BP Prudhoe Bay Royalty Trust has reported significant financial challenges in its latest 10-K filing, culminating in the termination of the Trust on December 31, 2024. The Trust did not receive any revenues attributable to the four quarters of 2023 and 2024, leading to a total royalty revenue of $0 for the year ended December 31, 2024, a stark decline from $6.64 million in 2023 and $82.28 million in 2022. This decline is attributed to a combination of decreased West Texas Intermediate (WTI) prices, which averaged $75.48 per barrel in 2024, and increased chargeable costs, which rose to $88.32 per barrel.
The Trust's cash earnings also reflected this downturn, reporting a loss of $1.14 million for 2024 compared to a profit of $5.6 million in 2023. Cash distributions to unit holders were non-existent in 2024, following a distribution of $6.37 million in the previous year. The Trust's administrative expenses increased slightly to $1.38 million, contributing to the overall financial strain. As of December 31, 2024, the Trust's corpus stood at $3.63 million, down from $4.96 million in 2023.
Operationally, the Trust's performance has been impacted by the ongoing decline in production from the Prudhoe Bay field, which has been in operation since 1977. The average net production from the 1989 Working Interests was less than 90,000 barrels per day during the years 2020 through 2024, and this trend is expected to continue. The Trust's royalty interest, which entitles it to a percentage of production, has been adversely affected by rising costs and fluctuating oil prices, leading to a projected cessation of royalty payments.
Looking ahead, the Trust's future appears uncertain. The Trustee has commenced the winding-up process, which includes selling the Trust's assets. HNS, the successor to BP Alaska, has the option to purchase the Royalty Interest at a price equal to the greater of the fair market value or $11.64 million. However, there is no guarantee that HNS will exercise this option, and the Trustee has indicated that the market for the Trust's assets may be limited. The Trust's ability to make any future distributions to unit holders will depend on the proceeds from the asset sale and the resolution of outstanding liabilities.
About BP PRUDHOE BAY ROYALTY TRUST
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