Pacific Coast Oil Trust Announces Monthly Net Profits Interest Calculations
Pacific Coast Oil Trust (ROYTL) announced no cash distribution to unitholders for October 31, 2024, based on August 2024 calculations. A key development involves a whistleblower complaint filed by a former PCEC employee alleging false data provision regarding asset retirement obligations. The Trust's financial position shows operating income of $1.5M from Developed Properties, with revenues of $3.3M and expenses of $1.7M. The Trust currently owes PCEC approximately $8.8M, and monthly shortfalls continue to accumulate. Due to significant asset retirement obligations and ongoing deficits, the likelihood of future unitholder distributions remains extremely remote.
The Trust was expected to terminate in 2021 due to insufficient annual proceeds, but dissolution plans are currently on hold pending review of the whistleblower complaint.Pacific Coast Oil Trust (ROYTL) ha annunciato che non ci sarà alcuna distribuzione monetaria agli unitholder per il 31 ottobre 2024, basandosi sui calcoli di agosto 2024. Un importante sviluppo riguarda una denuncia di un informatore presentata da un ex dipendente del PCEC, che accusa la fornitura di dati falsi relativi agli obblighi di pensionamento degli asset. La situazione finanziaria del Trust mostra un reddito operativo di $1,5 milioni proveniente da Proprietà Sviluppate, con ricavi di $3,3 milioni e spese di $1,7 milioni. Attualmente, il Trust deve circa $8,8 milioni al PCEC, e i deficit mensili continuano ad accumularsi. A causa di significativi obblighi di pensionamento degli asset e deficit in corso, la probabilità di future distribuzioni agli unitholder rimane estremamente remota.
Si prevedeva che il Trust si sciogliesse nel 2021 a causa di proventi annuali insufficienti, ma i piani di dissoluzione sono attualmente sospesi in attesa della revisione della denuncia dell'informatore.
Pacific Coast Oil Trust (ROYTL) anunció que no habrá distribución de efectivo para los tenedores de unidades hasta el 31 de octubre de 2024, basándose en los cálculos de agosto de 2024. Un desarrollo clave implica una queja de un denunciante presentada por un ex empleado de PCEC, alegando la provisión de datos falsos sobre las obligaciones de retiro de activos. La posición financiera del Trust muestra un ingreso operativo de $1,5 millones proveniente de Propiedades Desarrolladas, con ingresos de $3,3 millones y gastos de $1,7 millones. Actualmente, el Trust le debe a PCEC aproximadamente $8,8 millones, y los déficits mensuales continúan acumulándose. Debido a las significativas obligaciones de retiro de activos y déficits continuos, la probabilidad de futuras distribuciones a los tenedores de unidades sigue siendo extremadamente remota.
Se esperaba que el Trust se disolviera en 2021 debido a ingresos anuales insuficientes, pero los planes de disolución están actualmente en espera de la revisión de la queja del denunciante.
퍼시픽 코스트 오일 트러스트 (ROYTL)는 2024년 10월 31일 치 유닛 보유자에게 현금 배분이 없을 것이라고 발표했습니다. 이는 2024년 8월 계산에 기반한 것입니다. 한 중요한 개발은 PCEC의 전 직원이 자산 퇴역 의무에 관한 가짜 데이터 제공을 주장하는 내부 고발자 신고와 관련이 있습니다. 트러스트의 재무 상태는 개발된 자산으로부터 $1.5M의 운영 수익을 보여주며, 수익은 $3.3M, 비용은 $1.7M입니다. 현재 트러스트는 PCEC에 약 $8.8M를 빚지고 있으며, 월별 적자는 계속 쌓이고 있습니다. 큰 자산 퇴역 의무와 계속되는 적자 때문에, 앞으로 유닛 보유자에 대한 분배 가능성은 매우 희박합니다.
트러스트는 연간 수익이 부족하여 2021년에 종료될 것으로 예상되었지만, 내부 고발자 신고 검토를 기다리는 중이라 현재 해산 계획은 보류 중입니다.
