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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission File Number 1-10243
BP PRUDHOE BAY ROYALTY TRUST
(Exact name of registrant as specified in its charter)
Delaware 13-6943724
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
THE BANK OF NEW YORK
101 Barclay Street
New York, New York
Attention: Walter N. Gitlin 10286
(Address of principal executive offices) (Zip Code)
(212) 815-5084
(Registrants telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
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Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
As of May 8, 1995 -- 21,400,000 Units of Beneficial Interest in the BP Prudhoe
Bay Royalty Trust were outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
(See pages 3-8 below)
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BP PRUDHOE BAY ROYALTY TRUST
Financial Statements
March 31, 1995
(Unaudited)
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BP PRUDHOE BAY ROYALTY TRUST
Statement of Assets, Liabilities and Trust Corpus
March 31, 1995
(In thousands, except unit data)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1995 1994
------ --------- ------------
<S> <C> <C>
Royalty Interest (notes 1 and 2) $ 535,000 535,000
Less: accumulated amortization (203,477) (194,689)
--------- --------
Total assets $ 331,523 340,311
--------- --------
Liabilities and Trust Corpus
Accrued expenses 223 118
Trust corpus (40,000,000 units of beneficial
interest authorized, 21,400,000 units
issued and outstanding) 331,300 340,193
Contingencies (note 3)
--------- --------
Total liabilities and
Trust corpus $ 331,523 340,311
========= ========
</TABLE>
See accompanying notes to financial statements.
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BP PRUDHOE BAY ROYALTY TRUST
Statement of Cash Earnings and Distributions
(In thousands, except unit data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------------
1995 1994
----------- ----------
<S> <C> <C>
Royalty revenues $ 8,478 9,172
Trust administrative expenses 141 100
----------- ----------
Cash earnings $ 8,337 9,072
=========== ==========
Cash distributions $ 8,337 9,072
=========== ==========
Cash distributions per unit $ 0.390 0.424
=========== ==========
Units outstanding 21,400,000 21,400,000
=========== ==========
</TABLE>
See accompanying notes to financial statements.
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BP PRUDHOE BAY ROYALTY TRUST
Statement of Changes in Trust Corpus
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1995 1994
--------- --------
<S> <C> <C>
Trust corpus at beginning of period $ 340,193 407,057
Cash Earnings 8,337 9,072
Increase in accrued Trust expenses (105) (152)
Cash distributions (8,337) (9,072)
Amortization of Royalty Interest (8,788) (16,478)
--------- -------
Trust corpus at end of period $ 331,300 390,427
========= =======
</TABLE>
See accompanying notes to financial statements.
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BP PRUDHOE BAY ROYALTY TRUST
Notes to Financial Statements
March 31, 1995
(Unaudited)
(1) Formation of the Trust and Organization
BP Prudhoe Bay Royalty Trust (the "Trust") was formed pursuant to a
Trust Agreement, dated February 28, 1989 among The Standard Oil Company
("Standard Oil"), BP Exploration (Alaska) Inc. (the "Company"), The
Bank of New York and a co-trustee (collectively, the "Trustee").
Standard Oil and the Company are indirect wholly owned subsidiaries of
The British Petroleum Company p.l.c. ("BP").
On February 28, 1989, Standard Oil conveyed a royalty interest (the
"Royalty Interest") to the Trust. The Trust was formed for the sole
purpose of owning and administering the Royalty Interest. The Royalty
Interest represents the right to receive, effective February 28, 1989,
a per barrel royalty (the "Per Barrel Royalty") on 16.4246% of the
lesser of (a) the first 90,000 barrels of the average actual daily net
production of oil and condensate per quarter or (b) the average actual
daily net production of oil and condensate per quarter from the
Company's working interest in the Prudhoe Bay Field (the "Field")
located on the North Slope of Alaska.
The co-trustees of the Trust are The Bank of New York, a New York
corporation authorized to do a banking business, and The Bank of New
York (Delaware), a Delaware banking corporation. The Bank of New York
(Delaware) serves as co-trustee in order to satisfy certain
requirements of the Delaware Trust Act. The Bank of New York alone is
able to exercise the rights and powers granted to the Trustee in the
Trust Agreement.
The Trust is passive, with the Trustee having only such powers as are
necessary for the collection and distribution of revenues, the payment
of Trust liabilities and the protection of the Royalty Interest.
(2) Basis of Accounting
The financial statements of the Trust are prepared on a modified cash
basis and reflect the Trust's assets, liabilities and results of
operations as follows:
(a) Revenues are recorded when received (generally within 15 days of
the end of the preceding quarter) and distributions to Trust
Unit holders are recorded when paid.
(b) Trust expenses (which include accounting, engineering, legal,
and other professional fees, trustees' fees and out-of-pocket
expenses) are recorded when incurred.
(Continued)
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2
BP PRUDHOE BAY ROYALTY TRUST
Notes to Financial Statements
(Unaudited)
(2) Continued
(c) Amortization of the Royalty Interest is calculated based on the
units-of-production attributable to the Trust over the
production of estimated proved reserves attributable to the
Trust (approximately 81,000,000 barrels at December 31, 1994),
is charged directly to the Trust corpus, and does not affect
cash earnings. The rate for amortization per net equivalent
barrel of oil and condensate was $6.61 for the three months
ended March 31, 1995 and $12.39 for the three months ended March
31, 1994. The remaining unamortized balance of the net
overriding Royalty Interest at March 31, 1995 is not necessarily
indicative of the fair market value of the interest held by the
Trust.
