Whiting USA Trust II Announces Trust Quarterly Distribution
February 06 2015 - 3:30PM
Business Wire
Whiting USA Trust II (NYSE: WHZ) announced the first Trust
distribution in 2015, which relates to net profits generated during
the fourth quarterly payment period of 2014.
Unitholders of record on February 19, 2015 will receive a
distribution of $0.327255 per unit, which is payable on or before
March 2, 2015.
Volumes, average sales prices and net profits for the quarterly
payment period were:
Sales volumes: Oil (Bbl)(1) 289,980 Natural
gas (Mcf) 501,484 Total (BOE) 373,561 Average sales
prices: Oil (per Bbl)(1) $ 64.65 Natural gas (per Mcf)(2) $ 4.45
Gross proceeds:
Oil sales(1) $ 18,745,977 Natural gas sales 2,230,670
Total gross proceeds $ 20,976,647 Costs: Lease operating
expenses(3) $ 12,625,597 Production taxes 1,056,725 Development
costs 1,420,072 Cash settlements on commodity derivatives(4)
(988,530 ) Total costs $ 14,113,864
Net profits
$ 6,862,783 Percentage allocable to Trust’s Net Profits Interest
90 %
Total cash available for the Trust
$ 6,176,505 Provision for estimated Trust expenses (150,000 )
Montana state income taxes withheld (5,010 ) Net cash
proceeds available for distribution $ 6,021,495
Trust units outstanding
18,400,000 Cash distribution per Trust unit $
0.327255 (1) Oil includes natural gas liquids.
(2) The average sales price of natural gas for the gas
production months within the distribution period exceeded the
average NYMEX gas prices for those same months within the period
due to the “liquids rich” content of a portion of the natural gas
volumes produced by the underlying properties. (3) The
Trust’s underlying properties experienced increases in lease
operating expenses compared to the prior quarter’s distribution
because the fourth quarterly payment period of 2014 includes $2.8
million in ad valorem taxes. Ad valorem taxes are paid annually,
typically in the fourth quarter, and therefore, similar payments
were not made during the prior period. This timing of payment for
the underlying properties’ annual ad valorem tax bills is
consistent with when the prior year’s tax payments were made.
(4) 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. Consequently, for all distributions after the
February 2015 distribution, there will be no further cash
settlements on commodity hedges, and the Trust will have 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 currently estimated to be
December 31, 2021. 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 December 31, 2014, on a cumulative accrual basis, 4.60
MMBOE (43%) 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. Additionally, the year-end reserve
report reflects an expected annualized decline rate of
approximately 8.0% between 2015 and 2021. However, 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, or if expected future
development is 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.
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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