Financial Performance - Royalty revenues for the three months ended September 30, 2021, were $3,272,000, with cash earnings of $2,171,000, compared to a loss of $288,000 in the same period of 2020[11]. - Cash distributions per unit for the three months ended September 30, 2021, were $0.0244, while total cash distributions amounted to $521,000[11]. - The Trust's net revenues from the Royalty Interest exceeded $1,000,000 in 2021, resetting the earliest termination date of the Trust to sometime in 2023 or 2024[35]. - Royalty revenues for Q3 2021 amounted to $3,272,000, reflecting an increase due to higher average WTI prices[71]. - Cash earnings for Q3 2021 were reported at $2,171,000, an increase of $2,459,000 compared to the same period in 2020[71]. - Royalty revenues decreased by 64.7% to $3,272,000 for the nine months ended September 30, 2021, down from $9,270,000 in 2020[76]. - Cash earnings fell by 74.0% to $2,095,000, compared to $8,051,000 in the same period of 2020[76]. - Cash distributions dropped by 94.3% to $521,000, down from $9,078,000 in the previous year[76]. Asset and Cash Management - As of September 30, 2021, total assets increased to $1,772,000 from $266,000 as of December 31, 2020, reflecting a significant growth in cash and cash equivalents[8]. - The Trust's corpus at the end of the period was $1,343,000, a recovery from a deficit of $978,000 at the beginning of the period[14]. - The Trustee has increased the cash reserve to approximately $6,000,000 to ensure liquidity for future expenses and liabilities[19]. - The Trust's cash reserve was previously insufficient to cover administrative expenses in December 2020, leading to a demand for indemnity from HNS for unpaid expenses[19]. - The cash reserve balance was $6,000,000 as of September 30, 2021, after a deposit of $4,229,890[50]. - The Trustee plans to maintain the cash reserve at approximately $6,000,000 to cover administrative expenses for about two years[50]. - The Trust's ability to make distributions to Unit holders may be limited if future revenues from the Royalty Interest are insufficient[51]. - The Trust's administrative expenses increased significantly, necessitating careful management of cash reserves[49]. Revenue Generation and Trends - The Trust received a Royalty Payment of $3,203,261 for the quarter ended June 30, 2021, and $6,145,027 for the quarter ended September 30, 2021, indicating a positive trend in revenue generation[19]. - As of September 30, 2021, the Trust received a Royalty Payment of $6,145,027 for the quarter ended September 30, 2021, after adjusting for an overpayment from the previous quarter[30]. - The average daily closing WTI price for the third quarter of 2021 was $70.64, resulting in a calculated average per barrel royalty of $6.54[37]. - The average net production of crude oil and condensate allocated to the Trust was less than 90,000 barrels per day during certain quarters, affecting royalty payments[28]. - The Trust's revenues are highly sensitive to fluctuations in oil prices, which are influenced by global supply and demand dynamics[56]. Operational Challenges - The Trust is exploring options for potential loans or asset sales to address liquidity issues, although no loan has been secured to date[21]. - The Trust has not received any revenues from the Royalty Interest for the four quarters of 2020 and the first quarter of 2021 due to low oil prices and increased costs[46]. - The Trustee has engaged a financial advisory firm to explore options for potential loans or asset sales due to cash shortfalls[55]. - The Trust's operations and financial results are influenced by changes in the economic environment and financial markets, which could lead to material differences in estimates[3]. Administrative and Reporting Aspects - The Trust's financial statements are prepared on a modified cash basis, reflecting revenues when received and distributions when paid, which is considered meaningful for quarterly distributions[3]. - The Trust's federal tax return is filed as a grantor trust, with unit holders treated as owners of the Trust's income and corpus[25]. - The Trust's Royalty Payments are subject to adjustments for underpayments or overpayments based on actual production data[28]. - The Trust's internal control over financial reporting was deemed effective as of September 30, 2021[80]. - There were no changes in risk factors from the previous annual report[84].
BP Prudhoe Bay Royalty Trust(BPT) - 2021 Q3 - Quarterly Report