BP Prudhoe Bay Royalty Trust Announces No Unit Payment for the First Quarter of 2024
- None.
- No dividend payment for Q1 2024 due to negative payment calculation based on WTI Price and production costs.
Insights
The announcement by BP Prudhoe Bay Royalty Trust of a zero dividend for the quarter ended March 31, 2024, signifies a notable event for unitholders and potential investors. The lack of dividend distribution is directly tied to the underlying financial mechanics of the Trust, which are influenced by the volatile nature of commodity prices, in this case, crude oil. The Trust's revenue is contingent upon the average West Texas Intermediate (WTI) crude oil price surpassing the combined costs of chargeable costs and production taxes, a threshold which was not met this quarter.
The negative average per barrel royalty of $(15.28) indicates that the production costs and taxes exceeded the revenue from oil sales by a substantial margin. This situation reflects broader market conditions that could be symptomatic of sector-wide issues such as increased operational costs or depressed oil prices. Investors might consider the implications of such a dividend cut as a signal to reevaluate the stability and future profitability of the Trust, particularly in light of the fluctuating nature of oil markets.
The data provided on the average WTI price, alongside the average adjusted chargeable costs and production taxes, paints a clear picture of the challenges faced by the oil industry, particularly in the context of the North Slope operations managed by Hilcorp. The average WTI price of $77.01, when set against the backdrop of average adjusted chargeable costs of $89.61, demonstrates the sensitivity of royalty trusts to price swings in the commodity markets.
The negative royalty per barrel suggests that there are underlying inefficiencies or market pressures that are contributing to the Trust's inability to generate a positive cash flow. This could be of interest to stakeholders who track the operational performance and cost management of oil production entities. The average net production of 66.8 mb/d also provides an insight into the production scale and its potential impact on the Trust's ability to leverage economies of scale in future market conditions.
Ex-Dividend Date: |
April 12, 2024 |
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Record Date: |
April 15, 2024 |
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Payable Date: |
None |
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Dividend Rate: |
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As provided in the Trust Agreement, the quarterly royalty payment by Hilcorp North Slope, LLC to the Trust is the sum of the individual revenues attributed to the Trust as calculated each day during the quarter. The amount of revenue is determined by multiplying Royalty Production for each day in the calendar quarter by the Per Barrel Royalty for that day. Pursuant to the Trust Agreement, the Per Barrel Royalty for any day is the WTI Price for the day less the sum of (i) Chargeable Costs multiplied by the Cost Adjustment Factor and (ii) Production Taxes.
For the three months ended March 31, 2024, the Per Barrel Royalty was calculated based on the following information:
Average WTI Price |
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Average Adjusted Chargeable Costs |
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Average Production Taxes |
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Average Per Barrel Royalty |
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Average Net Production (mb/d) |
66.8 |
The average daily closing WTI price was below the “break-even” price for the quarter, resulting in a negative value for the payment calculation for the quarter. However, as provided in the Trust Agreement, the payment with respect to the Royalty Interest for any calendar quarter may not be less than zero.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this press release are subject to a number of risks and uncertainties beyond the control of the Trustee. The actual results, performance and prospects of the Trust could differ materially from those expressed or implied by forward-looking statements. Descriptions of some of the risks that could affect the future performance of the Trust appear in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2023, the Trust’s subsequent Quarterly Reports on Form 10-Q, and the Trust’s other filings with the Securities and Exchange Commission. The Trust’s annual, quarterly and other filed reports are or will be available over the Internet at the SEC’s website at http://www.sec.gov. Neither the Trust nor the Trustee intends, and neither assumes any obligation, to update any of the statements included in this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240405018638/en/
Elaina Rodgers
Vice President
The Bank of New York Mellon Trust Company, N.A.
713-483-6020
Source: BP Prudhoe Bay Royalty Trust
FAQ
Why will BP Prudhoe Bay Royalty Trust (BPT) unitholders not receive a dividend payment for Q1 2024?
What is the Ex-Dividend Date for BP Prudhoe Bay Royalty Trust (BPT) for Q1 2024?
How is the Trust's revenue calculated for BP Prudhoe Bay Royalty Trust (BPT)?
What is the average Per Barrel Royalty for BP Prudhoe Bay Royalty Trust (BPT) for Q1 2024?