Pacific Coast Oil Trust (ROYTL) a annoncé qu'il n'y aura aucune distribution de liquidités aux détenteurs d'unités pour le 31 octobre 2024, sur la base des calculs d'août 2024. Un développement clé concerne une plainte d'un lanceur d'alerte déposée par un ancien employé de PCEC, alléguant la fourniture de données fausses concernant les obligations de retraite d'actifs. La situation financière du Trust montre un revenu d'exploitation de 1,5 million de dollars provenant de Propriétés Développées, avec des revenus de 3,3 millions de dollars et des dépenses de 1,7 million de dollars. Le Trust doit actuellement environ 8,8 millions de dollars au PCEC, et les déficits mensuels continuent de s'accumuler. En raison d'obligations de retraite d'actifs significatives et de déficits persistants, la probabilité de futures distributions aux détenteurs d'unités reste extrêmement faible.
Le Trust devait être dissous en 2021 en raison de revenus annuels insuffisants, mais les plans de dissolution sont actuellement en attente de la révision de la plainte du lanceur d'alerte.
Pacific Coast Oil Trust (ROYTL) gab bekannt, dass es am 31. Oktober 2024 keine Ausschüttung an die Unitholder geben wird, basierend auf den Berechnungen von August 2024. Eine wichtige Entwicklung ist eine Beschwerde eines Whistleblowers, die von einem ehemaligen PCEC-Mitarbeiter eingereicht wurde und falsche Daten zur Verpflichtung zum Rückbau von Vermögenswerten behauptet. Die finanzielle Lage des Trusts zeigt ein Betriebsergebnis von 1,5 Millionen USD aus Entwickelten Immobilien, mit Einnahmen von 3,3 Millionen USD und Ausgaben von 1,7 Millionen USD. Der Trust schuldet PCEC derzeit etwa 8,8 Millionen USD, und die monatlichen Defizite häufen sich weiter an. Aufgrund erheblicher Rückbauverpflichtungen und anhaltender Defizite bleibt die Wahrscheinlichkeit künftiger Ausschüttungen an die Unitholder äußerst gering.
Man erwartete, dass der Trust 2021 aufgrund unzureichender jährlicher Erträge aufgelöst wird, jedoch sind die Auflösungspläne derzeit ausgesetzt, bis die Beschwerde des Whistleblowers überprüft wird.
- Operating income of $1.5M from Developed Properties
- Revenue of $3.3M from Developed Properties
- Decrease in net profits deficit for Developed Properties from $18.4M to $17.6M
- No cash distribution to unitholders
- Trust owes PCEC approximately $8.8M in debt
- Monthly operating expenses exceed income, creating $144,000 shortfall
- Whistleblower allegations of false data reporting
- Future unitholder distributions deemed 'extremely remote'
On October 23, 2024, a severed employee of PCEC filed a complaint, styled Brendan Potyondy v. Pacific Coast Energy Company, LP, in the
The Current Month’s distribution calculation for the Developed Properties reflected operating income of approximately
The Current Month’s calculation included approximately
The monthly operating and services fee of approximately
Sales Volumes and Prices
The following table displays PCEC’s underlying sales volumes and average prices for the Current Month:
Underlying Properties |
||||
Sales Volumes |
|
Average Price |
||
(Boe) |
(Boe/day) |
|
(per Boe) |
|
Developed Properties (a) |
43,533 |
1,404 |
|
|
Remaining Properties (b) |
13,366 |
431 |
|
|
(a) Crude oil sales represented |
||||
(b) Crude oil sales represented |
Update on Amounts Owed to PCEC by the Trust
PCEC has provided the Trust with a
As of the end of the Current Month, the Trust owed PCEC approximately
Loans made to the Trust and amounts drawn from the letter of credit, together with interest thereon, will be repaid from proceeds, if any, payable to the Trust pursuant to the Net Profits Interests and the Royalty Interest, and from any proceeds from a sale of the Trust’s assets in connection with the dissolution of the Trust. Consequently, no further distributions may be made until the Trust’s indebtedness created by such amounts drawn or borrowed, including interest thereon, has been paid in full. Given the outstanding amount borrowed by the Trust to date, there may not be any net proceeds from a sale of the Trust’s assets to be distributed to the Trust unitholders.
