UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		for the quarterly period ended March 31, 2010

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		for the transition period from                                          to

Commission File Number: 001-34026

 

WHITING USA TRUST I

(Exact name of registrant as specified in its charter)

Delaware		26-6053936
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
The Bank of New York Mellon
Trust Company, N.A., Trustee
Global Corporate Trust
919 Congress Avenue
Austin, Texas		78701
(Address of principal executive offices)		(Zip Code)

1-800-852-1422
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of May 5, 2010, 13,863,889 Units of Beneficial Interest in Whiting USA Trust I were outstanding.

 

 

TABLE OF CONTENTS

Glossary of Certain Terms			3
PART I – Financial Information
Item 1. Financial Statements (Unaudited)			5
Statements of Assets, Liabilities and Trust Corpus as of March 31, 2010 and December 31, 2009			5
Statements of Distributable Income for the Three Months Ended March 31, 2010 and 2009			5
Statements of Changes in Trust Corpus for the Three Months Ended March 31, 2010 and 2009			5
Notes to Financial Statements			6
Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations			10
Item 3. Quantitative and Qualitative Disclosures About Market Risk			13
Item 4. Controls and Procedures			15
PART II- Other Information			16
Item 1A. Risk Factors			16
Item 6. Exhibits			16
SIGNATURES			17
Exhibit Index			18
EX-31
EX-32

GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS

The following are definitions of significant terms used in this report:

     Bbl - One stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to oil and other liquid hydrocarbons.

     BOE - One stock tank barrel of oil equivalent, computed on an approximate energy equivalent basis that one Bbl of crude oil equals six Mcf of natural gas and one Bbl of crude oil equals one Bbl of natural gas liquids.

     Completion - The installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.

     COPAS - The Council of Petroleum Accountants Societies.

     Costless collar - An options position where the proceeds from the sale of a call option fund the purchase of a put option.

     FASB ASC - The Financial Accounting Standards Board Accounting Standards Codification.

     Field - An area consisting of either a single reservoir or multiple reservoirs, all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.

     GAAP - Generally accepted accounting principles in the United States.

     Gross Acres or Gross Wells - The total acres or wells, as the case may be, in which a working interest is owned.

     MBbl - One thousand barrels of crude oil or other liquid hydrocarbons.

     MBOE - One thousand BOE.

     Mcf - One thousand standard cubic feet of natural gas.

     MMBOE - One million BOE.

     MMcf - One million standard cubic feet of natural gas.

     Net Profits Interest (NPI) - A nonoperating interest that creates a share in gross production from an operating or working interest in oil and natural gas properties. The share is measured by net profits from the sale of production after deducting costs associated with that production.

     Plugging and Abandonment - Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another or to the surface. Regulations of many states require plugging of abandoned wells.

     Recompletion - The completion for production of an existing well bore in another formation from which that well has been previously completed.

     Reserves - Estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

     Reservoir - A porous and permeable underground formation containing a natural accumulation of producible crude oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

     SEC- The United States Securities and Exchange Commission.

     Working Interest - The interest in a crude oil and natural gas property (normally a leasehold interest) that gives the owner the right to drill, produce and conduct operations on the property and to share in production, subject to all royalties, overriding royalties and other burdens and to share in all costs of exploration, development and operations and all risks in connection therewith.

     Workover - Operations on a producing well to restore or increase production.

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

WHITING USA TRUST I

Statements of Assets, Liabilities and Trust Corpus (Unaudited)
(In thousands)

		March 31,				December 31,
		2010				2009
ASSETS
Cash and short-term investments		$	153			$	237
Investment in net profits interest, net			75,193				79,346
Total assets		$	75,346			$	79,583
LIABILITIES AND TRUST CORPUS
Reserve for Trust expenses		$	153			$	237
Trust corpus (13,863,889 Trust units issued and outstanding)			75,193				79,346
Total liabilities and Trust corpus		$	75,346			$	79,583

Statements of Distributable Income (Unaudited)
(In thousands, except per unit data)

		Three Months Ended March 31,
		2010				2009
Income from net profits interest		$	9,466			$	11,147
General and administrative expenses			(284	)			(295	)
Cash reserves used for current Trust expenses			84				120
State income tax withholding			(71	)			(57	)
Distributable income		$	9,195			$	10,915
Distributable income per unit		$	0.663181			$	0.787316

Statements of Changes in Trust Corpus (Unaudited)
(In thousands)

		Three Months Ended March 31,
		2010				2009
Trust corpus, beginning of period		$	79,346			$	97,798
Distributable income			9,195				10,915
Distributions to unitholders			(9,195	)			(10,915	)
Amortization of investment in net profits interest			(4,153	)			(4,559	)
Trust corpus, end of period		$	75,193			$	93,239

The accompanying notes are an integral part of these financial statements.

