Whiting USA Trust I Announces Trust Quarterly Distribution
August 07 2014 - 4:59PM
Business Wire
Whiting USA Trust I (NYSE: WHX) announced the third Trust
distribution in 2014, which relates to net profits generated during
the second quarterly payment period of 2014.
Unitholders of record on August 19, 2014 will receive a
distribution of $0.560534 per unit, which is payable on or before
August 29, 2014.
Volumes, average sales prices and net profits for the quarterly
payment period were:
Sales volumes: Oil (Bbl)(1) 170,304 Natural gas (Mcf)
597,391 Total (BOE) 269,869 Average sales prices: Oil (per
Bbl)(1) $ 85.97 Natural gas (per Mcf) $ 4.74 Gross proceeds:
Oil sales(1) $ 14,640,946 Natural gas sales 2,831,400
Total gross proceeds $ 17,472,346 Costs: Lease operating
expenses $ 7,384,578 Production taxes 1,120,131 Realized gains on
hedging settlements(2) - Total costs $ 8,504,709
Net profits $ 8,967,637 Percentage allocable to
Trust’s Net Profits Interest 90 % Total cash
available for the Trust $ 8,070,873 Provision for estimated Trust
expenses (250,000 ) Montana state income taxes withheld
(49,694 ) Net cash proceeds available for distribution $ 7,771,179
Trust units outstanding 13,863,889 Cash
distribution per Trust unit $ 0.560534
(1) Oil includes natural gas
liquids.
(2) All costless collar hedge
contracts terminated as of December 31, 2012 (which hedging effects
extended through the quarterly payment period covered by the
February 2013 distribution to unitholders) and no additional hedges
are allowed to be placed on Trust assets. Consequently, for all
distributions after February 2013, there have not been and will not
be any cash settlement gains or losses on commodity derivatives,
and the Trust therefore has increased exposure to oil and natural
gas price volatility currently.
The Trust’s net profits interest represents the right to receive
90% of the net proceeds from Whiting Petroleum Corporation’s
interests in certain existing oil and natural gas producing
properties located primarily in the Rocky Mountains, Mid-Continent,
Permian Basin and Gulf Coast regions of the United States.
The net profits interest will terminate when 9.11 MMBOE (which
amount is equivalent to 8.20 MMBOE attributable to the net profits
interest) have been produced and sold from the underlying
properties, and the Trust will soon thereafter wind up its affairs
and terminate, after which it will pay no further distributions.
Consequently the market price of the Trust units will decline to
zero around or shortly after the net profits interest termination
date, which is currently estimated to occur during the quarterly
payment period ending March 31, 2015. Therefore, to the extent that
the Trust units are trading at a price substantially in excess of
the aggregate distributions that may be reasonably expected to be
made prior to the termination of the Trust, the market price
decline in Trust units is likely to include one or more abrupt
substantial decreases. As described in the Trust’s public filings,
since the assets of the Trust are depleting assets, a portion of
each cash distribution paid on the Trust units should be considered
by investors as a return of capital, with the remainder being
considered as a return on investment or yield.
As of June 30, 2014, on a cumulative accrual basis, 7.60 MMBOE
(93%) of the Trust’s total 8.20 MMBOE have been produced and sold.
Based on the Trust’s reserve report for the underlying properties
as of December 31, 2013, the 9.11 MMBOE of reserves (8.20 MMBOE to
the 90% net profits interest) are projected to be produced from the
underlying properties by March 31, 2015, shortly after which the
Trust would terminate. Additionally, the year-end reserve report
reflects an expected annualized decline rate of approximately 11%
for crude oil and 15% for natural gas from 2014 through the
estimated net profits interest termination date. However, the rate
of future production cannot be predicted with certainty, and 9.11
MMBOE (8.20 MMBOE to the 90% net profits interest) may be produced
before or after the currently projected date. In addition, cash
distributions to unitholders may decline at a faster rate than the
rate of production due to fixed and semi-variable costs
attributable to the underlying properties.
This press release contains forward-looking statements,
including all statements made in this press release other than
statements of historical fact. No assurances can be given that such
statements will prove to be correct. The announced distributable
amount is based, in part, on the amount of cash received or
expected to be received by the Trust from Whiting Petroleum
Corporation pursuant to the net profits interest with respect to
the relevant quarterly period. Any differences in actual cash
receipts by the Trust could affect this distributable amount. Other
important factors that could cause actual results to differ
materially include expenses of the Trust, the establishment of a
cash reserve for the payment of expenses after the final
distribution to unitholders, fluctuations in oil and natural gas
prices, uncertainty of estimates of oil and natural gas reserves
and production, risks inherent in the operation and production of
oil and gas properties, and future production costs. Statements
made in this press release are qualified by the cautionary
statements made in this press release. The Trustee does not intend,
and assumes no obligation, to update any of the statements included
in this press release.
Whiting USA Trust IThe Bank of New York Mellon Trust
Company, N.A., as TrusteeMary Jo Davis,
512-236-6545http://whx.investorhq.businesswire.com/