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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-K    ☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, 2019 OR  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10243   BP PRUDHOE BAY ROYALTY TRUST (Exact name of registrant as specified in its charter)    DELAWARE

13-6943724State or other jurisdiction
of incorporation or organization)

(I.R.S. Employer Identification No.)THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., TRUSTEE
601 TRAVIS STREET, FLOOR 16
HOUSTON, TEXAS

77002(Address of principal executive offices)

(Zip Code) Registrants telephone number, including area code: (713)
483-6020 Securities registered pursuant to Section 12(b) of the Act:  Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which RegisteredUNITS OF BENEFICIAL INTEREST

BPT

NEW YORK STOCK EXCHANGE Securities registered pursuant to Section 12(g) of the Act: NONE   Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   ☐    No  ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   ☐    No  ☒ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  ☒    No  ☐ Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (17 CFR § 232.405) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files).     Yes   ☐     No   ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated
filer and smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):  Large Accelerated filer

☐

Accelerated filer

☒Non-accelerated filer

☐

Smaller reporting company

☐Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act    Yes   ☐     No  ☒ The aggregate market value of
Units held by nonaffiliates (computed by reference to the closing sale price in New York Stock Exchange transactions on June 28, 2019 (the last business day of the registrants most recently completed second fiscal quarter)) was
approximately $331,058,000. As of March 2, 2020, 21,400,000 Units of Beneficial Interest were outstanding. DOCUMENTS INCORPORATED BY REFERENCE None




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TABLE OF CONTENTS  PART I


1ITEM 1.

BUSINESS


1INTRODUCTION


1THE TRUST


2THE ROYALTY INTEREST


6THE UNITS


9THE BP SUPPORT AGREEMENT


11THE PRUDHOE BAY UNIT AND FIELD


12INDUSTRY CONDITIONS AND REGULATIONS


18CERTAIN TAX CONSIDERATIONS


18ITEM 1A.

RISK FACTORS


21ITEM 1B.

UNRESOLVED STAFF COMMENTS


32ITEM 2.

PROPERTIES


32ITEM 3.

LEGAL PROCEEDINGS


32ITEM 4.

MINE SAFETY DISCLOSURE


32PART II


32ITEM 5.

MARKET FOR REGISTRANTS UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF UNITS


32ITEM 6.

SELECTED FINANCIAL DATA


33ITEM 7.

TRUSTEES DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


33ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


37ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


38ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


53ITEM 9A.

CONTROLS AND PROCEDURES


53ITEM 9B.

OTHER INFORMATION


54PART III


54ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


54  i




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ITEM 11.

EXECUTIVE COMPENSATION


55ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS


55ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


56ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


56ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


56SIGNATURES


59  ii




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PART I  ITEM 1.
BUSINESS INTRODUCTION BP Prudhoe Bay Royalty Trust (the Trust) was created as a Delaware business trust by the BP Prudhoe Bay Royalty Trust Agreement
dated February 28, 1989 (the Trust Agreement) among The Standard Oil Company (Standard Oil), BP Exploration (Alaska) Inc. (BP Alaska), The Bank of New York Mellon (formerly named The Bank of New York), as
trustee, and F. James Hutchinson, co-trustee (BNY Mellon Trust of Delaware, formerly named The Bank of New York (Delaware), successor co-trustee). BP Alaska and Standard
Oil are wholly owned subsidiaries of BP p.l.c. (BP).1 Effective as
of December 15, 2010, The Bank of New York Mellon (BNYM) resigned as trustee under the Trust Agreement and BP Alaska appointed The Bank of New York Mellon Trust Company, N.A. (the Trust Company) to succeed BNYM as
trustee. The Trust Company accepted its appointment and assumed all rights, titles, duties, powers and authority formerly held and exercised by BNYM under the Trust Agreement. The corporate trust office of the Trust Company (which we refer to
hereafter as the Trustee) at which the affairs of the Trust are administered is located at 601 Travis Street, Floor 16, Houston, Texas 77002 and its telephone number at that address is (713)
483-6020. The Trust electronically files annual reports on Form
10-K, quarterly reports on Form 10-Q and, when certain events require them, current reports on Form 8-K with the Securities and
Exchange Commission (SEC). The public may read and copy any materials filed by the Trust with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that
contains reports, proxy and information statements, and other information regarding issuers (including the Trust) that file electronically with the SEC. The address of the SECs website is http://www.sec.gov. The Trust does not maintain an Internet website, but certain information concerning the Trust and the Trust Units may be obtained from the
BusinessWire website at the following page location: http://bpt.investorhq.businesswire.com. The Trustee will provide paper or electronic copies of the Trusts reports on Form 10-K, Form 10-Q and Form 8-K, and amendments to those reports, free of charge upon request as soon as reasonably practicable after the Trust files them with the SEC. Requests for copies
of reports may be made by mail to: The Bank of New York Mellon Trust Company, N.A., 601 Travis Street, Floor 16, Houston, TX 77002, Attention: Global Corporate Trust  Corporate Finance; by telephone to:
(713) 483-6020; or by e-mail to: elaina.c.rodgers@bnymellon.com. The information in this report relating to the Prudhoe Bay Unit, the calculation of royalty payments and certain other matters has been
furnished to the Trustee by BP Alaska.  1
As noted in the Trusts Current Report on Form 8-K dated August 30, 2019, on August 27, 2019, BP plc
announced that it has agreed to sell its entire business in Alaska to Hilcorp Alaska for a total consideration of $5.6 billion. According to the press release announcing the sale, the sale will include BPs entire upstream and midstream
business in Alaska, including its interest in BP Alaska, that owns all of BPs upstream oil and gas interest in Alaska (including oil and gas leases in the Prudhoe Bay field), and BP Pipelines (Alaska) Inc.s interest in the Trans Alaska
Pipeline System (TAPS). According to the press release, subject to state and federal regulatory approval, the transaction is expected to be completed in 2020.  1




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Forward-Looking Statements Various sections of this report contain forward-looking statements (that is, statements anticipating
future events or conditions and not statements of historical fact). Words such as anticipate, expect, believe, intend, plan or project, and should,
would, could, potentially, possibly or may, and other words that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking
statements in this report are subject to a number of risks and uncertainties beyond the control of the Trustee. These risks and uncertainties include such matters as future changes in oil prices, oil production levels, economic activity, domestic
and international political events and developments, legislation and regulation, and certain changes in expenses of the Trust. The actual
results, performance and prospects of the Trust could differ materially from those expressed or implied by forward-looking statements. Descriptions of some of the risks that could affect the future performance of the Trust appear in the following
Item 1A, RISK FACTORS, and elsewhere in this report. There may be additional risks of which the Trustee is unaware or which are currently deemed immaterial. In the light of these risks, uncertainties and assumptions, you should not rely unduly on any forward-looking statements. Forward-looking
events and outcomes discussed in this report may not occur or may turn out differently. The Trustee undertakes no obligation to update forward-looking statements after the date of this report, except as required by law, and all such forward-looking
statements in this report are qualified in their entirety by the preceding cautionary statements. THE TRUST Trust Property The property of
the Trust consists of an overriding royalty interest (the Royalty Interest) and cash and cash equivalents held by the Trustee from time to time. The Royalty Interest entitles the Trust to a royalty on 16.4246% of the lesser of
(i) the first 90,000 barrels2 of the average actual daily net production of crude oil and condensate per quarter from the working interest of BP Alaska as of February 28, 1989 in the
Prudhoe Bay oil field located on the North Slope in Alaska or (ii) the average actual daily net production of crude oil and condensate per quarter from that working interest. The Prudhoe Bay field is one of four contiguous North Slope oil
fields that are operated by BP Alaska and are known collectively as the Prudhoe Bay Unit. The Royalty Interest was conveyed to the Trust by an Overriding Royalty Conveyance dated February 27, 1989 from BP Alaska to Standard Oil
and a Trust Conveyance dated February 28, 1989 from Standard Oil to the Trust. Copies of the Overriding Royalty Conveyance and the Trust Conveyance are filed with the SEC as exhibits to this report. The Overriding Royalty Conveyance and
the Trust Conveyance are referred to collectively in this report as the Conveyance. The Royalty Interest is a non-operational interest in minerals. The Trust does not have the right to take oil and gas in kind, nor does it have any right to take over operations or to share in any operating decision with respect to BP
Alaskas working interest in the Prudhoe Bay field. BP Alaska is not obligated to continue to operate any well or maintain or attempt to maintain in force any portion of its working interest when, in its reasonable and prudent business
judgment, the well or interest ceases to produce or is not capable of producing oil or gas in paying quantities.  2
The term barrel is a unit of measure of petroleum liquids equal to 42 United States gallons
corrected to 60 degrees Fahrenheit temperature.  2




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Employees The Trust has no employees. All administrative functions of the Trust are performed by the Trustee. Duties and Powers of the Trustee The
duties of the Trustee are specified in the Trust Agreement and the laws of the State of Delaware. BNY Mellon Trust of Delaware has been appointed co-trustee in order to satisfy the Delaware Statutory Trust
Acts requirement that the Trust have at least one trustee resident in, or which has its principal place of business in, Delaware. However, The Bank of New York Mellon Trust Company, N.A. alone is able to exercise the rights and powers granted
to the Trustee in the Trust Agreement. A copy of the Trust Agreement is filed with the SEC as an exhibit to this report. The basic
function of the Trustee is to collect income from the Royalty Interest, to pay all expenses, charges and obligations of the Trust from the Trusts income and assets, and to pay available cash to Unit holders. Because of the passive nature of
the Trusts assets and the restrictions on the power of the Trustee to incur obligations, the only liabilities that the Trust normally incurs in the conduct of its operations are the Trustees fees and routine administrative expenses,
including accounting, legal and other professional fees. The Trust Agreement grants the Trustee only the rights and powers necessary to
achieve the purposes of the Trust. The Trust Agreement prohibits the Trust from engaging in any business or commercial activity or, with certain exceptions, any investment activity and from using any assets of the Trust to acquire any oil and gas
lease, royalty or other mineral interest. The Trustee is entitled to be indemnified out of the assets of the Trust for any liability or
loss incurred by it in the performance of its duties unless the loss results from its negligence, bad faith or fraud or from expenses incurred in carrying out its duties that exceed the compensation and reimbursement to which it is entitled under
the Trust Agreement. Sales of Royalty Interest; Borrowings and Reserves With certain exceptions, the Trustee may sell all or part of the Royalty Interest or an interest therein only if authorized to do so by vote of
the holders of 60% of the Units outstanding. However, if the sale is made in order to pay specific liabilities of the Trust then due and involves a part, but not all or substantially all, of the Trust properties, the sale only needs to be approved
by the vote of holders of a majority of the Units. Any sale of Trust properties must be for cash unless otherwise authorized by the Unit holders. The Trustee is obligated to distribute the available net proceeds of any such sale to the Unit holders
after establishing reserves for liabilities of the Trust. The Trustee has the power to borrow on behalf of the Trust or to sell Trust
assets to pay liabilities of the Trust and to establish a reserve for the payment of liabilities without the consent of the Unit holders under the following circumstances: The Trustee may borrow from a lender not affiliated with the Trustee if cash on hand is not sufficient to pay current
liabilities and the Trustee has determined that it is not practical to pay such liabilities out of funds anticipated to be available in subsequent quarters and that, without such borrowing, the Trust property is subject to the risk of loss or
diminution in value. To secure payment of its borrowings on behalf of the Trust, the Trustee is authorized to encumber the Trusts assets and to carve out and convey production payments. The borrowing must be on terms which (in the opinion of
an investment banking firm or commercial banking firm selected by the  3




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Trustee) are commercially reasonable when compared to other available alternatives. No distributions to Unit holders may be made until the borrowings by the Trust have been repaid in full. If the Trustee is unable to borrow to pay Trust liabilities, the Trustee may sell Trust assets if it determines that the
failure to pay the liabilities at a later date will be contrary to the best interest of the Unit holders and that it is not practicable to submit the sale to a vote of the Unit holders. The sale must be made for cash at a price which (in the opinion
of an investment banking firm or commercial banking firm selected by the Trustee) is at least equal to the fair market value of the interest sold and is made on commercially reasonable terms when compared to other available alternatives. The Trustee has the right to establish a cash reserve for the payment of material liabilities of the Trust which may become due
if it determines that it is not practical to pay such liabilities out of funds anticipated to be available in subsequent quarters and that, in the absence of a reserve, the Trust property is subject to the risk of loss or diminution in value or the
Trustee is subject to the risk of personal liability for such liabilities. In order for the Trustee to borrow, sell assets to pay Trust
liabilities or establish a reserve for Trust liabilities, the Trustee must receive an unqualified written legal opinion that the contemplated action will not adversely affect the classification of the Trust as a grantor trust for federal
income tax purposes or cause the income from the Trust to be treated as unrelated business taxable income for federal income tax purposes. If the Trustee is unable to obtain the required legal opinion, it still may proceed with the borrowing or
sale, or establish the reserve, if it determines that the failure to do so will be materially detrimental to the Unit holders considered as a whole. The Trustee has maintained a $1,000,000 cash reserve to provide liquidity to the Trust during any periods in which the Trust does not receive
a distribution from BP Alaska. On December 19, 2018, the Trust issued a press release to announce that the Trustee determined to gradually increase the Trustees existing cash reserve for the payment of future expenses and liabilities of
the Trust, as permitted by the Trust Agreement. The gradual increase in the cash reserve began with the distribution payable to Unit holders in April 2019. See Item 7 in Part II below. Irrevocability; Amendment of the Trust Agreement The Trust Agreement and the Trust are irrevocable. No person has the power to terminate, revoke or change the Trust Agreement except as
described in the following paragraph and below under Termination of the Trust. The Trust Agreement may be amended without a
vote of the Unit holders to cure an ambiguity, to correct or supplement any provision of the Trust Agreement that may be inconsistent with any other provision or to make any other provision with respect to matters arising under the Trust Agreement
that does not adversely affect the Unit holders. The Trust Agreement also may be amended with the approval of holders of a majority of the outstanding Units. However, no such amendment may alter the relative rights of Unit holders unless approved by
the affirmative vote of holders of 100% of the outstanding Units, nor may any amendment reduce or delay the distributions to the Unit holders, alter the voting rights of Unit holders or the number of Units in the Trust, or make certain other
changes, unless approved by the affirmative vote of holders of at least 80% of the outstanding Units and by the Trustee. The Trustee is required to consent to any amendment approved by the requisite vote of Unit holders unless the amendment affects
the Trustees rights, duties and immunities under the Trust Agreement. No amendment will be effective until the Trustee has received a ruling from the Internal Revenue Service or an opinion of  4