WHITING USA TRUST I

1. ORGANIZATION OF THE TRUST

Formation of the Trust — Whiting USA Trust I (the “Trust”) is a statutory trust formed in October 2007 under the Delaware Statutory Trust Act, pursuant to a trust agreement (the “Trust agreement”) among Whiting Oil and Gas Corporation and Equity Oil Company, as trustors, The Bank of New York Trust Company, N.A., as Trustee (subsequently renamed The Bank of New York Mellon Trust Company, N.A., and hereinafter referred to as the “Trustee”), and Wilmington Trust Company as Delaware Trustee (the “Delaware Trustee”). The initial capitalization of the Trust estate was funded by Whiting Petroleum Corporation (“Whiting”) in November 2007. Effective September 30, 2009, Equity Oil Company merged into Whiting Oil and Gas Corporation (“Whiting Oil and Gas”) with Whiting Oil and Gas as the surviving corporation. Whiting Oil and Gas, as referred to herein, is a subsidiary of Whiting and the successor to Equity Oil Company.

The Trust was created to acquire and hold a term net profits interest (“NPI”) for the benefit of the Trust unitholders pursuant to a conveyance to the Trust from Whiting Oil and Gas. The term NPI is an interest in underlying oil and natural gas properties located in the Rocky Mountains, Mid-Continent, Permian Basin and Gulf Coast regions (the “underlying properties”). The NPI is the only asset of the Trust, other than cash held for Trust expenses. These oil and gas properties include interests in 3,086 gross (381.7 net) producing oil and gas wells.

The NPI is passive in nature, and the Trustee has no management control over and no responsibility relating to the operation of the underlying properties. The NPI entitles the Trust to receive 90% of the net proceeds from the sale of production from the underlying properties. The NPI will terminate when 9.11 MMBOE have been produced and sold from the underlying properties (which amount is the equivalent of 8.20 MMBOE in respect of the Trust’s right to receive 90% of the net proceeds from such reserves pursuant to the NPI), and the Trust will soon thereafter wind up its affairs and terminate. These reserve quantities are projected to be produced by October 31, 2017, based on the reserve report for the underlying properties as of December 31, 2009.

The Trustee can authorize the Trust to borrow money to pay Trust administrative or incidental expenses that exceed cash held by the Trust. The Trustee may authorize the Trust to borrow from the Trustee, Whiting, or the Delaware Trustee as a lender provided the terms of the loan are similar to the terms it would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship. The Trustee may also deposit funds awaiting distribution in an account with itself and make other short-term investments with the funds distributed to the Trust.

Initial Issuance of Trust units and Net Profits Interest Conveyance — In April 2008, the registration statement on Form S-1/S-3 (Registration No. 333-147543) filed by Whiting and the Trust in connection with the initial public offering of the Trust units was declared effective by the SEC. Subsequently, the Trust issued 13,863,889 Trust units to Whiting in exchange for the conveyance of the term NPI from Whiting Oil and Gas, as discussed above. Immediately thereafter, Whiting completed an initial public offering of units of beneficial interest in the Trust, selling 11,677,500 Trust units to the public. Whiting retained an ownership in 2,186,389 Trust units, or 15.8% of the total Trust units issued and outstanding.

2. BASIS OF ACCOUNTING

Interim Financial Statements — The accompanying unaudited financial information has been prepared by the Trustee in accordance with the instructions to Form 10-Q. The accompanying financial information is prepared on a comprehensive basis of accounting other than GAAP. The Trustee believes that the information furnished reflects all adjustments (consisting of normal and recurring adjustments) which are, in the opinion of the Trustee, necessary for a fair presentation of the results for the interim periods presented. The Trust’s 2009 Annual Report on Form 10-K includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

Term Net Profits Interest — The Trust uses the modified cash basis of accounting to report Trust receipts from the term NPI and payments of expenses incurred. The actual cash distributions of the Trust are made based on the terms of the conveyance creating the Trust’s NPI. The term NPI entitles the Trust to receive revenues (oil, gas and natural gas liquid sales) less expenses (the amount by which all royalties, lease operating expenses including well workover costs, production and property taxes, payments made by Whiting to the hedge counterparty upon settlements of hedge contracts, maintenance expenses, post-production costs including plugging and abandonment, and producing overhead, exceed hedge payments received by Whiting under hedge contracts and other non-production revenue) of the underlying properties multiplied by 90% (term NPI percentage). Actual cash receipts may vary due to timing delays of cash receipts from the property operators or purchasers and due to wellhead and pipeline volume balancing agreements or practices.

