PACIFIC COAST OIL TRUST (NYSE:ROYT) (the “Trust”), a royalty
trust formed by Pacific Coast Energy Company LP (“PCEC”), announced
today a cash distribution to the holders of its units of beneficial
interest of $0.03987 per unit, payable on March 26, 2018 to
unitholders of record on March 12, 2018. The Trust’s distribution
calculation relates to net profits and overriding royalties
generated during January 2018 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 $2.1 million of revenues less direct operating expenses
and development costs. The current month’s revenues were $4.5
million, lease operating expenses including property taxes were
$2.1 million and capital expenditures were $0.4 million. Average
realized prices for the Developed Properties were $66.34 per Boe in
January, as compared to $60.55 per Boe in December. Net profits for
the month of January for the Developed Properties were $1.7
million.
The current month’s calculation included $69,000 for the 7.5%
overriding royalty on the Remaining Properties from Orcutt
Diatomite and Orcutt Field. Average realized prices for the
Remaining Properties were $63.24 per Boe in January, as compared to
$57.87 per Boe in December. The cumulative net profits deficit for
the Remaining Properties, including the 7.5% overriding royalty
payments, decreased $76,000 and totals $1.5 million for
January.
The net cash flow available for distribution to the holders of
units of beneficial interest is approximately $1.5 million. The
proceeds expected to be received by the Trust in March of $1.7
million consist of $1.7 million in income from the Developed
Properties and approximately $69,000 in income from the 7.5%
overriding royalty on the Remaining Properties. The proceeds to be
received by the Trust will be partially offset by $89,000 for the
monthly operating and services fee payable to PCEC and $100,000 in
Trust general and administrative expenses resulting in the net cash
flow available for distribution of approximately $1.5 million.
Sales Volumes and Prices
The following table displays PCEC’s underlying sales volumes and
average prices for the month of January 2018:
Underlying Properties Sales Volumes
Average Price (Boe) (per Boe) Developed Properties (a)
67,556 $ 66.34 Remaining Properties (b) 15,738 $ 63.24 (a)
Crude oil sales represented 100% of sales volumes (b) Crude oil
sales represented 100% of sales volumes
West Pico Natural Gas Export Line Update
Due to a temporary shutdown downstream of the natural gas export
pipeline from West Pico, West Pico has had to temporarily shut in
select wells to limit the amount of associated gas produced from
oil production. West Pico net production attributable to the
Developed Properties prior to the shutdown was approximately 320
Boe/d (approximately 260 Boe/d net to the Trust). During the
shutdown months, which began in December 2017 and are expected to
last through early 2018, production is down by approximately 40%.
Following the return to service of the natural gas export line,
West Pico is expected to return production to levels similar to
those prior to the shutdown months.
2018 Capital Program Summary and 2018 Operating and Financial
Sensitivity Analysis
2018 Capital Program
Summary
PCEC has informed the Trustee that its 2018 capital program is
expected to total approximately $9.9 million. This includes $7.7
million for capital projects which are expected to produce
significant incremental cash flow and return on capital to the
benefit of ROYT unit holders and $2.3 million for regulatory,
safety and mandatory projects. Of the $7.7 million for capital
projects, $4.1 million is for nine Orcutt Diatomite re-drills, $1.5
million for a gas-fired microturbine at West Pico, $0.8 million for
eight Orcutt Conventional injection projects, $0.8 million for 11
Orcutt Diatomite additional perforations, $0.3 million for two
Orcutt Conventional additional perforation projects and $0.2
million for non-operated rate generating projects. This total
includes expected investments of approximately $6.5 million ($5.2
million net to the Trust’s interest) in the Developed Properties
and approximately $3.4 million expected to be spent on the
Remaining Properties ($0.9 million net to the Trust’s
interest).
2018 Operating and Financial
Sensitivity Analysis (1)
PCEC has provided the Trustee with the following operating and
financial sensitivity analysis for the Trust for 2018. The Trust
assumes no responsibility for the sensitivity analysis set forth
below, but is providing the information furnished by PCEC as a
matter of disclosure to the unit holders. Neither the Trust nor the
Trustee was involved in the preparation of such sensitivity
analysis, and it is included here for informational purposes
only.
