Pacific Coast Oil Trust Announces There Will Be No December Cash Distribution
HOUSTON--(BUSINESS WIRE)--Nov 26, 2019--
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 of record on December 9, 2019 because the deficit incurred in the prior months has not yet been fully recovered, as further discussed below. The Trust’s distribution calculation relates to net profits and overriding royalties generated during October 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 $38,000 of direct operating revenues. The current month’s revenues were $3.3 million, lease operating expenses including property taxes were $3.1 million, and capital expenditures were $0.2 million. Average realized prices for the Developed Properties were $58.68 per Boe in October, as compared to $59.69 per Boe in September. Net profits for the month of October for the Developed Properties were $30,000, which was reduced by the cumulative net profits deficit for the Developed Properties of approximately $0.2 million, leaving a net deficit of approximately $0.1 million, which will be subtracted from any future net profits.
The current month’s calculation included approximately $92,000 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 $55.93 per Boe in October, as compared to $57.18 per Boe in September. 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 $0.1 million as of October 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 $92,000 received from PCEC from the 7.5% overriding royalty interest on the Remaining Properties, creating a shortfall of approximately $41,000.
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 $41,000, bringing the total amount of outstanding funds borrowed from PCEC to $141,000. 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 November 2019:
Developed Properties (a)
Remaining Properties (b)
(a) Crude oil sales represented 99% of sales volumes
(b) Crude oil sales represented 100% of sales volumes
As previously disclosed, on October 4, 2019 PricewaterhouseCoopers LLP resigned as the independent registered public accounting firm of the Trust. Although The Bank of New York Mellon Trust Company, N.A., the trustee of the Trust (the “Trustee”), is searching for a successor independent registered public accounting firm, the Trustee has not yet identified a suitable successor willing to serve as the Trust’s independent registered public accounting firm. As the Trust has not yet appointed a successor independent registered public accounting firm, the Trust was unable to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (the “Form 10-Q”) by the appropriate due date. As a result of the foregoing, the Trust has received notice from the New York Stock Exchange (the “NYSE”) that the Trust is not in compliance with the NYSE’s continued listing requirements under the timely filing criteria outlined in Section 802.01E of the NYSE Listed Company Manual. The Trust will have six months from November 12, 2019 to file the Form 10-Q with the SEC. The Trust can regain compliance with the NYSE’s continued listing requirements at any time during this six-month period by filing the Form 10-Q with the SEC. The Trust intends to file the Form 10-Q as soon as reasonably practicable following the appointment of a suitable successor independent registered public accounting firm. If the Trust fails to file the Form 10-Q within this six-month period, the NYSE may grant, at its sole discretion, an extension of up to six additional months for the Trust to regain compliance, depending on the specific circumstances. The notice from the NYSE also provides that the NYSE may nevertheless commence delisting proceedings at any time, including during the six-month grace period, if it deems that the circumstances warrant. Under NYSE rules, the Trust’s units of beneficial interest will remain listed on the NYSE under the symbol “ROYT” with an “LF” indicator to signify late filing status.
No assurance can be given that the Trust will be able to regain compliance with the aforementioned listing requirement or maintain compliance with the other continued listing requirements set forth in the NYSE Listed Company Manual. If the Trust’s units of beneficial interest ultimately were to be suspended from trading on, or delisted from, the NYSE for any reason, it could have adverse consequences including, among others: lower demand and market price for the Trust’s units of beneficial interest; adverse publicity; and a reduced interest in the Trust from investors, analysts and other market participants.
PCEC has retained Whitley Penn to be its independent registered public accounting firm and is currently engaging an expert to review the plugging and abandonment liabilities.
The state of California has issued a Moratorium on High-Pressure Extraction Practices as announced in the California Department of Conservation press release #2019-05 issued on November 19, 2019. The Moratorium expressly precludes any new drilling which utilizes High-Pressure Extraction Practices. PCEC is working with appropriate authorities to understand the impacts the Moratorium will have on PCEC business. PCEC currently is engaged in this type of extraction practices for a majority of its production.
Clarification for Brokers and Middlemen
Although no distributions were paid to unitholders in October or November 2019, income and expense reportable in those periods should be allocated among holders of record as of October 11, 2019 and November 12, 2019, respectively.
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, statements regarding the Trust’s ability to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and statements regarding the Trust’s ability to regain compliance with the NYSE listing requirement described above or maintain compliance with the other continued listing requirements set forth in the NYSE Listed Company Manual. 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 related to the operation of the Underlying Properties, including lease operating expenses, 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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CONTACT: Pacific Coast Oil Trust
The Bank of New York Mellon Trust Company, N.A., as Trustee
KEYWORD: TEXAS UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: OIL/GAS ENERGY
SOURCE: Pacific Coast Oil Trust
Copyright Business Wire 2019.
PUB: 11/26/2019 04:15 PM/DISC: 11/26/2019 04:15 PM