Workflow
BP Prudhoe Bay Royalty Trust(BPT) - 2024 Q3 - Quarterly Report
BPTBP Prudhoe Bay Royalty Trust(BPT)2024-11-12 21:05

Financial Performance - For the quarter ended September 30, 2024, the average WTI price was 75.20,whiletheaverageadjustedchargeablecostswere75.20, while the average adjusted chargeable costs were 90.90, resulting in an average per barrel royalty of (18.31)[24].−TheTrustdidnotreceiveanyroyaltypaymentsfortheentiretyof2023andthefirstthreequartersof2024duetodecliningWTIpricesandincreasedchargeablecosts[24].−Theaveragenetproductionforthequarterwas59.6mb/d,indicatingongoingproductionlevelsdespitethefinancialchallengesfacedbytheTrust[24].−Trustroyaltyrevenuesforthethirdquarterof2024werezero,consistentwithQ32023,duetonon−paymentofthePerBarrelRoyalty[54].−RoyaltyrevenuesfortheninemonthsendedSeptember30,2024,decreasedto(18.31)[24]. - The Trust did not receive any royalty payments for the entirety of 2023 and the first three quarters of 2024 due to declining WTI prices and increased chargeable costs[24]. - The average net production for the quarter was 59.6 mb/d, indicating ongoing production levels despite the financial challenges faced by the Trust[24]. - Trust royalty revenues for the third quarter of 2024 were zero, consistent with Q3 2023, due to non-payment of the Per Barrel Royalty[54]. - Royalty revenues for the nine months ended September 30, 2024, decreased to 0, a decline of 6,640thousandor100.06,640 thousand or 100.0% compared to 6,640 thousand in the same period of 2023[59]. - Cash earnings (loss) for the same period were (1,037)thousand,adecreaseof(1,037) thousand, a decrease of 6,869 thousand or 117.8% from 5,832thousandintheprioryear[59].−Cashdistributionsalsofellto5,832 thousand in the prior year[59]. - Cash distributions also fell to 0, down 6,365thousandor100.06,365 thousand or 100.0% compared to 6,365 thousand in the previous year[59]. - Administrative expenses for Q3 2024 increased by 109.6% to 329,primarilyduetotimingofinvoicesandincreasedserviceproviderfees[54].−Administrativeexpensesincreasedto329, primarily due to timing of invoices and increased service provider fees[54]. - Administrative expenses increased to 1,223 thousand, reflecting a rise of 199thousandor19.4199 thousand or 19.4% from 1,024 thousand in the same period of 2023[59]. Trust Operations and Management - The Trust will terminate if net revenues from the Royalty Interest are less than 1.0millionperyearfortwoconsecutiveyears,withapotentialterminationdateofDecember31,2024,ifrevenuesdonotexceedthisthreshold[24].−TheTrusteeintendstokeepthecashreserveprograminplacethroughthewindingupoftheTrust,withanyexcesscashreservedtobedistributedtounitholdersaftercoveringadministrativeexpenses[37].−TheTrusteehastheauthoritytoadjustthecashreservebasedontheTrust′sfinancialcircumstances,whichmayincludeincreasingordecreasingthereservewithoutpriornoticetounitholders[31].−TheTrustCorpusdecreasedattheendoftheninemonthsendedSeptember30,2024,duetothepaymentofexpensesfromcashreserves,slightlyoffsetbyanincreaseininterestincome[59].−TheTrustisatriskofdelistingfromtheNYSEifitcannotmeettheminimumpricerequirementof1.0 million per year for two consecutive years, with a potential termination date of December 31, 2024, if revenues do not exceed this threshold[24]. - The Trustee intends to keep the cash reserve program in place through the winding up of the Trust, with any excess cash reserved to be distributed to unit holders after covering administrative expenses[37]. - The Trustee has the authority to adjust the cash reserve based on the Trust's financial circumstances, which may include increasing or decreasing the reserve without prior notice to unit holders[31]. - The Trust Corpus decreased at the end of the nine months ended September 30, 2024, due to the payment of expenses from cash reserves, slightly offset by an increase in interest income[59]. - The Trust is at risk of delisting from the NYSE if it cannot meet the minimum price requirement of 1.00 per Unit over a consecutive 30 trading day period[68]. - If net revenues from the Royalty Interest do not exceed 1.0millionforthequarterendedDecember31,2024,theTrustwillterminateonDecember31,2024[70].