primarily as a result of higher prices received for production during the three months ended March 31, 2011. The average price received for oil production was $82.55 per Bbl during the three months ended March 31, 2011 compared to $72.73 per Bbl for the year ended December 31, 2010.

        Conversion of Proved Undeveloped Reserves.    During 2010, approximately 370 wells were drilled and approximately $193.8 million of drilling capital expenditures was spent to convert approximately 9 MMBoe of proved undeveloped reserves to proved developed reserves.

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Arena Resources, Inc.

Historical Results of Operations

 
  For the Years Ended
December 31,
 
 
  2008   2009  
 
  (in thousands, except
per unit amounts)

 

Net production:

             
 

Oil (Bbls)

    2,018     2,004  
 

Natural gas (Mcf)

    1,912     2,173  

Net sales:

             
 

Oil

  $ 190,051   $ 115,285  
 

Natural gas

    18,808     10,956  

Average sales price:

             
 

Oil (per Bbl)

  $ 94.16   $ 57.51  
 

Natural gas (per Mcf)

    9.84     5.04  
 

Total (per Boe)

    89.37     53.34  

Production costs and expenses:

             
 

Oil and gas production costs

  $ 17,833   $ 15,543  
 

Production taxes

    10,518     6,456  
 

Realized loss (gain) on oil derivative

    4,275     (14,885 )
 

Depreciation, depletion and amortization expense

    29,790     38,957  
 

Accretion expense

    309     411  
 

General and administrative expenses

    13,557     13,453  

Average production cost (per Boe)

 
$

7.63
 
$

6.57
 

Average production taxes (per Boe)

    4.50     2.73  

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

        Oil and Natural Gas Sales.    Arena's oil and natural gas sales revenue decreased approximately $82.6 million to $126.2 million in 2009. Oil sales decreased $74.8 million and natural gas sales decreased $7.8 million. The oil sales decrease was caused by a 39% decrease in the average realized per barrel oil price from $94.16 in 2008 to $57.51 in 2009 and a reduction in sales volume of 13.8 MBbls in 2009. These per barrel amounts are calculated by dividing revenue from oil sales by the volume of oil sold, in barrels. The natural gas sales decrease was caused by a 49% decrease in the average realized per Mcf gas price from $9.84 in 2008 to $5.04 in 2009, partially offset by an increase in the sales volume of 261,078 Mcf. These per Mcf amounts are calculated by dividing revenue from gas sales by the volume of gas sold, in Mcf. The volume increase for natural gas primarily resulted from development of existing properties in 2009.

        Oil and Gas Production Costs.    Aggregate oil and gas production costs decreased from $17.8 million in 2008 to $15.5 million, and decreased on a Boe basis from $7.63 in 2008 to $6.57 in 2009. These per Boe amounts are calculated by dividing the total production costs by the total volume sold, in Boe. This decrease in the aggregate and on a per Boe basis was the result of lower average costs for services and equipment.

        Oil and Gas Production Taxes.    Oil and gas production taxes as a percentage of oil and natural gas sales were 5.04% during 2008 and increased slightly to 5.11% in 2009.

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        Realized Loss (Gain) on Oil Derivative.    Realized loss (gain) on oil derivative changed from a loss of $4.3 million in 2008 to a gain of $14.9 million in 2009. This change was the result of significantly lower prices for the majority of 2009 as compared to 2008.

        Depreciation, Depletion and Amortization.    Depreciation, depletion and amortization expense increased by $9.3 million to $39.4 million in 2009. The increase was a result of an increase in the average depreciation, depletion and amortization rate from $12.88 per Boe during 2008 to $16.63 per Boe during 2009. These per Boe amounts were calculated by dividing total depreciation, depletion and amortization expense by total volume sold, in Boe. The increased depreciation, depletion and amortization was the result of an increase in estimated future development costs.

        General and Administrative Expenses.    General and administrative expenses remained relatively steady, decreasing by $0.1 million to $13.5 million during 2009. This decrease was primarily related to a decrease in compensation expense related to Arena's stock option plan, partially offset by increases in other areas, such as insurance and taxes and fees.

        Interest Income.    Interest income decreased $0.5 million to $0.8 million in 2009. The decrease was primarily due to lower interest rates between periods.

        Interest Expense.    Interest expense decreased $1.1 million to $0 in 2009. The decrease was due to not having any amounts outstanding on Arena's credit facility during 2009.

        Income Tax Expense.    Arena's effective tax rate was 37% during 2008 and 37% during 2009.

        Net Income.    Net income decreased from $83.6 million for 2008 to $42.3 million for 2009. The primary reason for this decrease was the lower average crude oil and natural gas prices received between periods.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

        Oil and Natural Gas Sales.    Arena's oil and natural gas sales revenue increased approximately $108.8 million to $208.9 million in 2008. Oil sales increased $102.1 million and natural gas sales increased $6.7 million. The oil sales increase was caused by a sales volume increase of 702,310 barrels in 2008, and a 41% increase in the average realized per barrel oil price from $66.82 in 2007 to $94.16 in 2008. These per barrel amounts were calculated by dividing revenue from oil sales by the volume of oil sold, in barrels. The natural gas sales increase was caused by a sales volume increase of 408,102 Mcf in 2008, and a 23% increase in the average realized per barrel oil price from $8.02 in 2007 to $9.84 in 2008. These per Mcf amounts were calculated by dividing revenue from gas sales by the volume of gas sold, in Mcf. The volume increase for crude oil and natural gas primarily resulted from development of existing properties in 2008.

        Oil and Gas Production Costs.    Aggregate oil and gas production costs increased from $11.5 million in 2007 to $17.8 million and increased on a Boe basis from $7.34 in 2007 to $7.63 in 2008. These per Boe amounts were calculated by dividing total production costs by total volume sold, in Boe. This aggregate increase was the result of the drilling of new wells in 2008 and cost increases. The increase on a per Boe basis was attributable to rising rates for labor and services.

        Oil and Gas Production Taxes.    Oil and gas production taxes as a percentage of oil and natural gas sales were 5.65% during 2007 and decreased to 5.04% in 2008.

        Realized Loss on Oil Derivative.    Realized loss on oil derivative increased from $0.9 million in 2007 to $4.3 million in 2008. This increase was the result of commodity price increases during most of 2008.

        Depreciation, Depletion and Amortization.    Depreciation, depletion and amortization expense increased by $11.9 million to $30.1 million in 2008. The increase was a result of an increase in the average depreciation, depletion and amortization rate from $11.59 per Boe during 2007 to $12.88 per Boe during

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2008. These per Boe amounts were calculated by dividing total depreciation, depletion and amortization expense by total volume sold, in Boe. The increased depreciation, depletion and amortization were the result of increased sales volume and an increase in estimated future development costs.

        General and Administrative Expenses.    General and administrative expenses increased by $5.7 million to $13.6 million during 2008. This increase was primarily related to increases in compensation expense associated with an increase in personnel required to administer growth and compensation expense related to Arena's stock option plan.

        Interest Income.    Interest income increased $0.4 million to $1.3 million in 2008. The increase was due to higher cash balances during periods of the year in 2008.

        Interest Expense.    Interest expense decreased $0.3 million to $1.1 million in 2008. The increase was due to lower amounts of debt being outstanding during periods of the year in 2008.

        Income Tax Expense.    Arena's effective tax rate was 37% during 2008 and 38% during 2007.

        Net Income.    Net income increased from $34.4 million for 2007 to $83.6 million for 2008. The primary reasons for this increase include higher crude oil and natural gas prices between periods and an increase in volumes sold, partially offset by higher oil and gas production costs, oil and gas production taxes and general and administrative expenses due to growth.

Arena's Historical Liquidity

        Arena's primary sources of cash were cash flows from operations and equity offerings. During the three years ended December 31, 2009, Arena generated $349.5 million from operating activities and financed $222.4 million through proceeds from the sale of stock and warrants and exercise of warrants and options. Arena primarily used this cash generation to fund its capital expenditures and development aggregating $497.8 million over the three years ended December 31, 2009. At December 31, 2009, Arena had cash on hand of $63.6 million and working capital of $62.4 million, compared to December 31, 2008 when Arena had cash of $58.5 million and working capital of $69.7 million.

Arena's Historical Critical Accounting Policies and Estimates

        The discussion of Arena's historical financial condition and results of operations set forth above is based upon the information reported in Arena's periodic reports filed with the SEC, including Arena's financial statements. The preparation of these statements required Arena to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of the financial statements. Arena based its assumptions and estimates on historical experience and other sources it believed to be reasonable at the time. Arena's historical significant accounting policies are detailed in Note 1 to its financial statements included in this prospectus.

SandRidge Permian Trust

The Trust's Liquidity and Capital Resources

        On a pro forma basis after giving effect to the closing of the offering and the transactions described in "The Trust—Formation Transactions," the trust's principal sources of liquidity will be distributions it receives from SandRidge pursuant to the Term Royalties and the Perpetual Royalties, as well as cash received pursuant to the hedging arrangements. The trust's principal uses of cash will be to make distributions to trust unitholders in accordance with the trust agreement, to make cash payments that may be required pursuant to the hedging arrangements, and to pay the trust's administrative expenses. The trust will not have any capital expenditures or other capital commitments. If the trustee determines that cash on hand and cash expected to be received are insufficient to cover the trust's liabilities, the trustee

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may cause the trust to borrow funds required to pay the liabilities. The trust may borrow the funds from any person, including the trustee or its affiliates. If the trust borrows funds, the trust unitholders will not receive distributions until the borrowed funds are repaid.

