Whiting USA Trust II (NYSE:WHZ) announced the fourth Trust
distribution in 2015, which relates to net profits generated during
the third quarterly payment period of 2015. Unitholders of record
on November 19, 2015 will receive a distribution of $0.010003 per
unit, which is payable on or before November 30, 2015.
As of the date of this press release, 99.9% of the Trust’s total
18,400,000 units outstanding were held by Cede & Co. (The
Depository Trust Corporation’s nominee) as the official unitholder
of record. The November 19, 2015 record date as it relates to this
distribution is only applicable to unitholders of record such as
Cede & Co., and the ex-date, as set by the New York Stock
Exchange, actually determines which street name holders will be
eligible to receive the distribution.
Sales volumes, net profits and selected performance metrics for
the quarterly payment period were:
Sales volumes: Oil (Bbl)(1) 276,116 Natural gas
(Mcf)(2) 388,487 Total (BOE) 340,864
Gross proceeds:
Oil sales(1) $ 10,867,136 Natural gas sales(2) 975,849
Total gross proceeds $ 11,842,985 Costs: Lease
operating expenses $ 9,530,429 Production taxes 579,668 Development
costs 1,424,902 Cash settlements on commodity derivatives(3)
- Total costs $ 11,534,999
Net profits
$ 307,986 Percentage allocable to Trust’s Net Profits Interest
90 %
Total cash available for the Trust
$ 277,187 Provision for estimated Trust expenses (90,000 ) Montana
state income taxes withheld (3,129 ) Net cash proceeds
available for distribution $ 184,058
Trust units outstanding
18,400,000 Cash distribution per Trust unit $
0.010003 Selected performance metrics: Crude oil
average realized price (per Bbl)(1) $ 39.36 Natural gas average
realized price (per Mcf) $ 2.51 Lease operating expenses (per BOE)
$ 27.96 Production tax rate (percent of total gross proceeds) 4.9 %
____________
(1) Oil includes natural gas liquids. (2) The Trust’s
natural gas wells have experienced a production decline rate of 17%
year to date. (3) All costless collar hedge contracts terminated as
of December 31, 2014 (which hedging effects extended through the
quarterly payment period covered by the February 2015 distribution
to unitholders), and no additional hedges are allowed to be placed
on Trust assets. Thus, there will be no further cash settlements on
commodity hedges, and the Trust therefore has increased exposure to
oil and natural gas price volatility.
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 properties
located primarily in the Rocky Mountains, Permian Basin, Gulf Coast
and Mid-Continent regions of the United States.
The net profits interest will terminate on the later to occur of
(1) December 31, 2021, or (2) the time when 11.79 MMBOE (10.61
MMBOE to the 90% net profits interest) have been produced from the
underlying properties and sold, 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 estimated to be December 31,
2021 based on the Trust’s year-end 2014 reserve report. 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.
As of September 30, 2015, on a cumulative accrual basis, 5.51
MMBOE (52%) of the Trust’s total 10.61 MMBOE have been produced and
sold. Based on the Trust’s reserve report for the underlying
properties as of December 31, 2014, the Trust’s 10.61 MMBOE are
projected to be produced from the underlying properties prior to
December 31, 2021, and the net profits interest would therefore
terminate on December 31, 2021. The year-end reserve report
reflects an expected annualized decline rate of approximately 8.0%
between 2015 and 2021. However, the Trust’s year-end reserve report
is derived from NYMEX oil and gas prices of $94.99 per Bbl and
$4.35 per Mcf pursuant to current SEC and FASB guidelines, whereas
the quoted NYMEX prices for oil and gas on November 3, 2015 were
$47.90 per Bbl and $2.25 per Mcf. Lower oil and gas prices are
likely to cause a reduction in the amount of oil, natural gas and
natural gas liquids that is economic to produce from the underlying
properties which may extend the length of time required to produce
11.79 MMBOE (10.61 MMBOE to the 90% net profits interest).
Additionally, cash distributions to unitholders may decline at a
faster rate than the rate of production due to industry specific
risks and uncertainties such as i) commodity price declines, ii)
fixed and semi-variable costs not decreasing as fast as production
volumes or iii) expected future development being delayed, reduced
or cancelled.
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.
Additionally, the estimated time when the market price of the Trust
units should decline to zero is based on the economic rights of the
Trust units. The trading price of the Trust units is affected by
factors outside of the control of the Trust or Whiting, including
actions of market participants, among others. Other important
factors that could cause actual results to differ materially
include expenses of the Trust, fluctuations in oil and natural gas
prices, uncertainty of estimates of oil and natural gas reserves
and production, the timing of any such production, risks inherent
in the operation, production and development of oil and gas
properties, and future production and development 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151105006873/en/
Whiting USA Trust IIThe Bank of New York Mellon Trust
Company, N.A., as TrusteeMike Ulrich,
512-236-6599http://WhitingWHZ.investorhq.businesswire.com/
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