Pacific Coast Oil Trust Announces There Will Be No May Cash Distribution

PACIFIC COAST OIL TRUST (OTC Pink–ROYTL) (the “Trust”), a royalty trust formed by Pacific Coast Energy Company LP (“PCEC”), announced today that there will be no cash distribution to the holders of its units of beneficial interest of record on May 28, 2021 based on the Trust’s calculation of net profits generated during March 2021 (the “Current Month”) as provided in the conveyance of net profits interests and overriding royalty interest (the “Conveyance”). If the Trust continues to receive insufficient monthly income from its net profits interests and overriding royalty interest, the Trust is expected to terminate by its terms by the end of 2021. As described further below, based on information from PCEC, the likelihood of distributions to the unitholders in the foreseeable future is extremely remote. The Trust may also be terminated upon the occurrence of other events as described in the Trust’s filings with the SEC. All financial and operational information in this press release has been provided to the Trustee by PCEC.

The Current Month’s distribution calculation for the Developed Properties resulted in operating income of approximately $738,000. Revenues from the Developed Properties were approximately $2.5 million, lease operating expenses including property taxes were approximately $1.68 million, and development costs were approximately $29,000. The average realized price for the Developed Properties was $62.45 per Boe for the Current Month, as compared to $58.51 per Boe in February 2021. Oil prices have continued to rise in recent months, following the sharp decline in the first quarter of 2020, and were higher in the Current Month as compared to March 2020. The cumulative net profits deficit amount for the Developed Properties decreased to approximately $24.6 million in the Current Month compared to approximately $25.2 million in the prior month.

The Current Month’s calculation included approximately $65,000 generated from the 7.5% overriding royalty interest on the Remaining Properties from Orcutt Diatomite and Orcutt Field. Average realized prices for the Remaining Properties were $56.74 per Boe in the Current Month, as compared to $56.39 per Boe in February 2021. The cumulative net profits deficit for the Remaining Properties decreased by approximately $109,000 and was approximately $2.5 million for the Current Month.

The monthly operating and services fee of approximately $95,000 payable to PCEC and Trust general and administrative expenses of approximately $158,000, together exceeded the payment of approximately $65,000 received from PCEC from the 7.5% overriding royalty interest on the Remaining Properties, creating a shortfall of approximately $188,000.

PCEC has provided the Trust with a $1 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses as they become due. As of March 31, 2021, the letter of credit has been fully drawn down. Further, the trust agreement provides that if the Trust requires more than the $1 million under the letter of credit to pay administrative expenses, PCEC will, upon written request of the Trustee, loan funds to the Trust in such amount as necessary to pay such expenses. Under the trust agreement, the Trust may only use funds provided under the letter of credit or loaned by PCEC or another source to pay the Trust’s current accounts or other obligations to trade creditors in connection with obtaining goods or services or for the payment of other accrued current liabilities arising in the ordinary course of the Trust’s business. As the Trust has fully drawn down the letter of credit, the Trustee has requested a loan from PCEC to pay the expected shortfall of approximately $188,000, which would bring the total amount of outstanding borrowings (not including the amount drawn from the letter of credit) from PCEC to approximately $1,334,000, including interest thereon, related to shortfalls from prior months, which also reflects approximately $675,000 in unpaid monthly operating and services fees that the Trust owes PCEC. Consequently, no further distributions may be made to Trust unitholders until the Trust’s indebtedness created by such amounts drawn or borrowed, including interest thereon, has been paid in full.

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)	39,319	1,268		$62.45
Remaining Properties (b)	15,314	494		$59.74
(a) Crude oil sales represented 99% of sales volumes
(b) Crude oil sales represented 100% of sales volumes

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 accounting recognition related to plugging and abandonment obligations 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, is $45,695,643, which is approximately $10.0 million less than the amount that was originally estimated before Moss Adams completed its analysis, as previously disclosed in the Trust’s Current Report on Form 8‑K filed on November 13, 2019. According to PCEC and its third-party consultants, its estimated ARO, which reflects PCEC’s assessment of current market conditions as of December 31, 2019 and changes in California law, was determined to be approximately $33.2 million for the Developed Properties and approximately $12.5 million for the Remaining Properties, or approximately $26.5 million and approximately $3.1 million net to the Trust, respectively, and PCEC has reflected these amounts beginning with the calculation of the net profits generated during January 2020. The accrual has resulted in a current cumulative net profits deficit of approximately $28.4 million, which must be recouped from proceeds otherwise payable to the Trust from the Trust’s Net Profits Interests. Therefore, until the net profits