WisdomTree Trust WidsomTree Middle East Reports Operating Results (10-Q)
Wisdomtree Trust Widsomtree Middle East has a market cap of $2.1 million; its shares were traded at around $14.761 . Highlight of Business Operations: In May 2008, we acquired four producing gas fields and undeveloped acreage in South Texas from Smith Production Inc. (“Smith”) for a purchase price of $65.0 million with an economic effective date of January 1, 2008. After adjustment for the estimated results of operations, and other typical purchase price adjustments of approximately $7.4 million for the period between the effective date and the closing date, the cash consideration was approximately $57.6 million.
In January 2008, we and our operator-partner entered into a series of agreements to sell our interests in wells and undeveloped acreage in the Fort Worth Barnett Shale Play in Johnson and Tarrant counties, Texas to another industry participant active in that area. We owned a 12.5% non-operated working interest in the assets being sold and had 1.5 Bcfe in proved reserves at December 31, 2007. The total consideration paid by the buyer was based on existing wells and undeveloped acreage owned by us and our partner at the time of the final closing. Our share of the consideration received was approximately $34.4 million. Proceeds received for our interest were primarily used to repay amounts outstanding under our senior revolving credit facility and to help finance our acquisition of the properties from Smith. Our net book value of the assets sold was $18.8 million, which resulted in a gain of $15.6 million.
On November 6, 2009 we issued an unsecured promissory note in the aggregate principal amount of $10.0 million to Wells Fargo Bank, National Association and an unsecured subordinated promissory note in the aggregate principal amount of $2.0 million to our majority stockholder. See Note 6 – “Debt” to Consolidated Financial Statements and “—Liquidity and Capital Resources—Capital Resources.”
Natural gas, crude oil and natural gas liquids prices are reported net of the realized effect of our hedging agreements. We realized gains of $1.6 million on our crude oil hedges and $8.8 million on our natural gas hedges in the third quarter 2009, compared to realized losses of $3.5 million for crude oil hedges and $2.2 million for natural gas hedges in the third quarter 2008.
Lease Operating Expenses. Lease operating expenses for the third quarter 2009 were $3.9 million, compared to $5.7 million in the third quarter 2008, a decrease resulting from the implementation of cost reduction initiatives during 2009 in response to the lower commodity price environment.
Production and Ad Valorem Tax Expenses. Production and ad valorem tax expenses for the third quarter 2009 were $1.6 million, compared to $4.8 million for the third quarter 2008, due to lower production and lower realized prices in 2009 and state tax credits, net to us, of $0.4 million as a result of our focus on maximizing allowable deductions and opportunities for tax relief for prior periods.
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