SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------| | ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10243 DELAWARE 13-6943724 State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) THE BANK OF NEW YORK MELLON TRUST COMP ...

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |---------------------------------------------------------------------------------------------------------|-----------------------------------------------------| | ...

SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-10243 BP PRUDHOE BAY ROYALTY TRUST (Exact Name of Registrant as Specified in Its Charter) Delaware 13-6943724 (State or Other Jurisdiction of Incorporation or ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements, prepared on a modified cash basis, detail the Trust's financial position as of March 31, 2019, and its first-quarter performance, showing decreased royalty revenues and cash earnings compared to the prior year [Financial Statements](index=3&type=section&id=Financial%20Statements) The statements show a year-over-year decrease in cash earnings, distributions, and royalty revenues for the three months ended March 31, 2019, alongside a slight decline in total assets Statements of Assets, Liabilities and Trust Corpus (In thousands) | | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,010 | $1,031 | | **Total assets** | **$1,010** | **$1,031** | | **Liabilities and Trust Corpus** | | | | Accrued expenses | $312 | $339 | | Trust corpus | $698 | $692 | | **Total liabilities and trust corpus** | **$1,010** | **$1,031** | Statements of Cash Earnings and Distributions (In thousands, except per unit data) | | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Royalty revenues | $21,759 | $26,539 | | Interest income | $9 | $6 | | Less: Trust administrative expenses | ($326) | ($215) | | **Cash earnings** | **$21,442** | **$26,330** | | **Cash distributions** | **$21,463** | **$26,325** | | **Cash distributions per unit** | **$1.0029** | **$1.2302** | [Notes to Financial Statements](index=6&type=section&id=Notes%20to%20Financial%20Statements) These notes detail the Trust's passive structure, its modified cash basis accounting, the full amortization of its Royalty Interest, its tax treatment as a grantor trust, and the Trustee's recent decision to withhold funds for cash reserves - The Trust's sole purpose is to own and administer the Royalty Interest, which is a **16.4246% per barrel royalty** on the first **90,000 barrels of average actual daily net production** per quarter from BP Alaska's 1989 working interests in the Prudhoe Bay field[19](index=19&type=chunk) - The financial statements are prepared on a **modified cash basis**, recording revenues when received, which is considered most meaningful for quarterly distributions[27](index=27&type=chunk)[28](index=28&type=chunk) - The carrying value of the Royalty Interest was reduced to **zero by December 31, 2010**, through **$359.5 million** in amortization and **$175.5 million** in impairment write-downs[34](index=34&type=chunk) - Subsequent Event (April 2019): The Trust received a royalty payment of **~$7.7 million** for Q1 2019, distributing **$7.38 million** to unit holders after withholding **$33,750** to increase cash reserves, a practice the Trustee intends to continue quarterly[45](index=45&type=chunk)[46](index=46&type=chunk) [Item 2. Trustee's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=11&type=section&id=Item%202.%20Trustee%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The Trustee's analysis highlights the Trust's sensitivity to oil prices and production, noting a significant Q1 2019 decline in royalty revenues and distributions primarily due to increased Chargeable Costs and lower production, leading to a new strategy for building cash reserves [Liquidity and Capital Resources](index=11&type=section&id=Liquidity%20and%20Capital%20Resources) The Trust's liquidity is solely dependent on royalty payments from BP Alaska, prompting the Trustee to implement a plan to increase cash reserves by withholding a portion of quarterly distributions starting April 2019 - The Trust is a passive entity with its sole source of liquidity and capital being the revenue from the Royalty Interest[50](index=50&type=chunk) - Commencing with the April 2019 distribution, the Trustee began withholding funds each quarter to increase the cash reserve by a total of approximately **$270,000** to cover future expenses[53](index=53&type=chunk) [Results of Operations](index=12&type=section&id=Results%20of%20Operations) Q1 2019 