        The trustee intends to withhold $1.0 million from the first distribution to unitholders to establish a cash reserve available to the trustee to pay trust administrative expenses. If the trustee uses such cash reserve (or any portion thereof) to pay or reimburse trust liabilities or expenses, no further distributions will be made to unitholders (except in respect of any previously determined quarterly cash distribution amount) until the cash reserve is replenished. This cash reserve will be part of the trust estate and will bear interest at the same rate as other cash on hand in the trust estate. Upon the dissolution of the trust, the balance of the cash reserve (including accrued interest thereon) will be distributed to trust unitholders on a pro rata basis.

        In addition, SandRidge has agreed that, if at any time the trust's cash on hand (including available cash reserves) is not sufficient to pay the trust's ordinary course administrative expenses as they become due, SandRidge will loan funds to the trust necessary to pay such expenses. Any funds loaned by SandRidge pursuant to this commitment will be made for the purpose of paying current accounts payable or other obligations to trade creditors in connection with obtaining goods or services or paying other accrued current liabilities arising in the ordinary course of the trust's business, and may not be used to satisfy trust indebtedness. If SandRidge loans funds pursuant to this commitment, unless SandRidge agrees otherwise, no further distributions will be made to unitholders (except in respect of any previously determined quarterly cash distribution amount) until such loan is repaid. Any such loan will be on an unsecured basis, and the terms of such loan will be substantially the same as those which would be obtained in an arms' length transaction between SandRidge and an unaffiliated third party.

The Trust's Critical Accounting Policies and Estimates

        The following is a summary of the significant accounting policies followed by the trust.

        Basis of Accounting.    The trust follows the "modified cash basis" of accounting. This means the financial statements of the trust are prepared on the following basis:

    Revenues are recorded when received and distributions to trust unitholders are recorded when declared.

    Trust expenses are recorded when paid.

    Cash reserves may be established for certain contingencies that would not generally be recorded under generally accepted accounting principles.

    Amortization of the investment in royalty interests is calculated on the units of production method. Such amortization is charged directly to the trust corpus, and does not affect cash earnings.

        While the trust's financial statements included in this prospectus differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), the modified cash basis of reporting revenues, expenses and distributions is considered to be the most meaningful because quarterly distributions to the trust unitholders are based on net cash receipts. This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

        Most accounting pronouncements apply to entities whose financial statements are prepared in accordance with GAAP, directing such entities to accrue or defer revenues and expenses in a period other than when such revenues were received or expenses were paid. Because the trust's financial statements are prepared on the modified cash basis as described above, most accounting pronouncements are not applicable to the trust's financial statements.

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        Distributable Income.    Income determined on a GAAP basis would include all expenses incurred for the period presented. However, the trust serves as a pass-through entity, with expenses for depletion, interest and income taxes, other than the Texas franchise tax to which the trust is subject, being based upon the status and elections of the trust unitholders. In addition, the royalty interests will not be burdened by field and lease operating expenses. Thus, the trust's pro forma statement of distributable income purports to show distributable income, defined as income of the trust available for distribution to the trust unitholders before application of those unitholders' additional expenses, if any, for depreciation, depletion and amortization, interest and income taxes. The trust's revenues are reflected net of existing royalties and overriding royalties and have been reduced by gathering and any other post-production expenses. Actual cash receipts may vary due to timing delays of actual cash receipts from the property purchasers and due to wellhead and pipeline volume balancing agreements or practices.

        Impairment of Royalty Interest.    Investment in royalty interests will be assessed to determine whether net capitalized cost is impaired whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment is indicated when the net capitalized costs of the investment in royalty interests exceeds undiscounted future net revenues attributable to the proved oil and natural gas reserves of the trust's royalty interests. The trust will provide a write-down to the extent that the net capitalized costs exceed the fair value of the proved oil and natural gas reserves attributable to the trust's royalty interests. Any such write-down would be charged directly to trust corpus and would not reduce distributable income.

Effects of Inflation and Pricing

        The oil and natural gas industry is very cyclical and the demand for goods and services of oil field companies, suppliers and others associated with the industry puts extreme pressure on the economic stability and pricing structure within the industry. Typically, as prices for oil and natural gas increase, so do all associated costs. Material changes in prices impact the current revenue stream, estimates of future reserves, borrowing base calculations of bank loans and value of properties in purchase and sale transactions. Material changes in prices can impact the value of oil and natural gas companies and their ability to raise capital, borrow money and retain personnel. Arena experienced increases and decreases in costs during 2009 due to fluctuating demand for oil field products and services as a result of fluctuating oil and natural gas prices. The trust anticipates costs will vary in accordance with commodity prices for oil and natural gas, and the associated increase or decrease in demand for services related to production and exploration.

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THE UNDERLYING PROPERTIES

        The Underlying Properties consist of the working interest owned by SandRidge in the Permian Basin in Andrews County, Texas arising under leases and farmout agreements related to properties from which the PDP Royalty Interest and the Development Royalty Interest will be conveyed. SandRidge acquired the Underlying Properties in July 2010 as part of its acquisition of Arena, and it expects to operate substantially all of the Underlying Properties. Arena acquired its working interests in a large portion of the Underlying Properties in 2004, and acquired interests in additional Underlying Properties from 2005 through 2009. Initial production of hydrocarbons from the Underlying Properties began prior to 1975. The Underlying Properties consist of approximately 16,800 gross acres (15,900 net acres), which SandRidge estimates provides approximately three times the acreage required to fulfill SandRidge's drilling obligation under the development agreement. The reserves attributable to the trust's royalty interests include the reserves that are expected to be produced from the Permian Basin during the 20-year period in which the trust owns the royalty interests as well as the residual interest in the reserves that the trust will sell on or shortly following the Termination Date. As of March 31, 2011 and after giving effect to the conveyance of the PDP Royalty Interest and the Development Royalty Interest to the trust, the total reserves estimated to be attributable to the trust were 21.8 MMBoe. This amount includes 5.8 MMBoe attributable to the PDP Royalty Interest and 16.0 MMBoe attributable to the Development Royalty Interest, respectively. SandRidge is currently the operator of all of the wells subject to the PDP Royalty Interest. The reserves consist of 96% liquids (87% oil and 9% natural gas liquids) and 4% natural gas.

Overview of Underlying Properties

        The Underlying Properties are located in the greater Fuhrman-Mascho field area, a region in Andrews County, Texas that produces oil from the Grayburg/San Andres formation within the Permian Basin. SandRidge currently operates three drilling rigs within the AMI and, as of March 31, 2011, had drilled 101 wells since acquiring the properties in July 2010. Within the AMI, SandRidge operates 509 wells and has 888 proven undeveloped locations as of March 31, 2011. These 888 proven locations are a combination of 5-acre, 10-acre and 20-acre infill spacing locations. As of March 31, 2011, average daily production from the Underlying Properties was approximately 3,400 Boe/d.

        Permian Basin.    The Permian Basin extends throughout southwest Texas and southeast New Mexico over an area approximately 250 miles wide and 300 miles long. It is one of the largest, most active and longest-producing oil basins in the United States. In 2010, production from the Permian Basin accounted for approximately 17% of total U.S. crude oil production, making this basin the second largest oil producing area after the Gulf of Mexico. The Permian Basin has been producing oil for over 80 years resulting in cumulative production of approximately 29 billion barrels.

        SandRidge currently operates approximately 2,600 gross producing wells in the Permian Basin, with an average working interest of 94%. SandRidge's average daily net production for the month of March 2011 in the Permian Basin was approximately 28,800 Boe/d. SandRidge was operating 16 rigs in the basin as of March 2011. SandRidge drilled 484 wells in this area in 2010 and expects to drill over 800 wells in 2011.

        Fuhrman-Mascho Field.    The Fuhrman-Mascho field is located near the center of the Central Basin Platform in the Permian Basin. The field produces from the Grayburg/San Andres formation from average depths of approximately 4,000 to 5,000 feet. The Fuhrman-Mascho field is the fifth largest producing field in the Permian Basin and since its discovery in 1930, the field has produced approximately 142 MMBoe. SandRidge currently operates eight drilling rigs in the area and has drilled 307 wells as of March 31, 2011 since acquiring the properties in July 2010.

Oil, Natural Gas and Natural Gas Liquids Reserves

        Netherland Sewell estimated oil, natural gas and natural gas liquids reserves attributable to the Underlying Properties as of March 31, 2011. Numerous uncertainties are inherent in estimating reserve

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volumes and values, and the estimates are subject to change as additional information becomes available. The reserves actually recovered and the timing of production of the reserves may vary significantly from the original estimates.

        Proved reserves of the Underlying Properties and royalty interests.    The following table sets forth certain estimated proved reserves and the PV-10 value as of March 31, 2011 attributable to the Underlying Properties and the royalty interests, in each case derived from the reserve report. The reserve report was prepared by Netherland Sewell in accordance with criteria established by the SEC.

        Proved reserve quantities attributable to the royalty interests are calculated by multiplying the gross reserves for each property by the royalty interest assigned to the trust in each property. The net revenues attributable to the trust's reserves are net of an assumed level of post-production costs based on historical results. The reserves related to the Underlying Properties include all of the proved reserves expected to be economically produced from the Permian Basin during the life of the properties. The reserves and revenues attributable to the trust's interests include only the reserves attributable to the Underlying Properties that are expected to be produced within the 20-year period in which the trust owns the royalty interest as well as the residual interest in the reserves that the trust will own on the Termination Date. The reserve report is included as Annex A to this prospectus.

