BP Prudhoe Bay Royalty Trust Announces No Unit Payment for the Second Quarter of 2024
BP Prudhoe Bay Royalty Trust (NYSE: BPT) announced that unitholders will not receive a dividend payment for the second quarter ending June 30, 2024. The Ex-Dividend Date is July 12, 2024, and the Record Date is July 15, 2024, with a dividend rate of $0.00 per unit.
The absence of a dividend is attributed to the calculation method specified in the Trust Agreement, which factors in the West Texas Intermediate (WTI) price, chargeable costs, and production taxes. For Q2 2024, the average WTI price was $80.62, average adjusted chargeable costs were $90.69, and average production taxes were $2.83, leading to a negative average per barrel royalty of -$12.89. The average net production was 61.5 mb/d.
The average daily closing WTI price was below the break-even price for the quarter, resulting in no royalty payment. According to the Trust Agreement, the payment cannot be less than zero.
- None.
- No dividend payment for Q2 2024.
- Average Per Barrel Royalty was negative at -$12.89.
- Average WTI price was below the break-even price.
- High average adjusted chargeable costs at $90.69.
Insights
Noticeable here is that the dividend payment for the BP Prudhoe Bay Royalty Trust (BPT) for the second quarter of 2024 is reported as zero. This information is significant for investors who rely on these payments as part of their income stream. The primary driver behind this decision is the average Per Barrel Royalty, which went into negative territory due to lower WTI prices and higher chargeable costs and production taxes. Specifically, the average WTI price was $80.62, with chargeable costs at $90.69 and production taxes at $2.83 per barrel.
From a financial perspective, this situation signals potential challenges. Lower WTI prices indicate that BPT may continue to struggle to generate positive royalty payments if oil prices do not increase. Investors should be aware that this zero dividend could become a trend if costs remain high and oil prices stay relatively low.
In the
This announcement highlights the sensitivity of BP Prudhoe Bay Royalty Trust's payout structure to oil prices and operational costs. The specific structure as outlined in the Trust Agreement shows how tightly connected revenue is to these variables. The average WTI price of $80.62, although not historically low, was insufficient to cover the higher average adjusted chargeable costs and production taxes, leading to a negative Per Barrel Royalty calculation.
Market-wise, this announcement might indicate an increased risk for investors. The Trust's unit payment depends significantly on external market factors like crude oil prices and internal operational efficiency. Retail investors should closely monitor oil market trends and cost management strategies employed by the operating company. This context is essential for understanding future dividend prospects and potential returns.
Additionally, the broader implications for other similar royalty trusts should not be ignored. If this situation reflects a larger trend of rising production costs or dipping oil prices, other trusts might also face similar financial pressures, affecting their dividends and, consequently, their stock valuations.
Ex-Dividend Date: |
July 12, 2024 |
|
Record Date: |
July 15, 2024 |
|
Payable Date: |
None |
|
Dividend Rate: |
|
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 June 30, 2024, the Per Barrel Royalty was calculated based on the following information:
Average WTI Price |
$ |
80.62 |
|
Average Adjusted Chargeable Costs |
$ |
90.69 |
|
Average Production Taxes |
$ |
2.83 |
|
Average Per Barrel Royalty |
$ |
(12.89 |
) |
Average Net Production (mb/d) |
|
61.5 |
|
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 “SEC”). 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. The Trustee undertakes no obligation to update forward-looking statements after the date of this report, except as required by law, and all such forward-looking statements in this report are qualified in their entirety by the preceding cautionary statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240705953460/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 did BP Prudhoe Bay Royalty Trust (BPT) announce no dividend payment for Q2 2024?
What were the key financial figures affecting BP Prudhoe Bay Royalty Trust's (BPT) Q2 2024 dividend?
When is the Ex-Dividend Date for BP Prudhoe Bay Royalty Trust (BPT) Q2 2024?
What is the Record Date for BP Prudhoe Bay Royalty Trust (BPT) Q2 2024 dividend?
How much is the dividend rate for BP Prudhoe Bay Royalty Trust (BPT) Q2 2024?
