Pacific Coast Oil Trust Announces There Will Be No October Cash Distribution
September 28 2016 - 4:15PM
Business Wire
PACIFIC COAST OIL TRUST (NYSE:ROYT) (the “Trust”) a perpetual
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 October
11, 2016. The Trust’s distribution calculation relates to net
profits and overriding royalties generated during August 2016 as
provided in the conveyance of net profits and overriding royalty
interest.
The current month’s calculation for the Developed Properties
resulted in a deficit of $237,000 of revenues less direct operating
expenses and development costs. The current month’s revenues were
$2.2 million, lease operating expenses including property taxes
were $2.5 million, and capital expenditures were $65,000. Average
realized prices for the Developed Properties were $33.26 per Boe in
August ($38.97 per Boe excluding prior period adjustments as noted
below), as compared to $36.79 per Boe in July. The net profits for
the month of August resulted in a cumulative net profits deficit of
$237,000 for the Developed Properties as compared to a cumulative
net profits deficit of zero in July.
The current month’s calculations included $78,000 for the 7.5%
overriding royalty on the Remaining Properties from Orcutt
Diatomite and Orcutt Field. Average realized prices for the
Remaining Properties were $52.14 per Boe in August ($37.20 per Boe
excluding prior period adjustments as noted below), as compared to
$36.59 per Boe in July. The cumulative net profits deficit on the
Remaining Properties, including the 7.5% overriding royalty
payments, decreased $24,000 and now totals $2.1 million.
The expected current month shortfall is $60,000, reflecting
$88,000 for the monthly operating and services fee payable to PCEC
and $50,000 Trust general and administrative expenses, partially
offset by $78,000 in proceeds from the 7.5% overriding royalty on
the Remaining Properties in August. The expected current month
shortfall will be borrowed from PCEC in October 2016 and is
expected to increase the cumulative borrowings from PCEC, including
interest, to $1,098,000.
The Trustee periodically engages an independent oil and gas
consulting firm to perform a detailed review of the computation of
the amounts paid to the Trust. The consulting firm has concluded
its review of payments relating to 2014, the Trustee and PCEC have
concluded their reviews and discussions of the findings, and the
resulting adjustments have been included in the current month’s
calculation. The adjustments decreased the amount payable to the
Trust from the Developed Properties by $199,000 and increased the
amount payable from the Remaining Properties by $74,000, making the
aggregate change to the Trust a negative $125,000. The adjustments
increased the Overriding Royalty Interests by $35,000, which was
used to reduce the amount that the Trust needed to borrow under the
promissory note described below for August 2016.
PCEC has agreed to loan funds to the Trust necessary to pay such
expenses at an interest rate of 8.5% per annum from February 25,
2016 to August 9, 2016 and 4% per annum from August 10, 2016 until
maturity (March 31, 2018). PCEC previously 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. Any
funds provided under the letter of credit or loaned by PCEC may
only be used for the payment of 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. No
distribution will be made to Trust unitholders until the
indebtedness 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 month of August 2016 (including prior period
adjustments):
Underlying Properties Sales Volumes
Average Price (Boe) (per Boe) Developed Properties (a)
66,756 $33.26 Remaining Properties (b) 26,500 $52.14 (a)
Crude oil sales represented 96% of sales volumes (b) Crude oil
sales represented 100% of sales volumes
Status of the Trust
As oil and natural gas prices continue to be depressed and as we
are unable to predict future commodity prices with any greater
precision than the futures market, it appears likely that
distributions to the Trust will continue to be significantly
impacted. The Trust Agreement provides that the Trust will
terminate in the event that annual proceeds received by the Trust
attributable to the Conveyed Interests (as defined in the Trust
Agreement), in the aggregate, are less than $2 million for each of
any two consecutive years.
Overview of Trust Structure
Pacific Coast Oil Trust is a perpetual Delaware statutory trust
formed by PCEC to own interests in certain oil and gas properties
in the Santa Maria Basin and the Los Angeles Basin in California
(the “Underlying Properties”). The Underlying Properties and the
Trust’s net profits and royalty interests are described in the
Trust’s filings with the Securities and Exchange Commission (the
“SEC”). As described in the Trust’s filings with the SEC, the
amount of any periodic distributions is expected to fluctuate,
depending on the proceeds received by the Trust as a result of
actual production volumes, oil and gas prices, development
expenses, and the amount and timing of the Trust’s administrative
expenses, among other factors. For additional information on the
Trust, please visit www.pacificcoastoiltrust.com.
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 purposes of these provisions.
These forward-looking statements include the amount and date of any
anticipated distribution to unitholders. The anticipated
distribution is based, in part, on the amount of cash received or
expected to be received by the Trust from PCEC with respect to the
relevant period. Any differences in actual cash receipts by the
Trust could affect this distributable amount. Other important
factors that could cause actual results to differ materially
include expenses of the Trust and reserves for anticipated future
expenses. Statements made in this press release are qualified by
the cautionary statements made in this press release. Neither PCEC
nor the Trustee intends, and neither assumes any obligation, to
update any of the statements included in this press release. An
investment in units issued by Pacific Coast Oil Trust is subject to
the risks described in the Trust's Annual Report on Form 10-K for
the year ended December 31, 2015 filed with the SEC on March 4,
2016, and if applicable, the Trust’s Quarterly Reports on Form
10-Q. The Trust's Annual Report on Form 10-K and the Quarterly
Reports on Form 10-Q reports are available over the Internet at the
SEC's website at http://www.sec.gov.
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version on businesswire.com: http://www.businesswire.com/news/home/20160928006218/en/
Pacific Coast Oil TrustThe Bank of New York Mellon Trust
Company, N.A., as TrusteeSarah Newell, 1-512-236-6555
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