Financial Performance - As of June 30, 2020, total assets decreased to $479,000 from $1,151,000 as of December 31, 2019, representing a decline of approximately 58.4%[10] - Royalty revenues for the three months ended June 30, 2020, were $(67,000), a significant decrease from $7,748,000 in the same period of 2019, indicating a decline of 100.9%[12] - Cash earnings for the six months ended June 30, 2020, were $(752,000), compared to $8,339,000 for the same period in 2019, reflecting a decrease of 109.0%[12] - Cash distributions per unit were $0.3449 for the six months ended June 30, 2019, but no distributions were made for the same period in 2020[12] - The Trust's corpus at the end of the period was $124,000, down from $898,000 at the beginning of the year, a decrease of approximately 86.2%[14] - Cash distributions for the six months ended June 30, 2020 were $9,078,000, a decrease of 68.5% from $28,844,000 in the same period of 2019[64] - Administrative expenses increased by 47.6% to $942,000 in the six months ended June 30, 2020 compared to $638,000 in the same period of 2019[64] Royalty Payments and Production - The Trust did not receive any royalty payments in April 2020 or July 2020, which adversely affected its financial position[21] - Royalty payment received in January 2020 was $9,337,000, an increase from $7,748,000 in April 2019 and $21,759,000 in January 2019[33] - Average net production of crude oil and condensate from proved reserves allocated to the Trust was less than 90,000 barrels per day during certain quarters[30] - No royalty payment was received by the Trust in July 2020 for the quarter ended June 30, 2020, due to overestimation of production volume[34] - The Trust's quarterly royalty payments are based on the WTI price less chargeable costs and production taxes[47] - Average per barrel royalty was $0.00 in Q1 2020, a decrease of 100% from $6.77 in Q1 2019[55] Market Conditions and Impact - The Trust's operations are significantly impacted by the COVID-19 pandemic and the resulting decline in oil prices, exacerbated by a price war among oil-producing nations[21] - The WTI price fell from approximately $61 per barrel at the beginning of 2020 to below $14 per barrel on April 22, 2020, before recovering to just under $22 per barrel by May 4, 2020[75] - The break-even WTI price for the Trust to receive a positive Per Barrel Royalty is $54.34, which is currently not being met due to depressed oil prices[21] - The U.S. Energy Information Administration forecasts WTI prices to average approximately $38 per barrel in the second half of 2020 and around $46 per barrel in 2021[75] - The COVID-19 pandemic has caused significant disruptions in the oil industry, impacting supply and demand dynamics[75] Financial Management and Controls - The Trust established a cash reserve account intended to cover approximately one year's current and expected liabilities, highlighting concerns about its ability to continue as a going concern[24] - The Trust maintained a cash reserve of $1,000,000 to provide liquidity during periods without distributions[41] - The Trustee intends to gradually increase the cash reserve by withholding the greater of $33,750 or 0.17% of funds available for distribution each quarter[41] - The Trust's internal control over financial reporting remains effective with no material changes identified during the last fiscal quarter[72] - The Trust's disclosure controls ensure timely receipt of information from HNS, which is crucial for compliance with the Exchange Act[70] Legal and Compliance - The Trust has not identified any legal proceedings that could materially affect its operations[74] - The Trust's financial reporting is not prepared in accordance with generally accepted accounting principles in the U.S.[85] - The Trust's agreements impose enforceable legal obligations on HNS to provide required information on a timely basis[71] - The Trust's quarterly report was completed prior to BP's planned $5.6 billion sale of assets and operations in Alaska to Hilcorp Alaska[71]
BP Prudhoe Bay Royalty Trust(BPT) - 2020 Q2 - Quarterly Report