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counsel to the effect that such modification will not adversely affect the classification of the Trust as a grantor trust for federal income tax purposes or cause the income from the
Trust to be treated as unrelated business taxable income for federal income tax purposes. Termination of the Trust The Trust will terminate if either (a) holders of at least 60% of the outstanding Units vote to terminate the Trust or (b) the net
revenues from the Royalty Interest for two successive years are less than $1,000,000 per year (unless the net revenues during the two-year period have been materially and adversely affected by certain
extraordinary events). Upon termination of the Trust, BP Alaska will have an option to purchase the Royalty Interest at a price equal to
the greater of (i) the fair market value of the Trust property as set forth in an opinion of an investment banking firm, commercial banking firm or other entity qualified to give an opinion as to the fair market value of the assets of the
Trust, or (ii) the number of outstanding Units multiplied by (a) the closing price of Units on the day of termination of the Trust on the stock exchange on which the Units are listed, or (b) if the Units are not listed on any stock
exchange but are traded in the over-the-counter market, the closing bid price on the day of termination of the Trust as quoted on the NASDAQ Stock Market. The purchase
must be for cash unless holders of 60% of the Units outstanding authorize the sale for non-cash consideration and the Trustee has received a ruling from the Internal Revenue Service or an opinion of counsel to
the effect that such non-cash sale will not adversely affect the classification of the Trust as a grantor trust for federal income tax purposes or cause the income from the Trust to be treated as
unrelated business taxable income for federal income tax purposes. If BP Alaska does not exercise its option, the Trustee will sell the
Trust property on terms and conditions approved by the vote of holders of 60% of the outstanding Units, unless the Trustee determines that it is not practicable to submit the matter to a vote of the Unit holders and the sale is made at a price at
least equal to the fair market value of the Trust property as set forth in the opinion of the investment banking firm, commercial banking firm or other entity mentioned above and on terms and conditions deemed commercially reasonable by that firm. The Trustee will distribute all available proceeds to the Unit holders after satisfying all existing liabilities of the Trust and
establishing adequate reserves for the payment of contingent liabilities. Unit holders do not have the right under the Trust Agreement to
seek or secure any partition or distribution of the Royalty Interest or any other asset of the Trust or any accounting during the term of the Trust or during any period of liquidation and winding up. Resignation or Removal of Trustee The
Trustee may resign at any time or be removed with or without cause by vote of the holders of a majority of the outstanding Units at a meeting called and held in accordance with the Trust Agreement. A successor trustee may be appointed by BP Alaska
or, if the Trustee has been removed at a meeting of the Unit holders, the successor trustee may be appointed by the Unit holders at the meeting. Any successor trustee must be a corporation organized, doing business and authorized to exercise trust
powers under the laws of the United States, any state thereof or the District of Columbia, or a national banking association domiciled in the United States, in either case having a combined capital, surplus and undivided profits of at least
$50,000,000 and subject to supervision or examination by federal or state authorities. Unless the Trust already has a trustee that is a resident of or has a principal office in Delaware, any successor trustee must be a resident of Delaware or have a
principal office in Delaware. No resignation or removal of the Trustee will become effective until a successor trustee has accepted appointment.  5




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Voting Rights of Unit Holders Unit holders possess certain voting rights, but their voting rights are not comparable to those of shareholders of a corporation. For example,
there is no requirement for annual meetings of Unit holders or for periodic reelection of the Trustee. A meeting of the Unit holders may
be called at any time to act with respect to any matter as to which the Trust Agreement authorizes the Unit holders to act. Any such meeting may be called by the Trustee in its discretion and will be called by the Trustee (i) as soon as
practicable after receipt of a written request by BP Alaska or a written request that sets forth in reasonable detail the action proposed to be taken at the meeting and is signed by holders of at least 25% of the outstanding Units or (ii) when
required by applicable laws or regulations or the New York Stock Exchange. The Trustee will give written notice of any meeting stating the time and place of the meeting and the matters to be acted on not more than 60 days nor fewer than 10 days
before the meeting to all Unit holders of record on a date not more than 60 days before the meeting at their addresses shown on the records of the Trust. All meetings of Unit holders are required to be held in Manhattan, New York City. Unit holders
are entitled to cast one vote on all matters coming before a meeting, in person or by proxy, for each Unit held on the record date for the meeting. THE ROYALTY INTEREST The Royalty Interest is a property right under Alaska law which burdens production, but there is no other security interest in the reserves or
production revenues assigned to it. The royalty payable to the Trust for each calendar quarter is the sum of the amounts obtained by multiplying Royalty Production for each day in the calendar quarter by the Per Barrel Royalty for that day. The
payment under the Royalty Interest for any calendar quarter may not be less than zero nor more than the aggregate value of the total production of oil and condensate from BP Alaskas working interest in the Prudhoe Bay Unit for the quarter, net
of the State of Alaska royalty and less the value of any applicable payments made to affiliates of BP Alaska. Royalty Production The Royalty Production for each day in a calendar quarter is 16.4246% of the lesser of (i) the first 90,000 barrels of the
actual average daily net production of crude oil and condensate for the quarter from the Prudhoe Bay (Permo-Triassic) Reservoir and saved and allocated to the oil and gas leases owned by BP Alaska in the Prudhoe Bay field as of
February 28, 1989 (the 1989 Working Interests), or (ii) the actual average daily net production of crude oil and condensate for the quarter from the 1989 Working Interests. The Royalty Production is based on oil produced
from the oil rim and condensate produced from the gas cap, but not on gas production or natural gas liquids production. The actual average daily net production of oil and condensate from the 1989 Working Interests for any calendar quarter is the
total production of oil and condensate for the quarter, net of the State of Alaska royalty, divided by the number of days in the quarter. Per Barrel
Royalty The Per Barrel Royalty for any day is the WTI Price for the day less the sum of (i) Chargeable Costs
multiplied by the Cost Adjustment Factor and (ii) Production Taxes.  6




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WTI Price The WTI Price for any trading day is (i) the price (in dollars per barrel) for West Texas intermediate crude oil of standard
quality having a specific gravity of 40 API degrees for delivery at Cushing, Oklahoma (West Texas Intermediate) quoted for that trading day by whichever of The Wall Street Journal, Reuters, or Platts Oilgram Price Report, in that order,
publishes West Texas Intermediate price quotations for the trading day, or (ii) if the price of West Texas Intermediate is not published by one of those publications, the WTI Price will be the simple average of the daily mean prices (in dollars
per barrel) quoted for West Texas Intermediate by one major oil company, one petroleum broker and one petroleum trading company designated by BP Alaska, in each case unaffiliated with BP and having substantial U.S. operations, until published price
quotations are again available. If prices for West Texas Intermediate are not quoted so as to permit the calculation of the WTI Price, the price of West Texas Intermediate, for the purposes of calculating the WTI Price will be the price
of another light sweet domestic crude oil of standard quality designated by BP Alaska and approved by the Trustee, with appropriate allowance for transportation costs to the Gulf coast (or another appropriate location) to equilibrate its price to
the WTI Price. The WTI Price for any day which is not a trading day is the WTI Price for the preceding trading day. Chargeable Costs The Chargeable Costs per barrel of Royalty Production for each calendar year are fixed amounts specified in the Conveyance and do
not necessarily represent BP Alaskas actual costs of production. Chargeable Costs per barrel were $17.00 during 2015, $17.10 during 2016, $17.20 during 2017, $20.00 during 2018 and $23.75 during 2019. Chargeable Costs during 2020 are $26.50.
After 2020, Chargeable Costs increase at a uniform rate of $2.75 per barrel per year. Cost Adjustment Factor Pursuant to the Overriding Royalty Conveyance,3 the Cost Adjustment Factor for a quarter was initially set as the ratio of the Consumer Price Index4 published for the most recently
past February, May, August or November to 121.1 (the Consumer Price Index for January 1989). The Overriding Royalty Conveyance provides, however, that if the average WTI Price for any calendar quarter falls to $18.00 or less5, the Cost Adjustment Factor for that quarter will be the Cost Adjustment Factor for the immediately preceding quarter. If the average WTI Price returns to more than $18.00 for a later quarter, then
for each subsequent quarter that the average WTI Price remains above $18.00, adjustments to the Cost Adjustment Factor resume, but with an adjustment to the formula that excludes changes in the Consumer Price Index during the period that adjustments
to the Cost Adjustment Factor were suspended.6  3
The method for determining the Cost Adjustment Factor is set forth in Section 4.5 of the Overriding Royalty
Conveyance. 4
The Consumer Price Index is the U.S. Consumer Price Index, all items and all urban consumers, U.S.
city average (1982-84 equals 100), as first published, without seasonal adjustment, by the Bureau of Labor Statistics, Department of Labor, without regard to subsequent revisions or corrections. 5
The WTI Price was most recently at this level in the second quarter of 1999, where the applicable Cost
Adjustment Factor and Consumer Price Index were 1.29737 and 1.662, respectively. 6
Pursuant to Section 4.5 of the Overriding Royalty Conveyance, the calculation of the Cost Adjustment Factor for
each subsequent quarter that the WTI Price remains above $18.00 is the product of (x) the Cost Adjustment Factor for the most recently past calendar quarter in which the average WTI Price was equal to or less than $18.00 and (y) a fraction, the
numerator of which is the Consumer Price Index published for the most recently past February, May, August or November, as the case may be, and the denominator of which is the Consumer Price Index published for the most recently past February, May,
August or November during a quarter in which the average WTI Price was equal to or less than $18.00.  7




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Production Taxes Production Taxes are the sum of any severance taxes, excise taxes (including windfall profit tax, if any), sales taxes, value added
taxes or other similar or direct taxes imposed upon the reserves or production, delivery or sale of Royalty Production, computed at defined statutory rates. On April 14, 2013, Alaskas legislature passed an oil-tax reform bill amending Alaskas
oil and gas production tax statutes, AS 43.55.10 et seq. (the Production Tax Statutes) with the aim of encouraging oil production and investment in Alaskas oil industry. On May 21, 2013, the Governor of Alaska signed
the bill into law as chapter 10 of the 2013 Session laws of Alaska (the Act). Among significant changes, the Act eliminated the monthly progressivity tax rate implemented by certain amendments to the Production Tax Statutes
in 2006 and 2007, increased the base rate from 25% to 35% and added a stair-step per-barrel tax credit for oil production. This tax credit is based on the gross value at the point of production per barrel of
taxable oil and may not reduce a producers tax liability below the minimum tax (which is a percentage, ranging from zero to 4%, of the gross value at the point of production of a producers taxable production during the
calendar year based on the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast for the year) under the Production Tax Statutes. These changes became effective on January 1, 2014. On January 15, 2014, the Trustee executed a letter agreement with BP Alaska dated January 15, 2014 (the 2014 Letter
Agreement) regarding the implementation of the Act with respect to the Trust. Pursuant to the 2014 Letter Agreement, Production Taxes for the Trusts Royalty Production will equal the tax for the relevant quarter, minus the allowable
monthly stair-step per-barrel tax credits for the Royalty Production during that quarter. If there is a minimum tax-related limitation on the amount of the stair-step
per-barrel tax credits that could otherwise be claimed for any quarter during the year, any difference between that limitation as preliminarily determined on a quarterly basis and the actual limitation for the
entire year will be reflected in the payment to the Trust for the first quarter Royalty Production in the following year. On July 6,
2015, BP Alaska and the Trustee signed a letter agreement (the 2014 Letter Agreement Amendment) amending the 2014 Letter Agreement to provide that if there is a minimum tax-related limitation on the amount of the stair-step per-barrel tax credits that could otherwise be claimed for any quarter during the year, any difference between that limitation as preliminarily determined on a quarterly basis and the actual limitation for the
entire year will be reflected in the payment to the Trust for the fourth quarter Royalty Production payment for such year rather than in the payment to the Trust for the first quarter Royalty Production in the following year. As a result of the 2014 Letter Agreement Amendment, any difference between the limitation as preliminarily determined for the first through
third quarters of 2019 and the actual limitation for 2019 is reflected in the payment to the Trust for the fourth quarter of 2019, and not in the payment to the Trust for the first quarter of 2020. Per Barrel Royalty Calculations The
following table shows how the above-described factors interacted during the past five years to produce the average Per Barrel Royalty paid during the calendar years indicated. Royalty revenues are generally received on the fifteenth day of the month
following the end of the calendar quarter in which  8




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##### Table of Contents

the related Royalty Production occurred. Revenues and expenses presented in the statement of cash earnings and distributions presented in Part II, Item 8 below are recorded on a modified cash
basis and, as a result, royalty revenues and distributions shown in such statements for any calendar year are attributable to BP Alaskas operations during the twelve-month period ended September 30 of that year. Dollar amounts in the
table have been rounded to two decimal places for presentation and do not reflect the precision of the actual calculations.  AverageWTI Price


ChargeableCosts


CostAdjustmentFactor


AdjustedChargeableCosts


ProductionTaxes


Average PerBarrelRoyaltyCalendar 2015:4th Qtr 2014

$
73.02


$
16.90



1.818


$
30.75


$
6.88


$
35.411st Qtr 2015


48.80



17.00



1.807



30.72



1.67



16.412nd Qtr 2015


57.80



17.00



1.831



31.13



2.02



24.653rd Qtr 2015


46.70



17.00



1.835



31.20



1.58



13.92Calendar 2016:4th Qtr 2015

$
42.15


$
17.00



1.827


$
31.07


$
1.40


$
9.681st Qtr 2016


33.73



17.10



1.826



31.22



1.06



1.452nd Qtr 2016


45.56



17.10



1.850



31.63



1.53



12.383rd Qtr 2016


45.03



17.10



1.855



31.71



1.51



11.81Calendar 2017:4th Qtr 2016

$
49.24


$
17.10



1.858


$
31.78


$
1.68


$
15.791st Qtr 2017


51.94



17.20



1.876



32.26



1.78



17.902nd Qtr 2017


48.32



17.20



1.884



32.41



1.63



14.273rd Qtr 2017


48.12



17.20



1.890



32.52



1.63



14.00Calendar 2018:4th Qtr 2017

$
55.48


$
17.20



1.899


$
32.67


$
1.92


$
20.891st Qtr 2018


62.96



20.00



1.917



38.34



2.21



22.382nd Qtr 2018


67.85



20.00



1.937



38.74



2.41



26.703rd Qtr 2018


69.60



20.00



1.942



38.83



2.81



27.96Calendar 20194th Qtr 2018

$
58.82


$
20.00



1.941


$
38.81


$
2.04


$
17.941st Qtr 2019


54.87



23.75



1.946



46.23



1.88



6.772nd Qtr 2019


59.86



23.75



1.972



46.83



2.08



10.943rd Qtr 2019

$
56.33


$
23.75



1.976


$
46.92


$
1.94



7.48 THE UNITS Units Each Unit represents an equal
undivided share of beneficial interest in the Trust. The Units do not represent an interest in or an obligation of BP Alaska, Standard Oil or any of their respective affiliates. Units are evidenced by transferable certificates issued by the Trustee.
Each Unit entitles its holder to the same rights as the holder of any other Unit. The Trust has no other authorized or outstanding class of securities.  9




