BPT's dividend is likely to decline sharply and end permanently
as soon as early 2018
According to its 2016 10-K filing, the BP Prudhoe Bay Trust could pay its last dividend as soon as 2018. It has an unusual contract with BP that subtracts a rising cost per barrel from its royalty payments. Those costs will rise by more than $5 per barrel per year starting in 2018, forever, even if BP's actual costs are declining! As a result, we estimate that BPT's total remaining distributions are unlikely to exceed $12, even if WTI crude oil eventually rallies to $60/barrel
For more information, read on, or contact BPT's trustee Elaina Rogers at 713-483-6020 or email@example.com
Estimated remaining dividends per share and date of final distribution in various WTI crude oil price scenarios, with no discount - this is the total value you will ever receive, cumulatively, for the entire period before the trust terminates:
$35 - $1.70 - February 2018
$40 - $1.78 - February 2019
$45 - $2.93 - February 2019
$50 - $4.50 - February 2020
$55 - $6.82 - February 2021
$60 - $10.28 - February 2021
$65 - $14.43 - February 2021
$70 - $19.22 - February 2022
Estimates and opinions are provided by HITE Hedge Asset Management which has no affiliation with BP or the BP Prudhoe Bay Trust. All estimates are forward looking statements based on information provided in BPT's publicly available regulatory filings, and are subject to change without notice. Estimates assume 2% CPI inflation, an average $50 WTI crude price in 2017 and the stated WTI crude price thereafter. HITE Hedge currently holds a short position in BPT and put options on BPT due to its negative view on the equity value, but is may add to or subtract from this position without notice. Photo copyrights are held by NOAA, Georgie Pauwels, Alon, and Mike Martinet and are used under the Creative Commons commercial use license. All rights reserved.
HITE Hedge Asset Management LLC is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. This document shall not constitute an offer to sell or the solicitation of an offer to buy interests in in any of the HITE funds, which may only be made at the time a qualified offeree receives a Confidential Private Placement Memorandum describing the offering and related subscription agreement.