BP Prudhoe Bay Royalty Trust (BPT) is retreating for a third straight day following a Wall Street Journal report on Friday night that stated the royalty trust's market cap appears to be larger than the amount of cash it has available for distributions. In its last annual report, BP Prudhoe said that it had $1.4B available for distribution, according to The Journal’s Jason Zweig. Even after the stock declined for two days, the trust's market cap was still about $1.87B before the market opened today. Since royalty trusts can't acquire new assets, their yield tends to drop as the wells and mines in which they own stakes become depleted, causing the trusts to eventually disappear, The Journal explained on August 24. In late morning trading, BP Prudhoe sank $7.26, or 7.77%, to $86.20. The stock has declined over 27% so far this week. Whiting USA Trust I (WHX), another trust mentioned by Zweig, has also been in a downward trend.
- BP Prudhoe Bay Royalty Trust
- Wall Street Journal