Financial Performance - Cash earnings for the three months ended June 30, 2024, were reported at a loss of $494,000, compared to a loss of $445,000 for the same period in 2023[4] - Cash earnings for the six months ended June 30, 2024, reported a loss of $765, a decrease of 112.9% compared to a gain of $5,918 in the same period in 2023[51] - Royalty revenues for the six months ended June 30, 2024, were $0, a 100% decrease from $6,640 in the same period in 2023[51] - Cash distributions for the six months ended June 30, 2024, were $0, while cash distributions per unit for the six months ended June 30, 2023, were $0.2974[4] - The Trust's cash earnings and distributions for the interim periods are not necessarily indicative of the results expected for the full year[11] Assets and Liabilities - As of June 30, 2024, total assets amounted to $4,537,000, a decrease from $5,302,000 as of December 31, 2023, reflecting a decline of approximately 14.4%[3] - The Trust corpus decreased to $4,202,000 from $4,964,000 at the end of 2023, representing a reduction of about 15.4%[6] - The Trust's total liabilities as of June 30, 2024, were $335,000, slightly down from $338,000 at the end of 2023[3] - The Trust's total accrued expenses through June 30, 2024, amounted to $334,765, which were paid from the cash reserve[19] Production and Revenue - As of June 30, 2024, the average daily net production was 61.5 thousand barrels per day, with an average WTI price of $80.62 per barrel[19] - The average adjusted chargeable costs were $90.69 per barrel, resulting in a negative average per barrel royalty of $(12.89)[19] - The Trust did not receive any royalty payments for the first and second quarters of 2024 due to declining WTI prices and increased production costs[19] - HNS's net production of oil and condensate allocated to the Trust has been less than 90,000 barrels per day annually from 2019 through 2024, with expectations of continued decline[35] - The average net production from the 1989 Working Interest declined by 4.1% in the six months ended March 31, 2024, due to the naturally declining production rate from the Prudhoe Bay field[48] Cash Reserve and Liquidity - The cash reserve was increased to approximately $6,000,000 in 2021 to ensure liquidity during periods without revenue[9] - The Trustee intends to continue evaluating the cash reserve adequacy and may adjust it based on prevailing circumstances[9] - The Trust's cash reserve was established to provide liquidity during periods of insufficient revenue from the royalty interest[23] - The cash reserve is intended to cover Administrative Expenses for a two-year period if net revenues from the Royalty Interest fall below $1.0 million per year[28] Market Conditions and Price Fluctuations - The Trust's revenues are significantly affected by fluctuations in oil prices, which are influenced by global supply and demand and geopolitical events[31] - The average WTI crude oil spot price fluctuated between a high of $83.47 and a low of $70.38 per barrel in the first quarter of 2024, remaining below the "break-even" level necessary for the Trust to receive a Per Barrel Royalty[37] - The U.S. Energy Information Administration forecasts WTI prices to average $79.95 per barrel in Q3 2024 and $81.47 per barrel in Q4 2024, but there is no assurance these prices will be met[38] - The average WTI Price for Q1 2024 increased by 1.1% to $77.01 compared to Q1 2023's $76.17[43] - Average WTI Price for the six-month period in 2024 decreased by 2.1% to $77.75 compared to $79.38 in 2023[48] Administrative and Other Expenses - Administrative expenses for the six months ended June 30, 2024, increased by 3.1% to $894 compared to $867 in the same period in 2023[51] - The Trust's financial statements are prepared on a modified cash basis, reflecting the most meaningful representation of cash receipts and distributions[11] Trust Operations and Governance - The Trust's internal control over financial reporting was evaluated as effective as of June 30, 2024[54] - The Trust's termination may occur if net revenues from the royalty interest fall below $1 million per year for two consecutive years[19] - The Trustee increased the cash reserve from $1.27 million by $500,000 in July 2021 and further increased it to $6.0 million in October 2021, fully funded from Royalty Payments[27] - The Trust's royalty interest had a carrying value of $535 million at inception, with accumulated amortization and impairment write-downs reducing its value to zero by December 31, 2010[12]
BP Prudhoe Bay Royalty Trust(BPT) - 2024 Q2 - Quarterly Report