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##### Table of Contents

Distributions of Income BP Alaska makes quarterly payments to the Trust of the amounts due with respect to the Trusts Royalty Interest on the fifteenth day
following the end of each calendar quarter or, if the fifteenth is not a business day, on the next succeeding business day (the Quarterly Record Date). The Trustee pays all expenses of the Trust for each quarter on the Quarterly Record
Date to the extent possible, then distributes the excess, if any, of the cash received by the Trust over the Trusts expenses, net of any additions to or subtractions from the cash reserve established for the payment of estimated liabilities
(the Quarterly Distribution), to the persons in whose names the Units were registered at the close of business on the Quarterly Record Date. The Trust Agreement requires the Trustee to pay the Quarterly Distribution to Unit holders on the fifth day after the Trustees receipt
of the amount paid by BP Alaska. Cash balances held by the Trustee for distribution to Unit holders are required to be invested in United States government or agency obligations secured by the full faith and credit of the United States
(Government Obligations) or, if Government Obligations that mature on the date of the distribution to Unit holders are not available, in repurchase agreements secured by Government Obligations with banks having capital, surplus and
undivided profits of $100,000,000 or more (which may include The Bank of New York Mellon). If time does not permit the Trustee to invest collected funds in Government Obligations or repurchase agreements, the Trustee may invest funds overnight in a
time deposit with a bank meeting the foregoing capital requirement (including The Bank of New York Mellon). Reports to Unit Holders After the end of each calendar year, the Trustee mails a report to the persons who held Units of record during the year containing information
to enable them to make the calculations necessary for federal and Alaska income tax purposes, including the calculation of any depletion or other deduction which may be available to them for the calendar year. In addition, after the end of each
calendar year the Trustee mails Unit holders an annual report containing a copy of this Form 10-K and certain other information required by the Trust Agreement. Limited Liability of Unit Holders The
Trust Agreement provides that the Unit holders are, to the full extent permitted by Delaware law, entitled to the same limitation of personal liability extended to stockholders of private corporations for profit under Delaware law. Possible Divestiture of Units The Trust
Agreement imposes no restrictions on nationality or other status of the persons eligible to hold Units. However, it provides that if at any time the Trust or the Trustee is named a party in any judicial or administrative proceeding seeking the
cancellation or forfeiture of any property in which the Trust has an interest because of the nationality, or any other status, of any one or more Unit holders, the Trustee may require each holder whose nationality or other status is an issue in the
proceeding to dispose of his Units to a party not of the nationality or other status at issue in the proceeding. If any holder fails to dispose of his Units within 30 days after receipt of notice from the Trustee to do so, the Trustee will redeem
any Units not so transferred within 90 days after the end of the 30-day period specified in the notice for a cash price equal to the fair market value of the Units. Units redeemed by the Trustee will be
cancelled.  10




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The Trustee may cause the Trust to borrow any amount required to redeem the Units. If the
purchase of Units from an ineligible holder by the Trustee would result in a non-exempt prohibited transaction under the Employee Retirement Income Security Act of 1970, or under the Internal
Revenue Code of 1986, the Units subject to the Trustees right of redemption will be purchased by BP Alaska or a designee of BP Alaska. Issuance
of Additional Units The Trust Agreement provides that BP Alaska or an affiliate from time to time may assign to the Trust additional
royalty interests meeting certain conditions and, upon satisfaction of various other conditions, the Trust may issue up to an additional 18,600,000 Units. BP Alaska has not conveyed any additional royalty interests to the Trust, and the Trust has
not issued any additional Units. THE BP SUPPORT AGREEMENT BP agreed to provide financial support to BP Alaska in meeting its payment obligations to the Trust in a Support Agreement dated
February 28, 1989 among BP, BP Alaska, Standard Oil and the Trust (the Support Agreement). Within 30 days after BP receives notice from the Trustee that the royalty payable with respect to the Royalty Interest or any other amount
payable by BP Alaska or Standard Oil has not been paid to the Trustee, BP will cause BP Alaska and Standard Oil to satisfy their respective payment obligations to the Trust and the Trustee under the Trust Agreement and the Conveyance, including
contributing to BP Alaska the funds necessary to make such payments. BP is required to make available to BP Alaska and Standard Oil such financial support as BP Alaska, Standard Oil or the Trustee may request in writing. Any Unit holder has the
unconditional right to institute suit against BP to enforce BPs obligations under the Support Agreement. Neither BP nor BP Alaska
may transfer or assign its rights or obligations under the Support Agreement without the prior written consent of the Trustee, except that BP can arrange for its obligations to be performed by any of its affiliates so long as BP remains responsible
for ensuring that its obligations are performed in a timely manner. BP Alaska may sell or transfer all or part of its working interest in
the Prudhoe Bay Unit, although such a transfer will not relieve BP of its responsibility to ensure that BP Alaskas payment obligations with respect to the Royalty Interest and under the Trust Agreement and the Conveyance are performed. BP will be released from its obligation under the Support Agreement upon the sale or transfer of all or substantially all of BP Alaskas
working interest in the Prudhoe Bay Unit if the transferee agrees in writing to assume and be bound by BPs obligation under the Support Agreement. The transferees agreement to assume BPs obligations must be reasonably satisfactory
to the Trustee and the transferee must be an entity having a rating of its unsecured, unsupported long-term debt of at least A3 from Moodys Investors Service, Inc., a rating of at least A- from
Standard & Poors, or an equivalent rating from at least one nationally-recognized statistical rating organization (after giving effect to the sale or transfer and the assumption of all of BP Alaskas obligations under the
Conveyance and all of BPs obligations under the Support Agreement). BPs obligations under the Support Agreement shall continue following the completion of the sale of its business in Alaska to Hilcorp Alaska.  11




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##### Table of Contents

THE PRUDHOE BAY UNIT AND FIELD Prudhoe Bay Unit Operation and Ownership Since several oil companies besides BP Alaska hold acreage within the Prudhoe Bay field, as well as several contiguous oil fields, the Prudhoe
Bay Unit was established to optimize field development. Other owners of these fields include affiliates of Exxon Mobil Corporation, ConocoPhillips and Chevron Corporation. The Trusts Royalty Interest pertains only to production from the 1989
Working Interests in the Prudhoe Bay field and does not include production from the other oil fields included in the Prudhoe Bay Unit. The operations of BP Alaska and the other working interest owners in the Prudhoe Bay Unit are governed by an agreement dated April 1,
1977 among the State of Alaska and the working interest owners establishing the Prudhoe Bay Unit (the Prudhoe Bay Unit Agreement) and an agreement dated April 1, 1977 among the working interest owners governing Prudhoe Bay Unit
operations (the Prudhoe Bay Unit Operating Agreement). The Prudhoe Bay Unit Operating Agreement specifies the allocation of
production and costs to the working interest owners. It also defines operator responsibilities and voting requirements and is unusual in its establishment of separate participating areas for the gas cap and oil rim. Since July 1, 2000, BP
Alaska has been the sole operator of the Prudhoe Bay Unit. The ownership of the Prudhoe Bay Unit by participating area as of
December 31, 2019 is shown in the following table:  Oil rim


Gas capBP Alaska


26.36
%(a)


26.36
%(b)Exxon Mobil


36.40



36.40ConocoPhillips


36.08



36.08Chevron


1.16



1.16Total


100.00
%


100.00
%  (a)
The Trusts share of oil production and condensate is computed based on BP Alaskas ownership
interest in the oil rim participating area of 50.68% as of February 28, 1989. Subsequent decreases in BP Alaskas participation in oil rim ownership do not affect calculation of Royalty Production from the 1989 Working Interests and have
not decreased the Trusts Royalty Interest. (b)
The Trusts share of condensate production is computed based on BP Alaskas ownership interest in the
gas cap participating area of 13.84% as of February 28, 1989. Subsequent increases in BP Alaskas gas cap ownership do not affect calculation of Royalty Production from the 1989 Working Interests and have not increased the Trusts
Royalty Interest. Under the terms of an Issues Resolution Agreement entered into by the Prudhoe Bay Unit owners in October 1990, produced condensate (defined as the Original Condensate Reserve in the agreement) from the gas cap participating area
was allocated to that participating area until a cumulative limit of 1,175 million barrels was reached. This cumulative limit was reached in June 2014, and beginning at that time and continuing thereafter, the condensate is allocated to the oil
rim participating area. If BP Alaska fails to pay any costs and expenses chargeable to BP Alaska under the Prudhoe Bay
Unit Operating Agreement and the production of oil and condensate is insufficient to pay such costs and expenses, the Royalty Interest is chargeable with a pro rata portion of such costs and expenses and is  12




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##### Table of Contents

subject to the enforcement against it of liens granted to the operators of the Prudhoe Bay Unit. However, in the Conveyance BP Alaska agreed to pay all costs and expenses chargeable to it and to
ensure that no such costs and expenses will be chargeable against the Royalty Interest. The Trust is not liable for any loss or liability incurred by BP Alaska or others attributable to BP Alaskas working interest in the Prudhoe Bay Unit or to
the oil produced from it and BP Alaska has agreed to indemnify the Trust and hold it harmless against any such impositions. BP Alaska has
the right to amend or terminate the Prudhoe Bay Unit Agreement, the Prudhoe Bay Unit Operating Agreement and any leases or conveyances with respect to the 1989 Working Interests in the exercise of its reasonable and prudent business judgment without
liability to the Trust. BP Alaska also has the right to sell or assign all or any part of the 1989 Working Interests, so long as the sale or assignment is expressly made subject to the Royalty Interest and the terms and provisions of the Conveyance. The Prudhoe Bay Field The Prudhoe
Bay field is located on the North Slope of Alaska, 250 miles north of the Arctic Circle and 650 miles north of Anchorage. The Prudhoe Bay field extends approximately 12 miles by 27 miles and contains nearly 150,000 gross productive acres.
Approximately 45% of the acreage within the field is subject to the Royalty Interest granted to the Trust by the Conveyance. The Prudhoe Bay field, which was discovered in 1968 by BP and others, has been in production since 1977 and is the largest
producing oil field in North America. As of December 31, 2019, approximately 12.6 billion barrels of oil and condensate had been produced from the Prudhoe Bay field. Field Geology The principal hydrocarbon
accumulations at Prudhoe Bay are in the Ivishak sandstone of the Sadlerochit Group at a depth of approximately 8,700 feet below sea level. The Ivishak is overlain by four minor reservoirs of varying extent which are designated the Put River, Eileen,
Sag River and Shublik (PESS) formations. Underlying the Sadlerochit Group are the oil-bearing Lisburne and Endicott formations. The net production allocated to the Royalty Interest pertains only to
the Ivishak and PESS formations, collectively known as the Prudhoe Bay (Permo-Triassic) Reservoir, and does not pertain to the Lisburne and Endicott formations. The Ivishak sandstone was deposited, commencing some 250 million years ago, during the Permian and Triassic geologic periods. The
sediments in the Ivishak are composed of sandstone, conglomerate and shale which were deposited by a massive braided river and delta system that flowed from an ancient mountain system to the north. Oil was trapped in the Ivishak by a combination of
structural and stratigraphic trapping mechanisms. Gross reservoir thickness is 550 feet, with a maximum oil column thickness of 425 feet.
The original oil column is bounded on the top by a gas-oil contact, originally at 8,575 feet below sea level across the main field, and on the bottom by an oil-water
contact at approximately 9,000 feet below sea level. A layer of heavy oil and tar overlays the oil-water contact in the main field and has an average thickness of around 40 feet. Oil Characteristics The oil produced
from the Prudhoe Bay (Permo-Triassic) Reservoir is a medium grade, low sulfur crude with an average specific gravity of 27 API degrees. The gas cap composition is such that, upon surfacing, a liquid hydrocarbon phase, known as condensate, is formed.  13




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##### Table of Contents

The Royalty Interest is based upon oil produced from the oil rim and condensate produced
from the gas cap, but not upon gas production (which is currently uneconomic on a large scale) or natural gas liquids production stripped from gas produced. Historical Production Production from
the Prudhoe Bay field began on June 19, 1977, with the completion of the Trans-Alaska Pipeline System (TAPS). As of December 31, 2019, there were 1046 active producing oil wells, 31gas reinjection wells, 189 water injection
wells and water and miscible gas injection wells in the Prudhoe Bay field. Production wells drilled in the field during the three years ended December 31, 2019 were: 23 in 2017, 14 in 2018 and 25 in 2019. These include new sidetrack completions
in existing wells. No exploratory drilling activities were conducted in the field during the three-year period. Production from the Prudhoe Bay field reached a peak in 1988 and has declined steadily since then. The average well production rate was
about 170 barrels per day in 2015, 171 barrels per day in 2016, 178 barrels per day in 2017, 166 barrels per day in 2018 and 163 barrels per day in 2019. BP Alaskas share of the hydrocarbon liquids production from the Prudhoe Bay field includes oil, condensate and natural gas liquids.
Using the production allocation procedures from the Prudhoe Bay Unit Operating Agreement, the Prudhoe Bay fields total production and the net share of oil and condensate (net of State of Alaska royalty) allocated to the 1989 Working Interests
have been as follows during the past five years:  Oil


CondensateCalendar
year

Total field


Net to 1989WorkingInterests


Total field


Net to 1989WorkingInterests(thousand barrels per day)2015


196.4



87.1



0.0
(a)


0.02016


197.9



87.8



0.0
(a)


0.02017


188.0



83.4



0.0
(a)


0.02018


174.2



77.3



0.0
(a)


0.02019


170.2



75.5



0.0
(a)


0.0  (a)
Having reached the cumulative condensate limit in June 2014, pursuant to the Issues Resolution Agreement all
condensate produced from the Initial Participating Area (IPA) is now allocated to the Oil Rim IPA for accounting purposes. Collection and Transportation of Prudhoe Bay Oil Raw crude oil produced from individual production wells located at well pads is diverted to flowlines (pipelines). The flowlines transport the
raw crude oil to one of six separation facilities (three on the western side of the Prudhoe Bay Unit and three on the eastern side) where the water and natural gas mixed with the raw crude are removed. The stabilized crude is then sent from the
separation facilities through two 34-inch diameter transit lines, one from each half of the Prudhoe Bay Unit, to Pump Station 1, the starting point for TAPS.  14




