BP Prudhoe Bay Royalty Trust (BPT) Options

I am new here and have owned BPT for a bit. I am buying....

Starting to buy now.

Well let’s go !!

$$ BPT $$

WHY I AM BULLISH $BPT (BP PRUDHOE BAY ROYALTY TRUST) https://www.optionmillionaires.com/bullish-bpt-bp-prudhoe-bay-royalty-trust/

Are the TRUSTING investors getting a true fiduciary return in this investment standing.
Are the overheads and charges etc. as presented far in excess of factual requirements ??????
Concerned.

Inflation at Aug. 2008 levels! Next comes inflation at 2009 levels!

Unit price is more than I would pay with ~$0.2 in revenue over the last 2 years!

There is a giant theft issue with Alaska's unconstitutional takings! But the trust does not have the capital to fight that in court. If they didn't make money in Q2 they were basically done!

. After 2020, Chargeable Costs increase at a uniform rate of $2.75 per barrel per year. p.12

Adjusted Chargable costs currently $59.xx. This puts share capital at significant risk! Should be trading @<$1

https://d18rn0p25nwr6d.cloudfront.net/CIK-0000850033/48e3e4b5-afd1-4195-ab3a-a0869684345d.pdf

BPT. Above $59.8 for 5 consecutive months. ( SBM )
Why no dividend?
Questions are beginning to be asked about "fiduciary standing"?
Value / Price unreflective........ etc.
Watching next quarter Mennon

Alaska stole the royalty!

Hard to get people to invest in new wells now!

rcookr1. Anything I should know about this stock?

Is it worth a look see?

Now it has become interesting.....

Well..your probably out...but anyhow...this one has a finite life.. Per barrel charge @ 29.25 for 2021...and 32.00 for 2022....and 34.75 for 2023. Adjust by a factor of two and add tax.....and it is close currently but not there yet.

Within three years..oil will need to be over $60 WTI or higher.

October, 2020 the (BPT) BP Prudhoe Bay Royalty Trust SqueezeTrigger Price was $1.46. If you had purchased BPT, the trade would have gained 0.36% as of today's price of $1.47. If you had traded 10,000 shares, you would currently have a gain of $52.00

Chart is starting to look good. And winter is upon us.. Found this BP Prudhoe Bay Royalty Trust – Consensus Indicates Potential 308.2% Upside https://www.directorstalkinterviews.com/bp-prudhoe-bay-royalty-trust-consensus-indicates-potential-308-2-upside/412862284

Derp!

"Game Over"!

BP Prudhoe Bay Royalty Trust: On Death Row
Jun. 12, 2019 10:28 AM ET|15 comments | About: BP Prudhoe Bay Royalty Trust (BPT)
Guy Whitehead
Guy Whitehead
Long/short equity, value
(138 followers)
Summary
At the current West Texas Intermediate crude price, BP Prudhoe Bay Royalty Trust (BPT) will stop payouts after January 2020.

As long as the WTI price stays under the 2020 “death line” of $55.05, WTI fluctuations have little effect on BPT’s intrinsic value.

Investors do not seem to recognize the serious risk to share price if WTI fails to rise.

The likely share value at dissolution is likely to be about zero.

It is a terrible long term investment for all and some investors may find it an attractive short.

BP Prudhoe Royalty Trust (BPT) is facing a severe crisis. Every year, the costs assigned to shareholders increase substantially by a formula. The recent severe decline in oil price means that payouts will be zero in 2020 at the current WTI oil price and two years later the Trust will dissolve.

In the fable of the boy who cried wolf, a boy kept shouting that a wolf was coming so that he could get attention. Eventually, the villagers ignored him; the wolf actually did come and ate the hapless lad. Over the years, whenever the price of oil drops some predict the imminent demise of the BPT trust. Each time a rally in oil prices has saved BPT from extinction (although the share price has dropped from $100 to $20 over the last few years.) Will BPT escape once again? Or not? I suspect not and am short BPT via long term put options.

The BPT Trust is structured so that costs are contracted at an increasing rate each year. This formula is in the Trust contract and has no relation to real costs of production. These costs of production and Alaskan taxes are subtracted from the average WTI for the quarter and the difference is paid out to share holders. If the costs are greater than the WTI price, no payment is made that quarter. After two years of no payments, the Trust dissolves. Any BPT investor should carefully review the BPT 10K.