 
  Proved Reserves(1)    
 
 
  Oil (MBbl)(2)   Natural Gas
(MMcf)
  Total
(MBoe)
  PV-10 Value(3)  
 
   
   
   
  (Dollars in
millions)

 

Underlying Properties

    30,644     7,215     31,847   $ 580.8  

Royalty Interests:

                         
 

PDP Royalty Interests (80%)(4)

    5,577     1,375     5,806   $ 213.7  
 

Development Royalty Interests (70%)

    15,401     3,570     15,996     555.8  
                   
   

Total

    20,977     4,945     21,802   $ 769.5  
                   

(1)
The proved reserves were determined using a 12-month unweighted arithmetic average of the first-day-of-the-month prices for oil and natural gas for the period from April 1, 2010 through March 1, 2011, without giving effect to derivative transactions, and were held constant for the life of the properties. The prices used in the reserve report, as well as SandRidge's internal reports, yield weighted average prices at the wellhead, which are based on first-day-of-the-month reference prices and adjusted for transportation and regional price differentials. The reference prices and the equivalent weighted average wellhead prices are both presented in the table below.

 
  Reference prices   Weighted average
wellhead prices
 
 
  Oil
(per Bbl)
  Natural gas
(per Mcf)
  Oil
(per Bbl)
  Natural gas
(per Mcf)
 

March 31, 2011

  $ 80.04   $ 4.102   $ 75.58   $ 3.003  
(2)
Includes natural gas liquids.

(3)
PV-10 is the present value of estimated future net revenue to be generated from the production of proved reserves, discounted using an annual discount rate of 10%, calculated without deducting future income taxes. PV-10 is a non-GAAP financial measure and generally differs from standardized measure of discounted net cash flows, or Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Because the historical financial information related to the Underlying Properties consists solely of revenues and direct operating expenses and does not include the effect of income taxes, we expect the PV-10 and Standardized Measure attributable to the Underlying Properties for each period to be

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    equivalent. Because the trust will not bear federal income tax expense, we also expect the PV-10 and Standardized Measure attributable to the royalty interests for each period to be equivalent. Neither PV-10 nor Standardized Measure represents an estimate of the fair market value of the Underlying Properties or the royalty interests. We and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities.

(4)
Includes reserves associated with wells in the process of being completed.

        Information concerning historical changes in net proved reserves attributable to the Underlying Properties, and the calculation of the standardized measure of discounted future net revenues related thereto, is contained in the unaudited supplemental information contained elsewhere in this prospectus. SandRidge has not filed reserve estimates covering the Underlying Properties with any other federal authority or agency.

The Reserve Report

        All of the oil, natural gas and natural gas liquids reserves in this registration statement were estimated by Netherland Sewell. The process to review and estimate the reserves began with a staff reservoir engineer collecting and verifying all pertinent data, including but not limited to well test data, production data, historical pricing, cost information, property ownership interests, reservoir data, and geosciences data. This data was reviewed by various levels of SandRidge management for accuracy, before consultation with Netherland Sewell. These individuals consulted regularly with Netherland Sewell during the reserve estimation process to review properties, assumptions, and any new data available. Internal reserve estimates and methodologies were compared to Netherland Sewell to test the reserve estimates and conclusions before the reserve estimates were included in this registration statement. Additionally, SandRidge's senior management reviewed and approved the reserve report contained herein.

        Internal Controls.    SandRidge's Executive Vice President—Reservoir Engineering is the technical person primarily responsible for overseeing the preparation of the company's reserve estimates, is the primary contact with Netherland Sewell and received the reserve report from Netherland Sewell. He has a Bachelor of Science degree in Mechanical Engineering with 30 years of practical industry experience, including 25 years of estimating and evaluating reserve information. In addition, SandRidge's Executive Vice President—Reservoir Engineering has been a certified professional engineer in the state of Oklahoma since 1988 and a member of the Society of Petroleum Engineers since 1980.

        SandRidge's Reservoir Engineering Department continually monitors asset performance and makes reserves estimate adjustments, as necessary, to ensure the most current reservoir information is reflected in reserves estimates. Reserve information includes production histories as well as other geologic, economic, ownership and engineering data. The department currently has a total of 16 full-time employees, comprised of six degreed engineers and 10 engineering analysts/technicians with a minimum of a four-year degree in mathematics, economics, finance or other business or science field.

        SandRidge maintains a continuous education program for engineers and technicians on new technologies and industry advancements and also offers refresher training on basic skill sets.

        In order to ensure the reliability of reserves estimates, internal controls observed within the reserve estimation process include:

    No employee's compensation is tied to the amount of reserves booked.

    Reserves estimates are made by experienced reservoir engineers or under their direct supervision.

    The Reservoir Engineering Department reports directly to the President, independently from all of SandRidge's operating divisions.

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    The Reservoir Engineering Department follows comprehensive SEC-compliant internal policies to determine and report proved reserves including:

    confirming that reserve estimates include all properties owned and are based upon proper working and net revenue interests;

    reviewing and using in the estimation process data provided by other departments within the Company such as Accounting; and

    comparing and reconciling internally generated reserve estimates to those prepared by third parties.

        Each quarter, the Executive Vice President—Reservoir Engineering presents the status of SandRidge's reserves, including the reserves associated with the Underlying Properties, to the Executive Committee, which subsequently approves all changes. In the event the quarterly updated reserves estimates are disclosed, the aforementioned review process is evidenced by signatures from the Executive Vice President—Reservoir Engineering and the Chief Financial Officer.

        SandRidge's Reservoir Engineering Department works closely with its independent petroleum consultants at each fiscal year end to ensure the integrity, accuracy and timeliness of an annually developed independent reserves estimate. These independently developed reserves estimates are adopted as SandRidge's corporate reserves and are reviewed by the Audit Committee, as well as the Chief Financial Officer, Senior Vice President of Accounting, Vice President of Internal Audit, Vice President of Financial Reporting, Treasurer and General Counsel. In addition to reviewing the independently developed reserve reports, the Audit Committee interviews the third-party engineer at Netherland Sewell primarily responsible for the reserve report.

        Technologies.    The reserve report was prepared using decline curve analysis to determine the reserves of individual Producing Wells. After estimating the reserves of each proved developed well, it was determined that a reasonable level of certainty exists with respect to the reserves that can be expected from close offset undeveloped wells in the field. The continuity of the formation across the AMI was established by reviewing electric well logs, geologically mapping the analogous reservoir and reviewing extensive production data from 496 wells. The reserves attributable to the Producing Wells, which cover a wide area of the AMI, and the continuity of the formation over the AMI further support proved undeveloped classification within close proximity to the Producing Wells. Data from SandRidge demonstrates a consistency in this formation over an area much larger than the AMI. In addition, direct measurement from producing wells has been used to confirm consistency in reservoir properties such as porosity, thickness and stratigraphic conformity.

        The proven undeveloped locations within the AMI are generally all offsets to the wells drilled and producing to date. Of the proved undeveloped drilling locations identified in the reserve report, only approximately 6% are not direct offsets of other historically producing wells. Those approximately 6% proved undeveloped drilling locations are generally characterized by the second offset interior to known production.

        Netherland Sewell.    Netherland Sewell, the independent petroleum engineering consultant, estimated all of the proved reserve information in this registration statement, in accordance with the definitions and guidelines of the SEC and, with the exception of the exclusion of future income taxes, conform to the FASB Accounting Standards Codification Topic 932, Extractive Activities—Oil and Gas. For the purposes of the reserve report, Netherland Sewell used technical and economic data including, but not limited to, well test data, production data, historical price and cost information, and property ownership interests. The reserves in the reserve report have been estimated using deterministic methods. Netherland Sewell used standard engineering and geosciences methods, or a combination of methods, such as performance analysis and analogy, that they considered to be appropriate and necessary to categorize and estimate reserves in accordance with SEC definitions and guidelines. A substantial portion of these reserves are for undeveloped locations and producing wells that lack sufficient production history upon which

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performance-related estimates of reserves can be based. Therefore, these reserves are based on estimates of reservoir volumes and recovery efficiencies along with analogy to properties with similar geologic and reservoir characteristics.

        Netherland Sewell's expertise is in petroleum engineering, geoscience, and petrophysical interpretation, not legal or accounting matters; they are not accountants, attorneys, or landmen. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geoscience data; therefore, the conclusions from Netherland Sewell necessarily represent only informed professional judgment. The titles to the properties have not been examined by Netherland Sewell, nor has the actual degree or type of interest owned been independently confirmed. The data used in Netherland Sewell's estimates were obtained from SandRidge and the non-confidential files of Netherland Sewell and were accepted as accurate. Supporting geoscience, field performance, and work data are on file in their office.

        The qualifications of the technical person at Netherland Sewell primarily responsible for overseeing his firm's preparation of the reserve estimates presented herein include: 29 years of practical experience in petroleum engineering and more than 12 years estimating and evaluating reserve information; a registered professional engineer in the states of Texas, Louisiana and Wyoming; and a Bachelor of Science Degree in Civil Engineering and Masters in Business Administration. These qualifications meet or exceed the Society of Petroleum Engineers standard requirements to be a professionally qualified Reserve Estimator and Auditor.

        Netherland Sewell are independent petroleum engineers, geologists, geophysicists, and petrophysicists; Netherland Sewell does not own an interest in these properties and are not employed on a contingent basis.

Additional Information Regarding the Arena Properties

        Drilling Activity.    The following table sets forth information with respect to the wells completed by Arena or SandRidge on the Underlying Properties during the periods indicated. SandRidge acquired Arena in July 2010. Productive wells are those that produce commercial quantities of hydrocarbons, regardless of whether they produce a reasonable rate of return. Gross wells refer to the total number of wells in which Arena or SandRidge had a working interest and net wells refer to gross wells multiplied by SandRidge's or Arena's weighted average working interest. As of December 31, 2010, there were 7 gross (5.9 net) wells drilling or awaiting completion.