While these statements differ from financial statements prepared in
accordance with generally accepted accounting principles, the cash
basis of reporting revenues and distributions is considered to be the
most meaningful because quarterly distributions to the Unit holders are
based on net cash receipts. The accompanying modified cash basis
financial statements contain all adjustments necessary to present
fairly the assets, liabilities and Trust corpus of the Trust as of
March 31, 1995 and December 31, 1994 and the modified cash earnings and
distributions and changes in Trust corpus for the three months ended
March 31, 1995 and 1994.
(3) Income Taxes
The Trust files its federal tax return as a grantor trust subject to
the provisions of subpart E of Part I of Subchapter J of the Internal
Revenue Code of 1986, as amended rather than an association taxable as
a corporation. The Unit holders are treated as the owners of Trust
income and corpus, and the entire taxable income of the Trust will be
reported by the Unit Holders on their respective tax returns.
If the Trust were determined to be an association taxable as a
corporation, it would be treated as an entity taxable as a corporation
on the taxable income from the Royalty Interest, the Trust Unit holders
would be treated as shareholders, and distributions to Trust Unit
holders would not be deductible in computing the Trust's tax liability
as an association.
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Item 2. Management's Discussion And Analysis
of Financial Condition and Results
of Operations.
Financial Condition.
The Trust is a passive entity with the Trustee having only
such powers as are necessary for the collection and distribution of revenues
from the Royalty Interest, the payment of Trust liabilities and expenses and
the protection of the Royalty Interest. All royalty payments received by the
Trustee are distributed, net of Trust expenses, to Trust Unit Holders.
Accordingly, a discussion of liquidity or capital resources is not applicable.
Results of Operations.
The BP Prudhoe Bay Royalty Trust (the "Trust") was formed
pursuant to the BP Prudhoe Bay Royalty Trust Agreement dated February 28, 1989
(the "Trust Agreement") and holds a royalty interest generally entitling the
Trust to a per barrel royalty on 16.4246% of the first 90,000 barrels of the
average actual daily net production of oil and condensate per calendar quarter
from the BP Exploration (Alaska) Inc. working interest in the Prudhoe Bay Unit.
Payments to the Trust with respect to the Royalty Interest
are payable on the fifteenth day after the end of the calendar quarter (or the
next succeeding business day if such fifteenth day is not a business day) in an
amount equal to the per barrel WTI Price for each day during the calendar
quarter less the sum of (i) the product of the per barrel Chargeable Costs and
the Cost Adjustments Factor (such product hereinafter referred to as "Adjusted
Chargeable Costs") and (ii) the per barrel Production Taxes.
On January 17, 1995 the Trust received its payment with
respect to the Royalty Interest for the period October 1, 1994 through December
31, 1994 (the "Fourth Quarter"). Such payment was in the amount, after
rounding, of $6.23 per barrel. During the Fourth Quarter the average WTI Price
was $17.67. The Adjusted Chargeable Costs per barrel were $9.53, based on
Chargeable Costs of $8.00 and a Cost Adjustment Factor of 1.192, and per barrel
Production Taxes were $1.90. After payment of Trust administrative expenses,
the Trust distributed $.390 per Unit. The payment received by the Trust with
respect to the Royalty Interest for the period October 1, 1993 through December
31, 1993 was in the amount, after rounding, of $6.74 per barrel. During such
period the average WTI price was $16.43, the Adjusted Chargeable Costs per
barrel were $7.96 and per barrel Production Taxes were $1.72. After payment of
Trust administrative expenses, the Trust distributed $.424 per Unit for such
period.
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The per barrel royalty payable to the Trust for the period
January 1, 1995 through March 31, 1995 (the "First Quarter") is, after rounding,
$6.45. During the First Quarter the average WTI price was $18.35. The Adjusted
Chargeable Costs per barrel were $9.90, based on Chargeable Costs of $8.25 and a
Cost Adjustment Factor of 1.1996, and per barrel Production Taxes were $2.00.
The payment received by the Trust with respect to the Royalty Interest for the
period January 1, 1994 through March 31, 1994 was in the amount, after rounding,
of $3.88 per barrel. During such period the average WTI price was $14.80, the
Adjusted Chargeable Costs per barrel were $9.44 and per barrel Production Taxes
were $1.48.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on 8-K
a. Exhibits
4. - Form of Trust Agreement (incorporated by reference to
Exhibit 6 to the Form 8-A Registration Statement of BP Prudhoe
Bay Royalty Trust, Commission File No. 1-10243)
27. - Financial Data Schedule - (see Exhibit 27.1 attached
hereto).
b. Reports on Form 8-K - No reports on Form 8-K have been filed
during the quarter for which this form is filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BP PRUDHOE BAY ROYALTY TRUST
THE BANK OF NEW YORK,
as Trustee
By: /s/ Walter N. Gitlin
------------------------
Name: Walter N. Gitlin
Title: Vice President
Date: May 8, 1995
The Registrant, BP Prudhoe Bay Royalty Trust, has no principal
executive officer, principal financial officer, board of directors or persons
performing similar functions. Accordingly, no additional signatures are
available and none have been provided.
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EXHIBIT INDEX
Exhibit 27.1 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS AND THE STATEMENTS OF CHANGES
IN TRUST CORPUS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 331,523,000
<CURRENT-LIABILITIES> 223,000
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 331,300,000
<TOTAL-LIABILITY-AND-EQUITY> 331,523,000
<SALES> 0
<TOTAL-REVENUES> 8,478,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,337,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,337,000
<EPS-PRIMARY> 0.390
<EPS-DILUTED> 0.390
</TABLE>