The 10K is available at SEC Filings | Prudhoe Bay Royalty Trust Investor Center. Pages 6-9 discuss calculation of costs, pages 4-5 discuss conditions for termination of the Trust, and pages 15-31 give a comprehensive review of risks facing the Trust. Daily WTI prices are available at the Bloomberg site under "Markets". Historical WTI prices (useful for estimating the payout for the end of a quarter) can be found at investing.com. The costs for Trust are approximately:

2019 $49.30

2020 $55.05

2021 $60.93

2022 $66.92

A simple formula for calculating the annual pay out for a given WTI oil price is

[(WTI - Costs) x 5398481] / 21.4 million. Divide by 4 to get the quarterly payout.

This permits you to estimate the pay out for any WTI scenario in a given year.

With this year’s bear market in oil, the WTI price is below the contracted cost for year 2020, which means no payouts at all starting in 2020 unless oil prices rise.

We can calculate the pay out for the rest of the 2019 based on any given WTI oil price. The benchmark for 2020 is $55.05 (assuming full production of 90,000 barrels per day which has not happened in years.)

The WTI tonight is $54.00. For the rest of 2019, this price will produce a total payout of $1.23 for 2019, and then payouts should stop. With the share price of BPT at $18.18, investors do not seem to recognize the severe risks in holding BPT. Share price - intrinsic value = a loss $16.95 at current oil prices. The July payout if WTI oil price persists at $54 will be 57-64 cents, depending on production.

If the WTI rose tomorrow to $60 and remained there, the total payouts would be $2.59 before the Trust stopped payments in 2021. These are hypothetical scenarios but give a clear look at what changes in oil prices will do for BPT. In the case of an immediate rise to $60, not much.

Investors seem to drive the share price of BPT based on small changes in oil prices. In this situation, that is irrational. Fluctuations in the WTI price below the 2020 “death line” actually have little effect on the intrinsic value of BPT. The total pay outs at WTI $54 is $1.23. If the WTI averages $51 for the rest of 2019, the payouts total $0.80. Either is a complete disaster for a BPT share holder. It’s like a drowning man worrying about whether he is 20 feet or 30 feet below the surface of the water.

The only salvation for BPT shareholders is a dramatic increase in oil prices. Bullish factors could include war in the Persian Gulf, an end to trade wars which would increase global confidence and growth, or a reduction in US oil production. Bearish factors could include increased US production as drillers here produce more to compensate for the decreased price of oil, a continued slackening in global oil demand, and a continued decline in Saudi Arabia’s ability to control oil prices.

I do not pretend to know the future of oil prices. But it is clear that if oil prices drop, BPT is doomed. If oil prices stay where they are today, BPT is doomed. Only if oil prices increase dramatically could BPT's market value be salvaged. If you strongly believe oil prices will rapidly increase soon, you would make much more money buying oil futures or the USO fund than BPT (which is wildly overvalued at current oil prices).

There have been frequent arguments on SA on the value of the BPT trust at termination. It is very likely to be virtually zero. The 10 K states that the sole purpose of the purpose of the Trust is owning and administering the Royalty Interest. The Royalty Interest value at termination should be zero unless the total Royalty Interest income for the year is between 0 and $1 million (not enough for pay outs to shareholders.) This would produce a value of 4 cents to 25 cents per share, depending on whether BPT exercised its option to buy and what an investment bank consultant would value the Royalty Interest at termination. The Trust is currently withholding a very small percentage of pay outs to cover costs of termination, which I take as a hint of their expectations (see page 4 of 10K). If anyone has a definite logical estimate of a higher valuation at termination that would make current share holders break even (e.g. $17), it would be great to hear it here.

Straightforward short selling has problems. The short seller is liable for the dividend pay outs, and these can be significant. Also, the short seller faces short term risks such as war in the Persian Gulf which is quite possible. A spike in oil prices and BPT share price could be absolutely disastrous for a short seller. Also, the borrowing costs for shorting shares of BPT are significant, as previous articles have highlighted.