royalty revenues decreased 18% year-over-year to **$21.8 million**, primarily due to a 14.1% drop in Average Per Barrel Royalty driven by increased Adjusted Chargeable Costs and lower average net production, despite a rise in WTI price Comparison of Royalty Calculation Factors (for Q4 production periods) | Factor | Q4 2018 | Q4 2017 | Change (%) | | :--- | :--- | :--- | :--- | | Average WTI Price | $58.82 | $55.48 | 6.0% | | Adjusted Chargeable Costs | $38.81 | $32.67 | 18.8% | | Average Production Taxes | $2.04 | $1.92 | 6.3% | | **Average Per Barrel Royalty** | **$17.94** | **$20.89** | **(14.1%)** | | Average net production (mb/d) | 78.7 | 84.0 | (6.3%) | Comparison of Financial Results (Three Months Ended March 31) | (In thousands) | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Royalty revenues | $21,759 | $26,539 | (18.0%) | | Cash earnings | $21,442 | $26,330 | (18.6%) | | Cash distributions | $21,463 | $26,325 | (18.5%) | - The decrease in royalty revenue was primarily caused by the increase in Adjusted Chargeable Costs and lower production, despite a **6% increase** in the average WTI price for the quarter[67](index=67&type=chunk)[70](index=70&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=15&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The Trust, as a passive entity, faces minimal market risk from interest rates, foreign currency, or derivatives, with oil price fluctuation being its inherent primary risk - The Trust is not subject to any material interest rate risk, foreign currency risk, or risk from derivative financial instruments[71](index=71&type=chunk) [Item 4. Controls and Procedures](index=15&type=section&id=Item%204.%20Controls%20and%20Procedures.) The Trustee confirmed the effectiveness of the Trust's disclosure controls and procedures, relying on BP Alaska's contractual reporting, with no material changes to internal control over financial reporting during the quarter - The Trustee evaluated the Trust's disclosure controls and procedures and concluded they are effective, relying on information contractually provided by BP Alaska[72](index=72&type=chunk)[77](index=77&type=chunk) - There were no changes in the Trust's internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal controls[78](index=78&type=chunk) [PART II - OTHER INFORMATION](index=17&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=17&type=section&id=Item%201.%20Legal%20Proceedings.) The Trust reports no legal proceedings - None[80](index=80&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Trust's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 - There have been no material changes in risk factors disclosed in the 2018 Annual Report[81](index=81&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=17&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The Trust reports no unregistered sales of equity securities - None[83](index=83&type=chunk) [Item 3. Defaults Upon Senior Securities](index=17&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The Trust reports no defaults upon senior securities - None[84](index=84&type=chunk) [Item 4. Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the Trust - Not applicable[85](index=85&type=chunk) [Item 5. Other Information](index=17&type=section&id=Item%205.%20Other%20Information.) This section references Note 7 of the financial statements, which details the subsequent event related to the April 2019 royalty payment and distribution - Reference is made to Note 7 of Notes to Financial Statements (Unaudited) in Part I, Item 1, regarding a subsequent event[86](index=86&type=chunk) [Item 6. Exhibits](index=17&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including certifications and various agreements incorporated by reference from previous filings - Exhibits filed include Rule 13a-14(a)/15d-14(a) Certifications and Section 1350 Certification. Other agreements are incorporated by reference[88](index=88&type=chunk) [Signature](index=19&type=section&id=SIGNATURE) [Signature](index=19&type=section&id=Signature) The report was duly signed and authorized on May 10, 2019, by The Bank of New York Mellon Trust Company, N.A., acting as the Trustee for the BP Prudhoe Bay Royalty Trust - The report was signed on **May 10, 2019**, by Elaina C. Rodgers, Vice President of The Bank of New York Mellon Trust Company, N.A., as Trustee[93](index=93&type=chunk)[94](index=94&type=chunk)

