Whiting USA Trust I Announces Trust Quarterly Distribution
November 07 2014 - 5:01PM
Business Wire
Whiting USA Trust I (NYSE: WHX) announced the fourth Trust
distribution in 2014, which relates to net profits generated during
the third quarterly payment period of 2014.
Unitholders of record on November 19, 2014 will receive a
distribution of $0.509336 per unit, which is payable on or before
December 1, 2014.
Volumes, average sales prices and net profits for the quarterly
payment period were:
Sales volumes: Oil (Bbl)(1) 178,516 Natural
gas (Mcf) 576,358 Total (BOE) 274,576 Average sales
prices: Oil (per Bbl)(1) $ 81.56 Natural gas (per Mcf) $ 4.12
Gross proceeds:
Oil sales(1) $ 14,560,019 Natural gas sales 2,376,400
Total gross proceeds $ 16,936,419 Costs: Lease operating
expenses $ 7,441,813 Production taxes 1,204,835 Cash settlements on
commodity derivatives(2) - Total costs $ 8,646,648
Net profits
$ 8,289,771 Percentage allocable to Trust’s Net Profits Interest
90 % Total cash available for the Trust $ 7,460,794
Provision for estimated Trust expenses(3) (350,000 ) Montana state
income taxes withheld (49,422 ) Net cash proceeds available
for distribution $ 7,061,372
Trust units outstanding
13,863,889 Cash distribution per Trust unit $
0.509336 (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 settlements on
commodity derivatives, and the Trust therefore has increased
exposure to oil and natural gas price volatility currently.
(3) The Trust agreement authorizes the Trustee to establish a cash
reserve for the payment of any liability that is contingent or
uncertain in amount or that is not otherwise currently due and
payable. In preparation for the termination of the Trust, the
Trustee must establish a cash reserve for the payment of Trust
termination-related expenses that are estimated to be incurred or
paid after the final distribution to unitholders. The Trust will
terminate shortly after the net profits interest termination date,
which is currently estimated to occur during the quarterly payment
period ending March 31, 2015. The initial withholdings to establish
this cash reserve amounted to $100,000 and are included in the
provision for estimated Trust expenses of $350,000 in the November
2014 distribution. This reserve may be funded from time to time by
additional withholdings from future distributions, including the
final distribution to be made to unitholders.
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 (8.20
MMBOE to the 90% 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 September 30, 2014, on a cumulative accrual basis, 7.85
MMBOE (96%) 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, an increase in the 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 TrusteeMike Ulrich,
512-236-6599http://whx.investorhq.businesswire.com/