 
  2010   2009   2008  
 
  Gross   Percent   Net   Percent   Gross   Percent   Net   Percent   Gross   Percent   Net   Percent  

Development:

                                                                         
 

Productive

    155     100 %   152.2     100 %   71     100 %   70.5     100 %   57     100 %   56.3     100 %
 

Dry

    0           0           0           0           0           0        
   

Total

    155     100 %   152.2     100 %   71     100 %   70.5     100 %   57     100 %   56.3     100 %

Exploratory:

                                                                         
 

Productive

    0           0           0           0           0           0        
 

Dry

    0           0           0           0           0           0        
   

Total

    0           0           0           0           0           0        

Total:

                                                                         
 

Productive

    155     100 %   155.2     100 %   71     100 %   70.5     100 %   57     100 %   56.3     100 %
 

Dry

    0           0           0           0           0           0        

    155     100 %   152.2     100 %   71     100 %   70.5     100 %   57     100 %   56.3     100 %

        Productive Wells.    The following table sets forth the number of productive wells within the AMI in which SandRidge owned working interests as of March 31, 2011 and from which SandRidge will convey the royalty interests to the trust. Productive wells consist of producing wells and wells capable of producing,

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including oil wells awaiting connection to production facilities and natural gas wells awaiting pipeline connections to commence deliveries. Gross wells are the total number of producing wells in which SandRidge has an interest and net wells are the sum of SandRidge's fractional working interests owned in gross wells.

 
  Oil   Natural Gas   Total  
 
  Gross   Net   Gross   Net   Gross   Net  

Productive Wells

    509     497.2     0     0     509     497.2  

        Developed and Undeveloped Acreage.    The following table sets forth information regarding developed and undeveloped acreage held by SandRidge within the AMI as of July 19, 2011:

 
  Developed
Acreage(1)
  Undeveloped
Acreage(2)
 
 
  Gross(3)   Net(4)   Gross(3)   Net(4)  

Acreage Held by SandRidge within the AMI

    8,214     7,962     8,632     7,939  

(1)
Developed acres are acres spaced or assigned to productive wells.

(2)
Undeveloped acres are acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves.

(3)
A gross acre is an acre in which SandRidge owns a working interest. The number of gross acres is the total number of acres in which SandRidge owns a working interest.

(4)
A net acre is deemed to exist when the sum of SandRidge's fractional ownership working interests in gross acres equals one. The number of net acres is the sum of SandRidge's fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.

        Many of the leases comprising the acreage set forth in the table above will expire at the end of their respective primary terms unless production from the leasehold acreage is established prior to such date, in which event the lease will remain in effect until production has ceased. The following table sets forth as of July 14, 2011 the expiration periods of the gross and net acres that are subject to leases in the acreage summarized in the above table.

 
  Acres
Expiring
 
Twelve Months Ending
  Net   Gross  

December 31, 2011

    162     920  

December 31, 2012

    332     801  

December 31, 2013

    136     800  

December 31, 2014

    16     200  

December, 2015 and later

         
           

Total

    646     2,721  

Properties Underlying the Development Royalty Interest

        SandRidge's average net revenue interest in the oil and natural gas properties underlying the Development Royalty Interest is approximately 69.3%. The Development Royalty Interest will entitle the trust to receive 70% of the proceeds attributable to SandRidge's net revenue interest in future production of oil and natural gas resulting from the drilling of the Development Wells, with 35% of such proceeds attributable to the Term Development Royalty and 35% of such proceeds attributable to the Perpetual Development Royalty.

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        SandRidge owns a majority working interest in substantially all of the locations on which it expects to drill the Development Wells, and it expects to operate such wells during the subordination period. Except as described in "The Trust—Development Agreement and Drilling Support Lien," until such time as SandRidge has met its commitment to drill the Development Wells, SandRidge will covenant and agree not to drill and complete, and will not permit any other person within its control to drill and complete, any well in the AMI for its own account. Upon the trustee's release of the Drilling Support Lien, SandRidge will further agree not to drill and complete, and will not permit any other person within its control to drill and complete, any well in the AMI that will have a perforation that will be within 170 feet of any perforation of any Development Well or Producing Well.

        If SandRidge drills one or more Development Wells in which it has less than a 69.3% net revenue interest, it may drill, or cause to be drilled, additional wells above the planned number for the trust in order to make the total number of Development Wells equal 888. For instance, if SandRidge drilled one well in which it has a 52.0% net revenue interest (assuming it was drilled and completed in the Grayburg/San Andres formation), such well would count for purposes of the development agreement as only .75 Development Wells (i.e., 52.0% / 69.3%). In order to compensate for this, SandRidge could drill, or cause to be drilled, an additional well (assuming it was drilled and completed in the Grayburg/San Andres formation) with a 86.6% net revenue interest (i.e., 86.6% / 69.3%) so that the trust receives 1.25 Development Wells. In addition, SandRidge may receive additional credit for drilling horizontal Development Wells. See "The Trust—Development Agreement and Drilling Support Lien."

        SandRidge may, in its sole discretion, make additional acreage or interests or acreage exchanged for other acreage in the AMI subject to the Development Royalty Interest, so long as the aggregate additional acreage or interests or exchanged acreage does not exceed five percent of the acreage currently subject to the Development Royalty Interest. See "Description of the Royalty Interests—Additional Features of the Royalty Interests."

Sale and Abandonment of the Underlying Properties

        SandRidge and any transferee will have the right to abandon its interest in any well or property comprising a portion of the Underlying Properties if, in its opinion, such well or property ceases to produce or is not capable of producing in commercially paying quantities. To reduce or eliminate the potential conflict of interest between SandRidge and the trust in determining whether a well is capable of producing in commercially paying quantities, SandRidge and any transferee, as applicable, will be required under the applicable conveyance to act as a reasonably prudent operator in the AMI under the same or similar circumstances would act if it were acting with respect to its own properties, disregarding the existence of the royalty interests as a burden affecting such properties.

        After completion of its drilling obligation, SandRidge generally may sell all or a portion of its interests in the Underlying Properties, subject to and burdened by the royalty interests, without the consent of the trust unitholders. In addition, SandRidge may, without the consent of the trust unitholders, require the trust to release for sale royalty interests with an aggregate value to the trust not to exceed $5.0 million during any 12-month period. These releases will be made only in connection with a sale by SandRidge of Underlying Properties and are conditioned upon the trust receiving an amount equal to the fair value to the trust of such royalty interests. Any net sales proceeds paid to the trust are distributable to trust unitholders for the quarter in which they are received. SandRidge has not identified for sale any of the Underlying Properties.

Marketing and Post-Production Services

        Pursuant to the terms of the conveyances creating the royalty interests, SandRidge will have the responsibility to market, or cause to be marketed, the oil, natural gas and natural gas liquids production related to the Underlying Properties. The terms of the conveyances creating the royalty interests do not permit SandRidge to charge any marketing fee when determining the proceeds upon which the royalty payments will be calculated. As a result, the proceeds to the trust from the sales of oil, natural gas and

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natural gas liquids production from the Underlying Properties will be determined based on the same price (net of post-production costs) that SandRidge receives for oil, natural gas and natural gas liquids production attributable to SandRidge's remaining interest in the Underlying Properties.

        A wholly owned subsidiary of SandRidge markets the majority of SandRidge's operated production. Such subsidiary enters into oil, natural gas and natural gas liquids sales arrangements with large aggregators of supply and these arrangements may be on a month-to-month basis or may be for a term of up to one year or longer. The oil, natural gas and natural gas liquids is sold at a market price and subsequently any applicable post-production costs will be deducted. The primary aggregators of supply with whom SandRidge currently does business in the AMI are Enterprise Crude Oil LLC, ConocoPhillips Company and DCP Midstream, LP.

        Following this offering, post-production costs will be deducted from proceeds paid to the trust. SandRidge may provide post-production services itself or contract with others to provide post-production services, including gathering, transportation, processing and other reasonable post-production services, including transportation on downstream interstate pipelines. Such post-production costs will be expressed either (1) as a cost per Bbl or MMBtu or (2) as a percentage of the gross production from a well. The trust's cash available for distribution will be reduced by SandRidge's deductions for these post-production costs.

        Post-production costs may be deducted by the ultimate purchaser of the oil, natural gas and natural gas liquids prior to payment being made to SandRidge or its marketing affiliate for such production. At other times, SandRidge or its marketing affiliate will make payments directly to the third parties providing such post-production services. In either instance, the trust's cash available for distribution will be reduced by the costs paid by SandRidge for such post-production services provided by third parties. If the post-production costs are expressed as a percentage of the gross production from a well, then the volume of production from that well actually available for sale is less the applicable percentage charged, and as a result the reserves associated with that well that are attributable to the royalty interest are reduced accordingly.

        The cost of marketing and post-production services is included within the assumed differentials from NYMEX pricing discussed above under "Target Distributions and Subordination and Incentive Thresholds."

        Regardless of whether the post-production costs are based upon a cost per Bbl or per MMBtu or a percentage of gross production from a well, such costs may increase or decrease in the future. The post-production costs attributable to third party arrangements may be costs established by arms-length negotiations or pursuant to a state or federal regulatory proceeding. SandRidge will be permitted to deduct from the proceeds available to the trust other post-production costs necessary to make the oil, natural gas and natural gas liquids from the Underlying Properties marketable, so long as such costs do not materially exceed the charges prevailing in the area for similar services.

        SandRidge expects to enter into oil, natural gas and natural gas liquids supply arrangements and post-production service arrangements for the oil, natural gas and natural gas liquids to be produced from the Development Wells that are similar to those in place with respect to the Producing Wells. Any new oil, natural gas and natural gas liquids supply arrangements or those entered into for providing post-production services, will be utilized in determining the proceeds for the Underlying Properties.

