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 January
15, 2016. The Trust’s distribution calculation relates to net
profits and overriding royalties generated during November 2016 as
provided in the conveyance of net profits and overriding royalty
interest.
The current month’s calculation for the Developed Properties
resulted in $469,000 of revenues less direct operating expenses and
development costs. The current month’s revenues were $3.0 million,
lease operating expenses including property taxes were $2.1
million, and capital expenditures were $470,000. Average realized
prices for the Developed Properties were $40.27 per Boe in
November, as compared to $46.46 per Boe in October. Net profits for
the month of November for the Developed Properties were $376,000.
At the end of October, the export line that transports natural gas
out of West Pico was returned to service and, in November,
production at West Pico returned to levels similar to production
prior to the shutdown months.
The current month’s calculations included $42,000 for the 7.5%
overriding royalty on the Remaining Properties from Orcutt
Diatomite and Orcutt Field. Average realized prices for the
Remaining Properties were $37.45 per Boe in November, as compared
to $41.91 per Boe in October. The cumulative net profits deficit
for the Remaining Properties, including the 7.5% overriding royalty
payments, increased $31,000 and remains at $2.1 million.
The current month’s cash flow before repayment of a portion of
amounts borrowed from PCEC under the promissory note entered into
in February 2016 was $65,000, reflecting $376,000 in income from
the Developed Properties and $42,000 in income from the 7.5%
overriding royalty on the Remaining Properties partially offset by
$88,000 for the monthly operating and services fee payable to PCEC
and $265,000 in Trust general and administrative expenses. The
current month’s cash flow will pay down amounts previously borrowed
from PCEC and is expected to reduce the cumulative borrowings from
PCEC, including interest, to $1,071,542 in January 2017.
PCEC has agreed to loan funds to the Trust necessary to pay
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 November 2016:
Underlying Properties Sales Volumes
Average Price (Boe) (per Boe) Developed Properties (a) 75,270 $
40.27 Remaining Properties (b) 17,827 $ 37.45 (a) Crude oil
sales represented 98% of sales volumes (b) Crude oil sales
represented 98% 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. As disclosed in the Trust’s monthly press releases,
quarterly and annual filings with the Securities and Exchange
Commission (SEC) and original offering documents also filed with
the SEC, 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 (the “Revenue Termination Provision”). If
this occurs, the Trust Agreement requires the trustee to sell the
Conveyed Interests and to distribute the net proceeds to the trust
unitholders after paying all liabilities of the Trust and setting
up cash reserves in such amounts as the trustee in its discretion
deems appropriate for contingent liabilities.
Also as previously disclosed, annual proceeds to the Trust in
2016 were substantially less than $2 million. Consequently, if
annual proceeds to the Trust in 2017 are less than $2 million, the
trustee would be required by the Revenue Termination Provision to
sell the Conveyed Interests and to distribute the net proceeds to
the trust unitholders, after paying liabilities and setting up
reserves as described above.
The trustee and PCEC have each received inquiries from
unitholders about the possibility of amending the Trust Agreement
to change the Revenue Termination Provision. Neither the trustee
nor PCEC has any power by itself to change the Revenue Termination
Provision. The Trust Agreement does permit certain amendments if
approved by the affirmative vote of Trust unitholders of record
holding at least 75% of the then outstanding Trust units at a
meeting held in accordance with the requirements of the Trust
Agreement. However, any amendment of the Revenue Termination
Provision would also require, among other things, the consent of
each of PCEC, the trustee and the Delaware trustee, none of which,
at the present time, have consented or agreed to consent to such an
amendment.
Trust unitholders owning of record not less than 10% of the
Trust units have the power to call a meeting of the Trust
unitholders to the extent authorized by the Trust Agreement to
transact any matter that the Trust Unitholders are authorized to
transact. If Trust unitholders call a meeting, the Trust Agreement
requires the Trust Unitholders calling the meeting to bear all
costs associated with calling the meeting. The Trustee also has the
power to call a meeting. If the trustee calls a meeting, all costs
associated with calling the meeting would be borne by the Trust.
However, the consent requirements described above would apply in
both circumstances.
Nothing in this press release is intended as a prediction (i)
that any vote of unitholders regarding the Revenue Termination
Provision will occur, (ii) that any of the required consents to any
proposed amendment of the Revenue Termination Provision would be
granted, or (iii) that if a vote were held and all required
consents were obtained, that any such proposed amendment would be
approved by holders of the required percentage of the Trust units.
Investors who consider any provisions of the Trust Agreement
unacceptable, including the Revenue Termination Provision and the
amendment provisions, should not own Trust units.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161222005702/en/
Pacific Coast Oil TrustThe Bank of New York Mellon Trust
Company, N.A., as TrusteeSarah Newell, 1-512-236-6555
Pacific Coast Oil (NYSE:ROYT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Pacific Coast Oil (NYSE:ROYT)
Historical Stock Chart
From Apr 2023 to Apr 2024