Asset Sales - BP announced the sale of its Alaska assets for a total consideration of $5.6 billion to Hilcorp Alaska, LLC, with the acquisition completed on June 30, 2020[71]. Oil Price Fluctuations - The Trust did not receive Royalty Payments for the first or second quarters of 2023 due to declining WTI prices and increased Average Adjusted Chargeable Costs[74]. - The average WTI Price for the first quarter of 2023 decreased by 19.4% compared to the first quarter of 2022, leading to a 133.1% decrease in the average Per Barrel Royalty[90]. - The average WTI Price for the six-month period in 2023 decreased by 7.3% compared to the same period in 2022, resulting in a $13.17 decrease in the Average Per Barrel Royalty[93]. - The Trust's revenues are significantly affected by fluctuations in oil prices, with the average WTI price forecasted to be approximately $73.32 per barrel in Q3 2023 and $74.97 per barrel in Q4 2023[86]. - Royalty revenues, cash earnings, and cash distributions decreased due to a decline in average WTI Price and an increase in Adjusted Chargeable Costs during the three months ended June 30, 2023[109]. - Average WTI Price for the six months ended March 31, 2023 was $79.38, a decrease of $6.24 or 7.3% compared to $85.62 in the same period in 2022[110]. Production and Revenue Declines - HNS's net production of oil and condensate allocated to the Trust was less than 90,000 barrels per day on an annual basis from 2018 to 2023, with expectations of continued decline[84]. - Production Taxes decreased by 21.9% in the first quarter of 2023 due to the decline in average WTI Price[90]. - The average net production from the 1989 Working Interest declined by 3.0% for the six months ended June 30, 2023, due to the naturally declining production rate from the Prudhoe Bay field[93]. - Average Per Barrel Royalty paid dropped to $3.16, a significant decrease of $13.17 or 80.6% compared to $16.33 in the same period last year[110]. - Average net production decreased to 70.3 mb/d, down by 2.2 mb/d or 3.0% from 72.5 mb/d in the same period in 2022[110]. Financial Control and Performance - The Trust's internal control over financial reporting was evaluated as effective as of June 30, 2023, based on COSO criteria[97]. - The Trust's internal control over financial reporting has not materially changed during the last fiscal quarter[116]. - The Trust will terminate if net revenues from the Royalty Interest are less than $1.0 million per year for two consecutive years, barring force majeure events[74]. - The Trust Corpus decreased at the end of the six months ended June 30, 2023, primarily due to the payment of expenses from cash reserves instead of from the Per Barrel Royalty[112]. - Administrative Expenses increased during the three months ended June 30, 2023, due to timing differences in invoice payments[109]. - There was an increase in interest income, which slightly offset the decrease in Trust Corpus[112]. - The overall financial performance reflects challenges in the market, particularly with fluctuating oil prices and rising operational costs[112]. Cost Adjustments - Adjusted Chargeable Costs increased to $76.89, reflecting a rise of $10.68 or 16.1% from $66.21 in the prior year[110].
BP Prudhoe Bay Royalty Trust(BPT) - 2023 Q2 - Quarterly Report