Modified Cash Basis of Accounting — The financial statements of the Trust, as prepared on a modified cash basis, reflect the Trust’s assets, liabilities, Trust corpus, earnings and distributions, as follows:

	a)		Income from net profits interest is recorded when NPI distributions are received by the Trust;
	b)		Distributions to Trust unitholders are recorded when paid by the Trust;
	c)		Trust general and administrative expenses (which include the Trustees’ fees as well as accounting, engineering, legal, and other professional fees) are recorded when paid;
	d)		Cash reserves for Trust expenses may be established by the Trustee for certain expenditures that would not be recorded as contingent liabilities under GAAP;
	e)		Amortization of the investment in net profits interest is calculated based on the units-of- production method. Such amortization is charged directly to Trust corpus and does not affect cash earnings; and
	f)		The Trust evaluates impairment of the investment in net profits interest by comparing the undiscounted cash flows expected to be realized from the investment in net profits interest to the carrying value. If the expected future undiscounted cash flows are less than the carrying value, the Trust recognizes an impairment loss for the difference between the carrying value and the estimated fair value of the investment in net profits interest. The determination of whether the NPI is impaired requires a significant amount of judgment by the Trustee and is based on the best information available to the Trustee at the time of the evaluation. If market conditions deteriorate, write-downs could be required in the future.

While these statements differ from financial statements prepared in accordance with GAAP, the modified cash basis of reporting revenues and distributions is considered the most meaningful because quarterly distributions to the Trust unitholders are based on net cash receipts. This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by FASB ASC Topic 932 Extractive Activities — Oil and Gas: Financial Statements of Royalty Trusts.

Most accounting pronouncements apply to entities whose financial statements are prepared in accordance with GAAP, directing such entities to accrue or defer revenues and expenses in a period other than when such revenues were received or expenses were paid. Because the Trust’s financial statements are prepared on the modified cash basis, as described above, most accounting pronouncements are not applicable to the Trust’s financial statements.

Recent Accounting Pronouncements— There were no accounting pronouncements issued during the three months ended March 31, 2010 applicable to the Trust.

3. INVESTMENT IN NET PROFITS INTEREST

Whiting Oil and Gas conveyed the NPI to the Trust in exchange for 13,863,889 Trust units. The investment in net profits interest was recorded at the historical cost of Whiting on April 30, 2008, the date of conveyance, and was determined to be $123.6 million, of which $111.2 million (90% of the NPI) was attributed to the Trust. As of March 31, 2010 and December 31, 2009, accumulated amortization of the investment in net profits interest was $36.0 million and $31.9 million, respectively.

4. INCOME TAXES

The Trust is a grantor trust and therefore is not subject to federal income taxes. Accordingly, no recognition has been given to federal income taxes in the Trust’s financial statements. The Trust unitholders are treated as the owners of Trust income and corpus, and the entire federal taxable income of the Trust is reported by the Trust unitholders on their respective tax returns.

For Montana state income tax purposes, Whiting must withhold from the NPI payable to the Trust, an amount equal to 6% of the net amount payable to the Trust from the sale of oil and gas in Montana. For North Dakota, Oklahoma, Arkansas, Michigan, New Mexico, Alabama, Louisiana, Colorado, Kansas, Utah and Mississippi, neither the Trust nor Whiting is withholding the income tax due such states on distributions made to an individual resident or nonresident Trust unitholder, as long as the Trust is taxed as a grantor trust under the Internal Revenue Code.

5. DISTRIBUTION TO UNITHOLDERS

Actual cash distributions to the Trust unitholders depend on the volumes of and prices received for oil, natural gas and natural gas liquids produced from the underlying properties, among other factors. Quarterly cash distributions during the term of the Trust are made by the Trustee generally no later than 60 days following the end of each quarter (or the next succeeding business day) to the Trust unitholders of record on the 50th day following the end of each quarter. Such amounts equal the excess, if any, of the cash received by the Trust during the quarter, over the expenses of the Trust paid during such quarter, subject to adjustments for changes made by the Trustee during such quarter in any cash reserves established for future expenses of the Trust.

6. RELATED PARTY TRANSACTIONS

Capital Expenditures — During the three months ended March 31, 2010 and 2009, Whiting incurred $225,281 and $735,629, respectively, of capital expenditures on the underlying properties, which are the costs net to Whiting’s interest in the wells, related to the drilling and completing of oil and gas wells, capital workovers, facility upgrades and well recompletions performed to secure production from new horizons. These expenditures may have the effect of ultimately increasing current and future period NPI net proceeds and thereby benefiting the Trust unitholders by accelerating their return on investment. Pursuant to the terms of the conveyance agreement, however, Whiting did not deduct, nor will it deduct in the future, such capital expenditures from the NPI gross proceeds or related distributions to the Trust. The Trust cannot provide any assurance that future capital expenditures will be consistent with historical levels.

