NEW YORK, Sept. 20, 2013 /PRNewswire/ -- Galbraith
Global Investment Management, LP ("Galbraith") announced that it
has delivered a letter to the Board of Directors (the "Board") of
Whiting Petroleum Corporation ("WLL")(NYSE: WLL) that strongly
urges the Board to divest WLL's holdings in Whiting USA Trust I ("WHX")(NYSE: WHX).
In the letter, Galbraith reiterates its belief that WHX is
grossly overvalued at a current market price near $5.00 per unit and that remaining distributions
to WHX unit holders will likely be less than $3.00 per unit.
The full text of the letter follows:
September 19,
2013
Board of Directors
Whiting Petroleum Corporation
1700 Broadway, Suite 2300
Denver, Colorado 80290-2300
Dear Sirs,
We write as concerned shareholders to warn you of a significant
downside risk associated with Whiting Petroleum Corporation's
("WLL") holdings in Whiting USA
Trust I ("WHX" or the "Trust"). As of the date hereof, WLL
holds 2,186,389 units of WHX, which equates to 15.77% of WHX's
outstanding units and nearly $11
million in market value. As we have previously and publicly
disclosed1, we believe that WHX's current unit price
remains divorced from the inherent value of the Trust. As the Board
of Directors of WLL, we believe that you must divest WLL's interest
in WHX and protect the significant value that we and fellow
shareholders are at risk of losing as a result of WLL's investment
in the Trust.
By virtue of the fact that WHX is a royalty trust created by
WLL, we believe that you, more than anyone, should be aware of how
drastically the market is overvaluing WHX's future distributions.
We believe that the value of WHX's remaining distributions to unit
holders is likely to be less than $3.00 per unit. As of the date hereof, WHX is
trading close to $5.00 per unit,
which is an astonishing 67% premium over what we believe is the
Trust's real value. We strongly urge you to liquidate your holdings
in WHX and honor your fiduciary duties to your shareholders by
protecting the over $4 million in
value that shareholders stand to lose as a result of WLL's position
in the Trust.
You have had many opportunities to protect your shareholders'
investment in WHX and could have saved your shareholders more than
$20 million had you divested your
holdings in WHX at an earlier date. Although the $4 million in value that is currently at stake is
a far cry from the $20 million in
value that should have been protected, you must act now before
WLL's investment in WHX erodes further.
We believe that divesting WLL's position in WHX is not only in
line with your fiduciary duties, but will also enable WLL to
dedicate its capital more prudently, such as by investing in wells
in the Red River region, where the value of this savings could
result in revenues of over $28
million.2
We welcome the opportunity to discuss our beliefs about WHX's
real value. We urge you to act promptly if you wish to protect your
shareholders' investment in the Trust.
Sincerely,
Galbraith Global Investment Management, LP
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.
1 See Press Releases issued by Galbraith Global
Investment Management, LP on April 30,
2013 (available here: http://ow.ly/oZfSH) and May 29, 2013 (available here:
http://ow.ly/oZfYl).
2 Based on well cost of $3-3.5
million and output of 200-300 MMBOE (numbers taken from WLL
presentation, p.23, dated 9/11/13), and BOE price of
$76.69 derived from current 8-K filed
on 9/9/13.
SOURCE Galbraith Global Investment Management, LP