23:00 | 09.02.2018
Whiting USA Trust II Announces Trust Quarterly Distribution

Whiting USA Trust II (OTC: WHZT) announced today that the Trust will
make a distribution to unitholders in the first quarter of 2018, which
relates to net profits generated during the fourth quarterly payment
period of 2017. Unitholders of record on February 19, 2018 will receive
a distribution of $0.171231 per unit, which is payable on or before
March 1, 2018 (the “February 2018 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
effective record date of February 19, 2018 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 February 2018 distribution.

Sales volumes, net profits and selected performance metrics for the
quarterly payment period were:



Sales volumes:

Oil (Bbl)(1)


Natural gas (Mcf)




Total (BOE)(2)


Gross proceeds:

Oil sales(1)



Natural gas sales




Total gross proceeds(2)





Lease operating expenses



Production taxes


Development costs


Cash settlements on commodity derivatives(3)



Total costs




Net profits



Percentage allocable to Trust’s Net Profits Interest




Total cash available for the Trust



Provision for estimated Trust expenses



Montana state income taxes withheld




Net cash proceeds available for distribution



Trust units outstanding




Cash distribution per Trust unit




Selected performance metrics:

Crude oil average realized price (per Bbl)(1)



Natural gas average realized price (per Mcf)(4)



Lease operating expenses (per BOE)



Production tax rate (percent of total gross proceeds)






Oil includes natural gas liquids.


The February 2018 distribution includes production of 21,099 BOE
attributable to the first two Keystone South farm-out wells, which
production generated gross proceeds of $1.0 million during the
fourth quarterly payment period of 2017.


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.


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.


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
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.
Trust Termination
The Trust will wind up its affairs and terminate shortly after the
earlier of (a) the NPI termination date or (b) the sale of the net
profits interest. The NPI termination date is 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, which is estimated to be December 31, 2021 based on
the Trust’s year-end 2017 reserve report. After the termination of the
Trust, it will pay no further distributions.

The market price of the Trust units will decline to zero at the
termination of the Trust, which will occur around or shortly after the
termination or sale of the net profits interest. 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.
Net Profits Interest Overview
As of December 31, 2017, on a cumulative accrual basis, 7.95 MMBOE (75%)
of the Trust’s total 10.61 MMBOE have been produced and sold or
divested. Based on the Trust’s reserve report for the underlying
properties as of December 31, 2017, the Trust’s 10.61 MMBOE are
projected to be produced by December 31, 2021, shortly after which the
Trust would terminate. The 2017 year-end reserve report reflects
expected annualized production decline rates of approximately 13.3% for
oil and 25.9% for gas between 2018 and 2021, which estimates are derived
from NYMEX oil and gas prices of $51.34 per Bbl and $2.98 per MMbtu as
calculated pursuant to current SEC and FASB guidelines. As of January
31, 2018, the NYMEX oil and gas prices were $64.73 per Bbl and $3.00 per
MMBtu, respectively.

Although oil and gas prices have stabilized since the lows experienced
during the 2016 distribution periods, oil and gas prices historically
have been volatile and may fluctuate widely in the future. As a result
of the low commodity prices experienced during 2016, the Trust did not
have sufficient available funds to make any distributions to unitholders
during the first three calendar quarters of 2016, and the NPI generated
relatively low distributable income for the fourth quarter of 2016.
Additionally, in the current commodity price environment, the Trust’s
distributions have increased sensitivity to fluctuations in operating
and capital expenditures, as was the case for the third quarterly
payment period of 2017 which resulted in a cash distribution of
approximately $0.01 per Trust unit. If the NPI generates net losses or
limited net proceeds, the net profits interest may not provide
sufficient funds to the Trustee to enable it to pay all of the Trust’s
administrative expenses.

The Trust is unable to predict future commodity prices. Lower commodity
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 in turn extend the length of time required to
produce the Trust’s 10.61 MMBOE. Alternatively, higher commodity prices
may potentially result in an increase in the amount of oil, natural gas
and natural gas liquids that is economic to produce from the underlying
properties, however, higher prices could result in increases in costs of
materials, services and personnel. Furthermore, 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) oil and gas
price declines, (ii) fixed and semi-variable costs not decreasing as
fast as production volumes, (iii) expected future development being
delayed, reduced or cancelled or (iv) increased operating or capital
expenditures for non-operated properties that are outside the control of
Whiting or the Trust.
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 Trust will terminate is
based on the Trust’s reserve report of the underlying properties as of
December 31, 2017 and is subject to the assumptions contained therein.
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, uncertainty as to 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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