Operating Overhead — Pursuant to the terms of the applicable operating agreements, Whiting deducts from the gross proceeds an overhead fee to operate those underlying properties, for which Whiting has been designated as the operator. Additionally, for those underlying properties for which Whiting is the operator but for which there is no operating agreement, Whiting deducts from the gross proceeds an overhead fee calculated in the same manner Whiting allocates overhead to other similarly owned properties, as is customary in the oil and gas industry. The operating overhead activities include various engineering, legal, and administrative functions. For the distributions made during the three months ended March 31, 2010 and 2009, the Trust’s portion of the monthly charge averaged $409 and $391 per active operated well, respectively, which totaled $439,990 and $424,581, respectively. The fee is adjusted annually pursuant to COPAS guidelines and will increase or decrease each year based on changes in the year-end index of average weekly earnings of crude petroleum and natural gas workers.

Administrative Services Fee — Under the terms of the administrative services agreement, the Trust pays a quarterly administration fee of $50,000 to Whiting 60 days following the end of each calendar quarter. General and administrative expenses in the Trust’s statements of distributable income for the three-month periods ending March 31, 2010 and 2009 each include $50,000 for quarterly administrative fees paid to Whiting.

Trustee Administrative Fee — Under the terms of the Trust agreement, the Trust pays an annual administrative fee to the Trustee of $160,000, paid in four quarterly installments of $40,000 each and is billed in arrears. General and administrative expenses in the Trust’s statements of distributable income for the three-month periods ending March 31, 2010 and 2009 each include $40,000 for quarterly administrative fees paid to the Trustee.

7. SUBSEQUENT EVENTS

The Trustee has evaluated subsequent events through the date that these financial statements were issued. The following information is disclosed as a nonrecognized subsequent event:

On May 7, 2010, the Trustee announced the Trust distribution of net profits for the first quarterly payment period in 2010. Unitholders of record on May 20, 2010 are expected to receive a distribution amounting to $9.7 million or $0.700986 per Trust unit, which is payable on or before May 30, 2010. This distribution is expected to consist of net cash proceeds of $10.0 million paid by Whiting to the Trust, which is inclusive of cash receipts totaling $764,238 (90% of $849,253) for commodity derivative contracts settled from January through March 2010, less a provision of $250,000 for estimated Trust expenses and $54,576 for Montana state income tax withholdings.

Item 2.		Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.

References to the “Trust” in this document refer to Whiting USA Trust I. References to “Whiting” in this document refer to Whiting Petroleum Corporation and its wholly-owned subsidiaries. References to “Whiting Oil and Gas” in this document refer to Whiting Oil and Gas Corporation, a wholly owned subsidiary of Whiting Petroleum Corporation and the successor to Equity Oil Company. Equity Oil Company was merged into Whiting Oil and Gas Corporation effective September 30, 2009. The merger did not have an effect on the Trust.

The following review of the Trust’s financial condition and results of operations should be read in conjunction with the financial statements and notes thereto, as well as the Trustee’s discussion and analysis contained in the Trust’s 2009 Annual Report on Form 10-K. The Trust’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available on the SEC’s website www.sec.gov.

Note Regarding Forward-Looking Statements

This Form 10-Q includes “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 other than statements of historical facts included in this Form 10-Q, including without limitation the statements under “Trustee’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. No assurance can be given that such expectations will prove to have been correct. When used in this document, the words “believes,” “expects,” “anticipates,” “projects,” “intends” or similar expressions are intended to identify such forward-looking statements. The following important factors, in addition to those discussed elsewhere in this Form 10-Q, could affect the future results of the energy industry in general, and Whiting and the Trust in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

	•		the effect of changes in commodity prices and conditions in the capital markets;
	•		the effects of global credit, financial and economic issues;
	•		uncertainty of estimates of oil and natural gas reserves and production;
	•		risks incident to the operation of oil and natural gas wells;
	•		future production costs;
	•		the inability to access oil and natural gas markets due to market conditions or operational impediments;
	•		failure of the underlying properties to yield oil or natural gas in commercially viable quantities;
	•		the effect of existing and future laws and regulatory actions;
	•		competition from others in the energy industry;
	•		risks arising out of the hedge contracts;
	•		inflation or deflation; and
	•		other risks described under the caption “Risk Factors” in the Trust’s 2009 Annual Report on Form 10-K.

All subsequent written and oral forward-looking statements attributable to Whiting or the Trust or persons acting on behalf of Whiting or the Trust are expressly qualified in their entirety by these factors. The Trust assumes no obligation, and disclaims any duty, to update these forward-looking statements.

Overview

The Trust does not conduct any operations or activities. The Trust’s purpose is, in general, to hold the NPI, to distribute to the Trust unitholders cash that the Trust receives in respect of the NPI and to perform certain administrative functions in respect of the NPI and the Trust units. The Trust derives substantially all of its income and cash flows from the NPI, which is in turn subject to commodity hedge contracts.

