Chesapeake Granite Wash Trust (NYSE:CHKR) (the “Trust”) today announced
that its common unit distribution for the quarter ended December 31,
2015 (which primarily relates to production attributable to the Trust’s
royalty interests from September 1, 2015 through November 30, 2015) will
be $0.2195 per common unit. The distribution will be paid on February
29, 2016 to all common unitholders of record at the close of business on
February 19, 2016.
During the three-month production period ended November 30, 2015, sales
volumes and realized prices were both lower than initial Trust
estimates. This resulted in quarterly income available for distribution
of $0.1646 per unit, which is $0.3954 below the applicable subordination
threshold of $0.5600. For this distribution, all of the quarterly income
available for distribution will be used to make a distribution per
common unit of $0.2195 and the Trust will not pay a subordinated unit
distribution for the quarter.
The following table provides supporting documentation for the
calculation of distributable income available to unitholders for the
production period from September 1, 2015 through November 30, 2015.
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Sales volumes:
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Oil (mbbl)
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47
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Natural gas (mmcf)
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1,221
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Natural gas liquids (mbbl)
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98
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Total oil equivalent volumes (mboe)
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349
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Average price received per production unit:(1)
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Oil
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$
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37.60
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Natural gas
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$
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0.62
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Natural gas liquids
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$
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15.87
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Distributable income calculation (in thousands except per unit
income):
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Revenue less production taxes(1)
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$
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3,959
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Derivative settlement gain
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4,312
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Trust expenses
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(575
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)
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Distributable income available to unitholders
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$
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7,696
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Calculated distributable income per unit(2)
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$
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0.1646
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Distributable income per common unit
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$
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0.2195
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Distributable income per subordinated unit(3)
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$
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--
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(1)
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Includes the effect of certain marketing, gathering and
transportation deductions.
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(2)
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Based on 46,750,000 units issued and outstanding, consisting of
35,062,500 common units and 11,687,500 subordinated units.
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(3)
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All subordinated shares are owned by Chesapeake Energy
Corporation. As the distribution per common unit is below the
applicable subordination threshold, no distribution will be paid
for the subordinated units.
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Due to the timing of the payment of production proceeds to the Trust,
quarterly distributions generally include royalties attributable to
sales of oil, natural gas liquids and natural gas for three months,
including the first two months of the quarter just ended and the last
month of the prior quarter.
The Trust was formed by Chesapeake Energy Corporation (NYSE:CHK)
("Chesapeake") in June 2011 and owns royalty interests in certain oil
and natural gas properties in the Colony Granite Wash play in Washita
County, Oklahoma. The Trust is entitled to receive proceeds from the
sale of production attributable to the royalty interests. As described
in the Trust’s filings with the Securities and Exchange Commission (the
“SEC”), the amount of Trust revenues and the quarterly distributions to
Trust unitholders will fluctuate from quarter to quarter, depending on
the timing of initial sales from the development wells drilled by
Chesapeake in which the Trust receives an interest, the sales volume of
oil, natural gas liquids and natural gas attributable to the Trust’s
royalty interests and the prices received for such sales, amounts
realized and paid under the Trust’s hedging arrangements and the amount
of the Trust's administrative expenses, among other factors.
For additional information regarding the Trust and its results of
operations and financial condition, please refer to the Trust’s SEC
filings.
ABOUT CHESAPEAKE GRANITE WASH TRUST:
Chesapeake Granite Wash Trust (NYSE: CHKR) is a Delaware statutory
trust formed by Chesapeake Energy Corporation to own certain royalty
interests in oil, natural gas liquids and natural gas wells in Washita
County, Oklahoma producing from the Colony Granite Wash play within the
broader Granite Wash formation of the Anadarko Basin. The common units
do not represent interests in and are not obligations of Chesapeake
Energy Corporation. The common units are listed on the New York Stock
Exchange under the symbol CHKR. Further information is available at www.chkgranitewashtrust.com
where Chesapeake Granite Wash Trust routinely posts announcements,
updates, investor information and news releases.
Pursuant to IRC Section 1446, withholding tax on income
effectively connected to a U.S. trade or business allocated to foreign
partners should be made at the highest marginal rate. Under
Section 1441, withholding tax on fixed, determinable, annual, periodic
income from U.S. sources allocated to foreign partners should be made at
30% of gross income unless the rate is reduced by treaty. This
release is intended to be a qualified notice to nominees and brokers as
provided for under Treasury Regulation Section 1.1446-4(b) by Chesapeake
Granite Wash Trust, and while specific relief is not specified for
Section 1441 income, this disclosure is intended to suffice. For
distributions made to foreign partners, nominees and brokers should
withhold at the highest effective tax rate.
This news release contains statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements contained in this news release, other
than statements of historical facts, are "forward-looking statements"
for purposes of these provisions. The anticipated distribution discussed
herein is based, in part, on the amount of cash received or expected to
be received by the Trust from Chesapeake with respect to the relevant
quarterly period. Any differences in actual cash receipts by the Trust
could affect this distributable amount. Other important factors that
could cause actual results to differ materially include expenses of the
Trust and reserves for anticipated future expenses. Neither Chesapeake
nor the Trustee intends, and neither assumes any obligation, to update
any of the statements included in this news release. An investment in
common units issued by Chesapeake Granite Wash Trust is subject to the
risks described in the Trust's Annual Report on Form 10-K for the year
ended December 31, 2014, as well as other risks identified in the
Trust’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
filed with the SEC. The Trust's annual, quarterly and other filed
reports are or will be available at the SEC's website at www.sec.gov.
The Trust does not intend, and assumes no obligations, to update any of
the statements included in this news release.
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