Title to Properties

        The Underlying Properties are subject to certain burdens that are described in more detail below. To the extent that these burdens and obligations affect SandRidge's rights to production and the value of production from the Underlying Properties, they have been taken into account in calculating the trust's interests and in estimating the size and the value of the reserves attributable to the royalty interests.

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        SandRidge acquired its interests in the Underlying Properties in July 2010 as part of its acquisition of Arena. Arena acquired its working interests in a large portion of the Underlying Properties in 2004, and acquired interests in additional Underlying Properties from 2005 through 2009, through a variety of means, including through the acquisition of oil and natural gas leases directly from the mineral owner, through assignments of oil and natural gas leases by the lessee who originally obtained the leases from the mineral owner, through farmout agreements that grant SandRidge the right to earn interests in the properties covered by such agreements by drilling wells, and through acquisitions of other oil and natural gas interests.

        SandRidge's interests in the oil and natural gas properties comprising the Underlying Properties are typically subject, in one degree or another, to one or more of the following:

    royalties and other burdens, express and implied, under oil and natural gas leases;

    production payments and similar interests and other burdens created by SandRidge or its predecessors in title;

    a variety of contractual obligations arising under operating agreements, farmout agreements, production sales contracts and other agreements that may affect the properties or their titles;

    liens that arise in the normal course of operations, such as those for unpaid taxes, statutory liens securing unpaid suppliers and contractors and contractual liens under operating agreements that are not yet delinquent or, if delinquent, are being contested in good faith;

    pooling, unitization and communitization agreements, declarations and orders;

    easements, restrictions, rights-of-way and other matters that commonly affect real property;

    conventional rights of reassignment that obligate SandRidge to reassign all or part of a property to a third party if SandRidge intends to release or abandon such property; and

    rights reserved to or vested in the appropriate governmental agency or authority to control or regulate the Underlying Properties.

        SandRidge believes that the burdens and obligations affecting the Underlying Properties and the royalty interests are conventional in the industry for similar properties. SandRidge also believes that the burdens and obligations do not, in the aggregate, materially interfere with the use of the Underlying Properties and will not materially adversely affect the value of the royalty interest.

        SandRidge believes that its title to the Underlying Properties is, and the trust's title to the royalty interests will be, good and defensible in accordance with standards generally accepted in the oil and gas industry, subject to such exceptions as are not so material as to detract substantially from the use or value of such properties or royalty interests. Consistent with industry practice, SandRidge has not yet obtained drilling title opinions on the properties upon which SandRidge intends to drill the Development Wells. SandRidge does not intend to perform any further title examination prior to the closing of the offering being made hereby. Frequently, as a result of title examinations, certain curative work must be done to correct identified title defects, and such curative work entails time and expense. SandRidge will not be relieved of its obligation to drill a well if title defects are identified that prevent SandRidge from drilling in such drill site.

Insurance

        In accordance with industry practice, SandRidge maintains insurance against some, but not all, of the operating risks to which its business is exposed. SandRidge currently has insurance policies that include coverage for general liability (includes sudden and accidental pollution), physical damage to its oil and gas properties, operational control of offshore wells, aviation, auto liability, marine liability, worker's compensation and employer's liability, among other things. At the depths and in the areas in which SandRidge operates, and in light of the vertical and horizontal drilling that it undertakes, SandRidge

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typically does not encounter high pressures or extreme drilling conditions. Accordingly, SandRidge does not carry control of well insurance for onshore operations.

        Currently, SandRidge has general liability insurance coverage up to $1 million per occurrence, which includes sudden and accidental environmental liability coverage for the effects of pollution on third parties arising from its operations. SandRidge's insurance policies contain maximum policy limits and in most cases, deductibles (generally ranging from $25,000 to $1 million) that must be met prior to recovery. These insurance policies are subject to certain customary exclusions and limitations. In addition, SandRidge maintains $100 million in excess liability coverage, which is in addition to and triggered if the general liability per occurrence limit is reached.

        SandRidge requires all of its third-party contractors to sign master service agreements in which they agree to indemnify SandRidge for injuries and deaths of the service provider's employees as well as contractors and subcontractors hired by the service provider. Similarly, SandRidge generally agrees to indemnify each third-party contractor against claims made by employees of SandRidge and SandRidge's other contractors. Additionally, each party generally is responsible for damage to its own property.

        The third-party contractors that perform hydraulic fracturing operations for SandRidge sign the master service agreements containing the indemnification provisions noted above. SandRidge does not currently have any insurance policies in effect that are intended to provide coverage for losses solely related to hydraulic fracturing operations. However, SandRidge believes its general liability and excess liability insurance policies would cover third party claims related to hydraulic fracturing operations and associated legal expenses, in accordance with, and subject to, the terms of such policies.

        SandRidge re-evaluates the purchase of insurance, coverage limits and deductibles annually. Future insurance coverage for the oil and gas industry could increase in cost and may include higher deductibles or retentions. In addition, some forms of insurance may become unavailable in the future or unavailable on terms that are economically acceptable. No assurance can be given that SandRidge will be able to maintain insurance in the future at rates that it considers reasonable and SandRidge may elect to self-insure or maintain only catastrophic coverage for certain risks in the future.

Competition and Markets

        The oil and natural gas industry is highly competitive. SandRidge competes with major oil and gas companies and independent oil and gas companies for leases, equipment, personnel and markets for the sale of oil, natural gas and natural gas liquids. Many of these competitors are financially stronger than SandRidge, but even financially troubled competitors can affect the market because of their need to sell oil, natural gas and natural gas liquids at any price to attempt to maintain cash flow. The trust will be subject to the same competitive conditions as SandRidge and other companies in the oil and gas industry.

        Oil, natural gas and natural gas liquids compete with other forms of energy available to customers, primarily based on price. These alternate forms of energy include electricity, coal and fuel oils. Changes in the availability or price of oil, natural gas and natural gas liquids or other forms of energy, as well as business conditions, conservation, legislation, regulations and the ability to convert to alternate fuels and other forms of energy may affect the demand for oil, natural gas and natural gas liquids.

        Future price fluctuations for oil, natural gas and natural gas liquids will directly impact trust distributions, estimates of reserves attributable to the trust's interests, and estimated and actual future net revenues to the trust. In view of the many uncertainties that affect the supply and demand for oil, natural gas and natural gas liquids, neither the trust nor SandRidge can make reliable predictions of future supply and demand for oil, natural gas and natural gas liquids, future oil, natural gas and natural gas liquids prices or the effect of future oil, natural gas and natural gas liquids prices on the trust.

Regulation

        Oil and Natural Gas Regulation.    The availability, terms and cost of transportation significantly affect sales of oil, natural gas and natural gas liquids. The interstate transportation and sale for resale of oil,

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natural gas and natural gas liquids is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission. Federal and state regulations govern the price and terms for access to oil and natural gas pipeline transportation. The Federal Energy Regulatory Commission's regulations for interstate oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil and natural gas.

        Sales of oil, natural gas and natural gas liquids are not currently regulated and are made at market prices. Although oil, natural gas and natural gas liquids prices are currently unregulated, Congress historically has been active in the area of oil and natural gas regulation. Neither SandRidge nor the trust can predict whether new legislation to regulate oil, natural gas and natural gas liquids prices might be proposed, what proposals, if any, might actually be enacted by Congress or state legislatures, and what effect, if any, the proposals might have on the operations of the Underlying Properties.

        Environmental Regulation.    The exploration, development and production of oil, natural gas and natural gas liquids are subject to federal, state and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may, among other things, require permits to conduct drilling, water withdrawal and waste disposal operations; govern the amounts and types of substances that may be disposed or released into the environment; limit or prohibit construction or drilling activities in sensitive areas such as wetlands, wilderness areas or areas inhabited by endangered or threatened species; require investigatory and remedial actions to mitigate pollution conditions arising from SandRidge's operations or attributable to former operations; and impose obligations to reclaim and abandon well sites and pits. Failure to comply with these laws and regulations may result in the assessment of sanctions, including monetary penalties, the imposition of remedial obligations and the issuance of orders enjoining operations in affected areas.

        The clear trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment, and thus, any changes in environmental laws and regulations or re-interpretation of enforcement policies that result in more stringent and costly construction, drilling, water management, completion, waste handling, storage, transport, disposal, or remediation requirements or emission or discharge limits could have a material adverse effect on the proceeds available to the trust under the royalty interests. Moreover, accidental releases or spills may occur in the course of SandRidge's operations on the Underlying Properties, and there can be no assurance that SandRidge will not incur significant costs and liabilities as a result of such releases or spills, including any third party claims for damage to property and natural resources or personal injury.

        The following is a summary of the more significant existing environmental, health and safety laws and regulations applicable to the oil and natural gas industry and for which compliance may have a material adverse impact on SandRidge's operation of the Underlying Properties.

        Hazardous Substances and Wastes.    The Comprehensive Environmental Response, Compensation and Liability Act, as amended ("CERCLA"), also known as the Superfund law and comparable state laws impose joint and several liability, without regard to fault or legality of conduct, on certain classes of persons who are considered to be responsible for the release of a "hazardous substance" into the environment. These persons include current and prior owners or operators of the site where the release occurred and entities that disposed or arranged for the disposal of the hazardous substances found at the site. Under CERCLA, these "responsible persons" may be subject to strict joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain environmental and health studies. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances into the environment. CERCLA also authorizes the EPA and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they

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incur. SandRidge generates materials in the course of its operations, including with respect to the Underlying Properties, that may be regulated as hazardous substances.

