|By PR Newswire||
|March 28, 2014 09:00 AM EDT||
NEW YORK, March 27, 2014 /PRNewswire/ -- Russian Hill Capital, LP ("Russian Hill"), would like to make investors aware of new language that The Bank of New York Mellon Trust Company (the "Trustee") has included in the latest annual report for Whiting USA Trust I ("WHX" or the "Trust"). Russian Hill believes that the following new language from WHX's annual report is an acknowledgement that WHX is overpriced and that investors bear significant risk: "To the extent that the Trust units are trading at a price substantially in excess of the aggregate distributions that may be reasonably expected to be made prior to the termination of the Trust, the market price decline in Trust units is likely to include one or more abrupt substantial decreases." [i]
The only assets that WHX holds are the net profits interest (the "NPI") in various oil and natural gas properties. The NPI entitles WHX to receive 90% of the net proceeds from the sale of 9.11 million barrels of oil or oil equivalent ("MMBOE"), meaning 8.20 MMBOE are allocated to the Trust. To date, 7.12 of these 8.20 MMBOE have been produced and sold. Russian Hill estimates that the proceeds from the sale of the remaining 1.08 MMBOE will be less than $2.10.
Since WHX is currently trading at $5.35, Russian Hill has taken a short position in WHX and expects that the stock will soon see one of the "abrupt substantial decreases" that the Trustee has warned about in WHX's annual report.
Also included in the annual report is the fact that the expected date of termination of the Trust has advanced to March 31, 2015 (from June 30, 2015).[ii] This means that investors will now receive only four (4) more distributions instead of five (5).
Russian Hill believes the new language in the annual report was long overdue. The substantial risk of loss that investors carry should have been highlighted much earlier and more prominently than in ambiguous disclosure in an annual report. Acknowledging that investors may be subject to "abrupt substantial decreases" in the value of their holdings and that they will receive fewer distributions than they had previously expected are both pieces of materially significant information that Russian Hill believes should have been the subject of a press release and 8-K. Russian Hill encourages investors to contact the Trustee[iii] and Whiting Petroleum[iv] (WHX's parent company) for guidance on the value of their shares.
Forward Looking Statements
This press release contains "forward-looking statements." Generally, the words "anticipate," "believe," "estimate," "expect," "intend," "may," "predict," "project," "plan," and similar expressions identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statement. Consequently, no reliance should be placed on any forward-looking statements contained herein and the reader should consider any such forward-looking statements only as Russian Hill's current beliefs as of the date of this press release. Even if these beliefs change because of future events or circumstances, Russian Hill declines any obligation to publicly update or revise any such forward-looking statements.
[i] WHX 10-K p.9: http://www.sec.gov/Archives/edgar/data/1417003/000119312514096064/d633645d10k.htm
[ii] WHX 10-K p.9: http://www.sec.gov/Archives/edgar/data/1417003/000119312514096064/d633645d10k.htm
[iii] Bank of New York Mellon Trust Company (713) 483-6792 or (512) 236-6599
[iv] Whiting Petroleum Corporation (303) 837-1661
SOURCE Russian Hill Capital, LP