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Whiting USA Trust I Whiting USA Message Board

  • peristentone peristentone Jan 1, 2013 7:00 AM Flag

    Average Oil Selling Price and Expenses in Q3 2012

    Can someone explain how WHX managed to sell its oil produced in third quarter 2012 at $75.26 per barrel? The West Texas Crude chart ($WTIC) apparently spent almost all of its time in this quarter at prices above $85. Are we being forced to discount from WTIC spot prices because of some kind of transportation problem?

    While we are at it, how can they have had higher expenses for oil production services in this quarter? Costs were up 15% in this quarter. I don't see oil services companies showing 15% higher revenues for all customers in Q3. Did I miss something? Why is WHX being singled out to receive higher costs?

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    • MVO just announced their distribution and they also reported increased costs.
      So looks not specific to WHX.

    • The price you are referring to applies only to Cushing, Oklahoma.
      Prices everywhere else are different and mostly less (and often a lot less) than the Cushing price.
      Just like the Brent-WTI differential that gets a lot of press, there are wide differentials within North America. Yes, it is due to pipeline bottlenecks. Not sure specifically where WHX sells its oil but you cannot assume they get Cushing prices.

      • 1 Reply to lizahuang54321
      • Thanks Liza. At least you would like to see them discuss where they sell and what the basis for the differential against WTIC is.

        Do you have any thoughts on why their oil services pricing goes up 15% last quarter?

        Isn't there a basic auditing problem with these trusts? They can sell the commodity below market to a related party or middleman as a trade for a favor to the parent company, or as part of some contract not held in the trust. How would a trust holder ever know?

        They can spend too much on operating costs for similar reasons, and how would a trust holder ever know?

        It seems to me these vehicles are being created for the benefit of the parent oil companies, not for shareholders. There is a basic accountability issue here that the current setups don't address well.

    • ck out whz numbers maybe you will find the costs

      Sentiment: Hold

      • 1 Reply to g_rat9
      • In the Whiting Trust 10Qs, they typically disclose only minimal detail on leasing operating expenses. I didn't see any greater level of detail in WHZ. Did you? Can you point to the page of the 10Q where you saw this detail?

        All I know is that WHX had its dividend collapse last quarter. I don't own it but a lot of us had modeled distributions of 60 cents+ going forward and last quarter didn't follow a logical pattern. It looks like they sold the resource too cheaply, and it looks like they had hugely inflated lease operating expenses which go completely unexplained.

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