        SandRidge generates wastes that are subject to the requirements of the Resource Conservation and Recovery Act, as amended ("RCRA"), and comparable state statutes. RCRA imposes strict requirements on the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. Drilling fluids, produced waters and most of the other wastes associated with the exploration, production and development of crude oil, natural gas and natural gas liquids are currently exempt from regulation as hazardous wastes under RCRA. However, it is possible that certain oil, natural gas and natural gas liquids exploration and production wastes now classified as non-hazardous could be classified as hazardous wastes in the future. In September 2010, the Natural Resources Defense Council filed a petition with the EPA requesting them to reconsider the RCRA exemption for exploration, production, and development wastes. To date, the EPA has not taken any action on the petition. Any change in the RCRA exemption for such wastes could result in an increase in costs to manage and dispose of wastes, which could have a material adverse effect on the cash distributions to the trust unitholders. In the course of its operations, SandRidge generates petroleum hydrocarbon wastes and ordinary industrial wastes that are subject to regulation under the RCRA. SandRidge is in substantial compliance with all regulations regarding the handling and disposal of oil and gas exploration and production wastes from its operations, including with respect to the Underlying Properties.

        SandRidge currently owns or leases, and in the past may have owned or leased, properties that have been used to explore for and produce oil, natural gas and natural gas liquids. Although SandRidge may have utilized operating and disposal practices that were standard in the industry at the time, hydrocarbons and wastes may have been disposed of or released on or under the properties owned or leased by SandRidge or on or under the other locations where these hydrocarbons and wastes have been taken for treatment or disposal. In addition, certain of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons and wastes was not under SandRidge's control. These properties and wastes disposed thereon may be subject to CERCLA, RCRA and analogous state laws. Under these laws, SandRidge could be required to remove or remediate previously disposed wastes, to clean up contaminated property and to perform remedial operations to prevent future contamination or to pay some or all of the costs of any such action.

        Air Emissions.    The Clean Air Act, as amended, and comparable state laws and regulations restrict the emission of air pollutants from many sources and also impose various monitoring and reporting requirements. These laws and regulations may require SandRidge to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with air permit requirements or utilize specific equipment or technologies to control emissions. Obtaining permits has the potential to delay the development of oil, natural gas and natural gas liquids projects. While SandRidge may be required to incur certain capital expenditures for air pollution control equipment or other air emissions-related issues, SandRidge does not believe that such requirements will have a material adverse effect on its ability to satisfy its obligations to the trust.

        Water Discharges.    The Federal Water Pollution Control Act, as amended ("Clean Water Act"), and analogous state laws impose restrictions and strict controls regarding the discharge of pollutants into navigable waters. Pursuant to the Clean Water Act and analogous state laws, permits must be obtained to discharge produced waters and sand, drilling fluids, drill cuttings and other substances related to the oil and gas industry into onshore, coastal and offshore waters of the United States or state waters. Any such discharge of pollutants into regulated waters must be performed in accordance with the terms of the permit issued by EPA or the analogous state agency. Spill prevention, control and countermeasure requirements under federal law require appropriate containment berms and similar structures to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture

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or leak. In addition, the Clean Water Act and analogous state laws require individual permits or coverage under general permits for discharges of storm water runoff from certain types of facilities.

        Climate Change.    In December 2009, the EPA published its findings that emissions of carbon dioxide, methane and certain other GHGs present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth's atmosphere and other climatic changes. These findings allow the EPA to adopt and implement regulations that restrict emissions of GHGs under existing provisions of the federal Clean Air Act. Accordingly, the EPA has adopted regulations that require a reduction in emissions of GHGs from motor vehicles and also trigger permit review for GHG emissions from certain large stationary sources. The EPA's rules relating to emissions of GHGs from large stationary sources of emissions are currently subject to a number of legal challenges, but the federal courts have thus far declined to issue any injunctions to prevent the EPA from implementing, or requiring state environmental agencies to implement, the rules. In addition, in October 2009, the EPA published a final rule requiring the reporting of GHG emissions from specified large GHG emission sources in the United States, including sources emitting more than 25,000 tons of GHGs on an annual basis, beginning in 2011 for emissions occurring in 2010. On November 30, 2010, the EPA published a final rule that expands its October 2009 final rule on reporting of GHG emissions to require certain owners and operators of onshore oil, natural gas and natural gas liquids production to monitor greenhouse gas emissions beginning in 2011 and to report those emissions beginning in 2012. The adoption and implementation of any regulations imposing reporting obligations on, or limiting emissions of GHG gases from, SandRidge's equipment and operations could require SandRidge to incur costs to reduce emissions of GHGs associated with its operations or could adversely affect demand for the oil, natural gas and natural gas liquids it produces. Finally, it should be noted that some scientists have concluded that increasing concentrations of GHGs in the Earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events; if any such effects were to occur, they could have an adverse effect on SandRidge's assets and operations.

        In addition, Congress has actively considered legislation to reduce emissions of GHGs and almost one-half of the states have begun taking actions to control and/or reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs. Any future federal laws or implementing regulations that may be adopted to address GHG emissions could require SandRidge to incur increased operating costs, could adversely affect demand for the oil, natural gas and natural gas liquids that it produces, and could have a material adverse effect on SandRidge's business, financial condition and results of operations.

        Endangered Species.    The federal Endangered Species Act ("ESA") restricts activities that may affect endangered or threatened species or their habitats. We believe our operations are in substantial compliance with the ESA. However, any future designation of previously unidentified species as endangered or threatened on properties where we operate could subject us to additional costs or cause our oil and gas activities to be subject to operating restrictions or bans.

        Employee Health and Safety.    The operations of SandRidge are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act, as amended ("OSHA"), and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in SandRidge's operations and that this information be provided to employees, state and local government authorities and citizens. SandRidge believes that it is in substantial compliance with all applicable laws and regulations relating to worker health and safety.

        State Regulation.    Texas regulates the drilling for, and the production and gathering of, oil, natural gas and natural gas liquids, including requirements relating to drilling permits, the location, spacing and

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density of wells, unitization and pooling of interests, the method of drilling, casing and equipping of wells, the protection of fresh water sources, the orderly development of common sources of supply of oil, natural gas and natural gas liquids, the operation of wells, allowable rates of production, the use of fresh water in oil, natural gas and natural gas liquids operations, saltwater injection and disposal operations, the plugging and abandonment of wells and the restoration of surface properties, the prevention of waste of oil, natural gas and natural gas liquids resources, the protection of the correlative rights of oil, natural gas and natural gas liquids owners and, where necessary to avoid unfair, unjust or discriminatory service, the fees, terms and conditions for the gathering of natural gas. The effect of these regulations may be to limit the number of wells that SandRidge may drill, impact the locations at which SandRidge may drill wells, restrict the amounts of oil, natural gas and natural gas liquids that may be produced from SandRidge's wells and increase the costs of its operations. Realized prices for the first sale of oil, natural gas and natural gas liquids are not subject to state regulation in Texas.

        Hydraulic Fracturing.    Oil, natural gas and natural gas liquids may be recovered from the Underlying Properties through the use of hydraulic fracturing, combined with sophisticated drilling. Hydraulic fracturing, which involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production, is typically regulated by state oil and gas commissions. However, the EPA recently asserted federal regulatory authority over certain hydraulic fracturing practices not currently employed by SandRidge in the AMI. At the same time, the EPA has commenced a study of the potential environmental impacts of hydraulic fracturing activities, with initial results of the study anticipated to be available by late 2012 and final results by 2014. Also for the second consecutive session, legislation has been introduced in Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the fracturing process. In addition, some states have adopted, and other states are considering adopting, regulations that could restrict hydraulic fracturing in certain circumstances. For instance, in June 2011, Texas adopted a law that requires disclosure to the Railroad Commission of Texas of the additives and other chemicals contained in hydraulic fracturing fluids used in the state, subject to certain trade secret protections. If new laws or regulations that significantly restrict hydraulic fracturing are adopted at the Texas state level, such legal requirements could make it more difficult or costly for SandRidge to perform fracturing to stimulate production in the play and thereby affect the determination of whether a well is commercially viable. In addition, if hydraulic fracturing is regulated at the federal level, SandRidge's fracturing activities, including with respect to its operations at the Underlying Properties, could become subject to additional permit requirements or operational restrictions and also to associated permitting delays and potential increases in costs. Restrictions on hydraulic fracturing could also reduce the amount of oil, natural gas and natural gas liquids that SandRidge is ultimately able to produce in commercial quantities from the Underlying Properties.

        All of the acreage and undeveloped reserves within the AMI are subject to hydraulic fracturing procedures as the process is required to economically develop the Grayburg/San Andres formation. The hydraulic fracturing process is integral to SandRidge's overall drilling and completion costs in the AMI and represents approximately 25% of the total drilling/completion costs per well (or, approximately $125,000 per well).

        The hydraulic fracturing activity is limited to the oil and gas bearing Grayburg/San Andres formation, which is found at depths of 4,000 to 5,000 feet from the surface in Andrews County, Texas. This county in West Texas comprises 1,501 square miles, with over 25,000 wells drilled to date. The Railroad Commission of Texas has defined potable water sources in this area as usable-quality ground water from the surface to a depth of 250 feet and water in the Santa Rosa formation in an interval between 1,100 and 1,600 feet.

        SandRidge diligently reviews best practices and industry standards, and complies with all regulatory requirements in the protection of these potable water sources. Protective practices include, but are not limited to, setting multiple strings of protection pipe across the potable water sources and cementing these pipes from setting depth to surface, continuously monitoring the hydraulic fracturing process in real time,

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and disposing of all non-commercially produced fluids in certified disposal wells at depths below the potable water sources.

