Whiting USA Trust II
For more information regarding Whiting USA Trust II
The Bank of New York Mellon Trust Company, N.A., Corporate Trust
919 Congress Ave, Suite 500
Austin, TX 78701
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Whiting USA Trust II was formed in December 2011 by Whiting Petroleum Corporation to own a term net profits interest in certain long-lived, predominantly producing properties located primarily in the Rocky Mountain, Permian Basin, Gulf Coast and Mid-Continent regions of the United States. The net profits interest will entitle the trust to receive 90% of the net proceeds from Whiting’s interests in the underlying properties. The trust will make quarterly cash distributions of substantially all of its quarterly cash receipts of net proceeds attributable to the trust, after deduction of fees and expenses for administration of the trust, to holders of its trust units during the term of the net profits interest.
The net profits interest will terminate on the later to occur of (1) December 31, 2021, or (2) the time when 11.79 million barrels of oil equivalent (MMBOE) have been produced from the underlying properties and sold (which is the equivalent of 10.61 MMBOE in respect to the trust’s 90% net profits interest). As of December 31, 2013, the total estimated proved reserves attributable to the underlying properties were 14.81 MMBOE. The net profits interest entitles the trust to receive net proceeds from the sale of production of an estimated 10.61 MMBOE of proved reserves during the term of the net profits interest, calculated as 90% of the proved reserves attributable to the underlying properties expected to be produced during the term of the net profits interest. The exact rate of production attributable to the underlying properties cannot be predicted. However, because the term of the trust continues until the later of December 31, 2021, or the time when the terminal production amount has been produced and sold, trust unitholders will have the right to participate in additional proceeds attributable to the underlying properties in excess of 10.61 MMBOE in the event such amount is produced and sold prior to December 31, 2021.
The underlying properties include interests in 1,308 gross (388.5 net) producing wells located in 48 predominantly mature fields with established production profiles in 10 states. As of December 31, 2013, approximately 99.0% of estimated proved reserves attributable to the underlying properties were classified as proved developed producing reserves, 0.8% were classified as proved developed non-producing reserves and 0.2% were classified as proved undeveloped reserves. The proved reserves associated with the 90% net profits interest were comprised of approximately 77% oil and natural gas liquids and 23% natural gas.
Based on the reserve report, production attributable to the underlying properties is expected to decline at an average year-over-year rate of approximately 8.4% between 2014 and 2021, assuming no additional development drilling or investments other than those assumed in the year-end reserve report. Whiting operates approximately 58% of the estimated proved reserve volumes of these properties.