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Philip Trinder  

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  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    malevy,

    Your expected distribution is $1.20 and your best case estimate is $1.80, what is driving the $0.60 difference in your model?

    Are you assuming there is another large payment for prior period adjustments?

    In your earlier comment you make this statement:

    "I believe they can effectively return small amounts of capital any time they want."

    Why would the BP Alaska employees tasked with providing the data and payment to the BPT Trustee ever be able to do what you stated?

    In your earlier comment you also made this statement:

    "If management wants to "hat trick" an extra $.20 - $.30 there are other ways to do it (we've seen it before.)"

    Can you provide a link to any BPT press releases or financial filings that support that statement?

    Again, why would the BP Alaska employees tasked with providing the data and payment to the BPT Trustee ever be able to do what you stated?

    Hypothetically, if the next distribution comes in at $1.00 that would be a ~63% reduction from the prior payment, if there are investors who are not paying any attention that suddenly see a 63% drop in their payout I think that might matter to them.

    Best Regards,
    Phil
    Mar 27, 2015. 01:01 PM | 1 Like Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    It will be very interesting to see the market reaction if the distribution is much lower than the last payment, since it appears that BPT is massively owned by retail investors (based on some recent data I saw, institutional ownership looks to only be ~11%).

    The recent massive drop in BPT unit price appears to have been driven by the JPM research report so I am wondering if that was mainly retail investors in JPM's system seeing the report realizing they don't fully understand what they own and then exiting. If so then I am also wondering, if the next distribution is a large decline, will that trigger another wave of retail investors to exit?

    My model estimate for the next distribution is tracking slightly below $1, although that assumes there are not any large prior period catch up payments like there were for the January distribution.
    Mar 26, 2015. 11:54 AM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    malevy,

    So is your best case estimate for the next distribution ~$1.80?
    If the distribution comes in at around $1.00, where would you expect to see BPT trade?

    Best Regards,
    Phil
    Mar 26, 2015. 10:52 AM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    Yogi6262 and malevy,

    Thanks for the responses and the link.

    Best Regards,
    Phil
    Mar 24, 2015. 10:45 AM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    malevy,

    I missed it, did he explain what changed his view from Feb 10, 2015? As of that date he was expecting oil to go to $20: http://nws.mx/1OtZgfT

    Also did he have a new target price and any timing expectations?

    Best Regards,
    Phil
    Mar 23, 2015. 11:56 PM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    Be Here Now,

    You're welcome, we'll see how much fun everyone can make of me on the financials in May!

    Also my April distribution estimate will be assuming there are no more large prior period payments so we'll see how that goes too.

    Best Regards,
    Phil
    Mar 19, 2015. 03:45 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    Alex,

    I know you have already fully exited your BPT position but for fun I have posted some detailed estimates for what numbers are going to show up in BPT's 1Q15 10-Q here (based on my BPT projection model): http://bit.ly/1LxsOdv

    My estimate for their next distribution is tracking around $1.00, but I will post an updated estimate on April 1. I expect them to announce the April distribution around April 3.

    Best Regards,
    Phil
    Mar 19, 2015. 01:41 PM | 1 Like Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    All,

    I posted some detailed estimates for what numbers are going to show up in BPT's 1Q15 10-Q here: http://bit.ly/1LxsOdv

    My estimate for their next distribution is tracking around $1.00, but I will post an updated estimate on April 1.

    Best Regards,
    Phil
    Mar 19, 2015. 01:34 PM | 1 Like Like |Link to Comment
  • Hold Your Nose And Start Buying Royalty Trusts [View article]
    Scott,

    Do you have an estimate for what BPT's next distribution will be? The last one was $2.6884 paid on January 20.

    Best Regards,
    Phil
    Mar 17, 2015. 01:23 PM | Likes Like |Link to Comment
  • Crude oil tumbles, ignoring OPEC's warning on U.S. oil boom [View news story]
    Douglas,

    Just FYI, the link you are using is only showing oil production for 7 regions. The data does not include all U.S. oil production so it is missing a substantial amount of production.

    For December 2014 total U.S. oil production averaged 9.226 Million Barrels a day (versus the 5.614 Million Barrels a Day shown for April 2015 for the 7 regions in the data set you referenced).

    EIA data on Total U.S. Oil Production can be found here: http://1.usa.gov/19t4sAF

    Best Regards,
    Phil
    Mar 16, 2015. 06:40 PM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    brophy2941,

    This is from your profile:

    "He is currently retired, trades futures fulltime, manages his portfolio, gives futures trading webinars and has written about investing, trading, marketing and retirement for Fidelity, Prudential, private investment managers and private software developers."

    Do you honestly believe that BPT will pay more than $10 in distributions over the next four payments?

    In your futures trading do you ever trade oil and if so have you looked at the current forward curve for WTI?

    Have you done any rough modeling to try and support BPT being able to pay $10 over the next four distributions and if so what WTI prices are you using?

    Do you think the next distribution will be more than $2.50?

