Financial Performance - Royalty revenues for the three months ended March 31, 2022, were $12,801,000, a significant increase from $0 in the same period of 2021[14] - Cash earnings for the first quarter of 2022 were $12,438,000, compared to a loss of $76,000 in the first quarter of 2021[14] - Cash distributions for the first quarter of 2022 totaled $12,437,000, with a distribution per unit of $0.5812[14] - The Trust received a cash distribution of $23,813,974 from HNS for the quarter ended March 31, 2022, which included $23,053,395 as the Royalty Payment and $760,579 for an underpayment from the previous quarter[31] - Royalty revenues for the three months ended March 31, 2022, were $12,801,000, reflecting an increase compared to the same period in 2021[69] - Cash earnings for the same period were $12,438,000, slightly down from $12,514,000 in the prior year[69] - Cash distributions remained stable at $12,437,000 for the three months ended March 31, 2022[69] Assets and Liabilities - As of March 31, 2022, total assets of BP Prudhoe Bay Royalty Trust were $6,003,000, compared to $6,002,000 as of December 31, 2021[11] - The Trust corpus at the end of the first quarter of 2022 was $5,462,000, down from $5,638,000 at the end of 2021[16] - The Trust maintained a cash reserve of approximately $6.0 million as of March 31, 2022, to cover future liabilities and expenses[21] - The Trust's cash reserve is currently approximately $6.0 million, maintained to cover administrative expenses and potential termination costs[49] - Accrued liabilities for administrative expenses decreased by approximately $172,000 to $541,000 as of March 31, 2022, compared to the previous year[69] Production and Revenue Factors - Average daily net production of crude oil and condensate from the proved reserves allocated to the Trust was less than 90,000 barrels per day during certain quarters, leading to adjustments in royalty payments[29] - The average WTI price for the first quarter ended March 31, 2022, was $94.45, with an average per barrel royalty calculated at $21.12[37] - The average WTI price for Q4 2021 was $76.91, an increase of 80.29% compared to Q4 2020's average of $42.66[66] - The average per barrel royalty paid in Q4 2021 was $11.57, reflecting the increase in average WTI prices[66] - The increase in royalty revenues was primarily driven by a rise in the average WTI price, despite a decline in average net production[69] Operational Risks - The Trust's operations are subject to risks including fluctuations in oil prices and changes in production levels, which could impact future revenues[39] - The Trust's financial condition is reliant on the revenues from the Royalty Interest, with no other sources of liquidity available[42] - The Trust has not received revenues from the Royalty Interest for four quarters in 2020 and the first quarter of 2021 due to lower oil prices and increased chargeable costs[45] - HNS's net production of oil and condensate allocated to the Trust was less than 90,000 barrels per day for 2018-2021 and is expected to remain below this threshold in future years[57] - The "break-even" WTI price for the Trust to receive a positive per barrel royalty was projected to be $66.46 per barrel in 2022, expected to increase thereafter[58] Financial Management and Reporting - The Trust's financial statements are prepared on a modified cash basis, reflecting revenues when received and distributions when paid[23] - The Trust unit holders are treated as owners of Trust income and corpus, reporting the entire taxable income on their respective tax returns[26] - Future distributions to unit holders may be withheld to cover accrued administrative expenses and to maintain the cash reserve[49] - The Trustee will continue to reassess the adequacy of the cash reserve based on ongoing evaluations and may adjust it without prior notice to unit holders[49] - The internal control over financial reporting was evaluated as effective as of March 31, 2022, based on COSO criteria[73] - There were no changes in internal control over financial reporting that materially affected the Trust during the last fiscal quarter[74] Administrative Expenses - Administrative expenses increased to $364,000 from $289,000, a rise of approximately 25.9%[69] Legal and Compliance - The Trust has no legal proceedings or unregistered sales of equity securities to report[76][78] Royalty Payment Adjustments - The Trust's agreement with HNS allows for adjustments in royalty payments based on actual production data, which can lead to future payment variations[29] - Royalty payments resumed in July 2021 after a hiatus due to the economic impacts of the COVID-19 pandemic, with payments received for subsequent quarters[21]
BP Prudhoe Bay Royalty Trust(BPT) - 2022 Q1 - Quarterly Report