        Based on current drilling techniques, a typical fracturing procedure for a well in the Grayburg/San Andres formation uses approximately 82,600 gallons of fluid (81,500 gallons of which is fresh water) and approximately 9,100 gallons-equivalent of sand. By volume, fresh water makes up nearly 99% of the total fracturing fluid. Of the remaining 1% of fluid, approximately one third is comprised of material such as enzymes and Guar (a common food additive), and slightly more than two thirds is a combination of other chemicals.

        In compliance with the law enacted in Texas in June 2011, SandRidge will disclose hydraulic fracturing data to the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission chemical registry. This disclosure is required for each chemical ingredient that is subject to the requirements of OSHA regulations, as well as the total volume of water used in the hydraulic fracturing treatment. A copy of the completed form will be submitted to the Railroad Commission of Texas with the completion report for the well. Additionally, a list of all other chemical ingredients not required by the registry will also be provided to the Railroad Commission for disclosure on a publicly accessible website. The Railroad Commission is currently in the process of writing the rules to implement the legislation and is required to have these rules implemented not later than July 1, 2012 for the registry components and not later than July 1, 2013 for the latter requirements.

        There have not been any incidents, citations or suits related to SandRidge's hydraulic fracturing activities involving environmental concerns.

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DESCRIPTION OF THE ROYALTY INTERESTS

        The royalty interests will be conveyed to the trust by SandRidge by means of conveyance instruments that will be recorded in the real property records of Andrews County, Texas and, if necessary, the real property records of any additional counties where the oil, natural gas and natural gas liquids to which the Underlying Properties relate are located.

        The royalty interests will be conveyed from SandRidge's interest in the Producing Wells and the Development Wells. The PDP Royalty Interest entitles the trust to receive 80% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of production of oil, natural gas and natural gas liquids attributable to SandRidge's net revenue interest in the Producing Wells. The Development Royalty Interest entitles the trust to receive 70% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of production of oil, natural gas and natural gas liquids attributable to SandRidge's net revenue interest in the Development Wells.

        The percentage of production proceeds to be received by the trust with respect to a well will equal the product of (1) the percentage of proceeds to which the trust is entitled under the terms of the conveyances (80% for the Producing Wells and 70% for the Development Wells) multiplied by (2) SandRidge's net revenue interest in the well. SandRidge on average owns a 73.0% net revenue interest in the Producing Wells. Therefore, the trust will have an average 58.4% net revenue interest in the Producing Wells. SandRidge on average owns a 69.3% net revenue interest in the properties in the AMI from which the Development Wells will be drilled and based on this net revenue interest, the trust would have an average 48.5% net revenue interest in the Development Wells. SandRidge's actual net revenue interest in any particular Development Well may differ from this average, and will depend on SandRidge's working interest and the royalty interests and similar revenue burdens owed to third parties with respect to such well.

PDP Royalty Interest

        The PDP Royalty Interest entitles the trust to receive an amount of cash for each calendar quarter equal to 80% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Producing Wells. Proceeds from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Producing Wells in any calendar quarter means, for any calendar quarter commencing on or after April 1, 2011, the amount calculated based on actual production volumes attributable to SandRidge's net revenue interest in the Producing Wells, in each case after deducting the trust's proportionate share of:

    any taxes levied on the severance or production of the oil, natural gas and natural gas liquids produced from the Producing Wells and any property taxes attributable to the oil, natural gas and natural gas liquids produced from the Producing Wells; and

    post-production costs, which will generally consist of costs incurred to gather, store, compress, transport, process, treat, dehydrate and market the oil, natural gas and natural gas liquids produced, as applicable.

        Proceeds payable to the trust from the sale of oil, natural gas and natural gas liquids production attributable to the Producing Wells in any calendar quarter will not be subject to any deductions for any expenses attributable to exploration, drilling, development, operating, maintenance or any other costs incident to the production of oil, natural gas and natural gas liquids production attributable to the Producing Wells, including any costs to plug and abandon a Producing Well.

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Development Royalty Interest

        The Development Royalty Interest entitles the trust to receive an amount of cash for each calendar quarter equal to 70% of the proceeds (exclusive of any production or development costs but after deducting post-production costs and any applicable taxes) from the sale of estimated oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Development Wells. Proceeds from the sale of oil, natural gas and natural gas liquids production attributable to SandRidge's net revenue interest in the Development Wells in any calendar quarter means, for any calendar quarter commencing on or after April 1, 2011, the amount calculated based on actual production volumes attributable to SandRidge's net revenue interest in the Development Wells, in each case after deducting the trust's proportionate share of:

    any taxes levied on the severance or production of the oil, natural gas and natural gas liquids produced from the Development Wells and any property taxes attributable to the oil, natural gas and natural gas liquids produced from the Development Wells; and

    post-production costs, which will generally consist of costs incurred to gather, store, compress, transport, process, treat, dehydrate and market the oil, natural gas and natural gas liquids produced, as applicable.

        Proceeds payable to the trust from the sale of oil, natural gas and natural gas liquids production attributable to the Development Wells in any calendar quarter will not be subject to any deductions for any expenses attributable to exploration, drilling, development, operating, maintenance or any other costs incident to the production of oil, natural gas and natural gas liquids production attributable to the Development Wells, including any costs to drill a Development Well.

Sale of the Perpetual Royalties

        The trust will begin to liquidate on the Termination Date and will soon thereafter wind up its affairs and terminate. The Term Royalties will automatically revert to SandRidge at the Termination Date, while the Perpetual Royalties will be sold and the proceeds thereof will be distributed to the unitholders at the Termination Date or soon thereafter. SandRidge will have a first right of refusal to purchase the Perpetual Royalties at the Termination Date.

        The trust agreement provides that the trustee will use commercially reasonable efforts to retain a third-party advisor to market the Perpetual Royalties within 30 business days of the Termination Date. If the trustee receives a bona fide offer from a proposed purchaser other than SandRidge and wants to sell all or part of the Perpetual Royalties, it will be required to give notice (the "Offer Notice") to SandRidge, identifying the proposed purchaser and setting forth the proposed sale price, payment terms and other material terms and conditions under which the trustee is proposing to sell. SandRidge would then have 30 days from receipt of the Offer Notice to elect, by notice to the trustee, to purchase the subject properties offered for sale on the terms and conditions set forth in the Offer Notice. If SandRidge makes such election, the proposed purchaser would be entitled to receive reimbursement of its reasonable and documented expenses incurred in connection with its review and analysis of the subject properties and bid preparation. SandRidge and the trust would share equally the cost of reimbursement to the proposed purchaser.

        If SandRidge does not give notice within the 30-day period following the Offer Notice, the trustee may, within 60 days, sell such properties to the identified purchaser on terms and conditions that are substantially the same as those previously set forth in such Offer Notice. Moreover, if, after a reasonable marketing period, no bid is received on any or all of the Perpetual Royalties from any party other than SandRidge, then SandRidge shall obtain, at the trust's expense, and deliver to the trustee, a fairness opinion from a nationally-recognized valuation firm with expertise in valuing oil, natural gas and natural

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gas liquids properties stating that the proposed sale price to be paid by SandRidge to the trust for the properties is fair to the trust.

Additional Features of the Royalty Interests

        Reasonably Prudent Operator Standard.    Under the conveyances, SandRidge is obligated to act as a reasonably prudent operator in the AMI under the same or similar circumstances as it would if it were acting with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. Accordingly, there may be situations where SandRidge will drill on one or more potential drilling locations within the AMI that are not those identified locations underlying the reserve report.

        True-up.    The conveyances provide that if SandRidge's net revenue interest with respect to the Underlying Properties is greater than what was warranted to the trust in the conveyances, SandRidge will have the right to deduct from amounts owed to the trust the difference between what the trust actually receives from the royalty interests and what the trust should have received from the royalty interests had SandRidge's net revenue interest been the amount warranted in the conveyances. On the other hand, if SandRidge's net revenue interest with respect to the Underlying Properties is less than what was warranted to the trust in the conveyances, SandRidge must add to amounts owed to the trust the difference between what the trust actually receives from the royalty interests and what the trust should have received from the royalty interests had SandRidge's net revenue interest been the amount warranted in the conveyance.

        Controversies.    If a controversy arises as to the sales price of any production, then for purposes of determining gross proceeds:

    amounts withheld or placed in escrow by a purchaser are not considered to be received by the owner of the underlying property until actually collected;

    amounts received by the owner of the underlying property and promptly deposited with a nonaffiliated escrow agent will not be considered to have been received until disbursed to it by the escrow agent; and

    amounts received by the owner of the underlying property and not deposited with an escrow agent will be considered to have been received.

        Overpayments.    The trustee is not obligated to return any cash received from the royalty interests. Any overpayments made to the trust by SandRidge due to adjustments to prior calculations of proceeds or otherwise will reduce future amounts payable to the trust until SandRidge recovers the overpayments.

        Sale of Underlying Properties.    The conveyances generally permit SandRidge to sell, without the consent or approval of the trust unitholders, all or any part of its interest in the Underlying Properties, if the Underlying Properties are sold, subject to and burdened by the royalty interests. Notwithstanding the foregoing, the conveyances provide that SandRidge may not sell any of the Underlying Properties subject to the Development Royalty Interest until it has satisfied the drilling obligation pursuant to the terms of the development agreement. The trust unitholders are not entitled to any proceeds of any sale of SandRidge's interest in the Underlying Properties that remains subject to and burdened by the royalty interests. Following such sale, the royalties attributable to the transferred property will be calculated as described in this prospectus, and paid by the purchaser or transferee to the trust. As a result, any additional costs resulting from the sold property will not reduce the proceeds paid to the trust from the Underlying Properties retained by SandRidge. SandRidge will require any purchaser of any of the Underlying Properties to enter into an agreement to perform SandRidge's obligations under the administrative services agreement with respect to those properties.