Update on Estimated Asset Retirement Obligations
As previously disclosed, in November 2019, PCEC informed the Trustee that, as permitted by the Conveyance, PCEC intended to begin deducting its estimated asset retirement obligations (“ARO”) associated with the West Pico, Orcutt Hill, Orcutt Hill Diatomite, East Coyote and Sawtelle fields, thereby reducing the amounts payable to the Trust under its Net Profits Interests. ARO is the recognition related to net present value of future plugging and abandonment costs that all oil and gas operators face. PCEC engaged an accounting firm, Moss Adams LLP (“Moss Adams”), acting as third-party consultants, to assist PCEC in determining its estimated ARO, and on February 27, 2020, PCEC informed the Trustee that based on the analysis performed by Moss Adams, PCEC’s estimated ARO, as of December 31, 2019, was
PCEC has informed the Trustee that in accordance with generally accepted accounting principles, PCEC will evaluate the ARO on a quarterly basis. As a result of that re-evaluation, the actual ARO incurred in the future may be greater or less than the estimated amounts provided by PCEC. As previously disclosed, PCEC has informed the Trustee that at year-end 2020, and following the end of each of the first, second and third quarters of 2021, in light of the accounting guidance under Accounting Standards Codification (“ASC”) 410-20-35-3, which requires the recognition of changes in the asset retirement obligation due to the passage of time and revision of the timing or amount of the originally estimated undiscounted cash flows, PCEC re-evaluated the estimated ARO, which resulted in an aggregate increase to the ARO accrual for the Developed Properties by approximately
In June 2023, PCEC engaged Cornerstone Engineering, Inc. (“Cornerstone”) to perform an ARO evaluation for the West Pico and Orcutt Hill fields. Based on Cornerstone’s report, Moss Adams has provided PCEC with an updated ARO valuation that reflects an upward adjustment in the ARO values as of December 31, 2022, of approximately
PCEC has informed the Trustee that in the net profits calculation for the Current Month, PCEC has reflected upward adjustments in the ARO of approximately
The net profits deficit for the Developed Properties decreased from approximately
Based on PCEC’s estimate of its ARO attributable to the Net Profits Interests, deductions relating to estimated ARO are likely to eliminate the likelihood of any distributions to Trust unitholders for the foreseeable future, as previously disclosed in the Trust’s Current Report on Form 8-K filed on November 13, 2019.
As previously disclosed, the Trust engaged Martindale Consultants, Inc. (“Martindale”), a provider of analysis and compliance review services to the oil and gas industry, to perform an independent review of the estimated ARO in the Moss Adams report that PCEC provided to the Trustee. The Trustee also has engaged an accounting expert to advise the Trustee regarding the accruals that PCEC has booked relating to its estimated ARO. As disclosed in the Trust’s Current Report on Form 8-K filed on December 29, 2020,
Status of the Dissolution of the Trust
As described in more detail in the Trust’s filings with the SEC, the Trust Agreement provides that the Trust will terminate if the annual cash proceeds received by the Trust from the Net Profits Interests and the Royalty Interest total less than
Evergreen Arbitration
As previously disclosed in the Trust’s Current Report on Form 8-K filed on December 23, 2021, on December 8, 2021, Evergreen Capital Management LLC (“Evergreen”) filed an Amended Class Action and Shareholder Derivative Complaint alleging a derivative action on behalf of the Trust and against PCEC in the Superior Court of the
On December 10, 2021, Evergreen filed a motion for temporary restraining order and for preliminary injunction, seeking to (1) enjoin the Trustee from dissolving the Trust, (2) enjoin PCEC from dissolving the Trust, (3) direct PCEC to account for all monies withheld from the Trust on the basis of ARO costs since September 2019, and (4) direct PCEC to place such monies in escrow. On December 16, 2021, the Court granted Evergreen’s application for a temporary restraining order only to the extent of enjoining the dissolution of the Trust. Accordingly, the Trust did not dissolve at the end of 2021 and commence the process of selling its assets and winding up its affairs.
