The Final Chapter for BP Prudhoe Bay Royalty Trust

BP Prudhoe Bay Royalty US0556301077

The BP Prudhoe Bay Royalty Trust has ceased operations and is now in the process of liquidation. This development marks the termination of all future distributions to unitholders, shifting the focus solely to the sale of the trust's remaining assets and its ultimate dissolution.

A significant milestone in the trust's wind-down is its removal from the New York Stock Exchange. The exchange initiated delisting procedures after the trust's units traded below the $1.00 minimum price requirement for a consecutive 30-day period. Trading was formally suspended on June 30, 2025. This action underscores the entity's conclusion as a publicly traded vehicle and aligns with the broader termination process.

Liquidation Process Underway

With operational activities officially ended as of December 31, 2024, the trustee, The Bank of New York Mellon Trust Company, has commenced the formal winding-up of the trust. The core mandate of this phase is the mandatory sale of all the trust's underlying assets, excluding any existing cash reserves. This step finalizes the trust's long-standing role as a participation entity in the Prudhoe Bay oil field.

The sale process for these royalty assets is currently in progress. Notably, Hilcorp North Slope, LLC (HNS) elected not to exercise its purchase option, which was set at a fixed price of $11.64 million or the prevailing market value. Moving forward, the successful execution of any asset sale requires approval from the holders of at least 60% of the trust's outstanding units.

Distribution Drought and Negative Economics

Unitholders have faced an extended period without income. The trust declared no distributions for the fourth quarter of 2024, followed by the first and second quarters of 2025. This cessation is directly attributable to consistently negative royalty calculations, driven by production costs exceeding the price of oil:

• Q1 2025: An average West Texas Intermediate (WTI) price of $71.50 per barrel was overwhelmed by adjusted costs of $98.89 and production taxes of $2.46, resulting in a net negative royalty of ($29.85) per barrel.
• Q2 2025: The situation worsened with a WTI price of $63.95 against costs of $99.63, generating a negative royalty of ($37.83) per barrel.

The path forward is unequivocal: a complete focus on the orderly disposition of the trust's remaining property and the final administrative steps to close this chapter for investors.