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Whiting USA Trust II - Declining Dividend Shows Rally Was Premature

Whiting USA Trust ii (WHZ) is another play in the oil and gas sector that has been experiencing massive volatility due to the crash in oil and natural gas prices, however unlike many other small producers which are still downtrodden, WHZ has actually experienced quite a rally in the last month. From their low of $5.40 in early January they advanced rapidly to $8.30 per share, for a one month gain of 53%. Unfortunately, I believe this rally to be premature and for a reversal in the share price likely due to declining dividends.

The company released their quarterly results after the markets closed on Friday 6th and unfortunately it shows a very high likelihood of even further dividend cuts ahead for shareholders. This is because the company was able to achieve much higher prices for its oil and natural gas than the current market price, and once the company… Read More …