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##### Table of Contents

At Pump Station 1, Alyeska Pipeline Service Company, the operator of TAPS, meters the oil
and pumps it in the 48-inch diameter pipeline to Valdez, almost 800 miles (1,288 km) to the south, where it is either loaded onto marine tankers or stored temporarily. It currently takes the oil about 16 days
to make the trip from the Prudhoe Bay Unit to Valdez. TAPS has a mechanical capacity of 2.1 million barrels of oil a day. During 2019, TAPS averaged 490 thousand barrels per day. Following a partial shutdown of the eastern side of the Prudhoe Bay Unit which lasted from August 7 until September 22, 2006, BP
Alaska replaced approximately 16 miles of oil transit lines and has implemented new integrity management and corrosion monitoring practices that supplement or replace the practices that existed in 2006. BP Alaska states that its integrity management
practices meet the requirements of 49 CFR 195.452 for pipeline integrity management in high consequence areas. Reservoir Management The Prudhoe Bay field is a complex, combination-drive reservoir, with widely varying reservoir properties. Reservoir management involves
directing field activities and projects to maximize the economic value of reserves. Several different oil recovery mechanisms are
currently active in the Prudhoe Bay field, including pressure depletion, gravity drainage/gas cap expansion, water flooding and miscible gas flooding. Separate yet integrated reservoir management strategies have been developed for the areas affected
by each of these recovery processes. Reserve Estimates Proved oil reserves attributable to the 1989 Working Interests at December 31, 2019 are those quantities of oil which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from 2020 forward from known reservoirs and under existing economic conditions, operating methods and government regulations. Estimates of
proved reserves are inherently imprecise and subjective and are revised over time as additional data becomes available. Such revisions often may be substantial. BP Alaskas reserve estimates and production assumptions and projections are
predicated upon a reasonable estimate of the allocation of hydrocarbon liquids between oil and condensate according to the procedures of the Prudhoe Bay Unit Operating Agreement. Oil and condensate are physically produced in a commingled stream of
hydrocarbon liquids. The allocation of hydrocarbon liquids between the oil and condensate from the Prudhoe Bay field is a theoretical calculation performed in accordance with procedures specified in the Prudhoe Bay Unit Operating Agreement. Under
the terms of an Issues Resolution Agreement entered into by the Prudhoe Bay Unit owners in October 1990 (the Issuers Resolution Agreement), the allocation procedures were adjusted to generally allocate condensate in a manner which
approximates the anticipated decline in the production of oil until an agreed original condensate reserve of 1,175 million barrels has been allocated to the working interest owners. By letter dated December 19, 2014, BP Alaska advised the Trustee that the portion of the hydrocarbon liquids produced from the initial
participating areas of the Prudhoe Bay Unit being allocated as condensate from the gas cap participating area was found to have reached on June 8, 2014 the agreed original condensate reserve of 1,175 million barrels allocated to the
working interest owners. As a result, the portion of hydrocarbon liquids previously allocated as condensate to the gas cap participating area will be allocated to the oil rim participating area. This event has had the effect of changing the
calculation of the volume of Royalty Production subject to the Royalty Interest because 50.68% of hydrocarbon  15




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##### Table of Contents

liquids allocated to the oil rim participating area7 are counted for the purpose of calculating such volume, but only 13.84% of the
hydrocarbon liquids are allocated to the gas cap participating area for such purpose.8 The end of the allocation to the gas cap participating area on June 8, 2014 meant that volumes of
hydrocarbon liquids subject to the Royalty Interest for the second and third quarters of 2014 were greater than the volumes of Royalty Production initially reported by BP Alaska. The correction to the volumes of Royalty Production and the Royalty
payments with respect to the Royalty Interest for such quarters were made in conjunction with the scheduled Royalty payment in January 2015 for the quarter ended December 31, 2014. See Note 6 of Notes to Financial Statements below. There is no precise method of forecasting the allocation of reserve volumes to the Trust. The Royalty Interest is not a working interest and
the Trust is not entitled to receive any specific volume of reserves from the 1989 Working Interests. The reserve volumes attributable to the 1989 Working Interests are estimated using an allocation of reserve volumes based on estimated future
production and the average WTI Price, and assume no future movement in the Consumer Price Index and no changes to the procedure for calculating Production Taxes. The estimated reserve volumes attributable to the Trust will vary if different
estimates of production, prices and other factors are used. Even if expected reservoir performance does not change, the estimated reserves, economic life, and future revenues attributable to the Trust may change significantly in the future. This may
result from changes in the WTI Price or from changes in other prescribed variables utilized in calculations defined by the Overriding Royalty Conveyance. The reserves attributable to the 1989 Working Interests constitute only a part of the overall reserves in the Prudhoe Bay Unit. BP Alaska has
estimated that the proved reserves allocated to the Trust as of December 31, 2019 were 4.465 million barrels of oil and condensate, of which 4.394 million barrels are proved developed reserves9 and 0.070 million barrels are proved undeveloped reserves10. Proved reserves attributable to the Trust were decreased by approximately
11.308 million barrels during 2019 as a result of the decrease in the West Texas Intermediate price, forecast revisions and capital activities including drilling and well treatments. Additional information regarding changes in estimated
quantities of proved oil and condensate, proved developed reserves and proved undeveloped reserves is found below in Supplemental Reserve Information and Standardized Measure of Discounted Future Net Cash Flow Relating to Proved Reserves
(Unaudited) following the Notes to Financial Statements. In all cases, the volumes are being progressed as a part of an adopted
development plan that calls for drilling of wells over a period of time. BP has a historical record of completing comparable projects. There were no contributions to proved undeveloped reserves from extensions or discoveries during 2019. Based on
the 2019 twelve-month average WTI Price11 of $55.69 per barrel, other economic parameters  7
See note (a) to the table of ownership of the Prudhoe Bay Unit by participating area as of December 31, 2019
above under the caption THE PRUDHOE BAY UNIT and FIELD  Prudhoe Bay Unit Operation and Ownership. 8
See note (b) to the table of ownership of the Prudhoe Bay Unit by participating area as of December 31, 2019
above under the caption THE PRUDHOE BAY UNIT and FIELD  Prudhoe Bay Unit Operation and Ownership. 9
Proved developed reserves are reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well. 10
Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively major expenditure is required for recompletion. 11
The unweighted arithmetic average of the WTI Price on the first day of each month during the year.  16




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##### Table of Contents

prescribed by the Conveyance, and utilizing procedures specified in Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) 932, Extractive Activities
 Oil and Gas, BP Alaska calculated that as of December 31, 2019 production of oil and condensate from the proved reserves allocated to the 1989 Working Interests will result in undiscounted estimated future cash flows to the Trust of
$5.785 million, with a net present value of estimated future cash flows at 10% discount of $5.516 million. The internal
controls applicable to the foregoing estimates of the reserves allocated to the Trust are those employed by BP, which provides the information to the Trustee. BP Alaska has advised the Trustee that BPs vice president of segment reserves is the
petroleum engineer primarily responsible for overseeing the preparation of the reserves estimate. He has 30 years of diversified industry experience managing the governance and compliance of BPs reserves estimation since 2005. He is a past
member of the Society of Petroleum Engineers Oil and Gas Reserves Committee, a sitting member of the American Association of Petroleum Geologists Committee on Resource Evaluation and current chair of the bureau of the United Nations Economic
Commission for Europe Expert Group on Resource Classification. The Trust employs Miller and Lents, Ltd., an international oil and gas consulting firm, to conduct an annual review of BP Alaskas estimates of the proved reserves allocated to the
Trust, estimated future net revenues to the Trust, and the remaining period of economic production from the Prudhoe Bay field attributable to the Trust. All Miller and Lents, Ltd. staff members assigned to the BP Prudhoe Bay Royalty Trust are
licensed professional engineers. Work was supervised by a licensed professional engineer with more than 15 years of experience with the Trust. Acopy of the February 21, 2020 report of Miller and Lents, Ltd.is filed as Exhibit 99
to this report. BP Alaska has undertaken a program of field-wide infrastructure renewal, pipeline replacement, and mechanical
improvements to wells. As a consequence of these activities and their required downtime, and the natural production declines discussed above under Historical Production, BP Alaskas net production of oil and condensate allocated to
the Trust from proved reserves was less than 90,000 barrels per day on an annual basis in 2017, 2018 and 2019. BP Alaska anticipates that its average net production of oil and condensate allocated to the Trust from proved reserves will be below
90,000 barrels per day on an annual average basis in most future years. The occurrence of major gas sales could accelerate the decline in net production, due to the consequent decline in reservoir pressure. See Item 1A, RISK FACTORS. Based on the 2019 twelve-month average WTI Price of $55.69 per barrel, current Production Taxes, and the Chargeable Costs adjusted as
prescribed by the Overriding Royalty Conveyance, it is estimated that royalty payments to the Trust will continue through the year 2020, and would be zero in the following year. Therefore, no proved reserves are currently attributed to the BP
Prudhoe Bay Royalty Trust after that date. Even if expected reservoir performance does not change, the estimated reserves, economic life and future net revenues attributable to the Trust may change significantly in the future. This may result from
sustained periods of change in the WTI Price, the Production Tax or from changes in other prescribed variables utilized in calculations as defined by the Overriding Royalty Conveyance. BP Alaska is under no obligation to make investments in development projects which would add additional
non-proved resources to proved reserves and cannot make such investments without the concurrence of the Prudhoe Bay Unit working interest owners. The Prudhoe Bay Unit working interest owners regularly assess
the technical and economic attractiveness of implementing projects to increase Prudhoe Bay Unit proved reserves. See Item 1A, RISK FACTORS, below.  17




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##### Table of Contents

In the event of changes in BP Alaskas current assumptions, oil and condensate
recoveries may be reduced from the current estimates, unless recovery projects other than those included in the current estimates are implemented. INDUSTRY CONDITIONS AND REGULATIONS The production of oil and gas in Alaska is affected by many state and federal regulations with respect to allowable rates of production,
marketing, environmental matters and pricing. Future regulations could change allowable rates of production or the manner in which oil and gas operations may be lawfully conducted. In general, BP Alaskas oil and gas activities are subject to existing federal, state and local laws and regulations relating to health,
safety, environmental quality and pollution control. BP Alaska believes that the equipment and facilities currently being used in its operations generally comply with the applicable legislation and regulations. During the past few years, numerous
environmental laws and regulations have taken effect at the federal, state and local levels. Oil and gas operations are subject to extensive federal and state regulation and to interruption or termination by governmental authorities due to
ecological and other considerations and in certain circumstances impose absolute liability upon lessees for the cost of cleaning up pollutants and for pollution damages resulting from their operations. Although BP Alaska has advised that the
existence of legislation and regulation has had no material adverse effect on BP Alaskas current method of operations, the effect of future legislation and regulations cannot be predicted. Since the end of 2006, the corrosion monitoring and mitigation practices for the oil transit lines in the Prudhoe Bay Unit have been monitored
and reviewed by the U.S. Department of Transportation (DOT). The construction, testing, and commissioning of the new replacement oil transit lines have been inspected by DOT inspectors. The replacement lines have been constructed and are
operated and maintained in accordance with the requirements of the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 (the PIPES Act). The applicable requirements of the subsequent regulations of the PIPES Act began to
be phased in in 2012. See THE PRUDHOE BAY UNIT AND FIELD  Collection and Transportation of Prudhoe Bay Oil above. CERTAIN TAX CONSIDERATIONS The following is a summary of the principal tax consequences to Unit holders resulting from the
ownership and disposition of Units. The laws and regulations affecting these matters are complex, and are subject to change by future legislation or regulations or new interpretations by the Internal Revenue Service, state taxing authorities or the
courts. In addition, there may be differences of opinion as to the applicability or interpretation of present tax laws and regulations. BP Alaska and the Trust have not requested any rulings from the Internal Revenue Service with respect to the tax
treatment of the Units, and no assurance can be given that the Internal Revenue Service would concur with the statements below. Unit
holders are urged to consult their tax advisors regarding the effects on their specific tax situations of owning and disposing of Units. Federal
Income Tax Classification of the Trust The following discussion assumes that the Trust is properly classified as a grantor trust under current law and is not an association taxable
as a corporation.  18




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##### Table of Contents

General Features of Grantor Trust Taxation A grantor trust is not subject to tax, and its beneficiaries (the Unit holders in the case of the Trust) are considered for tax purposes to own
the assets of the trust directly. The Trust pays no federal income tax but files an information return reporting all items of income or deduction. If a court were to hold that the Trust is an association taxable as a corporation, the Trust would
incur substantial income tax liabilities in addition to its other expenses. Taxation of Unit Holders In computing his federal income tax liability, each Unit holder is required to take into account his share of all items of Trust income, gain,
loss, deduction, credit and tax preference, based on the Unit holders method of accounting. Consequently, it is possible that in any year a Unit holders share of the taxable income of the Trust may exceed the cash actually distributed to
him in that year. For example, if the Trustee should add to the reserve for the payment of Trust liabilities or repay money borrowed to satisfy debts of the Trust, the money used to replenish the reserve or to repay the loan is income to and must be
reported by the Unit holder, even though the money was not distributed to the Unit holder. The Trust makes quarterly distributions to the
persons who held Units of record on each Quarterly Record Date. The terms of the Trust Agreement seek to assure to the extent practicable that income, expenses and deductions attributable to each distribution are reportable by the Unit holder who
receives the distribution. The Trust allocates income and deductions to Unit holders based on record ownership at Quarterly Record Dates.
It is not known whether the Internal Revenue Service will accept the allocation based on this method. Depletion Deductions The owner of an economic interest in producing oil and gas properties is entitled to deduct an allowance for the greater of cost
depletion or (if otherwise allowable) percentage depletion on each such property. A Unit holders deduction for cost depletion in any year is calculated by multiplying the holders adjusted tax basis in his Units (generally his cost less
prior depletion deductions) by Royalty Production during the year and dividing that product by the sum of Royalty Production during the year and estimated remaining Royalty Production as of the end of the year. The allowance for percentage depletion
generally does not apply to interests in proven oil and gas properties that were transferred after December 31, 1974 and prior to October 12, 1990. The Omnibus Budget Reconciliation Act of 1990 repealed this rule for transfers occurring on
or after October 12, 1990. Unit holders who acquired their Units on or after that date may be permitted to deduct an allowance for percentage depletion if such deduction would otherwise exceed the allowable deduction for cost depletion. In
order to take percentage depletion, a Unit holder must qualify for the independent producer exemption contained in section 613A(c) of the Internal Revenue Code of 1986. Percentage depletion is based on the Unit holders gross income
from the Trust rather than on his adjusted basis in his Units. Any deduction for cost depletion or percentage depletion allowable to a Unit holder reduces his adjusted basis in his Units for purposes of computing subsequent depletion or gain or loss
on any subsequent disposition of Units. Unit holders must maintain records of their adjusted basis in their Units, make adjustments for
depletion deductions to such basis, and use the adjusted basis for the computation of gain or loss on the disposition of the Units.  19




