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Whiting USA Trust II (WHZ) Message Board

  • dorkymcirish dorkymcirish Dec 18, 2012 11:16 AM Flag

    Liza

    So with these sell offs, what are your thoughts on value? WHZ at $14.50, SDR close to $16, SDT and PER near $17. Do you have any price targets you think these things should be at?

    I'm buying them all up but sold some WHZ near $18 and some SDT near $17 (to buy more whz near $15). Its weird for them to be trading so close together when I've got to imagine they have quite different values. Anything not adding up for you that you would be willing to share? Thanks!

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    • I don't do target prices and I answered (kind of) the same question (without really answering the question) on the PER board. I'm holding them all (not adding, not selling) but the MLP model is superior to trusts.

      • 5 Replies to lizahuang54321
      • I read your post over there and it makes sense. I'm buying on the dips but I'm more short term. Thanks.

      • Liza, for once I disagree, and I cannot post my comments. This new MB suks.

        Sentiment: Buy

      • Liza, for once I disagree: The model MLP and US Royal Trust are very different, I would even say the reasoning of establishing a US Royal Trust is very different.
        US Royal Trust is a straight forward deal. Monetize the value of the oil or gas to recoup the development cost and minimize the taxation as much as possible by passing it on to unit holders, with lower tax rate. The owner and/or operator own the infrastructures and use it to produce a profit. The cost of maintaining and managing the production is minimized by the amortization of the infrastructure. The owner and/or operator are effectively left with very little tax liability. From a unit holder point of view, the value is very easy to understand, you get the profit for the sale of the oil or gas through the distribution. The distribution, from the owner and /or operator is the way to lower his tax liability as much as possible. The oil and gas market dictate the value of what is sold and what is left to be sold. Once the oil or gas cannot be produced with a profit, the US Royal Trust ends. Alternatively could have a time or production quantity limits.
        The MLP makes the unit holder a partner. The unit holders literally own the oil or gas reserve but the entire infrastructure. The unit price is depending on the value of the oil or gas but of the residual value of the infrastructure. The maintenance of the infrastructure is a cost that the unit holder is liable for. The MLP declared value can change by new acquisitions including an added distinctive corporation. To be short, the value of a MLP may change according to the sale or purchased of new wells, infrastructure etc. For the unit holder a much more difficult value to ascertain. MLP can live forever, but at changing values.
        The US Royal Trust straight forward to analyses, MLP much more complicated and requires lots of homework. Both models have good and bad, but the US Royal Trust is, from my point of view better.

        Sentiment: Buy

      • US Royal Trust is a straight forward deal. Monetize the value of the oil or gas to recoup the development cost and minimize the taxation as much as possible by passing it on to unit holders, with lower tax rate. The owner and/or operator own the infrastructures and use it to produce a profit. The cost of maintaining and managing the production is minimized by the amortization of the infrastructure. The owner and/or operator are effectively left with very little tax liability. From a unit holder, the value is very easy to understand, you get the profit for the sale of the oil or gas through the distribution. The distribution, from the owner and /or operator is the way to lower his tax liability as much as possible. The oil and gas market dictate the value of what is sold and what is left to be sold. Once the oil or gas cannot be produced with a profit, the US Royal Trust ends.
        The MLP makes the unit holder a partner. The unit holders literally own the oil or gas reserve but the entire infrastructure. The unit price is depending on the value of the oil or gas but of the residual value of the infrastructure. The maintenance of the infrastructure is a cost that the unit holder is liable for. The MLP declared value can change by new acquisitions including a distinctive corporation. To be short, the value of a MLP may change according to the sale or purchased of new wells, infrastructure etc. For the unit holder a much more difficult value to ascertain. MLP can live forever, but at changing values.
        The US Royal Trust straight forward to analyses, MLP much more complicated and requires lots of homework. Both models have good and bad, but the US Royal Trust is, from my point of view better.

        Sentiment: Buy

      • MLP model superior to trust? What! Did you eat paint chips as a child? All apples better than all oranges? Even if one likes apples better quality still matters. Check yourself, I get a unit price of 19.80 for WHZ ... as fair value.

    • IMO WHZ should trade at a premium to SDR, SDT, PER, CHKR due to expected income through the 9 year life of the trust. The parent company WLL has a superior balance sheet to SD and CHK and what WHZ needs is some sponsorship from Wall Street or even a mention by Mad Money. I've tried calling in but can never get through.

 
WHZ
12.21+0.01(+0.08%)Sep 30 4:07 PMEDT

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