Part I [Business](index=5&type=section&id=ITEM%201%2E%20BUSINESS) BP Prudhoe Bay Royalty Trust is a passive Delaware business trust whose sole asset is a royalty interest in a portion of the Prudhoe Bay field's net production [The Trust](index=6&type=section&id=THE%20TRUST) The Trust's non-operational royalty interest in the Prudhoe Bay field is administered by a Trustee who manages income and distributions, maintaining a cash reserve and subject to specific termination conditions - The Trust's property consists of an overriding royalty interest on **16.4246%** of the lesser of the first **90,000 barrels** of average actual daily net production per quarter from BP Alaska's 1989 working interest in the Prudhoe Bay oil field, or the actual average daily net production from that interest[22](index=22&type=chunk) - The Trust has no employees and all administrative functions are performed by the Trustee, whose basic function is to collect income, pay expenses, and distribute available cash to Unit holders[23](index=23&type=chunk)[27](index=27&type=chunk) - On December 19, 2018, the Trustee announced a gradual increase to the existing **$1,000,000** cash reserve, starting with the April 2019 distribution, to cover future expenses and liabilities[35](index=35&type=chunk) - The Trust will terminate if net revenues are less than **$1,000,000** per year for two successive years or if holders of at least **60%** of the outstanding Units vote to terminate[37](index=37&type=chunk) [The Royalty Interest](index=10&type=section&id=THE%20ROYALTY%20INTEREST) Quarterly royalty payments are determined by daily Royalty Production and Per Barrel Royalty, which is the WTI Price less annually increasing Chargeable Costs and Production Taxes, impacted by Alaska's tax statutes Chargeable Costs per Barrel (2018-2020) | Calendar year | Chargeable Costs per barrel | | :--- | :--- | | 2018 | $20.00 | | 2019 | $23.75 | | 2020 | $26.50 | Per Barrel Royalty Calculation Example (2018) | Quarter | Average WTI Price | Adjusted Chargeable Costs | Production Taxes | Average Per Barrel Royalty | | :--- | :--- | :--- | :--- | :--- | | Q4 2017 | $55.48 | $32.67 | $1.92 | $20.89 | | Q1 2018 | $62.96 | $38.34 | $2.21 | $22.38 | | Q2 2018 | $67.85 | $38.74 | $2.41 | $26.70 | | Q3 2018 | $69.60 | $38.83 | $2.81 | $27.96 | - Alaska's 2013 oil-tax reform bill (the "Act") impacts the Production Tax calculation by adding a stair-step per-barrel tax credit, which may be limited by a "minimum tax"[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [The Prudhoe Bay Unit and Field](index=16&type=section&id=THE%20PRUDHOE%20BAY%20UNIT%20AND%20FIELD) The Trust's royalty interest is tied to BP Alaska's declining Prudhoe Bay field, with **15.772 million barrels** of proved reserves as of December 31, 2018, and projected royalty payments ceasing after 2022 based on 2018 WTI prices Net Production Allocated to 1989 Working Interests (2014-2018) | Calendar year | Oil (thousand barrels per day) | Condensate (thousand barrels per day) | | :--- | :--- | :--- | | 2014 | 81.8 | 2.3 | | 2015 | 87.1 | 0.0(a) | | 2016 | 87.8 | 0.0(a) | | 2017 | 83.4 | 0.0(a) | | 2018 | 77.3 | 0.0(a) | - As of Dec 31, 2018, proved reserves allocated to the Trust were **15.772 million barrels**, an increase of **6.702 million barrels** during 2018, primarily due to higher WTI prices extending the economic life of the field[107](index=107&type=chunk) - Based on the 2018 average WTI price of **$65.56**, royalty payments to the Trust are estimated to continue through **2022** and become zero in the following year, a forecast highly sensitive to future oil prices[112](index=112&type=chunk) Estimated Future Net Cash Flow (as of Dec 31, 2018) | Metric | Value (in millions) | | :--- | :--- | | Undiscounted Estimated Future Cash Flow | $154.662 | | Net Present Value (at 10% discount) | $138.541 | [Certain Tax Considerations](index=22&type=section&id=CERTAIN%20TAX%20CONSIDERATIONS) The Trust is a grantor trust for federal income tax purposes, with income and deductions passing through to Unitholders, who may claim depletion deductions, while foreign Unitholders face a 30% withholding tax - The Trust is a grantor trust and not subject to federal income tax, requiring Unitholders to report their share of all Trust income, deductions, and credits on their own tax returns[123](index=123&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - Foreign Unitholders are generally subject to a **30%** withholding tax on gross income from the Royalty Interest, though a lower treaty rate may apply[132](index=132&type=chunk) - The Trust is treated as a Widely Held Fixed Investment Trust (WHFIT), with the Trustee providing tax information in accordance with applicable