Although oil prices fell significantly after reaching highs in the third quarter of 2008, they have experienced a rebound in the second half of 2009 and first quarter 2010. For example, the daily average NYMEX oil price was $118.13 per Bbl and $58.75 per Bbl for the third and fourth quarters of 2008, respectively, $43.21, $59.62, $68.29 and $76.17 per Bbl for the first, second, third and fourth quarters of 2009, respectively, and $78.79 for the first quarter of 2010. Additionally, natural gas prices have fallen significantly since their third quarter 2008 levels and remained low throughout 2009, but have slightly increased during the first quarter of 2010. For example, daily average NYMEX natural gas prices declined from $10.27 per Mcf for the third quarter of 2008 to $6.96 per Mcf for the fourth quarter of 2008 and $3.99 for 2009, but rose to $5.30 per Mcf for the first quarter 2010. Lower oil and gas prices on production from the underlying properties could cause the following: (i) a reduction in the amount of net proceeds to which the Trust is entitled; (ii) an extension of the length of time required to produce 9.11 MMBOE (8.20 MMBOE to the 90% NPI) due to some wells reaching their economic limits sooner; and (iii) a reduction in the amount of oil, natural gas and natural gas liquids that is economic to produce from the underlying properties.

Results of Trust Operations

Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

The following is a summary of income from net profits interest received by the Trust for the three months ended March 31, 2010 and 2009, consisting of the February 2010 and February 2009 distributions, respectively (dollars in thousands, except per Bbl, per Mcf, and per BOE amounts):

		Three Months Ended March 31,
		2010				2009
Sales Volumes:
Oil from underlying properties (MBbls)			202	(a)			215	(c)
Natural gas from underlying properties (MMcf)			885	(b)			943	(d)
Total production (MBOE)			349				373
Average Sales Prices:
Oil (per Bbl)		$	64.40			$	54.08
Effect of oil hedges on average price (per Bbl)			0.36				16.67
Oil net of hedging (per Bbl)		$	64.76			$	70.75
Natural gas (per Mcf)		$	3.52			$	5.76
Effect of natural gas hedges on average price (per Mcf)			1.67				0.33
Natural gas net of hedging (per Mcf)		$	5.19			$	6.09
Costs (per BOE):
Lease operating expenses		$	17.06			$	20.03
Production taxes		$	3.36			$	3.04
Revenues:
Oil sales		$	12,984	(a)		$	11,650	(c)
Natural gas sales			3,112	(b)			5,437	(d)
Total revenues		$	16,096			$	17,087
Costs:
Lease operating expenses		$	5,957			$	7,462
Production taxes			1,175				1,134
Cash settlement gains received on commodity derivatives			(1,553	)			(3,895	)
Total costs		$	5,579			$	4,701
Net proceeds		$	10,517			$	12,386
Net profits percentage			90	%			90	%
Income from net profits interest		$	9,466			$	11,147

Income from Net Profits Interest. Income from net profits interest is recorded on a cash basis when NPI proceeds are received by the Trust from Whiting. NPI proceeds that Whiting remits to the Trust are based on the oil and gas production Whiting has received payment for within one month following the end of the most recent fiscal quarter. Whiting receives payment for its crude oil sales generally within 30 days following the month in which it is produced, and Whiting receives payment for its natural gas sales generally within 60 days following the month in which it is produced. Income from net profits interest is generally a function of oil and gas revenues, lease operating expenses, production taxes, and cash settlements on commodity derivatives as follows:

Revenues. Oil and natural gas revenues decreased $1.0 million or 6% for the quarter ended March 31, 2010 as compared to the same period in 2009. Revenues are a function of average sales prices and volumes sold. The decrease in revenues between periods was primarily due to the significant decline in market prices for natural gas, offset in part by an increase in the market price for oil. The average price for natural gas before the effects of hedging decreased 39%, while the average price for oil before the effects of hedging increased 19%. Oil sales volumes decreased 6% or 13 MBOE and gas sales volumes decreased 6% or 58 MMcf in the first quarter of 2010 as compared to the same period in 2009, primarily due to normal field production decline. Oil and gas production attributable to the underlying properties is estimated to decline at a rate of approximately 14.6% annually from 2010 to 2017, based on the reserve report prepared by the Trust’s independent reservoir engineers at December 31, 2009.

Lease Operating Expenses. Lease operating expenses decreased $1.5 million or 20% from the first quarter of 2009 to the first quarter of 2010, while lease operating expenses per BOE decreased 15% from $20.03 during the first quarter of 2009 to $17.06 during the same period in 2010. This decrease in lease operating expense during the first quarter of 2010 was primarily due to lower amounts of operating costs charged to wells that are not operated by Whiting, a lower level of well workovers as well as plug and abandonment charges, and a decrease in pipeline gathering fees between periods.

