SandRidge Mississippian Trust I

Impairment of Investment in Royalty Interests.  On a quarterly basis, the Trust evaluates the carrying value of the Investment in Royalty Interests by comparing the undiscounted cash flows expected to be realized from the Royalty Interest to the carrying value. If the expected future undiscounted cash flows are less than the carrying value, the Trust recognizes an impairment loss for the difference between the carrying value and the estimated fair value of the Royalty Interest, which is determined using future cash flows of the net oil, natural gas and NGL reserves attributable to the Royalty Interests, discounted at a rate based upon the weighted average cost of capital of royalty trusts. The weighted average cost of capital is based upon inputs that are readily available in the public market. The future cash flows of the net oil, natural gas and NGL reserves attributable to the Royalty Interests utilizes the oil and natural gas futures prices readily available in the public market and estimated quantities of oil, natural gas and NGL reserves that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under existing economic and operating conditions. As there are numerous uncertainties inherent in estimating quantities of proved reserves, these quantities are a significant unobservable input resulting in the fair value measurement being considered a level 3 measurement within the fair value hierarchy.  The Trust recorded impairments in the carrying value of the Investment in Royalty Interests of $40.1 million and $127.0 million during the nine-month periods ended September 30, 2016 and 2015, respectively. The impairments resulted in non-cash charges to trust corpus and did not affect the Trust’s distributable income. Material write-downs in subsequent periods may occur if commodity prices decline. Any impairment would result in a non-cash charge to trust corpus and would not affect the Trust’s distributable income. See “Risks and Uncertainties” in Note 5 below for further discussion.

Registration Rights Agreement. The Trust is party to a registration rights agreement pursuant to which the Trust has agreed to register the offering of the Trust units held by SandRidge and certain of its affiliates and permitted transferees upon request by SandRidge. The holders have the right to require the Trust to file no more than five registration statements in aggregate, one of which has been filed to date. The Trust does not bear any expenses associated with such transactions.

Derivative Settlements. The Trust’s derivatives agreement with SandRidge reduced the Trust’s exposure to commodity price volatility attributable to a portion of production from the Royalty Interests through December 31, 2015 by the use of oil fixed price swaps and natural gas collars. Net cash settlements received under the derivatives agreement for the three-month period ended September 30, 2015 for production from March 1, 2015 to May 31, 2015 were approximately $5.9 million. This effectively increased the average price received for oil by $171.61 per Bbl to $219.90 per Bbl due to the ratio of the oil volumes hedged to oil volumes produced and the substantial declines in the market prices of oil compared to contract prices. The average price received for natural gas was effectively increased by $0.58 per Mcf to $2.74 per Mcf ($2.23 per Mcf including the impact of post-production expenses) during the 2015 period.

Production Taxes. Production taxes for the nine-month period ended September 30, 2016 totaled approximately $0.2 million, or $0.60 per Boe, and were approximately 3.9% of royalty income. Production taxes for the nine-month period ended September 30, 2015 totaled approximately $0.4 million, or $0.81 per Boe, and were approximately 3.0% of royalty income.

Future Trust Distributions to Unitholders. During the three-month production period from June 1, 2016 to August 31, 2016, total sales volumes were slightly lower than the previous period; however, oil, natural gas and NGL prices increased. On October 27, 2016, the Trust declared a cash distribution of $0.0542 per unit covering production for the period. The distribution will be paid on or about November 25, 2016 to record unitholders as of November 11, 2016 and was calculated as follows (in thousands, except for unit and per unit amounts):