regulations[137](index=137&type=chunk) [Risk Factors](index=25&type=section&id=ITEM%201A%2E%20RISK%20FACTORS) Unitholders face significant risks including declining Prudhoe Bay oil production, volatile WTI crude oil prices, operational disruptions to the field or TAPS, and potential adverse impacts from natural gas pipeline construction or changes in Alaska's tax laws - Production from the Prudhoe Bay field is declining and is projected to cease being economic for the Trust after **2022**, based on 2018 average WTI prices[141](index=141&type=chunk)[142](index=142&type=chunk) - Royalty payments are unpredictable due to the volatility of WTI crude oil prices, which can fall below the 'break-even' point required to generate a positive Per Barrel Royalty, with the break-even price on January 1, 2019, being **$47.69**[145](index=145&type=chunk)[163](index=163&type=chunk) - The Trans-Alaska Pipeline System (TAPS), the only transport for North Slope oil, is vulnerable to damage from natural causes, accidents, and issues related to declining oil flow, which could halt production[175](index=175&type=chunk)[176](index=176&type=chunk) - Construction of a natural gas pipeline from the North Slope could lower reservoir pressure in the Prudhoe Bay field, accelerating the decline in oil production and royalty payments, with no offsetting gas revenue for the Trust[185](index=185&type=chunk) - Potential conflicts of interest exist, as BP Alaska might decide to halt production from the 1989 Working Interests based on its own profitability, even if a Per Barrel Royalty would still be payable to the Trust[198](index=198&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=ITEM%201B%2E%20UNRESOLVED%20STAFF%20COMMENTS) The Trust has not received any unresolved written comments from the Securities and Exchange Commission staff regarding its periodic or current reports - The Trust has no unresolved written comments from the SEC staff[199](index=199&type=chunk) [Properties](index=35&type=section&id=ITEM%202%2E%20PROPERTIES) Information regarding the Trust's properties is detailed in Item 1 of this report - This section refers to Item 1 for information on the Trust's properties[200](index=200&type=chunk) [Legal Proceedings](index=35&type=section&id=ITEM%203%2E%20LEGAL%20PROCEEDINGS) The Trust reports no legal proceedings - There are no legal proceedings to report[201](index=201&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=ITEM%204%2E%20MINE%20SAFETY) This item is not applicable to the Trust - Mine safety disclosures are not applicable[201](index=201&type=chunk) Part II [Market for Registrant's Units, Related Unitholder Matters and Issuer Purchases of Units](index=36&type=section&id=ITEM%205%2E%20MARKET%20FOR%20REGISTRANT%27S%20UNITS%2C%20RELATED%20UNITHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20UNITS) The Trust's Units of Beneficial Interest are traded on the NYSE under symbol BPT, with **21,400,000** Units outstanding as of February 14, 2019, and future distributions dependent on WTI prices, production, and costs Quarterly Unit Price and Distributions (2017-2018) | Period | High Price | Low Price | Distributions Per Unit | | :--- | :--- | :--- | :--- | | **2017** | | | | | Q1 | $32.95 | $15.00 | $0.994 | | Q2 | $24.65 | $18.55 | $1.098 | | Q3 | $22.45 | $18.75 | $0.833 | | Q4 | $22.75 | $18.65 | $0.675 | | **2018** | | | | | Q1 | $27.95 | $19.25 | $1.230 | | Q2 | $31.80 | $20.85 | $1.275 | | Q3 | $34.60 | $26.75 | $1.408 | | Q4 | $37.23 | $17.00 | $1.380 | - As of February 14, 2019, there were **21,400,000** Units outstanding[205](index=205&type=chunk) [Selected Financial Data](index=37&type=section&id=ITEM%206%2E%20SELECTED%20FINANCIAL%20DATA) This section presents a five-year summary of the Trust's key financial data, highlighting **$114.4 million** in royalty revenues and **$5.293** cash distributions per unit for the year ended December 31, 2018 Selected Financial Data (2014-2018) | (in thousands, except per Unit amounts) | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | Royalty revenues | $114,369 | $78,193 | $44,917 | $126,781 | $227,904 | | Cash earnings | $113,282 | $77,039 | $43,621 | $125,461 | $226,763 | | Cash distributions | $113,263 | $77,031 | $43,619 | $125,461 | $226,763 | | Cash distributions per unit | $5.293 | $3.600 | $2.038 | $5.863 | $10.596 | [Trustee's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=37&type=section&id=ITEM%207%2E%20TRUSTEE%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) The Trust's financial condition and results are primarily driven by WTI