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Taxation of Foreign Unit Holders Generally, a holder of Units who is a nonresident alien individual or which is a foreign corporation (a Foreign Taxpayer) is
subject to tax on the gross income produced by the Royalty Interest at a rate equal to 30% (or at a lower treaty rate, if applicable). This tax is withheld by the Trustee and remitted directly to the United States Treasury. A Foreign Taxpayer may
elect to treat the income from the Royalty Interest as effectively connected with the conduct of a United States trade or business under Internal Revenue Code section 871 or section 882, or pursuant to any similar provisions of applicable treaties.
If a Foreign Taxpayer makes this election, it is entitled to claim all deductions with respect to such income, but a United States federal income tax return must be filed to claim such deductions. This election once made is irrevocable unless an
applicable treaty provides otherwise or unless the Secretary of the Treasury consents to a revocation. Section 897 of the Internal
Revenue Code and the Treasury Regulations thereunder treat the Trust as if it were a United States real property holding corporation. Foreign holders owning more than five percent of the outstanding Units are subject to United States federal income
tax on the gain on the disposition of their Units. Foreign Unit holders owning less than five percent of the outstanding Units are not subject to United States federal income tax on the gain on the disposition of their Units, unless they have
elected under Internal Revenue Code section 871 or section 882 to treat the income from the Royalty Interest as effectively connected with the conduct of a United States trade or business. If a Foreign Taxpayer is a corporation which made an election under Internal Revenue Code section 882(d), the corporation would also be
subject to a 30% tax under Internal Revenue Code section 884. This tax is imposed on U.S. branch profits of a foreign corporation that are not reinvested in the U.S. trade or business. This tax is in addition to the tax on effectively connected
income. The branch profits tax may be either reduced or eliminated by treaty. Sale of Units Generally, a Unit holder will realize gain or loss on the sale or exchange of his Units measured by the difference between the amount realized
on the sale or exchange and his adjusted basis for such Units. Gain on the sale of Units by a holder that is not a dealer with respect to such Units will generally be treated as capital gain. However, pursuant to Internal Revenue Code section 1254,
certain depletion deductions claimed with respect to the Units must be recaptured as ordinary income upon sale or disposition of such interest. Backup
Withholding A payor must withhold 24% of any reportable payment if the payee fails to furnish his taxpayer identification number
(TIN) to the payor in the required manner or if the Secretary of the Treasury notifies the payor that the TIN furnished by the payee is incorrect. Unit holders will avoid backup withholding by furnishing their correct TINs to the Trustee
in the form required by law. Widely Held Fixed Investment Trusts The Trustee assumes that some Trust Units are held by a middleman, as such term is broadly defined in the U.S. Treasury Regulations (which
includes custodians, nominees, certain joint owners, and brokers holding an interest for a custodian in street name). Therefore, the Trustee considers the Trust to be a widely held fixed investment trust (WHFIT) for U.S. Federal income
tax purposes. The Bank of New York Mellon Trust Company, N.A. is the representative of the Trust that will provide tax information in accordance with applicable U.S. Treasury Regulations governing the information reporting requirements  20




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of the Trust as a WHFIT. For information contact The Bank of New York Mellon Trust Company, N.A., Global Corporate Trust  Corporate Finance, 601 Travis Street, Floor 16, Houston, TX 77002,
telephone number (713) 483-6020. State Income Taxes Unit holders may be required to report their share of income from the Trust to their state of residence or commercial domicile. However, only
corporate Unit holders will need to report their share of income to the State of Alaska. Alaska does not impose an income tax on individuals or estates and trusts. All Trust income is Alaska source income to corporate Unit holders and should be
reported accordingly. Foreign Account Tax Compliance Act Pursuant to the Foreign Account Tax Compliance Act (commonly referred to as FATCA), distributions from the Trust to foreign
financial institutions and certain other non-financial foreign entities may be subject to U.S. withholding taxes. Specifically, certain withholdable payments (including certain
royalties, interest and other gains or income from U.S. sources) made to a foreign financial institution or non-financial foreign entity will generally be subject to the withholding tax unless the foreign
financial institution or non-financial foreign entity complies with certain information reporting, withholding, identification, certification and related requirements imposed by FATCA. Foreign financial
institutions and non-financial foreign entities located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Foreign Unit holders
are encouraged to consult their own tax advisors regarding the possible implications of these withholding provisions on their investment in Trust Units.  ITEM 1A.
RISK FACTORS Owners of Units are exposed to risks and uncertainties that are particular to their investment.  

Future Royalty Production from the Prudhoe Bay field is projected to decline and will eventually
cease. Volume of production from the 1989 Working Interests varies from quarter to quarter and a decline in production will affect the Trusts revenues. The Prudhoe Bay field has been in production since 1977. Development of the field is largely completed and proved reserves are being depleted.
Production of oil and condensate from the field has been declining during recent years and the decline is expected to continue. As discussed above under the caption THE PRUDHOE BAY UNIT and FIELD  Reserve Estimates, Royalty
payments to the Trust, based on calculations using a 2019 WTI Price of $55.69 per barrel, among other prescribed variables, are projected to cease after 2020.12 Production estimates included in this report are based on economic conditions and production forecasts as of the end of 2019, and also depend
on various assumptions, projections and estimates which are continually revised and updated by BP Alaska. These revisions could result in material changes to the projected declines in production. It is possible that economic production from the
reserves allocated to the 1989 Working Interests could decline more quickly and end sooner than is currently projected. It is
increasingly likely that the Trusts revenues in future periods also will be affected by decreases in production from the 1989 Working Interests. BP Alaskas average net production of oil and condensate allocated to the Trust from proved
reserves was less than 90,000 barrels per day on an annual basis during 2017, 2018 and 2019, and the Trustee has been advised that BP Alaska expects that average net  12
A primary driver of the projected cessation of royalty payments after 2020 is the annual increase in Chargeable
Costs, as adjusted upward by the Cost Adjustment Factor.  21




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production allocated to the Trust from the proved reserves will be less than 90,000 barrels a day on an annual basis in future years. Unit holders thus are subject to the risk that cash
distributions with respect to their Units may vary widely from quarter to quarter.  

The amount and value of reserves attributable to the Trust, the estimated life of the Trust, estimates of
future net revenues and estimates of the present value of future net revenues fluctuate based on the WTI Price, among other factors. WTI Prices may be below the break-even point for daily royalty calculations. As discussed above under THE ROYALTY INTEREST in Item 1, revenues to the Trust are calculated daily by BP
Alaska using the WTI price, production tax, and other variables as prescribed by the Conveyance applicable on that specific day. On January 1, 2020, the break-even WTI price (at which all taxes and prescribed deductions are equal to
the WTI price) was $54.34. The quarterly royalty payment by BP Alaska to the Trust is the sum of the individual revenues calculated each day during the quarter. In the event that one or more daily calculations results in a negative amount, the total
of such daily negative amounts during that calendar quarter would be subtracted from total daily positive amounts during such quarter to determine the royalty payment for such quarter, provided, that in no event will any quarterly royalty payment be
less than zero. The estimated future net revenues and present value of estimated future net revenues reported herein are calculated based
on a single average WTI price, that being the average of 12 WTI values, each value representing the WTI price in effect on the first calendar day of the month for the 12 months prior to January 1, 2020. As a result, any single calculation of a
calendar day will not reflect the value of the dividend paid to the Trust for any quarter, nor will it reflect the estimated future value of the Trust or the estimation of how long royalty payments to the Trust will continue. Based on the 2019 twelve-month average WTI Price of $55.69 per barrel, current Production Taxes, and the Chargeable Costs adjusted as
prescribed by the Overriding Royalty Conveyance, it is estimated that royalty payments to the Trust will continue through 2020 and would be zero in the following year. Therefore, no proved reserves are currently attributed to the BP Prudhoe Bay
Royalty Trust after that date. Even if expected reservoir performance does not change, the estimated reserves, economic life and future net revenues attributable to the Trust may change significantly in the future as a result of sustained periods of
change in the WTI Price, the Production Tax or from changes in other prescribed variables utilized in calculations as defined by the Overriding Royalty Conveyance. Such changes could result in royalty payments going to zero prior to the end of 2020. While energy price forecasts are highly uncertain, the U.S. Energy Information Administration (EIA) forecast in its
Short-Term Energy Outlook (STEO), dated February 11, 2020, that Brent crude oil spot prices will average approximately $61.25 per barrel in 2020 and WTI spot prices will average $55.71 per barrel in 2020. As discussed under THE PRUDHOE
BAY UNIT AND FIELD  Reserve Estimates, the amount and value of reserves attributable to the Trust and the estimated life of the Trust fluctuate based on changes to certain prescribed factors, including the WTI price. WTI prices at the
level forecast by EIA should, subject to the effect of the other prescribed variables, result in positive royalty payments to the Trust, if such prices actually constitute the 2020 twelve-month average WTI Price (that is, the unweighted arithmetic
average of the WTI price on the first day of each month during the year). If the actual 2020 twelve-month average WTI Price is lower than forecast, this could result, subject to the effect of the other prescribed variables, in substantial decreases
in the value and the estimated life of the Trust as calculated for such periods compared to the 2019 calculations set forth under THE PRUDHOE BAY UNIT AND FIELD  Reserve Estimates.  22




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However, future domestic and international events and conditions may produce wide swings in
crude oil prices over relatively short periods of time. Recent moves in crude oil prices have been affected by many factors. These include concerns regarding the spread of the coronavirus (COVID-19) and the
effect that might have on the global economy, changes in demand due to variations in economic activity, increased efficiency, increased demand for other types of fuel, strong production growth, new supplies from tight and shale resources, whether
OPEC and other oil producing nations have been willing to intervene, and the success of such intervention, to stabilize oversupplied crude oil markets by cutting production or to take other measures in order to preserve or expand market share,
shifts in inventory management strategies by international oil companies, conservation measures by consumers, increasing effects of the oil futures market and other unpredictable political, geopolitical, psychological and economic factors, such as
increased tensions between the U.S. and Iran, political unrest in Iran and developments with respect to the Iran nuclear deal, the continuing collapse of Venezuelas oil industry, tensions between North Korea and South Korea and the U.S., the
strength or weakness of the U.S. dollar (the currency in which crude oil is quoted, with crude oil prices, like prices of other commodities priced in dollars, generally moving inversely to the value of the dollar), how the policies of the U.S.
administration may influence oil production and markets, expectations for global economic growth, developments relating to the U.S.-China trade dispute, events relating to the departure of the United Kingdom from the European Union
(Brexit), political turmoil in Libya threatening that countrys oil production and exports, ongoing tensions in other regions of the world and turmoil and volatility in global stock markets. For additional information, see the history of WTI Prices since 1986 published by the U.S. Energy Information Administration at
http://tonto.eia.doe.gov.  

Production from the 1989 Working Interests may be interrupted or discontinued by BP Alaska. BP Alaska has no obligation to continue production from the 1989 Working Interests or to maintain production at any
level and may interrupt or discontinue production at any time. The Trust does not have the right to take over operation of the 1989 Working Interests or share in any operating decisions by BP Alaska concerning the Prudhoe Bay Unit. The operation of
the Prudhoe Bay Unit is subject to normal operating hazards incident to the production and transportation of oil in Alaska. In the event of damage to the infrastructure, facilities and equipment in the Prudhoe Bay field which is covered by
insurance, BP Alaska has no obligation to use insurance proceeds to repair such damage and may elect to retain such proceeds and close damaged areas to production.  

The impact that the sale, if completed, of BPs Alaska assets to Hilcorp Alaska may have on the 1989
Working Interests is currently difficult to determine. As noted in footnote 1 above and in the Trusts
Current Report on Form 8-K dated August 30, 2019, on August 27, 2019, BP plc announced that it had agreed to sell its entire business in Alaska for a total consideration of $5.6 billion to
Hilcorp Alaska, which is an affiliate of Houston-based Hilcorp Energy Company (Hilcorp). Hilcorp is one of the largest privately held oil and natural gas exploration and production companies in the U.S. and is currently the largest
private oil and gas operator in Alaska. According to the press release announcing the sale, the sale will include BPs entire upstream and midstream business in Alaska, including its interest in BP Alaska (which owns all of BPs upstream
oil and gas interest in Alaska (including oil and gas leases in the Prudhoe Bay field)) and BP Pipelines (Alaska) Inc.s interest in the Trans-Alaska Pipeline System (TAPS). Also according to the press release, the transaction, subject to state
and federal regulatory approval, is expected to be completed in 2020. Hilcorp Alaska, whose headquarters are in Anchorage, employs more than 500 full-time employees in Alaska.  23




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Hilcorp has been operating in Alaska since 2012. In 2014, the company purchased BPs
interests in the Endicott and North Star fields and half of BPs interests in the Milne Point and Liberty fields. Because Hilcorp is closely held there is less information publicly available regarding its finances than there is for publicly
owned entities such as Exxon Mobil, BP and ConocoPhillips, that have been major North Slope producers. Royalty payments by BP
Alaska to the Trust are unpredictable, because they depend on Cushing, Oklahoma WTI spot prices, which, like crude oil prices in general, are subject to volatility. WTI prices, like prices in the global crude oil market generally, are subject to periodic fluctuations and significant volatility. Volatility
in recent years has resulted from factors such as increased U.S. shale oil production13, OPECs resistance to raising crude oil prices in order not to lose market share to U.S. producers, the
increased strength of the dollar14, slowing global demand for crude oil and a variety of geopolitical events. The impact of such geopolitical events on crude oil prices was evident from a number
of incidents in 2019, such as production outages in Libya, attacks on oil tankers in the Persian Gulf and the Red Sea, the September 2019 drone and missile attack on Saudi Arabias energy infrastructure and heightened tensions between the
United States and Iran, which contributed to spikes in crude oil prices during 2019. Despite these occasional sudden price increases, however, the average 2019 closing prices of two of the worlds major benchmark crudes, Brent and WTI15, declined by approximately $7 a barrel (although the closing price at year end for each benchmark was actually higher than at the end of 2018), as production by the U.S. and other producers outside
of OPEC Plus (OPEC and ten other oil producing countries led by Russia) continued to grow. In its February STEO, EIA forecast
that Brent spot prices will average $61.25 per barrel in 2020 and $67.53 per barrel in 2021 and WTI crude oil prices will average about $55.71 per barrel in 2020 and $62.03 per barrel in 2021. EIA anticipates that increases in crude oil production
in the United States will be offset in part by decreased production elsewhere, particularly in OPEC. With respect to global oil consumption, EIAs forecast was revised down in its February STEO from its January forecast largely as a result of
the outbreak of the coronavirus, with EIA noting that the magnitude and duration of the coronaviruss effects remain highly uncertain. EIAs supply and demand forecast in general for 2020 is subject to significant uncertainty and actual
results or changes in market expectations regarding supply and demand could cause significant price fluctuations in 2020. Forecasts
regarding WTI generally take into account whether pipeline capacity from production areas in West Texas and from Cushing, Oklahoma to refineries and export terminals on the U.S. Gulf Coast will continue to be adequate. EIA expects that new capacity
to carry crude oil from West Texas to the Gulf Coast will go into operation and will reduce distribution bottlenecks throughout Texas and Oklahoma that have resulted from the tremendous growth in shale oil production from the Permian Basin and other
producing regions.   13
In 2018, the U.S. became the worlds largest producer of crude oil. 14
The U.S. dollar is the currency in which crude oil is quoted. Crude oil prices, like prices of other
commodities priced in dollars, generally moves inversely to the value of the dollar. 15
While Brent and WTI prices generally track each other, there have been divergences due to issues such as
imbalances in supply and demand or geopolitical events. In 2015, a surge in production in U.S. shale oil led to a shortage of pipeline capacity which limited the ability to move the oil from production areas to and from Cushing and to Gulf Coast
refineries and ports. This resulted in a fall in WTI prices relative to Brent and large increases in the spread between Brent and WTI prices.  24




