WHITING PETROLEUM CORP (WHZ) IPO

 
net profits interest will entitle the trust to receive 90% of the net proceeds 
(calculated as described below) from Whiting’s interests in the underlying 
properties after the effective date of the conveyance of the net profits 
interest to the trust. The trust will make quarterly cash distributions of 
substantially all of its quarterly cash receipts of net proceeds attributable 
to the trust, after deduction of fees and expenses for administration of the 
trust, to holders of its trust units during the term of the net profits 
interest. Please read “Computation of net proceeds” beginning on page 73. The 
net profits interest will terminate on the later to occur of (1) December 31, 
2021, or (2) the time when 11.79 MMBOE have been produced from the underlying 
properties and sold (which is the equivalent of 10.61 MMBOE in respect of the 
trust’s right to receive 90% of the net proceeds from such reserves pursuant to
the net profits interest), subject to certain specified exceptions. 

As of December 31, 2011, the estimated proved reserves attributable to the 
underlying properties for the full economic life of the underlying properties, 
as estimated in the reserve report, were 18.28 MMBOE with a pre-tax PV10% value
of $408.5 million. Based on the reserve report, the net profits interest would 
entitle the trust to receive net proceeds from the sale of production of an 
estimated 10.61 MMBOE of proved reserves during the term of the net profits 
interest, calculated as 90% of the proved reserves attributable to the 
underlying properties expected to be produced during the term of the net 
profits interest. Based on the reserve report, the total estimated proved 
reserves attributable to the net profits interest had a pre-tax PV10% value of 
$323.6 million as of December 31, 2011. The exact rate of production 
attributable to the underlying properties cannot be predicted. However, because
the term of the trust continues until the later of December 31, 2021, or the 
time when the terminal production amount has been produced and sold, trust 
unitholders will have the right to participate in additional proceeds 
attributable to the underlying properties in excess of 10.61 MMBOE in the event
such amount is produced and sold prior to December 31, 2021. As of December 31,
2011 and assuming its continued ownership of the underlying properties, the 
total estimated proved reserves attributable to Whiting’s remaining interest in
the underlying properties at the termination of the net profits interest, as 
estimated in the reserve report, are expected to be 6.49 MMBOE, or 
approximately 35.5% of total estimated proved reserves attributable to the 
underlying properties. 

The underlying properties include interests in 1,300 gross (390.3 net) 
producing wells located in 49 predominantly mature fields with established 
production profiles in 10 states. As of December 31, 2011, approximately 96.4% 
of estimated proved reserves attributable to the underlying properties during 
the estimated term of the net profits interest were classified as proved 
developed producing reserves, 2.3% were classified as proved developed non-
producing reserves and 1.3% were classified as proved undeveloped reserves. For
the three months ended December 31, 2011, the average daily net production from
the underlying properties was approximately 4,988 BOE/d (or 4,489 BOE/d 
attributable to the net profits interest) and was comprised of approximately 
72% oil, 25% natural gas and 3% natural gas liquids. Based on the reserve 
report, production attributable to the underlying properties is expected to 
decline at an average year-over-year rate of approximately 8.4% between 2012 
and 2021, assuming no additional development drilling or other development 
expenditures are made on the underlying properties after 2014. Whiting operates
approximately 59% and 56% of the estimated proved reserve volumes and pre-tax 
PV10% value, respectively, of these properties based on the reserve report. 

Whiting believes that its retained interest in the underlying properties, which
entitles it to 10% of the net proceeds from the sale of production attributable
to the underlying properties during the term of the net profits interest and 
all of the net proceeds thereafter, together with its ownership of trust units,
if any, will provide incentive for it to operate (or cause to be operated) the 
underlying properties in an efficient and cost-effective manner. In addition, 
Whiting has agreed to operate the properties for which it is the operator as a
reasonably prudent operator in the same manner that it would operate if these 
properties were not burdened by the net profits interest. Furthermore, for 
those properties that it is not the operator, Whiting has agreed to use 
commercially reasonable efforts to cause the operator to operate the property 
in the same manner; however, Whiting’s ability to cause other operators to take
certain actions is limited. 

The trust will make quarterly cash distributions of substantially all of its 
quarterly cash receipts of net proceeds attributable to the trust, after 
deduction of fees and expenses for the administration of the trust, to holders 
of its trust units during the term of the net profits interest. The first 
quarterly distribution is expected to be made on or prior to May 30, 2012 to 
trust unitholders owning trust units on May 20, 2012. The trust’s first 
quarterly distribution will consist of an amount in cash paid by Whiting equal 
to the amount that would have been payable to the trust had the net profits 
interest been in effect during the period from January 1, 2012 through the day 
prior to close of this offering plus the amount payable under the net profits 
interest for the period from the day of closing of the offering through March 
31, 2012, less any general and administrative expenses and reserves of the 
trust. Because payments to the trust will be generated by depleting assets and 
the trust has a finite life with the production from the underlying properties 
diminishing over time, a portion of each distribution will represent a return 
of your original investment. 

The gross proceeds from the underlying properties used to calculate the net 
profits interest will fluctuate and will be based on prices realized for oil, 
natural gas and natural gas liquids attributable to the underlying properties 
for each calendar quarter during the term of the net profits interest and 
calculated on an aggregate basis for all these properties. In calculating the 
net proceeds to be attributed to the trust, Whiting will deduct from the gross 
proceeds from oil, natural gas and natural gas liquids sales all production and
development costs and amounts that may be reserved for future development, 
maintenance or operating expenses (which reserve amounts may not exceed $2.0 
million at any time), all calculated on an aggregate basis for all of these 
properties. The production and development costs will be reduced by hedge 
payments received by Whiting, if any, under the hedge contracts described below
and other non-production revenue. If at any time production and development 
costs should exceed gross proceeds, neither the trust nor the trust unitholders
would be liable for the excess costs; the trust, however, would not receive any
net proceeds until future net proceeds exceed the total of those excess costs, 
plus interest at the prevailing money market rate. 

Whiting has entered into hedge contracts, which are structured as costless 
collar arrangements, to hedge approximately 50% of the anticipated oil 
production from the estimated proved reserves attributable to the underlying 
properties in the reserve report for the period from April 1, 2012 through 
December 31, 2014. The hedge contracts provide a fixed floor price of $80.00 
and a fixed ceiling price of $122.50 for this oil production during this 
period. During the term of the hedge contracts, Whiting expects these contracts
will reduce the oil price-related risks inherent in holding interests in oil 
properties, although they will also limit the potential for upside during the 
hedged period if oil prices increase. Trust unitholders will be exposed to 
fluctuations in prices of natural gas and natural gas liquids throughout the 
term of the trust; and after the hedge contracts terminate on December 31, 
2014, trust unitholders’ exposure to fluctuations in oil prices will increase. 
Because the trust is intended to qualify as a grantor trust for U.S. federal 
income tax purposes, it is generally prohibited from varying or reinvesting its
assets. Permitting Whiting to enter into additional hedge arrangements after 
the closing of this offering relating to production from the underlying 
properties could be treated as the trust constructively retaining the right to 
vary its assets. Accordingly, under the terms of the conveyance, Whiting will 
be prohibited from entering into hedging arrangements covering the production 
from the underlying properties following the completion of this offering. 

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The principal offices of the trust are located at 919 Congress Avenue, Suite 
500, Austin, Texas 78701, and its telephone number is (512) 236-6599. Its 
website is www.whiting.com.