The following sensitivity analysis is subject to all of the
cautionary statements and limitations described below and under the
caption "Cautionary Statement Regarding Forward-Looking
Information." In addition, PCEC’s estimates of future production
volumes are based on, among other things, assumptions of capital
expenditure levels and the assumption that market demand and prices
for oil and natural gas will continue at levels that allow for
economic production of these products. The production,
transportation and marketing of oil and natural gas are extremely
complex and are subject to disruption due to permitting delays or
denials, transportation and processing availability, mechanical
failure, human error, weather and numerous other factors. PCEC's
estimates are based on certain other assumptions, such as well
performance and the timing of permitting approvals, which may
actually prove to vary significantly from those assumed. Operating
costs, which include major maintenance costs, vary in response to
changes in prices of services and materials used in the operation
of PCEC’s properties and the amount of maintenance activity
required. Operating costs, including taxes, utilities and service
company costs, move directionally with increases and decreases in
commodity prices, and PCEC cannot fully predict such future
commodity prices or operating costs. Similarly, price differentials
are set by the market and are not within PCEC’s control. They can
vary dramatically from time to time. Capital expenditures are based
on PCEC’s current expectations as to the level of capital
expenditures that will be justified based upon the other
assumptions set forth below as well as expectations about other
operating and economic factors not set forth below. The sensitivity
analysis below does not constitute any form of guarantee, assurance
or promise that the matters indicated will actually be achieved.
Rather, the information simply sets forth PCEC’s best estimate
today for these matters based upon its current expectations about
the future based upon both stated and unstated assumptions. Actual
conditions and those assumptions may, and probably will, change
over the course of the year.
Production Year 2018 Pricing
Assumed Brent Oil Price ($/bbl) $60.00
Total
Developed Properties Daily Net Production (boe/d) (2)
2,450 − 2,580 Assumed Price Differential ($/boe discount to
Brent) ($6.50) Expenses ($/boe) (3) $32.80 − $29.40
Capital Expenditures ($mm) $6.8 − $6.5 Developed Properties
Cash Flow ($mm) $11.7 − $16.2 80% Net
Profits Interest ($mm) $9.3 − $13.0
Total
Remaining Properties (4) Orcutt Daily Oil
Production (bbl/d) 520 − 550 Assumed Price Differential
($/boe discount to Brent) ($9.10) 7.5%
Overriding Royalty Interest ($mm) (5) $0.7 − $0.8
Quarterly G&A / Op Svcs Fee ($mm) (6) $1.9 − $1.9
Total Trust Cash Flow ($mm)
$8.2 − $11.8 Distribution Per
Unit ($/unit) $0.21 − $0.31 (1)
Sensitivity analysis is provided on the basis of production
periods, not distribution periods (i.e., production from January –
December 2018 representing distributions paid to unitholders March
2018 – February 2019). Expenses and development capital estimates
are based on flat $60 per barrel Brent crude oil and $3.00 per mcf
natural gas price levels. Operating costs generally move with
commodity prices but do not typically increase or decrease as
rapidly as commodity prices. (2) Daily net production is estimated
to be comprised of 96.4% oil. (3) Comprised of lease operating
expenses and taxes. (4)
The Remaining Properties are expected to
continue to pay an Overriding Royalty Interest of 7.5% on revenues
less taxes for production in the Orcutt fields during the projected
periods presented. Production from Remaining Properties other than
the Orcutt fields is expected to be immaterial. Cumulative deficit
of the Remaining Properties NPI is expected to be approximately
$1.6 million at the end of production month December 2018.
(5) Reflects impact of estimated tax on gross revenues generated
from Orcutt fields before giving effect to 7.5% Overriding Royalty
Interest. (6) Includes monthly fee paid to PCEC for operating and
informational services as well as certain estimated general and
administrative fees incurred by the Trust.
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 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 PCEC’s estimates regarding
its 2018 capital program, the amount and date of any anticipated
distribution to unitholders, the expected length of the shutdown of
select wells in West Pico, and the expected production levels of
those wells following their return to service. 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. 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, 2016 filed with the SEC on March 10, 2017, 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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version on businesswire.com: http://www.businesswire.com/news/home/20180228006290/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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