USCF announced today that it will execute a one-for-eight reverse share split that will be effective for shareholders of the United States Oil Fund, LP (NYSE: USO) after the close of the markets on April 28, 2020. Shares of USO will trade at their post-split prices on April 29, 2020. USO’s ticker symbol, “USO”, will not change, and shares of USO will continue to trade on the NYSE Arca. USO’s new CUSIP number will be 91232N207.

The reverse share split will reduce the number of USO’s shares outstanding and will result in a proportionate increase in the net asset value per share (“NAV”) of USO. As a result of the reverse share split, USO shareholders on April 28, 2020 will receive one post-split share of USO for every eight pre-split shares of USO they hold. Immediately after the reverse share split is effective, USO’s post-split shares will have an NAV that is eight times higher than that of pre-split shares.

The reverse share split will affect all of USO’s shareholders. The reverse share split will not affect any shareholder’s percentage interest in USO, except to the extent that the reverse share split results in a shareholder receiving cash in the transaction. The NYSE Arca does not permit the trading of fractional shares. As described below, shareholders otherwise entitled to receive fractional shares as a result of the reverse share split will thus receive cash in lieu of such fractional shares.

Illustration of a Reverse Share Split

The following table shows the effect of a hypothetical 1 for 8 reverse share split:

Table 1.

Hypothetical Example of a 1-for-8 Reverse Share Split:

Period # of Shares Net Asset Value (NAV) Total Value
Pre-Split 120 $5 $600
Post-Split 15 $40 $600

Redemption of Fractional Shares and Tax Consequences for the Reverse Share Split

USO shareholders that hold USO shares that are not an exact multiple of USO’s reverse share split ratio (a multiple of 8) would hold fractional shares as a result of the reverse share split. As noted above, the NYSE Arca does not permit the trading of fractional shares. Shareholders otherwise entitled to fractional shares as a result of the reverse share split will receive cash in lieu of such fractional shares. The receipt of cash in lieu of fractional shares will generally reduce a USO shareholder’s basis in USO shares by the amount of cash received. If the amount of cash received in lieu of fractional shares exceeds a USO shareholder’s aggregate basis in the shareholder’s shares, such shareholder would recognize gain equal to the amount of such excess. This may cause a taxable event for those shareholders. Other than in the case of USO shareholders receiving cash in excess of basis, the reverse share split is not anticipated to result in the recognition of taxable gain to USO shareholders.