−Theterminationandwinding−upoftheTrustmaynegativelyaffectUnitpricesandincreasepricevolatility[70].MarketConditionsandRisks−TheTrust′srevenuesandoperationsaresignificantlyaffectedbyfluctuationsinoilprices,whichareinfluencedbyglobalsupplyanddemand,geopoliticalevents,andmarketconditions[38].−Forward−lookingstatementsregardingtheTrust′sperformancearesubjecttovariousrisks,includingchangesinoilpricesandgeopoliticaldevelopments,whichcouldmateriallyaffectfutureresults[25].−TheaverageWTIcrudeoilspotpriceforQ22024wasbelowthe"break−even"levelnecessaryfortheTrusttoreceiveaPerBarrelRoyalty,fluctuatingbetweenahighof1.0 million for the quarter ended December 31, 2024, the Trust will terminate on December 31, 2024[70]. - The termination and winding-up of the Trust may negatively affect Unit prices and increase price volatility[70]. Market Conditions and Risks - The Trust's revenues and operations are significantly affected by fluctuations in oil prices, which are influenced by global supply and demand, geopolitical events, and market conditions[38]. - Forward-looking statements regarding the Trust's performance are subject to various risks, including changes in oil prices and geopolitical developments, which could materially affect future results[25]. - The average WTI crude oil spot price for Q2 2024 was below the "break-even" level necessary for the Trust to receive a Per Barrel Royalty, fluctuating between a high of 86.91 and a low of 73.25[43].−TheaverageWTIcrudeoilspotpriceforQ32024alsoremainedbelowthe"break−even"level,withahighof73.25[43]. - The average WTI crude oil spot price for Q3 2024 also remained below the "break-even" level, with a high of 83.88 and a low of 65.75[44].−TheU.S.EnergyInformationAdministrationforecastsWTIpricestoaverage65.75[44]. - The U.S. Energy Information Administration forecasts WTI prices to average 71.97 per barrel in Q4 2024 and 73.67perbarrelinQ12025,butthereisnoassurancethesepriceswillbeachieved[45].ProductionTrends−TheaveragenetproductionofoilandcondensateallocatedtotheTrustfromprovedreserveswaslessthan90,000barrelsperdayfrom2019through2024,withexpectationstoremainbelowthisthresholdinfutureyearsduetodecliningproductionrates[41].−Theaveragenetproductionfromthe1989WorkingInterestdeclinedby6.773.67 per barrel in Q1 2025, but there is no assurance these prices will be achieved[45]. Production Trends - The average net production of oil and condensate allocated to the Trust from proved reserves was less than 90,000 barrels per day from 2019 through 2024, with expectations to remain below this threshold in future years due to declining production rates[41]. - The average net production from the 1989 Working Interest declined by 6.7% in Q2 2024 compared to Q2 2023, attributed to the declining production rate from the Prudhoe Bay field[52]. - The average net production for the nine-month period ending June 30, 2024, was 65.3 mb/d, a decrease of 5.1% compared to the same period in 2023[57]. Financial Reporting and Controls - The internal control over financial reporting was evaluated as effective as of September 30, 2024, based on COSO criteria[64]. - The average WTI Price for the second quarter of 2024 increased by 9.3% compared to Q2 2023, while Adjusted Chargeable Costs increased by 11.4%[52]. - The average Per Barrel Royalty paid in Q2 2024 was (12.89), a decrease of $(2.70) or (26.5%) compared to Q2 2023[52].