Production Taxes. Production taxes are generally calculated as a percentage of oil and gas revenues before the effects of hedging. Credits and exemptions allowed in the various taxing jurisdictions are fully utilized. Production taxes for the first quarter of 2010 increased to 7.3% of oil and gas sales as compared to 6.6% of oil and gas sales for the same period in 2009. This increase was the result of higher oil and gas revenues between periods in the state of North Dakota, which carries an 11.5% production tax rate, combined with a decrease in oil and gas revenues in the states of Texas, Louisiana, Michigan and Utah, which all have much lower production tax rates ranging from 4.4% to 7.9% of oil and gas sales.

Cash Settlements on Commodity Derivatives. Whiting entered into certain costless collar hedge contracts for the benefit of the Trust prior to the conveyance. Cash settlements relating to the hedges resulted in a gain of $1.6 million for the three months ended March 31, 2010, which had the effect of increasing the average price of oil and natural gas net of hedging by $0.36 per Bbl of oil and $1.67 per Mcf of natural gas, respectively. Cash settlements relating to these hedges resulted in a gain of $3.9 million for the three months ended March 31, 2009 which had the effect of increasing the average price of oil and natural gas net of hedging by $16.67 per Bbl of oil and $0.33 per Mcf of natural gas, respectively.

Distributable Income. For the three months ended March 31, 2010, the Trust’s distributable income was $9.2 million and was based on income from net profits interest of $9.5 million less estimated Trust expenses of $200,000 and Montana state income tax withholdings of

$71,337. This compares to distributable income of $10.9 million for the first three months of 2009 which was based on income from net profits interest of $11.1 million less $175,000 for estimated Trust expenses and $57,426 in Montana state income tax withholdings.

Liquidity and Capital Resources

The Trust has no source of liquidity or capital resources other than cash flows from the NPI. Other than Trust administrative expenses, including any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to Trust unitholders. Administrative expenses include payments to the Trustee and the Delaware Trustee as well as a quarterly fee to Whiting pursuant to an administrative services agreement. Each quarter, the Trustee determines the amount of funds available for distribution. Available funds are the excess cash, if any, received by the Trust from the NPI and other sources (such as interest earned on any amounts reserved by the Trustee) that quarter, over the Trust’s expenses for that quarter. Available funds are reduced by any cash the Trustee decides to hold as a reserve against future liabilities. The Trustee may borrow funds required to pay liabilities if the Trustee determines that the cash on hand and the cash to be received are insufficient to cover the Trust’s liabilities. If the Trustee borrows funds, the Trust unitholders will not receive distributions until the borrowed funds are repaid.

Income to the Trust from the NPI is based on the calculation and definitions of “gross proceeds” and “net proceeds” contained in the conveyance, which is filed as an exhibit to this report, and reference is hereby made to the conveyance for the actual definitions of “gross proceeds” and “net proceeds”.

Although capital expenditures for the testing, drilling, completion, equipping, plugging back or recompletion of any well that is a part of the underlying properties cannot be deducted from gross proceeds pursuant to the terms of the conveyance agreement, Whiting incurred capital expenditures of $225,281 on the underlying properties during the three months ended March 31, 2010. Accordingly, these expenditures were not deducted from gross proceeds or the distribution in the first quarter of 2010, but which may have the effect of ultimately accelerating the receipt of NPI net proceeds and thereby benefiting Trust unitholders by accelerating their return on investment. The Trust cannot provide any assurance that future capital expenditures will be consistent with historical levels.

The Trust does not have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the Trust’s liquidity or the availability of capital resources.

Future Trust Distributions to Unitholders

On May 7, 2010, the Trustee announced the Trust distribution of net profits for the first quarterly payment period in 2010. Unitholders of record on May 20, 2010 are expected to receive a distribution amounting to $9.7 million or $0.700986 per Trust unit, which is payable on or before May 30, 2010. This distribution is expected to consist of net cash proceeds of $10.0 million paid by Whiting to the Trust, which is inclusive of cash receipts totaling $764,328 (90% of $849,253) for commodity derivative contracts settled from January through March 2010, less a provision of $250,000 for estimated Trust expenses and $54,576 for Montana state income tax withholdings.

New Accounting Pronouncements

There were no accounting pronouncements issued during the three months ended March 31, 2010 applicable to the Trust.

Critical Accounting Policies and Estimates

A disclosure of critical accounting policies which affect the more significant judgments and estimates used in the preparation of the Trust’s financial statements is included in Item 7 of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2009. There have been no significant changes to the critical accounting policies during the three months ended March 31, 2010.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Commodity Hedge Contracts

The primary asset of and source of income to the Trust is the term NPI, which generally entitles the Trust to receive 90% of the net proceeds from oil and gas production from the underlying properties. Consequently, the Trust is exposed to market risk from fluctuations in oil and gas prices. Through 2012, however, the NPI is subject to commodity hedge contracts in the form of costless collars, which reduce its exposure to commodity price volatility.