crude oil prices, leading to increased royalty revenues and distributions in 2018, with the Trustee also planning to gradually increase the cash reserve [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The Trust's liquidity is dependent on royalty revenues, with the Trustee planning to gradually increase the existing **$1,000,000** cash reserve by approximately **$270,000** starting April 2019 to cover future expenses - The Trustee announced on December 19, 2018, a plan to gradually increase the existing cash reserve by approximately **$270,000**, commencing with the April 2019 distribution[211](index=211&type=chunk)[213](index=213&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) The Trust's financial results significantly improved in 2018 due to a **29.4%** increase in average WTI prices, leading to a **46.3%** rise in royalty revenues to **$114.4 million**, despite lower production volumes Comparison of Operating Factors (For Fiscal Years 2018 vs. 2017) | Factor | 12 Months Ended 9/30/2018 | 12 Months Ended 9/30/2017 | % Change | | :--- | :--- | :--- | :--- | | Average WTI Price | $63.95 | $49.41 | 29.4% | | Average Per Barrel Royalty | $24.48 | $15.49 | 58.0% | | Average net royalty production (mb/d) | 78.3 | 84.8 | (7.7)% | Comparison of Financial Results (FY 2018 vs. FY 2017) | (Dollars in thousands) | Year Ended 12/31/2018 | Year Ended 12/31/2017 | % Change | | :--- | :--- | :--- | :--- | | Royalty revenues | $114,369 | $78,193 | 46.3% | | Cash earnings | $113,282 | $77,039 | 47.0% | | Cash distributions | $113,263 | $77,031 | 47.0% | Comparison of Operating Factors (For Fiscal Years 2017 vs. 2016) | Factor | 12 Months Ended 9/30/2017 | 12 Months Ended 9/30/2016 | % Change | | :--- | :--- | :--- | :--- | | Average WTI Price | $49.41 | $41.61 | 18.7% | | Average Per Barrel Royalty | $15.49 | $8.81 | 75.8% | | Average net royalty production (mb/d) | 84.8 | 89.0 | (4.7)% | [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=ITEM%207A%2E%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a passive entity, the Trust is not subject to material interest rate risk due to its short-term, restricted investments, nor does it engage in foreign currency or derivative transactions - The Trust is not subject to any material interest rate risk due to the short-term nature of its investments[235](index=235&type=chunk) - The Trust does not engage in transactions involving foreign currencies or derivative financial instruments[235](index=235&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=ITEM%208%2E%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the Trust's financial statements, prepared on a modified cash basis, with an unqualified auditor's opinion, showing **$1.031 million** in assets and **$113.3 million** in cash earnings for 2018, and **15.772 million barrels** of proved reserves projected to end after 2022 [Financial Statements](index=46&type=section&id=Financial%20Statements) The Trust's financial statements, prepared on a modified cash basis, report total assets of **$1.031 million** and liabilities of **$339 thousand** as of December 31, 2018, with **$114.369 million** in royalty revenues and **$5.293** cash distributions per unit for the year Statement of Assets, Liabilities and Trust Corpus (in thousands) | | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,031 | $1,012 | | **Total assets** | **$1,031** | **$1,012** | | **Liabilities and Trust Corpus** | | | | Accrued expenses | $339 | $227 | | Trust corpus | $692 | $785 | | **Total liabilities and trust corpus** | **$1,031** | **$1,012** | Statement of Cash Earnings and Distributions (in thousands, except per unit data) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Royalty revenues | $114,369 | $78,193 | $44,917 | | Cash earnings | $113,282 | $77,039 | $43,621 | | Cash distributions per unit | $5.293 | $3.600 | $2.038 | [Notes to Financial Statements](index=49&type=section&id=Notes%20to%20Financial%20Statements) The notes detail the modified cash basis accounting, grantor trust tax status, Alaska's production tax impact, royalty payment adjustments, and supplemental reserve information, noting a positive revision in 2018 reserves due to higher WTI prices extending the Trust's economic life to **2022** - The financial statements are prepared on a modified cash basis, where revenues are recorded when cash is received, and distributions are recorded when paid[270](index=270&type=chunk) - The carrying value of the Royalty Interest on the Trust's books was reduced to zero by December 31, 2010, through amortization