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As a result of the increase in production in the Permian Basin, many producers of such crude
have in the past had difficulty accessing the means for transporting their crude oil to market. In response to this situation, a number of major oil pipeline projects started service in 2019 bringing crude oil out of the Permian Basin. In August
2019, Plains All American Pipelines Cactus II went into service, with a total capacity of 670,000 barrels per day. The Cactus II carries crude oil form the Permian Basin to the Corpus Christi area. Shortly after Cactus II began operation, Epic
Midstream LLC announced that it had started temporarily transporting crude oil via its EPIC Y-Grade natural gas liquids pipeline. The Y-Grade pipeline will transport up
to 400,000 barrels per day from the Permian Basin to terminals in Corpus Christi and Ingleside, Texas. Epic Midstreams permanent crude oil pipeline, the EPIC Crude Oil Pipeline, which runs from Orla, Texas to Corpus Christi, is expected to be
completed in the first quarter of 2020. This pipeline is anticipated to have an initial capacity of 600,000 barrels per day with volume expected to increase during the first quarter of 2020. The EPIC Crude Oil Pipeline will service the Permian and
Eagle Ford Basins. In addition, Energy Transfer LPs Permian Express 4 pipeline went into operation in October 2019. This pipeline added 120,000 barrel per day capacity to Energy Transfers Permian express pipeline system. Also, in
November 2019, initial service began on Phillips 66s Gray Oak pipeline that runs from the Permian Basin to Corpus Christi. The Gray Oak pipeline will have a capacity of 900,000 barrels per day and is expected to be in full service in the first
quarter of 2020. Because of these new projects, it is now expected that the Permian Basin will actually have a surplus of pipeline capacity by the end of 2020. In addition, in October 2019, Enterprise Products Partners L.P. announced a further expansion of its pipeline system to connect its storage
facility in Midland, Texas through its Eagle Ford system in South Texas to its ECHO Terminal in Houston. This pipeline will have an initial capacity of 450,000 barrels per day and can be expanded up to 540,000 barrels per day. The pipeline is
expected to begin service in the first half of 2021. This expansion will also enable Enterprise to take advantage of the versatility of its 200,000 barrel per day Seminole Red pipeline, which can carry either crude oil or natural gas liquid
(NGL). Also in 2019, in response to demand for crude oil pipeline capacity from Midland to the Houston market, Enterprise converted its Seminole Red pipeline from mixed NGL to crude oil service, although Enterprise currently expects to
convert the Seminole Red pipeline back into NGL service during the second half of 2021. This new network of pipelines is expected to help
U.S. producers avoid previous bottlenecks and deliver more crude oil to Gulf Coast refineries and to Texas ports for export and could help U.S. crude compete more efficiently with waterborne crudes like Brent. While these new pipeline systems are helping to move crude oil to the Gulf Coast, Cushing, Oklahoma continues to be an essential U.S. crude
oil hub. Crude oil arrives at Cushing from various production areas and is distributed to refineries in the Midwest and Mid-continent and to refineries and ports along the Gulf Coast. Pipeline capacity into
and out of Cushing has expanded significantly in recent years and continues to increase. In November 2018, Plains All American Pipeline LP announced that the expanded Sunrise Pipeline oil system from the Permian basin to Cushing was placed into
service. The expanded Sunrise Pipeline currently transports approximately 500,000 barrels per day from Midland to Colorado City and Wichita Falls, Texas, and provides connections to Cushing. Also, the Saddlehorn pipeline, completed in 2016, which
runs from Carr, Colorado to Platteville, Colorado, where it links up with the Grand Mesa Oil Pipeline, is currently capable of transporting 190,000 barrels per day to storage facilities in Cushing. In addition, the Matador pipeline, which runs 38
miles from Adams County, Colorado to the Saddlehorn terminal in Platteville Colorado for ultimate delivery to Cushing, is also currently under development and is expected have an initial capacity of 220,000 barrels per day. Tallgrass Energy, LP
(Tallgrass) also plans an expansion project for its Pony Express Pipeline. Once in service, this project is expected to increase capacity to move crude oil from the Bakken and Powder Rivers Basins to Cushing.  25




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It was expected that even more crude oil would flow into Cushing following the approval by
the Trump administration in January 2017 of a permit allowing TransCanada Corp. (now TC Energy) to build the controversial Keystone XL pipeline and the approval by the Nebraska Public Service Commission of a new route for the pipeline in November
2017. Nebraska was the only state that had not yet approved the route of the pipeline. However, on November 8, 2018, a U.S. federal district court judge in Montana ordered a temporary halt to construction of the Keystone XL pipeline and ordered
the U.S. Department of State to conduct a supplemental environmental impact statement. On appeal, the 9th U.S. Circuit Court of Appeals vacated the lower court ruling in June 2019 and in August 2019 Nebraskas highest court upheld the earlier
decision by the Nebraska Public Service Commission to approve the route through Nebraska. TC Energy forecasts that upon completion the Keystone XL will eventually carry up to 830,000 barrels of oil per day. While Cushing has occasionally become oversupplied due to new oil flows from Canada and the United States and lack of takeaway capacity, these
transportation problems appear to have been largely resolved as a result of measures such as the 2012 reversal of the direction of the Seaway crude oil pipeline; the 2014 opening of the Seaway Twin pipeline running parallel to the
reversed Seaway pipeline; the 2014 start of operations of the Cushing MarketLink phase of the Keystone pipeline, which starts at Cushing, then runs south to terminals in Nederland, Texas near refineries located in the Port Arthur, Texas area; the
2017 start of operations of the Houston Lateral, which carries crude oil from the MarketLink pipeline in Liberty County, Texas, to refineries and terminals in the Houston area; and the December 2017 start of operations of the Plains All American and
Valero Diamond Pipeline connecting Cushing to Valeros refinery in Memphis, Tennessee. In addition to these measures, there are
currently six pipeline projects proposed to transport approximately two million barrels per day of crude away from Cushing by the end of 2021. For example, in August 2018, Tallgrass announced that it plans to develop a new crude oil pipeline, known
as the Seahorse Pipeline, from Cushing to the refining complex located in St. James, Louisiana. The approximately 700-mile-long pipeline is expected to transport up to 800,000 barrels of crude oil per day from
Cushing to the Louisiana Gulf Coast. This pipeline is expected to start operations in the third quarter of 2021. Another potential project that might help prevent future Cushing bottlenecks is the Capline reversal project. Capline currently
transports crude oil from St. James, Louisiana, to Patoka, Illinois. Although Capline does not connect to Cushing, it could divert crude oil that would otherwise flow through Cushing. In addition to the effect that a reduction in transportation bottlenecks has had on the Brent-WTI
spread, the spread between the Brent price and the price of U.S. domestic crude production has also been affected by the 2015 lifting of the U.S. ban on crude oil exports introduced in the 1970s. U.S. oil exports began to rise soon after the
ban was lifted. This provided an outlet for U.S. oil and has helped to limit oversupplies of inventory. In November 2019, EIA reported that the U.S. exported an all-time high of 12.8 million barrels per
day of oil production in that month and that in September 2019, the U.S. exported more petroleum products than it imported in a one-month period for the first time since EIA began keeping records in 1949.
Moreover, EIA reported that in 2019 the U.S. briefly surpassed Saudi Arabia and Russia to become the worlds largest oil exporter.  26




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

The amount and value of reserves attributable to the Trust, the estimated life of the Trust, estimates of
future net revenues and estimates of the present value of future net revenues fluctuate based on the WTI Price, among other factors. WTI Prices may be below the break-even point for daily royalty calculations. As discussed above under THE ROYALTY INTEREST in Item 1, revenues to the Trust are calculated daily by BP
Alaska using the WTI price, production tax, and other variables as prescribed by the Conveyance applicable on that specific day. On January 1, 2020, the break-even WTI price (at which all taxes and prescribed deductions are equal to
the WTI price) was $54.34.16 The quarterly royalty payment by BP Alaska to the Trust is the sum of the individual revenues calculated each day during the quarter. In the event that one or more
daily calculations results in a negative amount, the total of such daily negative amounts during that calendar quarter would be subtracted from total daily positive amounts during such quarter to determine the royalty payment for such quarter,
provided, that in no event will any quarterly royalty payment be less than zero. The estimated future net revenues and present value of
estimated future net revenues reported herein are calculated based on a single average WTI price, that being the average of 12 WTI values, each value representing the WTI price in effect on the first calendar day of the month for the 12 months prior
to January 1, 2020. As a result, any single calculation of a calendar day will not reflect the value of the dividend paid to the Trust for any quarter, nor will it reflect the estimated future value of the Trust or the estimation of how long
royalty payments to the Trust will continue. Based on the 2019 twelve-month average WTI Price of $55.69 per barrel, current Production
Taxes, and the Chargeable Costs adjusted as prescribed by the Overriding Royalty Conveyance, it is estimated that royalty payments to the Trust will continue through the year 2020, and would be zero in the following year. Therefore, no proved
reserves are currently attributed to the BP Prudhoe Bay Royalty Trust after that date. Even if expected reservoir performance does not change, the estimated reserves, economic life and future net revenues attributable to the Trust may change
significantly in the future as a result of sustained periods of change in the WTI Price, the Production Tax or from changes in other prescribed variables utilized in calculations as defined by the Overriding Royalty Conveyance. Such changes could
result in the termination of royalty payments prior to the end of 2020. While energy price forecasts are highly uncertain, EIA, as noted
above, forecasts that Brent crude oil spot prices will average approximately $61.25 per barrel in 2020 and WTI spot prices will average $55.71 per barrel in 2020. As discussed under THE PRUDHOE BAY UNIT AND FIELD  Reserve
Estimates, the amount and value of reserves attributable to the Trust and the estimated life of the Trust fluctuate based on changes to certain prescribed factors, including the WTI price. WTI prices at the level forecast by EIA should,
subject to the effect of the other prescribed variables, result in positive royalty payments to the Trust, if such prices actually constitute the 2020 twelve-month average WTI Price (that is, the unweighted arithmetic average of the WTI price on the
first day of each month during the year). If the actual 2020 twelve-month average WTI Price is lower than forecast, this could result, subject to the effect of the other prescribed variables, in substantial decreases in the value and the estimated
life of the Trust as calculated for such periods compared to the 2019 calculations set forth under THE PRUDHOE BAY UNIT AND FIELD  Reserve Estimates. However, as previously noted, future domestic and international events and
conditions may produce wide swings in crude oil prices over relatively short periods of time. It is increasingly likely that the
Trusts revenues in future periods also will be affected by decreases in production from the 1989 Working Interests. BP Alaskas average net production of oil and condensate  16
The fixed Chargeable Cost increases specified in the Conveyance will impact the break-even price in
future years.  27




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allocated to the Trust from proved reserves was less than 90,000 barrels per day on an annual basis during 2017, 2018 and 2019, and the Trustee has been advised that BP Alaska expects that
average net production allocated to the Trust from the proved reserves will be less than 90,000 barrels a day on an annual basis in future years. Unit holders thus are subject to the risk that cash distributions with respect to their Units may vary
widely from quarter to quarter.  

Prudhoe Bay field oil production could be shut in partially or entirely from time to time as a result of
damage to or failures of field pipelines or equipment. In August 2006, BP Alaska shut down the eastern side of
the Prudhoe Bay Unit following the discovery of unexpectedly severe corrosion and a small spill from the oil transit line on that side of the Unit. Earlier, in March of 2006, BP had to temporarily shut down and commence the replacement of a
three-mile segment of transit line on the western side of the Prudhoe Bay Unit following discovery of a large oil spill. BP Alaska
completely replaced approximately 16 miles of transit lines on the eastern and western sides of the Prudhoe Bay Unit and has implemented federally-required corrosion monitoring practices. However, the discovery of additional defects in Prudhoe Bay
Unit oil flowlines and transit lines, and damage to or failures of separation facilities or other critical equipment, could result in future shutdowns of oil production from all or portions of the Prudhoe Bay Unit and have an adverse effect on
future royalty payments.  

Oil production from the Prudhoe Bay Unit could be interrupted by damage to the Trans-Alaska Pipeline System
from natural causes, accidents, deliberate attacks or declining oil flows. The Trans-Alaska Pipeline System
connects the North Slope oil fields to the southern port of Valdez, almost 800 miles away. It is the only way that oil can be transported from the North Slope to market. The pipeline system crosses three mountain ranges, many rivers and streams and
thaw-sensitive permafrost. It is susceptible along its length to damage from earthquakes, forest fires and other natural disasters. The pipeline system also is vulnerable to failures of pipeline segments and pumping equipment, accidental damage and
deliberate attacks. Recently, the pipeline has become susceptible to damage resulting from declining flows of oil from the North Slope. Slower flows cause the temperature of the oil in the pipeline to cool faster, increasing the rate of deposit of
wax, which coats pipe walls, hides corrosion and clogs sensors on smart pigs sent through the pipeline to detect it. Even lower flow rates projected in the future may lead to internal damage caused by ice formation within the pipe and external
damage from frost heaves under buried segments. Major upgrades to the pipeline may be required to counteract the effects of cooler oil temperature. If the pipeline or its pumping stations should suffer major damage from natural or man-made causes, production from the Prudhoe Bay Unit could be shut in until the pipeline system can be repaired and restarted. Royalty payments to the Trust could be halted or reduced by a material amount as a
result of interruption to production from the Prudhoe Bay Unit. In January 2011, TAPS was shut down over two periods of several days each
as a result of the discovery of a leak of crude oil in the basement of a booster pump building at Pump Station No. 1. See THE PRUDHOE BAY UNIT AND FIELD  Collection and Transportation of Prudhoe Bay Oil in Item 1 for
additional information. On November 30, 2018, TAPS was shut down for 7 hours as a precaution after a 7.0 magnitude earthquake struck
the region. No damages to TAPS were reported and it was brought back online after Alyeska Pipeline Service Company, the operator of TAPS, determined it was operationally safe to restart the system.  28




