PACIFIC COAST OIL TRUST (NYSE:ROYT) (the “Trust”) a perpetual royalty trust, announced today a cash distribution to the holders of its units of beneficial interest of $0.15228 per unit, payable on December 14, 2012, to unitholders of record on November 30, 2012. The Trust’s distribution relates to net profits and overriding royalties generated during October 2012 as provided in the conveyance of net profits and overriding royalty interest. This month’s distribution is higher than the previous month ($0.15228 per unit vs. $0.13939 per unit). Total daily production was approximately 7% higher than the prior month, which favorably offset lower average realized prices which were 4% lower than the prior month. In addition, lease operating expenses were lower than the prior month principally due to lower well repair expenses and lower injection well work. There were no Trust administrative expenses deducted during the period as the cash reserves were sufficient to cover current month expenses. The current net profits amount from the Developed Properties was approximately $5.8 million, after receipt by PCEC from its counterparties of $0.2 million related to the settlement of applicable hedge contracts. The development expense for the Developed Properties was $0.1 million during the period. The current distribution also includes a 7.5% overriding royalty on the Remaining Properties which produced 17,099 Boe from 30 Orcutt Diatomite wells and one Orcutt Field well, which was approximately 106% higher than the prior month due to the Orcutt Diatomite expansion project being ahead of schedule. The cumulative deficit of the net profit interest on the Remaining Properties, including the 7.5% overriding royalty payments, is approximately $5.1 million. The monthly operating and services fee payable to PCEC, totaling $0.1 million was deducted in the calculation of the distribution payable to unit holders. Sales Volumes and Prices The following table displays Pacific Coast Energy Company LP’s (“PCEC”) underlying sales volumes and average prices for the month of October 2012.
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 (the “Underlying Properties”). The Underlying Properties consist of (i) the proved developed reserves as of December 31, 2011 on the Underlying Properties, which we refer to as the “Developed Properties,” and (ii) all other development potential on the Underlying Properties, which we refer to as the “Remaining Properties.” Production from the Developed Properties attributable to the Trust is produced from wells that, because they have already been drilled, require limited additional capital expenditures. Production from the Remaining Properties that will be attributable to the Trust will require capital expenditures for the drilling of wells and installation of infrastructure. PCEC will supply required capital on behalf of the Trust during this period; however, because the costs initially incurred exceed gross proceeds, the Remaining Properties currently have negative net profits during this drilling and development period. During this period of negative net profits, instead of being paid net profits, the Trust is paid a 7.5% overriding royalty on the portion of the Remaining Properties located on PCEC’s Orcutt properties. Once revenues from the Remaining Properties have paid back PCEC for the cumulative costs it has advanced on behalf of the Trust (referred to as the 25% Net Profits Interest Accrued Deficit Balance and includes the payments made to the Trust pursuant to the 7.5% overriding royalty), then the net profits interests on the Remaining Properties will be paid out in place of the overriding royalty interest. These interests entitle the Trust to receive the following:
|Sales Volumes||Average Price|
|Developed Properties (a)||106,310||$||98.28|
|Remaining Properties (b)||17,099||$||96.45|
|(a) Crude oil sales represented 97% of sales volumes.|
|(b) Crude oil sales represented 100% of sales volumes.|
- 80% of the net profits from the sale of oil and natural gas production from the Developed Properties.
- 7.5% of the proceeds (free of any production or development costs but bearing the proportionate share of production and property taxes and post-production costs) attributable to the sale of all oil and natural gas production from the Remaining Properties located on PCEC’s Orcutt properties, or
- 25% of the net profits from the sale of oil and natural gas production from all of the Remaining Properties.