On January 11, 2022, PCEC and Evergreen filed an agreed stipulation to stay the prosecution of Evergreen’s derivative claims pending an arbitration of such claims. On January 13, 2022, the Court signed an Order dissolving the December 16, 2021, temporary restraining order and entering a new temporary restraining order to preserve the status quo until a tribunal of three arbitrators appointed pursuant to the Trust Agreement could rule on any request by Evergreen for injunctive relief. On April 11, 2022, PCEC notified the Court, at the arbitrators’ request, that the arbitration panel had issued an order on April 7, 2022, denying Evergreen’s request for injunctive relief. On April 13, 2022, Evergreen notified the Court that Evergreen had filed a motion for reconsideration with the arbitration panel that same day, which was denied on May 26, 2022. On August 30, 2022, the arbitration Panel issued a Partial Final Award dismissing with prejudice Evergreen’s derivative claims against PCEC, including Evergreen’s application for an injunction. On December 5, 2023, the
On June 20, 2022, Evergreen filed an amended pleading in the arbitration, adding the Trustee as a party to that proceeding. In early September 2022, Evergreen informed the Trustee that it was going to seek a preliminary injunction while its claims against the Trustee were pending. At the request of the arbitration panel, the Trustee agreed to take no steps toward the sale of the Trust corpus until the Panel decided Evergreen’s application for a preliminary injunction. On September 12, 2022, the Trustee filed a motion to dismiss Evergreen’s claims against the Trustee. On September 22, 2022, Evergreen filed an opposition to the Trustee’s motion to dismiss. On September 15, 2022, Evergreen filed a motion to enjoin the Trustee from selling the Trust assets or dissolving the Trust during the pendency of the arbitration. The Trustee and PCEC filed a response in opposition to Evergreen’s motion on September 22, 2022. Both motions were heard by the Panel on October 24, 2022. On October 31, 2022, the Panel granted the Trustee’s motion and dismissed Evergreen’s claims against the Trustee with prejudice, which mooted Evergreen’s request for injunctive relief.
As a result, subject to appropriate steps the Trustee will take in response to the whistleblower complaint against PCEC described above, the Trustee plans to move forward with the winding up of the Trust in accordance with the provisions of the Trust Agreement, which will include selling all of the Trust’s assets and distributing the net proceeds of the sale to the Trust unitholders after payment, or reasonable provision for payment, of all Trust liabilities, including the establishment of cash reserves in such amounts as the Trustee in its discretion deems appropriate for the purpose of making reasonable provision for all claims and obligations of the Trust, including any contingent, conditional or unmatured claims and obligations, in accordance with the Delaware Statutory Trust Act.
PCEC Arbitration
On March 31, 2023, PCEC submitted a demand for arbitration against the Trustee, as trustee of the Trust, seeking, among other things, (1) an order compelling the Trustee to commence the process of dissolving the Trust pursuant to the provisions of the Trust Agreement, (2) a declaration that the Conveyance permits the legal fees and costs that PCEC, as operator, incurred in defending the Evergreen litigation and arbitration proceedings described above to be deducted from the proceeds from the Net Profits Interests, and (3) a declaration that the Trust must repay, with interest, the legal fees and costs that PCEC paid on behalf of the Trust to defend claims against the Trustee in the Evergreen proceedings or, alternatively, that PCEC may deduct such legal fees and costs from the proceeds from the Net Profits Interests.
The hearing before the arbitration panel was concluded on August 2, 2023, and on September 28, 2023, as previously disclosed, the arbitration panel issued its Partial Final Award, in which the panel found as follows:
- The Trustee is not required to immediately commence the marketing and sale of the Trust’s assets;
- PCEC is entitled to deduct from the net profits its own legal fees and the Trustee’s legal fees paid by PCEC in connection with the Evergreen proceedings; and
- PCEC is not entitled to reimbursement of such legal fees from the proceeds of the sale of the Trust’s assets.
