BP Prudhoe Bay Royalty Trust Reports Financial Loss and Declining Assets in Q1 2025

BP Prudhoe Bay Royalty Trust reported its financial results for the first quarter of 2025, revealing a continued lack of royalty revenues, which has persisted since 2023. The Trust's cash earnings for the three months ended March 31, 2025, showed a loss of $490,000, compared to a loss of $271,000 for the same period in 2024. The Trust's total assets decreased to $3.669 million from $4.159 million at the end of 2024, primarily due to increased administrative expenses, which rose to $532,000 from $338,000 year-over-year. The Trust's corpus also declined to $3.081 million from $3.627 million, reflecting the ongoing financial strain.

The Trust has not received any royalty payments since the fourth quarter of 2022, leading to its termination on December 31, 2024, as stipulated in the Trust Agreement. The absence of revenue is attributed to the average West Texas Intermediate (WTI) crude oil prices remaining below the break-even level necessary for the Trust to receive payments. The average WTI price for the first quarter of 2025 was reported at $70.32, which was insufficient to generate any royalty income. The Trust's operational metrics indicate a decline in average net production from the Prudhoe Bay field, which fell to 64.6 thousand barrels per day, down from 67.9 thousand barrels per day in the previous year.

Strategically, the Trust has maintained a cash reserve established in 1999 to provide liquidity during periods without revenue. As of March 31, 2025, the cash reserve was utilized to cover administrative expenses, with the Trustee indicating that it would continue to evaluate the adequacy of this reserve. The Trust's ability to pay its liabilities is contingent on the cash reserve, which is currently targeted at approximately $6 million. The Trustee has indicated that any future revenues, if received, may first be allocated to replenish this reserve before distributions to unit holders.

Looking ahead, the Trust's outlook remains uncertain, heavily influenced by fluctuating oil prices and production levels. The U.S. Energy Information Administration forecasts that WTI prices will average $60.85 per barrel in the second quarter of 2025 and $58.00 in the third quarter. However, the Trust has cautioned that there is no assurance these prices will be sufficient to generate revenues in the future. The Trustee has emphasized the importance of monitoring market conditions and the Trust's financial health as it navigates the winding-up process, which is expected to incur various costs associated with the termination of the Trust.