    Best Regards,
    Phil
    Mar 12, 2015. 09:28 PM | 1 Like Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    sts66,

    If you owned BPT at any time during 2014 they send you the annual tax booklet (even if you day traded the position).

    You can find them here (see bottom left side of the page for links to BPT tax booklets): http://bit.ly/1kdnzfM

    Best Regards,
    Phil
    Mar 12, 2015. 06:04 PM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    Gentlemen,

    The calendar year financials in the 10-K actual cover the production periods of 4Q13 through 3Q14, yes even though the financial statements are "As of December 31, 2014." See pages 9-10 in the 10-K where they show which quarters are included in each set of Calendar Year Financials.

    The January payment was for the production period ending December 31, 2014 (so 4Q14). These financial results will be covered in the March 31, 2015 10-Q (1Q15).

    Why are the financials like this? It is because they are being prepared on a modified cash basis of accounting (not GAAP) and being audited as such by KPMG. From KPMG's audit letter on page 35 (where they also disclose the material weakness in control's over financial reporting):

    "As described in note 2 to the financial statements, these financial statements were prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America."

    The Trustee is doing it this way because of the simplistic flow through nature of the Trust.

    "These financial statements are the responsibility of The Bank of New York Mellon Trust Company, N.A., as the Trust’s trustee (the Trustee)."

    It's just another fun wrinkle for BPT that adds some timing lag on figuring out the financials, which in turn just makes it more fun to try and figure out a projection model.

    Best Regards,
    Phil
    Mar 11, 2015. 01:42 PM | 2 Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    Alex,

    Thank you for the response. So your view on BPT on February 26 was:

    "I plan on holding the shares for the rest of the year to allow the shares to stabilize and retake the $80 level. If the price of oil does firm up and trade above $60 on the WTI contract it will help accelerate the trusts recovery. I may reinvest the dividend as long as the trust sells below $70 per share."

    You changed your view after seeing an XOM presentation on March 4 and then decided to exit BPT for a 4.3% gain. Based on your response I'm assuming you exited BPT on March 4, 5 trading days after your article was published (perhaps at a price ~$65.50 compared to current prices of $56.50). Congrats on exiting your position for a gain.

    You commented on this article on March 6 in response to Fred above without disclosing that you had completely exited BPT. Did you consider letting your readers know that you had completely changed your view on BPT and had also completely exited your BPT position for a gain?

    You can also submit changes/updates to your article so you can change this statement to reflect your current views:

    "I plan on holding the shares for the rest of the year to allow the shares to stabilize and retake the $80 level. If the price of oil does firm up and trade above $60 on the WTI contract it will help accelerate the trusts recovery. I may reinvest the dividend as long as the trust sells below $70 per share."

    Many of the readers on Seeking Alpha seem to prefer reading opinions that match their own and are all about confirmation bias. It just seems more forthright to me to go ahead and let people know when you completely change your mind on a position within 5 trading days so they do not read your article and think to themselves "well somebody has analyzed BPT and they are going to hold and reinvest the dividends for the rest of 2015, so I am going to hold and hope as well."

    Best Regards,
    Phil
    Mar 11, 2015. 12:58 PM | 1 Like Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust: Annual Report Indicates Termination And Shares Overvaluation [View article]
    malevy,

    You make this statement:

    "my gut feeling is that the trust doesn't really end until there is not enough oil left in the ground to make it worth keeping"

    Your statement makes sense for other finite life upstream royalty trusts where the Royalty Interest is directly tied to the actual operating results of the underlying properties such that the Royalty payment calculation takes into account the actual cash operating costs, development costs, production levels, production taxes, etc. within the underlying producing field(s). Some examples would be SJT, PBT, PER, HGT, MVO, and NDRO (I've just been looking through their 10-Ks to double check their structures).

    However, BPT is very different. BPT has the Adjusted Chargeable Costs concept that is a calculated number that has absolutely nothing to do with the actual cash operating costs incurred to actually physically produce the oil from the Prudhoe Bay field. Additionally the BPT royalty payment is calculated based on WTI prices during the production period reported in the financials (and uses that WTI number to come up with calculated Alaska Production Taxes, which again are not the actual production taxes being paid in the Prudhoe Bay field). The actual physical crude oil being produced in the Prudhoe Bay field is not sold at WTI prices. The only direct connection to actual results in the Prudhoe Bay field is the production volume amount used in the calculations so if the whole field production levels goes to zero then that would also trigger termination of the trust.

    I feel bad for investors who do not understand some of the structural nuances of BPT. They may continue to look at the last distribution and annualize it and think that they will receive something similar to that "yield" in perpetuity (or until the Prudhoe Bay field stops producing, which is also likely wrong because it is more likely that the Adjusted Chargeable Costs are going to become an issue before the actual field stops producing). This confusion will eventually come back to haunt them because of the built in contractual escalation of the "Chargeable Costs."

    Best Regards,
    Phil
    Mar 10, 2015. 07:53 PM | 1 Like Like |Link to Comment
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