In light of the arbitration panel’s finding that the Trustee is not required to immediately commence the marketing of the Trust’s assets, the Trustee has continued to work with PCEC and the Trust’s independent auditor to complete the audits of the Trust’s financial statements for the years ended December 31, 2019 through December 31, 2023 and the reviews of the Trust’s quarterly financial statements for the years 2022, 2023 and 2024 and to prepare a comprehensive annual report on Form 10-K as part of the Trust’s efforts to become current in its filing obligations under the Securities Exchange Act of 1934, as amended. The Trust expects to file the comprehensive annual report with the Securities and Exchange Commission as soon as possible after completion of the audits, at which point the Trustee expects to commence the marketing and sale process; however, it is possible that additional delays in the completion and filing of the comprehensive annual report could occur, including as a result of appropriate steps the Trustee will take in response to the whistleblower complaint against PCEC described above. In the meantime, the Trustee will continue to communicate material information to unitholders via press releases and Forms 8‑K.
Meanwhile, because the Partial Final Award confirmed PCEC’s right to deduct from the net profits its own legal fees and the Trustee’s legal fees paid by PCEC in connection with the Evergreen proceedings, PCEC deducted approximately
The Trust has borrowed funds from PCEC sufficient to pay the approximately
Replacement of the Trustee
As previously disclosed, at a special meeting of the unitholders of the Trust held on July 12, 2023 (the “Special Meeting”), a majority of the unitholders voted to remove The Bank of New York Mellon Trust Company, N.A. as trustee of the Trust. A successor trustee was not nominated for approval at the Special Meeting. Under Section 6.05 of the Trust Agreement, if a new trustee has not been approved within 60 days after a vote of unitholders removing a trustee, a successor trustee may be appointed by any State or
On September 11, 2023, PCEC filed a petition with the Court of Chancery of the
On September 12, 2023, unitholders Evergreen Capital Management LLC, Shipyard Capital LP, Shipyard Capital Management LLC, Cedar Creek Partners LP, Eriksen Capital Management LLC and Walter Keenan (collectively, the “Unitholder Petitioners”) jointly filed a petition with the Court seeking to appoint Barclay Leib as temporary trustee and as successor trustee as of January 1, 2024. As Section 6.05 of the Trust Agreement requires that any successor trustee must be a bank or trust company having combined capital, surplus and undivided profits of at least
On October 31, 2023, PCEC filed a motion for summary judgment with regard to the appointment of a successor or temporary trustee, and the Trustee filed a response in opposition to that motion on November 14, 2023. The Court denied PCEC’s motion at a hearing held on November 28, 2023. PCEC elected not to proceed at this time and filed a stipulated dismissal of its petition, without prejudice, on February 27, 2024, which was signed by the Court that day.
The Trustee is unable to predict when a successor trustee will be appointed. Until that time, the Trustee will remain as trustee of the Trust and will continue to have the rights and obligations as trustee pursuant to the Trust Agreement.
The Trust has borrowed funds from PCEC sufficient to pay the approximately
Production Update
PCEC has informed the Trustee that PCEC continues to strategically deploy capital to maintain production within export and transportation constraints resulting from the previously disclosed termination of the Phillips 66 pipeline Connection Agreement described in greater detail below. These constraints have led to a curtailment of production at
Cancellation of Connection Agreement with Phillips 66
As previously disclosed, PCEC has informed the Trustee that on September 22, 2022, PCEC received notice from Phillips 66 of the cancellation of the Connection Agreement between PCEC and Phillips 66 with respect to the three leases located south of
The shutdown of the refinery and the pipeline will adversely affect PCEC’s financial performance, and the revenues that may be payable to the Trust. PCEC previously informed the Trustee that it was able to secure a short-term contract to transport oil from the
Overview of Trust Structure
Pacific Coast Oil Trust is a
Cautionary Statement Regarding Forward-Looking Information
This press release contains statements that are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release, other than statements of historical facts, are "forward-looking statements" for the purposes of these provisions. These forward-looking statements include estimates of future asset retirement obligations, expectations regarding the impact of deductions for such obligations on future distributions to unitholders, estimates of future total distributions to unitholders, the outcome of the proceedings relating to the appointment of a successor trustee, uncertainties regarding transportation of oil from the
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Pacific Coast Oil Trust
The Bank of New York Mellon Trust Company, N.A., as Trustee
Sarah
1 (512) 236-6555
601 Travis Street, 16th Floor,
Source: Pacific Coast Oil Trust
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