SandRidge Mississippian Trust II (NYSE: SDR) this morning completed its long-awaited initial public offering (IPO) and expanded the float to 26 million shares from the initially planned 25 million shares. The stock priced at the top end of its projected range of between $19 and $21 per share.

I’ve written about this royalty trust extensively since the sponsor in January 2012 filed the first S-1 statement with the Securities and Exchange Commission. You can find my most recent analysis of the trust in the March 21, 2012, issue of The Energy Strategist, Flying under the Radar.

I explained my valuation model for US royalty trusts in the Feb. 23, 2012, issue of The Energy Strategist, Sticking to Our Values. My base valuation for SandRidge Mississippian Trust II is $25 per unit, while my aggressive valuation is close to $27 per unit–either model implies significant upside from current levels.

Newly listed stocks often fluctuate in value during their first few days of trading; investors buying SandRidge Mississippian Trust II should be prepared for some volatility over the next week or two. Nonetheless, now is a great opportunity to buy the units before the crowd catches on to its potential yield.

SandRidge Mississippian II will likely distribute about $2 per unit in 2012, which equates to a 9.5 percent yield at the stock’s current price. We expect the trust to pay out almost $3 per unit in 2013, equivalent to a yield of more than 14 percent at current levels. SandRidge Mississippian Trust II rates a buy up to 23 in the Growth Portfolio and on my Best Buys List.

The Portfolios include two other buy-rated US oil and gas trusts.

Units of Chesapeake Granite Wash Trust (NYSE: CHKR) have pulled back 5.5 percent today and now trade below our buy target of $25. The units had returned roughly 38 percent since the stock market began to rally in fall 2011, which, as we noted in Sticking to Our Values, made the position ripe for profit-taking.

The prospect of booking returns became more alluring after Reuters published a story revealing that Aubrey McClendon, CEO of Chesapeake Energy Corp (NYSE: CHK), had borrowed as much as $1.1 billion over the last three years against his stake in the company’s wells.

McClendon enjoys the opportunity to purchase a 2.5 percent stake in the company’s wells (and shoulder 2.5 percent of the production costs) and has borrowed against these positions to add to his investments. These revelations raise questions about conflicts of interest and McClendon’s ability to maintain his fiduciary duty to shareholders. Shares of Chesapeake Energy have plummeted 7.4 percent thus far today.

We regard the pullback in units of Chesapeake Granite Wash Trust as overdone and view this correction as a buying opportunity. Buy Chesapeake Granite Wash Trust under 25.

The final buy-rated royalty trust in the model Portfolios, SandRidge Permian Trust (NYSE: PER), rates a buy under 26. We expect this trust to disburse between $2.30 and $2.50 per unit over the next four quarters, which equates to a yield of 10 percent to 11 percent at current prices.