and impairment write-downs[273](index=273&type=chunk) Changes in Estimated Proved Reserves (in thousands of barrels) | Description | Barrels | | :--- | :--- | | Balance at Dec 31, 2017 | 9,070 | | Revisions of previous estimates | 11,311 | | Production | (4,609) | | **Balance at Dec 31, 2018** | **15,772** | - The positive revision in year-end 2018 reserves is primarily due to the increase in the 12-month average WTI price from **$51.34** in 2017 to **$65.56** in 2018, which extended the forecast economic life of the trust from year-end 2019 to year-end **2022**[298](index=298&type=chunk) [Controls and Procedures](index=58&type=section&id=ITEM%209A%2E%20CONTROLS%20AND%20PROCEDURES) The Trustee concluded that the Trust's disclosure controls and internal control over financial reporting were effective as of December 31, 2018, with KPMG LLP issuing an unqualified opinion on internal controls - The Trustee concluded that the Trust's disclosure controls and procedures were effective as of December 31, 2018[305](index=305&type=chunk) - Management concluded that the Trust's internal control over financial reporting was effective as of December 31, 2018, based on the COSO criteria[310](index=310&type=chunk) - KPMG LLP, the independent registered public accounting firm, provided an unqualified opinion on the effectiveness of the Trust's internal control over financial reporting as of December 31, 2018[311](index=311&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=59&type=section&id=ITEM%2010%2E%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The Trust has no directors, executive officers, or audit committee, being administered solely by the Trustee under the Trust Agreement and Delaware law without a formal code of ethics - The Trust has no directors, executive officers, or audit committee, being administered by the Trustee[315](index=315&type=chunk)[318](index=318&type=chunk) [Executive Compensation](index=60&type=section&id=ITEM%2011%2E%20EXECUTIVE%20COMPENSATION) The Trust pays no executive compensation as it has no directors, officers, or employees, with the Trustee receiving a quarterly administrative fee of **$0.0011** per outstanding Unit plus **$10.00** per wire transfer, subject to inflation adjustment Compensation to Trustee (2016-2018) | Year ended December 31, | Trustee's Fees | | :--- | :--- | | 2016 | $238,011 | | 2017 | $234,716 | | 2018 | $223,755 | [Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters](index=60&type=section&id=ITEM%2012%2E%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20UNITHOLDER%20MATTERS) As of February 24, 2019, the Trustee was unaware of any beneficial owners holding more than **5%** of the Trust's Units, and neither BP entities nor the Trustee own any Units, with no Units authorized under equity compensation plans - There are no persons known to the Trustee to be beneficial owners of more than **5%** of the Units[323](index=323&type=chunk) - Neither BP, its subsidiaries, nor the Trustee own any Units[324](index=324&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=61&type=section&id=ITEM%2013%2E%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The Trust has no independent directors and has engaged in no material related party transactions since early 2018, apart from fees and expense reimbursements paid to the Trustee as per the Trust Agreement - The only related party transactions are the fees and reimbursements paid to the Trustee as specified in the Trust Agreement[326](index=326&type=chunk) [Principal Accountant Fees and Services](index=61&type=section&id=ITEM%2014%2E%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section details the fees paid to KPMG LLP for audit, audit-related, and tax services in 2018 and 2017, noting the Trust lacks an audit committee or pre-approval policy for these fees Accountant Fees (KPMG LLP) | Service | 2018 | 2017 | | :--- | :--- | :--- | | Audit | $193,100 | $186,300 | | Audit related | $24,000 | $23,400 | | Tax | $220,000 | $215,000 | | **Total** | **$437,100** | **$424,700** | [Exhibits and Financial Statement Schedules](index=61&type=section&id=ITEM%2015%2E%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements from Item 8 and exhibits filed with the report, including the Trust Agreement, Conveyance documents, and the independent petroleum engineering firm's report - Lists the financial statements and exhibits filed with the Form 10-K, including the report of Miller and Lents, Ltd. dated February 25, 2019[329](index=329&type=chunk)[331](index=331&type=chunk)[333](index=333&type=chunk)