The revenues derived from the underlying properties depend substantially on prevailing crude oil, natural gas and natural gas liquid prices. As a result, commodity prices also affect the amount of cash flow available for distribution to the Trust unitholders. Lower prices may also reduce the amount of oil, natural gas and natural gas liquids that Whiting can economically produce. Whiting sells the oil, natural gas and natural gas liquid production from the underlying properties under floating market price contracts each month. Whiting has entered into certain hedge contracts through December 31, 2012 to manage the exposure to crude oil and natural gas price volatility, which is associated with revenues generated from the underlying properties, and to achieve more predictable cash flows. However, these contracts limit the amount of cash available for distribution if prices increase above the fixed ceilings. The hedge contracts consist of costless collar arrangements placed with a single trading counterparty, JPMorgan Chase Bank National Association. Whiting cannot provide assurance that this trading counterparty will not become a credit risk in the future. No additional hedges are allowed to be placed on Trust assets.

Crude oil costless collar arrangements settle based on the average of the closing settlement price for each commodity business day in the contract period. Natural gas costless collar arrangements settle based on the closing settlement price on the second to last scheduled trading day of the month prior to delivery. In a collar arrangement, the counterparty is required to make a payment to Whiting for the difference between the fixed floor price and the settlement price if the settlement price is below the fixed floor price. Whiting is required to make a payment to the counterparty for the difference between the fixed ceiling price and the settlement price if the settlement price is above the fixed ceiling price. Whiting’s crude oil and natural gas price risk management positions in collar arrangements through December 31, 2012 (which collars have the potential to affect Whiting’s future distributions to the Trust) are as follows:

		Oil Collars				Natural Gas Collars
				Weighted				Weighted
				Average Price				Average Price
		Volumes		(per Bbl)		Volumes		(per Mcf)
		(Bbls)		Floor / Ceiling		(Mcf)		Floor / Ceiling
Three Months Ending March 31, 2010		135,252		$76.00/$135.09		536,709		$7.00/$18.65
Three Months Ending June 30, 2010		131,934		$76.00/$134.85		518,619		$6.00/$13.20
Three Months Ending September 30, 2010		128,898		$76.00/$134.89		502,749		$6.00/$14.00
Three Months Ending December 31, 2010		125,772		$76.00/$135.11		488,991		$7.00/$14.20
Three Months Ending March 31, 2011		122,934		$74.00/$139.68		472,800		$7.00/$17.40
Three Months Ending June 30, 2011		120,198		$74.00/$140.08		458,109		$6.00/$13.05
Three Months Ending September 30, 2011		117,510		$74.00/$140.15		444,489		$6.00/$13.65
Three Months Ending December 31, 2011		114,726		$74.00/$140.75		428,361		$7.00/$14.25
Three Months Ending March 31, 2012		112,236		$74.00/$141.27		413,820		$7.00/$15.55
Three Months Ending June 30, 2012		109,716		$74.00/$141.73		402,609		$6.00/$13.60
Three Months Ending September 30, 2012		107,226		$74.00/$141.70		390,519		$6.00/$14.45
Three Months Ending December 31, 2012		105,084		$74.00/$142.21		379,839		$7.00/$13.40

The collared hedges shown above have the effect of providing a protective floor while allowing Trust unitholders to share in upward pricing movements. Consequently, while these hedges are designed to decrease exposure to price decreases, they also have the effect of limiting the benefit of price increases beyond the ceiling. For the 2010 crude oil contracts listed above, a hypothetical $5.00 change in the NYMEX price above the ceiling price or below the floor price applied to the notional amounts would cause a change in the cash settlement payments (gains received) on hedging activities in 2010 of $2.6 million to Whiting, of which 90% would be transferred to the Trust. For the 2010 natural gas contracts listed above, a hypothetical $1.00 change in the NYMEX price above the ceiling price or below the floor price applied to the notional amounts would cause a change in the cash settlement payments (gains received) on hedging activities in 2010 of $2.0 million to Whiting, of which 90% would be transferred to the Trust.

The amounts received by Whiting from the counterparty upon settlements of the hedge contracts will reduce the operating expenses related to the underlying properties when calculating the net proceeds. However, if the hedge payments received by Whiting under the hedge contracts and other non-production revenue exceed operating expenses during a quarterly period, the ability to use such excess amounts to offset operating expenses may be deferred, with interest accruing on such amounts at the prevailing money market rate, until the next quarterly period where the hedge payments and the other non-production revenue are less than such expenses. In addition, the aggregate amounts paid by Whiting on settlement of the hedge contracts will reduce the amount of net proceeds paid to the Trust.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. The Trustee maintains disclosure controls and procedures designed to ensure that information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations promulgated by the SEC. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Trust is accumulated and communicated by Whiting to The Bank of New York Mellon Trust Company, N.A., as Trustee of the Trust, and its employees who participate in the preparation of the Trust’s periodic reports as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Trustee carried out an evaluation of the Trustee’s disclosure controls and procedures. Mike Ulrich, as Trust Officer of the Trustee, has concluded that the disclosure controls and procedures of the Trust are effective.