Puts for BPT have a significant spread and are costly. Nevertheless, given the potential for a major decline in the BPT share price, long term puts are the path I have chosen. I currently have puts for December 20 2019 with a strike price of $20. I would have preferred January, but they were not available. If BPT maintains its current price while the WTI price drops below $49, I will probably add OTM shorter time puts in anticipation of a share price collapse. Eventually reality takes hold, even with BPT. If USO drops to 10 (unlikely) I will probably buy 2 USO calls @ 11 December 20 2019 for every BPT put. This would guarantee a profit on USO if the WTI started to rise toward crossing the "death line" and would hedge my BPT puts at a low cost. In any case, BPT puts are expensive and have the risk of a complete loss if the oil price spikes. Therefore, BPT puts are a very small portion of my portfolio.

Summary
At current oil prices, BPT is a tremendously overvalued security. Either the shareholders are supremely confident of a major oil price increase or they are mesmerized by the trailing dividend yield of 22% and don’t understand at all how BPT works and its risks. While BPT has dropped 80% in the last decade and shorting it can still be considered.

Good Luck to all Investors. Read the 10K!!!

Disclosure: I am/we are short BPT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am short BPT with long term put options. IF the USO price should decline, I may purchase USO calls as a hedge.
I am not an investment adviser and do not offer investment advice. All investors should do their own research and due diligence, especially a careful reading of the BPT 10K.

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News: $BPT BP Prudhoe Bay Royalty Trust Announces Second Quarter 2019 Unit Payment

This is to advise you that BP Prudhoe Bay Royalty Trust ( NYSE: BPT ) announces that the dividend information for the Second Quarter of 2019 is as follows: *Actual average daily production for the quarter was 74,254 BBLS. Any questions, please feel free to contact The Bank of New York...

Got this from BP Prudhoe Bay Royalty Trust Announces Second Quarter 2019 Unit Payment

Need 25$ /share to load 10k

04/13 1Q X dividend

Need more printing presses! Rollin over!

Yeesh, BPT is taking a beating today...

looking good picked up 4000 shares a few days ago

You can always sell enough shares to cover your initial buy in , then let the remaining shares pay you dividends for life .

Ok - this has gone up a little since I bought it in August. From what I can read their dividend is mostly based on the WTI price minus fairly fixed expenses/taxes/etc of around $35. So at a WTI price of 50 they make $15/bbl. At $60 they make $25. I assume this is the reason for the increase - and the dividend increase announced this week.

I see production has recently dipped below 90,000bbl/day. I assume this is partly due to less aggressive pumping at the lower price, and partly due to depletion of the fields.

Does anyone have any references on the long-term (5-10 year)outlook for production? I'm trying to decide whether to enjoy the dividends, or take the capital gains and run.

Obviously I'm missing something here. Too good to be true dividends and P/E.

Can anyone tell me why not to buy this stock?

So far holding this level well.. waiting for a nice breakout to confirm this bottom

Anybody here

Looks like a decent long term but down here based on the 5 year chart what do u think?? I haven't looked into the guts of the company just looking around

Ugh, forgot about this one and look at this thing go! Shorts had their way with it, maybe another round soon.

I expect it to retest the lows!

I'm following you too, thanks

Sure. I'm following you

I've moved on too unless it drops in the single digits. After the trades here, I have to wait until Monday until my funds clear. Best of luck!

I'm playing a few others if you're interest. Just check my recent post history to figure out which. I like casual chatter between us. Take care, Jonas

Nice. The bounce wasn't that strong, I have no confidence in playing this any further so I move on.

I got out yesterday at $20...

Hit my stop, I'm out. Gl to you

Let's go green! So I can sell tomorrow lol

Probably... haven't sold yet but am regretting buying yesterday. Good luck!

Reloaded at 19 flat, might be too early but what the heck.

Probably wise... this stock is crazy for a trust... large swings that make no sense up and down

I'm going to check back tomorrow.

Back in at 21.70.

It hit my stop loss at $23... I'm out too... great run... looks a bit scarier now than it did this morning

You might be right, but I've been schooled to take the money when it's there. I'm looking for another pullback to do the same again. GL

I'm still in... that's my stop loss price but this is cruising up. Nothing wrong with taking big profit though

Aaaand.... I'm out 23 and change. $$$
Very easy play, quick money

In at 18.25

Bear raid, time to scoop some up for the rebound