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Whiting USA Trust II (WHZ) Message Board

  • santosjames39 santosjames39 Feb 8, 2013 5:58 PM Flag

    Whats wrong with 16%

    @ 65 cents a quarter with todays 16.25 closing thats 16% a year. who holds trusts till the end.

    Sentiment: Strong Buy

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    • If there was nothing wrong with the lower distribution then the trust wouldn't have dropped. It did so there is something wrong.

    • I hear ya, and you're right. 15-16% is nothing to sneeze at. If it's at least somewhat sustainable. But as liza pointed out, this thing isn't even close to living up to the expectations the parent company laid out for it, and the reasons for the underperformance are especially clear. That makes sustainability a huge question mark. GLTA

      • 1 Reply to chrisoverb2002
      • Lisa is a very good investor, I regard her thinking has good from a trading angle.
        The premise of the any O&G business model depends on the commodity value. This fact is true for all producers of WTI and WTS in: The Permian Eagle Fort Basin, Sand ridge basin, Big horn basin, Mississippian basin, have the same problem, they cannot have a quick access to the GOM refineries. They can wait their turn or they can discount and sale to the local refineries. This bottle neck is making rail crude transport competitive, especially to the East Coast.
        That is the time we are dealing with. It will ultimately change, in 2 to 4 years. Exporting of US WTI crude is out of the question, we need to import Brent to top off the GOM refineries. We can export refine product, that all. You figure out the pipeline fees, and you have the discount rate.
        The Seaway pipeline a 42 inch can carry 130,000 BPD of crude at full capacity. The Future Keystone a 36 inch, once built, will carry 130,000 BPD. That will help a great deal.

        Sentiment: Buy

    • There is nothing wrong with 16% distribution. Most traders want a large distribution and an increase of the unit price near the xdate. The present situation in general is the WTI oil pricing.
      The reason WTI is $23.10 less than Brent is access to GOM refineries. There are 2 bottles necks in Cushing OK and Midland TX. The pipeline throughput cannot sustain the new volume of crude oil production. Cushing has more than 250 days of storage waiting to flow to the GOM. This consequence is detrimental to the WTI pricing. The refineries outside the GOM can buy WTI and WTC at a significant discount. The GOM refineries have to import Brent crude, because LLC cannot provide enough crude. The GOM corridor refineries need 8 million BPD of crude to stay at 90% production. So the profit margin on the GOM is challenged by the Brent crude high price, and the refineries outside the GOM are buying WTI or WTC at significant discount, last I check the retail price of gasoline or diesel was the national average. ALDW and NTI were on a tire today. By selling at lose WHZ today was the Divi amount, ALDW and NTI neutralize my loss. I wanted to keep WHZ but I have to take care of no. 1, moi!!

      • 3 Replies to ousaouparis
      • Yeah, but refinery access wasn't an unforeseen issue that suddenly popped up this quarter. The situation you describe has prevailed for 2+ years. And sub-optimal WTI pricing doesn't explain the underperformance, either. WTI prices were a lot higher in the most recent quarter than in the one previous to it. I'm wondering if selling WHZ today might be a good idea. GLTA

      • Ousaparis, your knowledge base is impressive. Have you compared the WHZ profit sources with those of BPT, which has a similar Trust structure, but whose payout INCREASED for the same 4thQ 2012?
        Is it possible that management personnel or skills at WHZ may need an upgrade?

        Sentiment: Buy

      • Even though I'm very discouraged by trusts right now, I'm holding my shares in WHZ. I'm also holding my shares in ALDW and NTI. I agree, the that ALDW and NTI have an advantage right now, but we never know what the future holds. NTI went up almost $2.00 on Fri. enjoy the ride for now. Nothing, at all wrong with a 16% yield. Just watch the crackspreads.