Whiting USA Trust II Announces Trust Quarterly Distribution

Rhea-AI Summary

Whiting USA Trust II (OTC: WHZT) announced a distribution of $0.218464 per unit for Q4 2021, payable by November 29, 2021, to unitholders of record as of November 19, 2021. The Trust holds 18.4 million units, primarily owned by Cede & Co. Key metrics include oil sales of $11.6 million and natural gas sales of $735,405, resulting in net profits of $4.7 million. The Trust will terminate on December 31, 2021, after which a final distribution may occur by March 1, 2022. Future distributions are uncertain due to commodity price volatility.

Positive

• Announced a distribution of $0.218464 per unit for Q4 2021.
• Total gross proceeds for the quarter were $12.3 million.
• Net profits of $4.7 million indicate profitability.

Negative

• Oil sales decreased by 13% compared to the previous quarter.
• Total gross proceeds decreased by $0.6 million (4%).
• Trust termination anticipated on December 31, 2021, leading to a decline in unit value.

HOUSTON--(BUSINESS WIRE)-- Whiting USA Trust II (the “Trust”) (OTC:WHZT) announced today that the Trust will make a distribution to unitholders in the fourth quarter of 2021, which relates to net profits generated during the third quarterly payment period of 2021. Unitholders of record on November 19, 2021 will receive a distribution of $0.218464 per unit, which is payable on or before November 29, 2021 (the “November 2021 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 November 19, 2021 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 November 2021 distribution.

Sales volumes, net profits and selected performance metrics for the quarterly payment period (mainly affected by July 2021 through September 2021 oil prices and June 2021 through August 2021 gas prices) were:

Sales volumes:
Oil (Bbl)(1)(2)			179,970
Natural gas (Mcf)			171,405
Total (BOE)			208,538
Gross proceeds:
Oil sales(1)		$	11,552,469
Natural gas sales			735,405
Total gross proceeds(3)		$	12,287,874
Costs:
Lease operating expenses		$	6,530,713
Production taxes			639,821
Development costs			368,693
Cash settlements on commodity derivatives(4)			-
Total costs		$	7,539,227
Net profits		$	4,748,647
Percentage allocable to Trust’s Net Profits Interest			90	%
Total cash available for the Trust		$	4,273,782
Proceeds from sale of oil and gas properties			-
Provision for estimated Trust expenses(5)			(250,000	)
Montana state income taxes withheld			(4,037	)
Net cash proceeds available for distribution		$	4,019,745
Trust units outstanding			18,400,000
Cash distribution per Trust unit		$	0.218464
Selected performance metrics:
Crude oil average realized price (per Bbl)(1)(3)		$	64.19
Natural gas average realized price (per Mcf)(3)		$	4.29
Lease operating expenses (per BOE)		$	31.32
Production tax rate (percent of total gross proceeds)			5.2	%

__________
(1)		Oil includes natural gas liquids.
(2)		Oil volumes decreased 13% during the third quarterly payment period of 2021 as compared to the second quarterly payment period of 2021 primarily due to differences in the timing of receiving revenues associated with non-operated properties.
(3)		Total gross proceeds decreased $0.6 million (or 4%) during the third quarterly payment period of 2021 as compared to the second quarterly payment period of 2021. The decrease in gross proceeds between periods was primarily due to differences in the timing associated with revenues received from non-operated properties, as discussed above, that were partially offset by higher average realized oil and natural gas prices due to increased NYMEX prices between periods.
(4)		All costless collar hedge contracts terminated as of December 31, 2014, and no additional hedges are allowed to be placed on Trust assets. Consequently, there are no further cash settlements on commodity hedges for inclusion in the Trust’s computation of net profits (or net losses, as the case may be), and the Trust has increased exposure to oil and natural gas price volatility.
(5)		The provision for estimated Trust expenses decreased $1.0 million for the third quarterly payment period of 2021 as compared to the second quarterly payment period of 2021. 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 net proceeds will be generated. The Trustee may increase or decrease this reserve at any time without advance notice to the unitholders. It is expected that any such reserve that exceeds the Trust’s actual general and administrative expenses in future periods will be returned to Trust unitholders in a future distribution.

The Trust’s net profits interest (“NPI”), which is the only asset of the Trust other than cash reserves held for future Trust expenses, represents the right to receive 90% of the net 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 until the NPI terminates on December 31, 2021.

Trust Termination

After the NPI terminates on December 31, 2021, it is anticipated that the Trust will make a final quarterly distribution, if any, no later than March 1, 2022, to the Trust unitholders of record on the 50th day following December 31, 2021, and the Trust will wind up its affairs and terminate. After the termination of the Trust, it will pay no further distributions. Consequently, after the payment of the November 2021 distribution, the Trust expects to make only one final distribution in March 2022. In accordance with the terms of the NPI, the final quarterly distribution, if any, will only include proceeds for oil and gas production received by Whiting prior to December 31, 2021.

The market price of the Trust units will decline to zero at the termination of the Trust, which will occur after the termination of the NPI. 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, if any, should be considered by investors as a return of capital, with the remainder being considered as a return on investment.

Status of the Trust

Although oil and gas prices have improved since the lows experienced during 2020, oil and gas prices have historically been volatile and may fluctuate widely in the future. The Trust is unable to predict future commodity prices or future performance and distributions to unitholders are significantly impacted by low oil and natural gas prices and may be reduced to zero, as was the case during the second, third and fourth quarters of 2020 and first quarter of 2021. Additionally, the Trust’s distributions are sensitive to fluctuations in operating and capital expenditures and commodity price differentials.

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. Other important factors that could cause actual results to differ materially include fluctuations in oil and natural gas prices, the effect, impact, potential duration or other implications of the COVID-19 pandemic, or any government response to such pandemic, expenses of the Trust, risks inherent in the operation, production and development of oil and gas, future production and development costs, uncertainty of estimates of oil and natural gas reserves and production, and other risks described in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2020 and in its other filings with the Securities and Exchange Commission (the “SEC”). The Trust’s annual, quarterly and other reports filed under the Securities Exchange Act of 1934, as amended, are available electronically from the website maintained by the SEC at http://www.sec.gov. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006215/en/

Whiting USA Trust II

The Bank of New York Mellon Trust Company, N.A., as Trustee

Sarah Newell

(512) 236-6555

Source: Whiting USA Trust II

FAQ

What is the distribution amount for Whiting USA Trust II for Q4 2021?

The distribution amount is $0.218464 per unit.

When will the Q4 2021 distribution be paid to unit holders of WHZT?

The distribution will be paid on or before November 29, 2021.

What were the net profits for Whiting USA Trust II in Q3 2021?

The net profits for Q3 2021 were $4.7 million.

When is the termination date for Whiting USA Trust II?

The Trust is set to terminate on December 31, 2021.

What impacts can future commodity pricing have on WHZT distributions?

Future commodity price volatility can significantly impact distributions to unitholders.