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##### Table of Contents

As noted above, without more crude oil to be transported by TAPS, slower flows and freezing
temperatures could eventually force the closure of the pipeline, making it impossible to transport oil from the North Slope to market. In 2019, the pipelines average throughput decreased by approximately 18,000 barrels per day compared to
2018. This amounted to a 3.7 percent decrease. The 2019 throughput was the pipelines lowest annual daily average. 2019 was the second consecutive year of decreased throughput following two consecutive years of increases in 2016 and 2017.
The 2016 and 2017 increases have been attributed to a combination of factors, such as better than expected performance from newer oil fields west of Prudhoe Bay, such as ConocoPhillips CD-5 development
on the North Slope in the Colville River Unit (part of the Alpine Field and the first commercial oil development on Alaska Native lands within the boundaries of the National Petroleum Reserve-Alaska (NPRA) as discussed below) and the
ability of oil companies to produce oil from mature fields like Prudhoe Bay more efficiently. Nevertheless, throughput for the last three years has averaged only 509,001 barrels per day. The pipeline was designed to carry much higher volumes of
oil. In 2011, a study by Alyeska raised questions as to whether TAPS could continue in operation below a throughput level of approximately 300,000 barrels per day. A 2018 update of the 2011 low flow study details steps Alyeska is taking or plans to
take  such as adding heat to maintain crude oil temperature within operating parameters - to mitigate the problems associated with slower oil flow through the pipeline. The EIA, which has forecast continued declining production from the North
Slope, has also noted that considerable investment could be required to keep TAPS operational if throughput goes below 350,000 barrels per day. Alaskas Department of Revenue has also forecast that Alaska North Slope oil production will decline to an average of 492,000 barrels per
day in the fiscal year that ends June 30, 2020, which is down from the 494,900 barrels per day produced in fiscal 2019. Production is expected to decline further through 2024 before subsequently increasing to 494,500 barrels per day by 2029, as
recent discoveries in the North Slope begin production. Among such discoveries is the oil in Smith Bay on Alaskas northern coast
announced by Caelus Energy LLC in October 2016. Smith Bay is expected to hold between 1.8 and 2.4 billion barrels of recoverable reserves. In March of 2017, a partnership between Spanish oil company Repsol and its U.S. partner, Armstrong Energy
announced a significant oil discovery in a well known as Horseshoe in the Nanushuk formation located across the central and western portion of the North Slope. This discovery is near where Repsol-Armstrong had already found oil in 2014 and 2015 in a
project known as the Pikka Unit. First production from the Pikka Unit is expected to begin by 2023 and is estimated to produce up to 120,000 barrels per day. Also in January 2017, ConocoPhillips announced a new oil discovery, known as Willow,
located in the Greater Mooses Tooth Unit on ConocoPhillips leases in the northeastern portion of NPRA. According to ConocoPhillips, Willow could produce up to 130,000 barrels of oil per day, with production likely to begin in 2026. In
addition, production at ConocoPhillips CD-5 development reached 37,000 barrels of oil per day in 2018, more than originally projected. ConocoPhillips also announced in October 2018 that it had begun
production at its Greater Mooses Tooth 1 field (GMT1), which was the first development on federal lands in the NPRA. The field is projected to eventually produce up to 38,000 barrels per day. In October 2018, the Bureau of Land
Management and the U.S. Army Corps of Engineers issued a Joint Record of Decision approving ConocoPhillips Greater Mooses Tooth 2 project (GMT2). GMT2 is located about 8 miles west of GMT1 in the NPRA and is expected to produce up
to 35,000 to 40,000 barrels per day. The Horseshoe, Willow, Smith Bay and GMT discoveries are all located in the Nanushuk formation or the related Torok formation. Another potential source of crude oil in Alaska lies in the 19 million acres of the Arctic National Wildlife Refuge (ANWR).
It is estimated that a 1.5-million-acre part of the coastal plain of ANWR known as the 1002 area contains 11.8 billion barrels of potentially recoverable crude oil. A 40-year-old ban on energy development in the ANWR was removed when the Tax Cuts and Jobs Act (the TCJA) was enacted in December 2017. The TCJA includes a provision
that permits oil exploration and drilling  29




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##### Table of Contents

in the 1002 area. An administration plan to hold an oil and gas lease sale in the ANWR before the end of 2019 did not take place because of certain procedural delays. The Trump administration
also announced in January 2018 that it would allow new offshore oil and gas drilling in nearly all United States coastal waters, including the Arctic Ocean. However, in March 2019, a U.S District Court judge for the District of Alaska ruled that the
executive order that removed the ban on oil and gas drilling in the Arctic Ocean and parts of the North Atlantic coast was unlawful. Construction of a gas pipeline from the North Slope of Alaska could accelerate the decline in Royalty Production from the Prudhoe Bay
field. The construction of a natural gas pipeline to bring natural gas from the North Slope could make it economical to extract
natural gas from the Prudhoe Bay field and transport it to market. Currently, natural gas released by pumping oil is reinjected into the ground, which helps to maintain reservoir pressure and facilitates extraction of oil from the field. Extraction
of natural gas from the Prudhoe Bay field would lower reservoir pressure, although carbon dioxide stripped out of the gas could be reinjected and other methods could be employed to mitigate the reduction. The lowering of the reservoir pressure could
accelerate the decline in production from the 1989 Working Interests and the time at which royalty payments to the Trust would cease. Since the Trust is not entitled to any royalty payments with respect to natural gas production from the 1989
Working Interests, the Unit holders would not realize any offsetting benefit from natural gas production from the Prudhoe Bay field. It
has long been considered that without a pipeline, extraction of natural gas from the Prudhoe Bay field on a large scale would not be economical. In October 2012, ExxonMobil, ConocoPhillips, BP and Calgary-based TransCanada Corporation
(TransCanada) notified the Alaska Governor that they had agreed on a plan to combine what were once two competing natural gas pipeline projects destined for the continental U.S. into one project focused on export markets. This project
contemplated building an 800-mile natural gas pipeline from the North Slope to a port on the southern coast of Alaska from which liquified natural gas (LNG) would be exported to Asia. It was
contemplated that the project would also include natural gas processing facilities and a natural-gas export terminal. In January 2014, it was announced that the state of Alaska would pursue becoming an equity partner in the Alaska natural gas pipeline project
and that ExxonMobil, BP, ConocoPhillips, TransCanada, Alaska Gasline Development Corporation (AGDC), and Alaskas commissioners of natural resources and revenue had signed a heads of agreement (HOA) for the Alaska LNG
Project. At the end of 2016, it was announced that AGDC had concluded agreements with ExxonMobil, BP and ConocoPhillips to take over the leadership position in the Alaska LNG project. The Alaska LNG project, which AGDC has stated may cost
approximately $43 billion, is currently in the federal regulatory phase. It is possible that FERC commissioners may vote on the project in early June 2020. Unlike the Alaska LNG project, and inspired by Russias Yamal LNG, a new company, Qilak LNG, would forego transporting LNG via pipeline
and proposes to ship LNG from the North Slope to Asian markets on ice-breaking tankers from Point Thomson. A feasibility study is scheduled to begin in 2020 with a final investing decision possible in 2021 or
2022. It is anticipated that shipments of LNG could start in the mid-2020s. The effect of
any changes to the Alaska Production Tax Statutes on Per Barrel Royalty and Royalty Production from the Prudhoe Bay field is unpredictable. As noted (see THE ROYALTY INTEREST  Production Taxes in Item 1 above), Alaskas Production Tax Statutes affect the
calculation of the Per Barrel Royalty. Among other changes to the Production Tax Statutes, the 2013 amendments added a stair-step per-barrel tax credit for oil production,  30




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##### Table of Contents

provided that a producers tax liability may not be reduced below the minimum tax. Since going into effect on January 1, 2014, the 2013 amendments had the effect of reducing
Production Taxes imposed on Royalty Production. Moreover, as a result of the low oil price environment that began in mid-2014, Royalty Production has been subject to the minimum tax under the Production Tax
Statutes since the first quarter of 2015. The reduction in Production Taxes has in part offset the reduction in royalty payments that resulted from declining WTI prices. Any changes to the Production Tax Statutes in the future may also impact the amount of Production Taxes and, in turn, the amount of royalty
payments. Whether or when any such changes may occur and the effect any such changes may have on the Per Barrel Royalty is unpredictable.17 The Production Tax Statutes can also have an impact on Royalty Production from the Prudhoe Bay field. For example, the 2007 amendments to the
Production Tax Statutes (see THE ROYALTY INTEREST  Production Taxes in Item 1 above) may have accelerated the decline in production of oil and condensate from the Prudhoe Bay field to the extent that it caused BP Alaska and the
other owners of working interests in the Prudhoe Bay Unit to reduce or defer investment in oil production infrastructure renewal, well development and implementation of new technology due to uncompetitive returns on investment in Alaska. The 2007
amendments, in addition to increasing the basic oil production tax rate and the progressivity factor, also eliminated or reduced many deductions and credits permitted under the 2006 amendments to the Production Tax Statutes. Due in part to the 2007
amendments, BP Alaskas spending on production adding activity, adjusted for inflation, was flat to declining from 2008 through 2012. As noted under THE ROYALTY INTEREST  Production Taxes in Item 1 above, the 2013 amendments
to the Production Tax Statutes were intended to encourage oil production and investment in Alaskas oil industry by eliminating the monthly progressivity tax rate implemented by 2006 and 2007 amendments and adding a stair-step per-barrel tax credit for oil production. Due to the low oil price environment that has prevailed for much of the time since the 2013 amendments went into effect, and since the Prudhoe Bay field is a mature field,
the impact of the 2013 amendments in terms of encouraging oil production and investment with respect to the Prudhoe Bay field is uncertain. However, it has been suggested that the 2013 amendments to the Production Tax Statutes provided the impetus
for the series of recent Alaska oil discoveries discussed above.  

There are potential conflicts of interest between BP Alaska and the Trust that could affect
the royalties paid to Unit holders. The interests of BP Alaska and the Trust with respect to the Prudhoe Bay
Unit could at times be different. The Per Barrel Royalty that BP Alaska pays to the Trust is based on the WTI Price, Chargeable Costs and Production Taxes, all of which are amounts contractually defined in the Conveyance. The WTI Price does not
necessarily correspond to the actual price realized by BP Alaska for crude oil produced from the 1989 Working Interests, and Chargeable Costs and Production Taxes may not bear any relation to BP Alaskas actual costs of production and tax
expenses. The actual per barrel profit realized by BP Alaska on the Royalty Production may differ materially from the Per Barrel Royalty that it is required to pay to the Trust. It is possible under certain circumstances that the relationship
between BP Alaskas actual per barrel revenues and costs could be such that BP Alaska might determine to interrupt or discontinue production in whole or in part from the 1989 Working Interests even though a Per Barrel Royalty might otherwise be
payable to the Trust under the Conveyance.  17
A citizens ballot initiative that would raise production taxes on Alaska legacy fields, including
Prudhoe, is on the brink of passing the threshold needed to get the initiative before Alaska voters. Depending on when the current Alaska Legislature session ends, the ballot initiative would appear on either the August Primary Election ballot or
the November General Election ballot. The proposed ballot measure would raise production taxes by over 300%.  31




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##### Table of Contents

ITEM 1B.
UNRESOLVED STAFF COMMENTS The Trust has not received any written comments from the staff of the Securities and Exchange Commission regarding its periodic or current
reports under the Securities Exchange Act of 1934 (the Exchange Act) that remain unresolved.  ITEM 2.
PROPERTIES Reference is made to Item 1 for the information required by this item.  ITEM 3.
LEGAL PROCEEDINGS None  ITEM 4.
MINE SAFETY DISCLOSURE Not applicable. PART II  ITEM 5.
MARKET FOR REGISTRANTS UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF UNITS The Units are listed and traded on the New York Stock Exchange under the symbol BPT. The following table shows the
high and low sales prices per Unit on the New York Stock Exchange and the cash distributions paid per Unit, for each calendar quarter in the two years ended December 31, 2019.  High


Low


DistributionsPer Unit2018:First Quarter

$
27.95


$
19.25


$
1.230Second Quarter


31.80



20.85



1.275Third Quarter


34.60



26.75



1.408Fourth Quarter


37.23



17.00



1.3802019:First Quarter

$
28.00


$
19.63


$
1.003Second Quarter


28.19



14.43



0.345Third Quarter


16.58



7.30



0.551Fourth Quarter


9.38



5.60



0.335 As of February 17, 2020, 21,400,000 Units were outstanding and were held by 238 holders of record. No
Units were purchased by the Trust or any affiliated purchaser during the year ended December 31, 2019. Future payments of cash
distributions are dependent on such factors as prevailing WTI Prices, the relationship of the rate of change in the WTI Price to the rate of change in the Consumer Price Index, the Chargeable Costs, the rates of Production Taxes prevailing from time
to time, and the actual Royalty Production from the 1989 Working Interests. See THE ROYALTY INTEREST in Item 1.  32




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##### Table of Contents

ITEM 6.
SELECTED FINANCIAL DATA The following table presents in summary form selected financial information regarding the Trust.  Year ended December 312019


2018


2017


2016


2015(in thousands, except per Unit amounts)Royalty revenues

$
48,972


$
114,369


$
78,193


$
44,917


$
126,781Interest income


35



34



11



2



Trust administration expenses

$
(1,085
)

$
(1,121
)

$
(1,165
)

$
(1,298
)

$
(1,320
)Cash earnings

$
47,922


$
113,282


$
77,039


$
43,621


$
125,461Cash distributions

$
47,802


$
113,263


$
77,031


$
43,619


$
125,461Cash distributions per unit

$
2.234


$
5.293


$
3.600


$
2.038


$
5.8632019


2018


2017


2016


2015Trust corpus

$
898


$
692


$
785


$
786


$
750Total assets

$
1,151


$
1,031


$
1,012


$
1,004


$
1,002Units outstanding


21,400,000



21,400,000



21,400,000



21,400,000



21,400,000  ITEM 7.
TRUSTEES DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Trust is a passive entity. The Trustees activities are limited to collecting and distributing the revenues from the Royalty Interest
and paying liabilities and expenses of the Trust. Generally, the Trust has no source of liquidity and no capital resources other than the revenue attributable to the Royalty Interest that it receives from time to time. See the discussion under
THE ROYALTY INTEREST in Item 1 for a description of the calculation of the Per Barrel Royalty, and the discussion under THE PRUDHOE BAY UNIT AND FIELD  Reserve Estimates in Item 1 for information concerning the
estimated future net revenues of the Trust. However, the Trust Agreement gives the Trustee power to borrow, establish a cash reserve, or dispose of all or part of the Trust property under limited circumstances. See the discussion under THE
TRUST  Sales of Royalty Interest; Borrowings and Reserves in Item 1. Since 1999, the Trustee has maintained a $1,000,000 cash
reserve to provide liquidity to the Trust during any future periods in which the Trust does not receive a distribution. As noted above under THE TRUST  Sales of Royalty Interest; Borrowings and Reserves, on December 19, 2018,
the Trust issued a press release to announce that the Trustee had determined to gradually increase the Trustees existing cash reserve for the payment of future expenses and liabilities of the Trust, as permitted by the Trust  33




