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 August 5, 2016. The Trust’s
distribution calculation relates to net profits and overriding royalties
generated during June 2016 as provided in the conveyance of net profits
and overriding royalty interest.
The current month’s calculation for the Developed Properties resulted in
$495,000 of excess revenues over direct operating expenses and
development expenses. The current month’s revenues were $3.4 million,
lease operating expenses including property taxes were $2.4 million, and
capital expenditures were $344,000. Average realized prices for the
Developed Properties were $41.33 per Boe in June, as compared to $41.06
per Boe in May. The cumulative net profits deficit for the Developed
Properties decreased $495,000 in the current month and now stands at
$583,000 versus $1.1 million at the end of the prior month. The Trust
will not receive any net profits from the Developed Properties until the
cumulative net profits deficit for the Developed Properties is recovered
in full.
The current month’s calculations included $33,000 for the 7.5%
overriding royalty on the Remaining Properties from Orcutt Diatomite and
Orcutt Field. Average realized prices for the Remaining Properties were
$39.81 per Boe in June, as compared to $41.50 per Boe in May. The
cumulative net profits deficit on the Remaining Properties, including
the 7.5% overriding royalty payments, is now $2.1 million, unchanged
from the prior month.
The expected current month shortfall is $80,000, reflecting $88,000 for
the monthly operating and services fee payable to PCEC and $25,000 Trust
general and administrative expenses, partially offset by $33,000 in
proceeds from the 7.5% overriding royalty on the Remaining Properties in
June. The expected current month shortfall will be borrowed from PCEC in
August 2016 and is expected to increase the cumulative borrowings from
PCEC, including interest, to $962,000.
PCEC has agreed to loan funds to the Trust necessary to pay such
expenses at an interest rate of 8.5% per annum. PCEC previously provided
the Trust with a $1 million letter of credit to be used by the Trust if
its cash on hand (including available cash reserves) is not sufficient
to pay ordinary course administrative expenses as they become due. Any
funds provided under the letter of credit or loaned by PCEC may only be
used for the payment of current accounts or other obligations to trade
creditors in connection with obtaining goods or services or for the
payment of other accrued current liabilities arising in the ordinary
course of the Trust’s business. No distribution will be made to Trust
unitholders until the indebtedness borrowed, including interest thereon,
has been paid in full.
Sales Volumes and Prices
The following table displays PCEC’s underlying sales volumes and average
prices for the month of June 2016:
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Underlying Properties
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Sales Volumes
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Average Price
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(Boe)
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(per Boe)
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Developed Properties (a)
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82,137
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$
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41.33
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Remaining Properties (b)
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13,485
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$
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39.81
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(a) Crude oil sales represented 97% of sales volumes.
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(b) Crude oil sales represented 100% of sales volumes.
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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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