NEW YORK, April 30, 2013 /PRNewswire/ -- Galbraith
Global Investment Management, LP ("Galbraith"), issued a warning
today to investors of Whiting USA
Trust I ("the Trust" or "WHX") (NYSE:WHX) that Galbraith believes
WHX's current unit price is divorced from what it believes is the
inherent value of the Trust. As a holder of a short position
in WHX, Galbraith believes that the market has failed up to now to
recognize the fact that WHX expects to make only nine more
quarterly distributions, and to terminate in August 2015 with no residual value.
WHX was formed to acquire and hold a term net profits interest
("NPI") in various oil and natural gas properties for the benefit
of its unit holders. The NPI entitles WHX to receive 90% of the net
proceeds from the sale of a total of 9.11 million barrels of oil or
oil equivalent ("MMBOE"). To date, WHX has distributed proceeds
from 6.78 MMBOE, leaving 2.33 MMBOE available for the Trust to
distribute. WHX has no assets besides the NPI in the remaining 2.33
MMBOE. Once the remaining 2.33 MMBOE have been produced and sold,
WHX will terminate and have no residual value.i
WHX is currently expected to produce and sell the remaining 2.33
MMBOE by June 30, 2015, and deliver
returns to unit holders over 9 distribution periods. WHX has
advised they expect production yields to decline by approximately
10% annually for the remaining two years of the Trust. In
addition, WHX has historically used derivatives contracts to hedge
the price of oil and gas. The profits from these contracts
accounted for an average of 17% of the value of the dividend over
the last four quarters.ii However, these
derivative contracts expired in 2012 and the dividend paid on
3/1/13 was the last one that will
include these profits (and the Trust will have no future
derivatives positions).iii As a result of the
declining production and the expiration of the hedges, Galbraith
expects that future distributions will be significantly smaller
than last quarter's distribution.
For the above reasons, Galbraith has a short position in WHX and
values the Trust's total future distributions at no more than
$4 per unit. Galbraith believes that
at a current market valuation of approximately $7 per unit, WHX is overvalued and, therefore,
investors holding a long position will lose a substantial portion
of their investment.
Forward Looking Statements
This press release contains "forward-looking statements."
Generally, the words "anticipate," "believe," "estimate,"
"expect," "intend," "may," "predict," "project," "plan," and
similar expressions identify forward-looking statements.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements to differ materially from any future
results, performance, or achievements expressed or implied by such
forward-looking statement. Consequently, no reliance should
be placed on any forward-looking statements contained herein and
the reader should consider any such forward-looking statements only
as Galbraith's current beliefs as of the date of this press
release. Even if these beliefs change because of future
events or circumstances, Galbraith declines any obligation to
publicly update or revise any such forward-looking statements.
i See 10-K filing on 3/15/13 pp. 10-11, 28 and 8-K filing on
2/7/13 for details of trust and
remaining distributions
ii See distribution summary at Whiting website:
http://www.whiting.com/whiting-usa-trust-i/dist-summary/
iii See 10-K filing on 3/15/13 pp. 11, 29
SOURCE Galbraith Global Investment Management, LP