        Exchange, Addition and Release of Acreage.    SandRidge may at its option at any time prior to the completion of its drilling obligation, cause the trust to exchange leased acreage subject to the royalty

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interests, free and clear of such royalty interests, for other leased acreage within the AMI and to cause such leased acreage exchanged to the trust to be made subject to the royalty interests as set forth in the conveyances. In addition, in the event SandRidge acquires any additional leases or interests in the AMI prior to the completion of its drilling obligation, SandRidge may at its option make such additional leases or interests subject to the royalty interests. In no event, however, may any exchange of acreage or any addition of leased acreage or interests be effected unless SandRidge certifies to the trust that, among other things, all of the aggregate acreage attributable to the exchanged leases or additional leases or interests shall not exceed five percent of the acreage subject to the royalty interest.

        In addition, SandRidge may, at its option and without the consent of the trust unitholders, require the trust to release acreage subject to the royalty interest with an aggregate value to the trust of up to $5.0 million during any 12-month period. These releases will be made only in connection with a sale by SandRidge of a portion of the Underlying Property and are conditioned upon the trust receiving an amount equal to the fair value to the trust of such released royalty interests.

        Abandonment of Underlying Property.    SandRidge or any transferee of an Underlying Property will have the right to abandon any well or property if it reasonably believes the well or property ceases to produce or is not capable of producing in commercially paying quantities. In making such decisions, SandRidge or any transferee of an Underlying Property is required under the applicable conveyance to act as a reasonably prudent operator in the AMI under the same or similar circumstances would act if it were acting with respect to its own properties, disregarding the existence of the royalty interests as burdens affecting such properties. Upon termination of the lease, that portion of the royalty interests relating to the abandoned property will be extinguished.

        Maintenance of Books and Records.    SandRidge must maintain books and records sufficient to determine the amounts payable for the royalty interests to the trust. Quarterly and annually, SandRidge must deliver to the trustee a statement of the computation of the proceeds for each computation period as well as quarterly drilling and production results. Because SandRidge files reports with the SEC, those reports will be publicly available. See "Where You Can Find More Information."

        Reservation of Rights.    Pursuant to the conveyances, SandRidge will expressly except and reserve all right, title and interest in and to any well and appurtenant production facilities not expressly conveyed to the trust.

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DESCRIPTION OF THE TRUST AGREEMENT

Creation and Organization of the Trust; Amendments

        The trust was created under Delaware law as a separate legal entity to acquire and hold the royalty interests for the benefit of the trust unitholders pursuant to an agreement between SandRidge, the trustee and the Delaware trustee. The royalty interests are passive in nature and neither the trust nor the trustee has any control over or responsibility for costs relating to the operation of the Underlying Properties. Neither SandRidge nor other operators of the Underlying Properties have any contractual commitments to the trust to provide additional funding or to conduct further drilling on or to maintain their ownership interest in any of these properties other than the obligations of SandRidge to designate and drill the Development Wells. After the conveyance of the royalty interests, however, SandRidge will retain an interest in each of the Underlying Properties. For a description of the Underlying Properties and other information relating to them, see "The Underlying Properties."

        The trust agreement will provide that the trust's business activities will generally be limited to owning the royalty interests and entering into hedging arrangements and activities reasonably related thereto, including activities required or permitted by the terms of the conveyances related to the royalty interests. As a result, the trust will not be permitted to acquire other oil, natural gas and natural gas liquids properties or royalty interests. Additionally, following the completion of this offering, the trust will not be able to issue any additional trust units.

        The beneficial interests in the trust are divided into 52,500,000 trust units. Each trust unit represents an equal undivided beneficial interest in the property of the trust. Please read "Description of the Trust Units" for additional information concerning the trust units.

        Amendment of the trust agreement generally requires the vote of holders of a majority of the trust units and a majority of the common units (excluding common units owned by SandRidge and its affiliates) voting in person or by proxy at a meeting of such unitholders at which a quorum is present. At any time that SandRidge and its affiliates collectively own less than 10% of the total trust units outstanding, however, the standard for approval will be the vote of a majority of the trust units, including units owned by SandRidge, voting in person or by proxy at a meeting of the unitholders at which a quorum is present. Abstentions and broker non-votes shall not be deemed to be a vote cast. However, no amendment may:

    increase the power of the trustee to engage in business or investment activities;

    decrease the incentive threshold or increase the subordination threshold or change the portion of the quarterly cash distributions payable as an incentive distribution;

    alter the rights of the trust unitholders as among themselves; or

    permit the trustee to distribute the royalty interests in kind.

        Amendments to the trust agreement's provisions addressing the following matters may not be made without SandRidge's consent:

    dispositions of the trust's assets;

    indemnification of the trustee;

    reimbursement of out-of-pocket expenses of SandRidge when acting as the trust's agent;

    termination of the trust; and

    amendments of the trust agreement.

        Certain amendments to the trust agreement do not require the vote of the trust unitholders. See "—Permitted Amendments."

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        The business and affairs of the trust will be managed by the trustee. The trustee will have no ability to manage or influence the operations of the Underlying Properties. SandRidge operates all of the Producing Wells and expects to operate substantially all of the Development Wells during the subordination period, but will have no ability to manage or influence the management of the trust, except through its limited voting rights as a holder of trust units and its limited ability to manage the hedging program.

Assets of the Trust

        Upon completion of this offering, the principal assets of the trust will consist of the PDP Royalty Interest and the Development Royalty Interest, the development agreement, the Drilling Support Lien, the administrative services agreement, the derivatives agreement, the hedge contracts with unaffiliated hedge counterparties, and any cash and temporary investments being held for the payment of expenses and liabilities and for distribution to the trust unitholders. See "The Trust" for more information.

Duties and Powers of the Trustee; Liability of the Trustee

        The duties and powers of the trustee are specified in the trust agreement and by the laws of the State of Delaware, except as modified by the trust agreement. The trust agreement provides that the trustee shall not have any duties or liabilities, including fiduciary duties, except as expressly set forth in the trust agreement and the duties and liabilities of the trustee as set forth in the trust agreement replace any other duties and liabilities, including fiduciary duties, to which the trustee might otherwise be subject.

        The trustee's principal duties consist of:

    collecting cash proceeds attributable to the royalty interests;

    paying expenses, charges and obligations of the trust from the trust's assets;

    receiving and making payments under the derivatives agreement with SandRidge and hedge contacts with the unaffiliated hedge counterparties;

    determining whether cash distributions exceed subordination or incentive thresholds, and making cash distributions to the unitholders and SandRidge (with respect to incentive distributions) in accordance with the trust agreement;

    causing to be prepared and distributed a Schedule K-1 for each trust unitholder and to prepare and file tax returns on behalf of the trust; and

    causing to be prepared and filed reports required to be filed under the Securities Exchange Act of 1934, as amended, and by the rules of any securities exchange or quotation system on which the trust units are listed or admitted to trading.

        SandRidge will provide administrative and other services to the trust in fulfillment of certain of the foregoing duties, pursuant to the administrative services agreement.

        If a trust liability is contingent or uncertain in amount or not yet currently due and payable, the trustee may create a cash reserve to pay for the liability. If the trustee determines that the cash on hand and the cash to be received are insufficient to cover the trust's liability, the trustee may cause the trust to borrow funds required to pay the liabilities. The trust may borrow the funds from any person, including the trustee or its affiliates or, as described below, SandRidge. The terms of such indebtedness, if funds were loaned by the entity serving as trustee or Delaware trustee, would be similar to the terms which such entity would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship, and such entity shall be entitled to enforce its rights with respect to any such indebtedness as if it were not then serving as trustee or Delaware trustee. If the trust borrows funds, the trust unitholders will not receive distributions until the borrowed funds are repaid (except, in certain circumstances, where the trust borrows funds from SandRidge). For information regarding SandRidge's obligation to loan funds to the trust in

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certain limited circumstances, see "—SandRidge Obligation to Fund Trust Expenses in Certain Circumstances" below.

        Each quarter, the trustee will pay trust obligations and expenses and distribute to the trust unitholders the remaining proceeds received from the royalty interests and hedging arrangements. The cash held by the trustee as a reserve against future liabilities must be invested in:

    interest bearing obligations of the United States government;

    money market funds that invest only in United States government securities;

    repurchase agreements secured by interest-bearing obligations of the United States government; or

    bank certificates of deposit.

        Alternatively, cash held for distribution at the next distribution date may be held in a non-interest bearing account.

        The trustee intends to withhold $1.0 million from the first distribution to unitholders to establish a cash reserve available to the trustee to pay trust administrative expenses. If the trustee uses such cash reserve (or any portion thereof) to pay or reimburse trust liabilities or expenses, no further distributions will be made to unitholders (except in respect of any previously determined quarterly cash distribution amount) until the cash reserve is replenished. This cash reserve will be part of the trust estate and will bear interest at the same rate as other cash on hand in the trust estate. Upon the dissolution of the trust, the balance of the cash reserve (including accrued interest thereon) will be distributed to trust unitholders on a pro rata basis.

        The trust may not acquire any asset except the royalty interests, the other assets described above under "—Assets of the Trust" and cash and temporary cash investments, and it may not engage in any investment activity except investing cash on hand. The trust may also enter into replacement hedges, or modify its hedging arrangements, in certain circumstances.

        The trust agreement provides that the trustee will not make business decisions affecting the assets of the trust. However, the trustee may:

    prosecute or defend, and settle, claims of or against the trust or its agents;