Whiting USA Trust II Announces Final Quarterly Distribution
HOUSTON–(BUSINESS WIRE)–Whiting USA Trust II (the “Trust”) (OTC:WHZT) announced today that the Trust will make a final distribution to unitholders in the first quarter of 2022, which relates to net profits generated during the fourth quarterly payment period of 2021 and the release of funds withheld from previous distributions for the payment of the Trust’s administrative expenses. The net profits interest (“NPI”) held by the Trust, which was the only asset of the Trust other than cash reserves held for future Trust expenses, terminated on December 31, 2021, and accordingly, there will be no future net profits generated or distributed after the March 2022 Distribution (as defined in the next sentence). Unitholders of record on February 22, 2022 will receive a distribution of $0.163070 per unit, which is payable on or before March 1, 2022 (the “March 2022 Distribution”), which will be the final Trust distribution.
As of the date of this press release, 99.9% of the Trust’s total 18,400,000 units outstanding were held by Cede & Co. (the Depository Trust Corporation’s nominee) as the official unitholder of record. The record date of February 22, 2022 for this distribution is only applicable to unitholders of record such as Cede & Co., and the ex-date, as set by The Financial Industry Regulatory Authority, Inc., or FINRA, actually determines which street name holders will be eligible to receive the March 2022 Distribution.
The Trust was entitled to net cash profits generated by the underlying properties through the NPI termination date of December 31, 2021, and accordingly, results in the fourth quarterly payment period include two months of net profits as compared to three months of net profits for previous quarterly payment periods. Sales volumes, net profits and selected performance metrics for this quarterly payment period (mainly affected by October 2021 through November 2021 oil prices and September 2021 through October 2021 gas prices) were:
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Sales volumes: |
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Oil (Bbl)(1) |
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119,851 |
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Natural gas (Mcf) |
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116,249 |
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Total (BOE)(2) |
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139,226 |
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Gross proceeds: |
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Oil sales(1)(3) |
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$ |
8,736,194 |
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Natural gas sales(4) |
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673,865 |
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Total gross proceeds |
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$ |
9,410,059 |
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Costs: |
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Lease operating expenses(5) |
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$ |
6,144,588 |
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Production taxes |
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494,734 |
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Development costs(6) |
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466,151 |
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Total costs |
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$ |
7,105,473 |
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Net profits |
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$ |
2,304,586 |
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Percentage allocable to Trust’s Net Profits Interest |
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90 |
% |
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Total cash available for the Trust |
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$ |
2,074,127 |
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Proceeds from sale of oil and gas properties |
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– |
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Release of Trust cash reserves(7) |
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928,972 |
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Montana state income taxes withheld |
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(2,615) |
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Net cash proceeds available for distribution |
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$ |
3,000,484 |
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Trust units outstanding |
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18,400,000 |
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Cash distribution per Trust unit |
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$ |
0.163070 |
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Selected performance metrics: |
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Crude oil average realized price (per Bbl)(1)(3) |
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$ |
72.89 |
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Natural gas average realized price (per Mcf)(4) |
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$ |
5.80 |
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Lease operating expenses (per BOE)(5) |
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$ |
44.13 |
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Production tax rate (percent of total gross proceeds) |
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5.3 |
% |
__________
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(1) |
Oil includes natural gas liquids. |
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(2) |
Oil and gas volumes decreased 33% during the fourth quarterly payment period of 2021 as compared to the third quarterly payment period of 2021 primarily due to the fourth quarterly payment period including only two months of sales, as compared to three months of sales included in the third quarterly payment period. |
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(3) |
Oil sales proceeds decreased $2.8 million (or 24%) during the fourth quarterly payment period of 2021 as compared to the third quarterly payment period of 2021. The decrease in oil sales proceeds between periods was primarily due to the lower sales volumes included in the fourth quarterly payment period as compared to the previous quarterly payment period, which decrease was partially offset by an increase in NYMEX prices between periods and improved differentials. |
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(4) |
Gas sales proceeds decreased $0.1 million (or 8%) during the fourth quarterly payment period of 2021 as compared to the third quarterly payment period of 2021. The decrease in gas sales proceeds between periods was primarily due to the lower sales volumes included in the fourth quarterly payment period as compared to the previous quarterly payment period, which decrease was partially offset by an increase in NYMEX prices between periods. |
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(5) |
Lease operating expenses decreased $0.4 million (or 6%) during the fourth quarterly payment period of 2021 as compared to the third quarterly payment period of 2021. The decrease in lease operating expenses between periods was primarily due to the fourth quarterly payment period including only two months of expenses, as compared to three months of expenses included in the third quarterly payment period. This decrease was partially offset by higher ad valorem tax expense as a result of the timing of recognizing such expenses. |
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(6) |
Development costs increased $0.1 million (or 26%) during the fourth quarterly payment period of 2021 as compared to the third quarterly payment period of 2021. The increase in development costs was primarily the result of increased workover and development costs on non-operated properties, during the fourth quarterly payment period as compared to the previous quarterly payment period. |
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(7) |
During the second quarterly payment period of 2021, the Trustee determined it was necessary to establish a $1.0 million reserve to ensure that the Trust has sufficient cash available to pay its general and administrative expenses through its termination date, which includes periods after the termination of the net profits interest when no proceeds will be generated. The March 2022 Distribution includes the balance of such reserve less a provision for anticipated final expenses of the Trust. |
The NPI, which terminated December 31, 2021, was the only asset of the Trust other than cash reserves held for future Trust expenses and represented the right to receive 90% of the net cash proceeds from Whiting’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.
Trust Termination
The Trust is in the process of winding up its affairs and terminating. The Trust will pay no further distributions to unitholders after the March 2022 Distribution.
The market price of the Trust units will decline to zero upon the termination of the Trust. Since the assets of the Trust are depleting assets, a portion of each cash distribution paid on the Trust units, if any, should be considered by investors as a return of capital, with the remainder being considered as a return on investment.
Forward-Looking Statements
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 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. 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.
Contacts
Whiting USA Trust II
The Bank of New York Mellon Trust Company, N.A., as Trustee
Sarah Newell
(512) 236-6555