Due to the contractual arrangements of (i) the Trust agreement and (ii) the conveyance of the NPI, the Trustee relies on (A) information provided by Whiting, including historical operating data, plans for future operating and capital expenditures, reserve information and information relating to projected production, and (B) conclusions and reports regarding reserves by the Trust’s independent reserve engineers. For a description of certain risks relating to these arrangements and risks relating to the Trustee’s reliance on information reported by Whiting and included in the Trust’s results of operations, see the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, Item 1A. Risk Factors “-The Trust and the Trust unitholders have no voting or managerial rights with respect to the underlying properties. As a result, neither the Trust nor the unitholders have any ability to influence the operation of the underlying properties”.

Changes in Internal Control over Financial Reporting. During the quarter ended March 31, 2010, there has been no change in the Trustee’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Trustee’s internal control over financial reporting relating to the Trust. The Trustee notes for purposes of clarification that it has no authority over, and makes no statement concerning, the internal control over financial reporting of Whiting.

PART II-OTHER INFORMATION

Item 1A. Risk Factors.

Risk factors relating to the Trust are contained in Item 1A of the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. No material change to such risk factors has occurred during the three months ended March 31, 2010.

Item 6. Exhibits.

The exhibits listed in the accompanying index to exhibits are filed as part of the Quarterly Report on Form 10-Q.

Exhibit
Number						Description
	3.1*			—		Certificate of Trust of Whiting USA Trust I (Incorporated herein by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (Registration No. 333-147543))
	3.2*			—		Amended and Restated Trust Agreement, dated April 30, 2008, among Whiting Oil and Gas Corporation, Equity Oil Company (subsequently merged into Whiting Oil and Gas Corporation), The Bank of New York Mellon Trust Company, N.A. (formerly known as (f/k/a) The Bank of New York Trust Co., N.A.) as Trustee and Wilmington Trust Company as Delaware Trustee. (Incorporated herein by reference to Exhibit 3.1 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	10.1*			—		Conveyance of Net Profits Interest, dated April 30, 2008, from Whiting Oil and Gas Corporation and Equity Oil Company (subsequently merged into Whiting Oil and Gas Corporation), to The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee of Whiting USA Trust I. (Incorporated herein by reference to Exhibit 10.1 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	10.2*			—		Administrative Services Agreement, dated April 30, 2008, by and between Whiting Oil and Gas Corporation and The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee of Whiting USA Trust I. (Incorporated herein by reference to Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	10.3*			—		Registration Rights Agreement, dated April 30, 2008, by and between Whiting Petroleum Corporation and The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee of Whiting USA Trust I. (Incorporated herein by reference to Exhibit 10.3 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	31			—		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32			—		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 10, 2010

The Registrant, Whiting USA Trust I, has no principal executive officer, principal financial officer, board of directors or persons performing similar functions. Accordingly, no additional signatures are available, and none have been provided. In signing the report above, the Trustee does not imply that it has performed any such function or that such function exists pursuant to the terms of the Trust agreement under which it serves.

EXHIBIT INDEX

Exhibit
Number						Description
	3.1*			—		Certificate of Trust of Whiting USA Trust I (Incorporated herein by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (Registration No. 333-147543))
	3.2*			—		Amended and Restated Trust Agreement, dated April 30, 2008, among Whiting Oil and Gas Corporation, Equity Oil Company (subsequently merged into Whiting Oil and Gas Corporation), The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee and Wilmington Trust Company as Delaware Trustee. (Incorporated herein by reference to Exhibit 3.1 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	10.1*			—		Conveyance of Net Profits Interest, dated April 30, 2008, from Whiting Oil and Gas Corporation and Equity Oil Company (subsequently merged into Whiting Oil and Gas Corporation), to The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee of Whiting USA Trust I. (Incorporated herein by reference to Exhibit 10.1 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	10.2*			—		Administrative Services Agreement, dated April 30, 2008, by and between Whiting Oil and Gas Corporation and The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee of Whiting USA Trust I. (Incorporated herein by reference to Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	10.3*			—		Registration Rights Agreement, dated April 30, 2008, by and between Whiting Petroleum Corporation and The Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Co., N.A.) as Trustee of Whiting USA Trust I. (Incorporated herein by reference to Exhibit 10.3 to the Trust’s Current Report on Form 8-K filed on April 30, 2008 (File No. 001-34026))
	31			—		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32			—		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002