Pacific Coast Oil Trust Announces There Will Be No November Cash Distribution
October 30 2019 - 4:15PM
Business Wire
PACIFIC COAST OIL TRUST (NYSE: ROYT) (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 in November 2019 because the deficit
incurred in the prior month has not yet been fully recovered. The
Trust’s distribution calculation relates to net profits and
overriding royalties generated during September 2019 as provided in
the conveyance of net profits and overriding royalty interest. All
information in this press release has been provided to the Trustee
by PCEC.
The current month’s calculation for the Developed Properties
resulted in $0.5 million of direct operating revenues. The current
month’s revenues were $3.4 million, lease operating expenses
including property taxes were $2.7 million, and capital
expenditures were $0.2 million. Average realized prices for the
Developed Properties were $59.69 per Boe in September, as compared
to $58.22 per Boe in August. Net profits for the month of September
for the Developed Properties were $0.4 million, which was reduced
by the cumulative net profits deficit for the Developed Properties
of $0.6 million, leaving a net deficit of $0.2 million, which will
be subtracted from any future net profits.
The current month’s calculation included approximately $85,000
for the 7.5% overriding royalty interest on the Remaining
Properties from Orcutt Diatomite and Orcutt Field. Average realized
prices for the Remaining Properties were $57.18 per Boe in
September, as compared to $55.79 per Boe in August. The cumulative
net profits deficit for the Remaining Properties, including the
7.5% overriding royalty interest payments, decreased by
approximately $0.1 million and now totals $0.3 million as of
September 2019.
The monthly operating and services fee of approximately $93,000
payable to PCEC and Trust general and administrative expenses of
$40,000 together exceeded the distribution of approximately $86,000
received from PCEC from the 7.5% overriding royalty interest on the
Remaining Properties, creating a shortfall of approximately
$48,000.
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. Further, if the Trust
requires more than the $1 million under the letter of credit to pay
administrative expenses, PCEC may loan funds to the Trust necessary
to pay such expenses. 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. The Trust will be borrowing funds from PCEC to pay the
expected shortfall of approximately $48,000, bringing the total
amount of outstanding funds borrowed from PCEC to $100,000.
Consequently, no further distributions will be made to Trust
unitholders until the 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 month of September 2019:
Underlying Properties
Sales Volumes
Average Price
(Boe)
(Boe/day)
(per Boe)
Developed Properties (a)
57,376
1,913
$59.69
Remaining Properties (b)
21,014
700
$57.18
(a) Crude oil sales represented 98% of
sales volumes
(b) Crude oil sales represented 100% of
sales volumes
Recent Developments
As previously disclosed, on October 4, 2019
PricewaterhouseCoopers LLP resigned as the independent registered
public accounting firm of the Trust. The Trust has commenced a
search for, but has not yet identified, a successor independent
registered public accounting firm. The Trust anticipates that the
Trust may be unable to file its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2019 on a timely basis.
Overview of Trust Structure
Pacific Coast Oil Trust is a 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 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 Trust’s borrowing of
funds from PCEC, and statements regarding the Trust’s ability to
file its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2019 on a timely basis. Any 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. The amount of such cash received
or expected to be received by the Trust (and its ability to pay
distributions) has been and will be significantly and negatively
affected by prevailing low commodity prices, which have declined
significantly, could decline further and could remain low for an
extended period of time. 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,
2018 filed with the SEC on March 8, 2019, and if applicable, the
Trust’s subsequent Quarterly Reports on Form 10-Q. The Trust's
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q are
available over the Internet at the SEC's website at
http://www.sec.gov.
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Pacific Coast Oil Trust The Bank of New York Mellon Trust
Company, N.A., as Trustee Sarah Newell 1(512) 236-6555
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