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##### Table of Contents

Agreement. Commencing with the distribution to Unit holders payable in April, 2019, the Trustee began withholding the greater of $33,750 or 0.17% of the funds otherwise available for distribution
each quarter to gradually increase existing cash reserves by a total of approximately $270,000. The Trustee may increase or decrease the targeted amount at any time, and may increase or decrease the rate at which it is withholding funds to build the
cash reserve at any time, without advance notice to the Unit holders. Cash held in reserve will be invested as required by the Trust Agreement. Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known,
anticipated or contingent expenses or liabilities eventually will be distributed to Unit holders, together with interest earned on the funds. The Trustee will draw funds from the cash reserve account during any quarter in which the quarterly distribution received by the Trust does
not exceed the liabilities and expenses of the Trust, and will replenish the reserve from future quarterly distributions, if any. The Trustee anticipates that it will keep this cash reserve program in place until termination of the Trust. The Trust
believes current cash reserves are sufficient to pay approximately one years current and expected liabilities of the Trust, given that, if the current WTI pricing environment continues through 2020, the Trust may not receive royalty payments
during the remaining quarters of 2020. Amounts set aside for the cash reserve are invested by the Trustee in U.S. government or agency
securities secured by the full faith and credit of the United States, or mutual funds investing in such securities. Results of Operations Relatively modest changes in oil prices significantly affect the Trusts revenues and results of operations. Crude oil prices are subject
to significant changes in response to fluctuations in the domestic and world supply and demand and other market conditions as well as the world political situation as it affects OPEC and other producing countries. The effect of changing economic
conditions on the demand and supply for energy throughout the world and future prices of oil cannot be accurately projected. Royalty
revenues are generally received on the Quarterly Record Date (generally the fifteenth day of the month) following the end of the calendar quarter in which the related Royalty Production occurred. The Trustee, to the extent possible, pays all
expenses of the Trust for each quarter on the Quarterly Record Date on which the revenues for the quarter are received. For the statement of cash earnings and distributions, revenues and Trust expenses are recorded on a cash basis and, as a result,
distributions to Unit holders in each calendar year ending December 31 are attributable to BP Alaskas operations during the twelve-month period ended on the preceding September 30. When BP Alaskas average net production of oil and condensate per quarter from the 1989 Working Interests exceeds 90,000 barrels a day,
the principal factors affecting the Trusts revenues and distributions to Unit holders are changes in WTI Prices, scheduled annual increases in Chargeable Costs, changes in the Consumer Price Index and changes in Production Taxes. However, it
is likely that the Trusts revenues in future periods also will be affected by increases and decreases in production from the 1989 Working Interests. BP Alaskas net production of oil and condensate allocated to the Trust from proved
reserves was less than 90,000 barrels per day on an annual basis during 2017, 2018 and 2019. The Trustee has been advised that BP Alaska expects that average net production allocated to the Trust from the proved reserves will be less than 90,000
barrels a day on an annual basis in future years. BP Alaska estimates Royalty Production from the 1989 Working Interests for purposes of
calculating quarterly royalty payments to the Trust because complete actual field production data for the preceding calendar quarter generally is not available by the Quarterly Record Date. To the extent that average net production from the 1989
Working Interests is below 90,000 barrels per day, calculation by BP Alaska of actual Royalty Production data may result in revisions of prior Royalty Production estimates. Revisions by BP Alaska of its Royalty Production calculations may result in
quarterly royalty payments by BP Alaska which reflect adjustments for overpayments or underpayments of royalties with respect to prior  34




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##### Table of Contents

quarters. Such adjustments, if material, may adversely affect certain Unit holders who buy or sell Units between the Quarterly Record Dates for the Quarterly Distributions affected. See Note 8 of
Notes to Financial Statements in Item 8. Because the annual statement of cash earnings and distributions of the Trust is prepared on a modified cash basis, royalty revenues for the calendar year do not include the amounts of underpayments or
overpayments affecting payments received during the fourth quarter of the year. During the years 2018 and 2019, WTI Prices have been
above the level necessary for the Trust to receive a Per Barrel Royalty. Whether the Trust will be entitled to future distributions during the remainder of 2020 will depend on WTI Prices prevailing during the remainder of the year. As discussed above in Item 1A RISK FACTORS, it is possible that global oil prices could remain at current or lower levels for a
significant period. As also discussed above in Item 1A RISK FACTORS, on January 1, 2020, the break-even WTI price (the price at which all taxes and prescribed deductions are equal to the WTI price) for the Trust to
receive a positive Per Barrel Royalty with respect to a particular days production was $54.34. From the beginning of the first quarter of 2020 through February 27, 2020, the WTI crude oil spot price fluctuated between a high of
$63.27 per barrel on January 6, 2020 and a low of $47.09 per barrel on February 27, 2020. The quarterly royalty payment by BP Alaska to the Trust is the sum of the individual revenues attributed to the Trust as calculated each day
during the quarter. Any single calculation of a calendar day will not reflect the value of the dividend paid to the Trust for the quarter, nor will it reflect the estimated future value of the Trust.However, if a low oil price
environment should occur for a protracted period, quarterly royalty payments could decline significantly, and could in fact be zero. 2019 compared to
2018 As explained in Note 2 of Notes to Financial Statements below, the financial statements of the Trust are prepared on a modified
cash basis and differ from financial statements prepared in accordance with generally accepted accounting principles in that (a) revenues are recorded when received (generally within 15 days of the end of the preceding quarter) and
distributions to Trust Unit holders are recorded when paid and (b) Trust expenses are recorded on an accrual basis. As a consequence, Trust royalty revenues for the fiscal year are based on Royalty Production during the twelve months ended
September 30 of the fiscal year.  Increase (decrease)12 MonthsEnded9/30/2019


Amount


Percent


12 MonthsEnded9/30/2018(Dollars per barrel)Average WTI Price

$
57.48


$
(6.49
)


(10.1
)

$
63.97Adjusted Chargeable Costs

$
44.70


$
7.55



20.3


$
37.15Average Production Taxes

$
1.99


$
(0.35
)


(15.0
)

$
2.34Average Per Barrel Royalty

$
10.79


$
(13.69
)


(55.9
)

$
24.48Average net royalty production (mb/d)


73.8



(4.5
)


(5.7
)


78.3  35




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##### Table of Contents

Average WTI prices during the twelve months ended September 30, 2019 decreased by
approximately 10 percent compared to the preceding twelve-month period. Average monthly WTI prices during this period ranged from a high of $70.72 during the first month of the period in October 2018 to a low of $48.82 at the end of December
2018. The increase in the Consumer Price Index used to calculate the Cost Adjustment Factor, as well as the scheduled increase in Chargeable Costs from $20.00 in calendar 2018 to $23.75 in calendar 2019, resulted in the 20 percent increase in
Adjusted Chargeable Costs during the twelve months ended September 30, 2019. The decrease in the average Per Barrel Royalty for the period resulted primarily from the decrease in WTI prices and the increase in Adjusted Chargeable Costs. This
decrease was modestly offset by the decline in Production Taxes, which remained historically low for the twelve months ended September 30, 2019 because Production Taxes during the period were calculated on the basis of the minimum tax under the
Act and the 2014 Letter Agreement. See Note 5 of Notes to Financial Statements in Item 8 below. The decrease in the average net
production from the 1989 Working Interests between the two periods was due to the naturally declining production rate from the Prudhoe Bay field and variance in the impacts of planned and unplanned downtime during the two reporting periods.  Increase (decrease)Year Ended12/31/2019


Amount


Percent


Year Ended12/31/2018(Dollars in thousands)Royalty revenues

$
48,972


$
(63,397
)


(57.2
)

$
114,369Cash earnings

$
47,922


$
(65,360
)


(57.7
)

$
113,282Cash distributions

$
47,802


$
(65,461
)


(57.8
)

$
113,263Administrative expenses

$
(1,085
)

$
(36
)


(3.2
)

$
1,121Trust corpus at year end

$
898


$
206



29.8


$
692 The period-to-period decreases
in royalty revenues, cash earnings and cash distributions are due to the substantial decline in the average Per Barrel Royalty as a result of the lower average WTI Price, the increase in Adjusted Chargeable Costs and the decline in average net
production that prevailed during 2019 compared to 2018. The decrease in administrative expenses reflects lower overall costs of supplies and services and timing differences in accruals of expenses. The increase in the Trust corpus reflects the
decrease in accrued expenses for the period. 2018 compared to 2017  Increase (decrease)12 MonthsEnded9/30/2018


Amount


Percent


12 MonthsEnded9/30/2017(Dollars per barrel)Average WTI Price

$
63.97


$
14.57



29.5


$
49.40Adjusted Chargeable Costs

$
37.15


$
4.9



15.2


$
32.25Average Production Taxes

$
2.34


$
0.66



39.2


$
1.68Average Per Barrel Royalty

$
24.48


$
8.99



58.0


$
15.49Average net royalty production (mb/d)


78.3



(6.5
)


(7.7
)


84.8  36




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##### Table of Contents

Average WTI prices during the twelve months ended September 30, 2018 increased
significantly compared to the preceding twelve-month period. Average monthly WTI prices during this period ranged from a low of $51.58 during the first month of the period in October 2017 to a high of $70.92 during July 2018. The increase in the
Consumer Price Index used to calculate the Cost Adjustment Factor, as well as the scheduled increase in Chargeable Costs from $17.20 in calendar 2017 to $20.00 in calendar 2018, resulted in the increase in Adjusted Chargeable Costs during the twelve
month ended September 30, 2018. The increase in the average Per Barrel Royalty for the period resulted primarily from the rise in WTI prices. This increase was partially offset by the increase in Production Taxes. Although the nearly
40 percent increase in Production Taxes resulted from the increase in WTI price between the two periods, Production Taxes remained historically low for the twelve months ended September 30, 2018 because Production Taxes for the first three
quarters during the period were calculated on the basis of the minimum tax under the Act and the 2014 Letter Agreement. See Note 5 of Notes to Financial Statements in Item 8 below. The decrease in the average net production from the 1989 Working Interests between the two periods was due to the naturally declining
production rate from the Prudhoe Bay field and variance in the impacts of planned and unplanned downtime during the two reporting periods.  Increase (decrease)Year Ended12/31/2018


Amount


Percent


Year Ended12/31/2017(Dollars in thousands)Royalty revenues

$
114,369


$
36,176



46.3


$
78,193Cash earnings

$
113,282


$
36,243



47.0


$
77,039Cash distributions

$
113,263


$
36,232



47.0


$
77,031Administrative expenses

$
1,121


$
(44
)


(3.8
)

$
1,165Trust corpus at year end

$
691


$
(94
)


(12.0
)

$
785 The period-to-period increases
in royalty revenues, cash earnings and cash distributions are due to the significantly higher average WTI Prices that prevailed during 2018 compared to 2017. The decrease in administrative expenses reflects lower overall costs of supplies and
services and timing differences in accruals of expenses. The decrease in the Trust corpus reflects the increase in accrued expenses for the period.  ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Trust is a passive entity and except for the Trusts ability to borrow money as necessary to pay liabilities of the Trust that cannot
be paid out of cash on hand, the Trust is prohibited from engaging in borrowing transactions. The Trust periodically holds short-term investments acquired with funds held by the Trust pending distribution to Unit holders and funds held in reserve
for the payment of Trust expenses and liabilities. Because of the short-term nature of these investments and limitations on the types of investments which may be held by the Trust, the Trust is not subject to any material interest rate risk. The
Trust does not engage in transactions in foreign currencies which could expose the Trust or Unit holders to any foreign currency related market risk or invest in derivative financial instruments. It has no foreign operations and holds no long-term
debt instruments.  37




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##### Table of Contents

ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA BP PRUDHOE BAY ROYALTY TRUST Index To Financial Statements  PageReports of Independent Registered Public Accounting Firm


39Statements of Assets, Liabilities and Trust Corpus as of December 
31, 2019 and 2018


42Statements of Cash Earnings and Distributions for the years ended December 31,
 2019, 2018 and 2017


43Statements of Changes in Trust Corpus for the years ended December 
31 2019, 2018 and 2017


44Notes to Financial Statements


45  38




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Report of Independent Registered Public Accounting Firm To the Trustee and Holders of Trust Units BP Prudhoe Bay
Royalty Trust: Opinion on the Financial Statements We have audited the accompanying statements of assets, liabilities and trust corpus of BP Prudhoe Bay Royalty Trust (the Trust) as of December 31, 2019
and 2018, the related statements of cash earnings and distributions and changes in trust corpus for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively,
the financial statements). In our opinion, the financial statements present fairly, in all material respects, the assets, liabilities and trust corpus of the Trust as of December 31, 2019 and 2018, and its cash earnings and distributions and
changes in trust corpus for each of the years in the three-year period ended December 31, 2019, in conformity with the modified cash basis of accounting described in note 2 to the financial statements. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Trusts
internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control  Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission,
and our report dated March 2, 2020 expressed an unqualified opinion on the effectiveness of the Trusts internal control over financial reporting. Basis of Accounting 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. Basis for Opinion These financial statements are the
responsibility of The Bank of New York Mellon Trust Company, N.A., as the Trusts trustee (the Trustee). Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by the Trustee, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. (signed) KPMG LLP We have served as the
Trusts auditor since 1989. Dallas, Texas March 2, 2020  39




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Report of Independent Registered Public Accounting Firm To the Trustee and Holders of Trust Units BP Prudhoe Bay
Royalty Trust: Opinion on Internal Control Over Financial Reporting We have audited BP Prudhoe Bay Royalty Trusts (the Trust) internal control over financial reporting as of December 31, 2019, based on criteria
established inInternal Control  Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Trust maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2019, based on criteria established in Internal Control  Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the statements of assets,
liabilities and trust corpus of the Trust as of December 31, 2019 and 2018, the related statements of cash earnings and distributions and changes in trust corpus for each of the years in the three-year period ended December 31, 2019, and
the related notes (collectively, the financial statements), and our report dated March 2, 2020 expressed an unqualified opinion on those financial statements. Basis for Opinion The Bank of New York Mellon Trust
Company, N.A., as the Trusts trustee (the Trustee) is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Trusts internal control over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of
Internal Control Over Financial Reporting A trusts internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the modified cash basis of accounting. A trusts internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the trust; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with the modified cash basis of accounting, and that receipts and expenditures of the trust are being made only in accordance with authorizations of
the trustee; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the trusts assets that could have a material effect on the financial statements.  40




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Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. (signed) KPMG LLP Dallas,
Texas March 2, 2020  41




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Statements of Assets, Liabilities and Trust Corpus (Prepared on a modified cash basis) (In thousands, except unit data)  December 31,2019





December 31,2018AssetsCash and cash equivalents (Note 2)

$
1,151






$
1,031Total assets

$
1,151






$
1,031Liabilities and Trust CorpusAccrued expenses

$
253






$
339Trust corpus (40,000,000 units of beneficial interest authorized, 21,400,000 units issued and
outstanding)


898







692Total liabilities and trust corpus

$
1,151






$
1,031 See accompanying notes to financial statements.  42




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Statements of Cash Earnings and Distributions (Prepared on a modified cash basis) (In thousands, except unit data)  Year Ended December 31,2019


2018


2017Royalty revenues

$
48,972


$
114,369


$
78,193Interest income


35



34



11Less: Trust administrative expenses


(1,085
)


(1,121
)


(1,165
)Cash earnings

$
47,922


$
113,282


$
77,039Cash distributions

$
47,802


$
113,263


$
77,031Cash distributions per unit

$
2.234


$
5.293


$
3.600Units outstanding


21,400,000



21,400,000



21,400,000 See accompanying notes to financial statements.  43




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Statements of Changes in Trust Corpus (Prepared on a modified cash basis) (In thousands)  Year Ended December 31,2019


2018


2017Trust corpus at beginning of year

$
692


$
785


$
786Cash earnings


47,922



113,282



77,039(Increase) decrease in accrued expenses


86



(112
)


(9
)Cash distributions


(47,802
)


(113,263
)


(77,031
)Trust corpus at end of year

$
898


$
692


$
785 See accompanying notes to financial statements.  44




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  (1)
Formation of the Trust and Organization BP Prudhoe Bay Royalty Trust (the Trust), a grantor trust, was created as a Delaware statutory trust pursuant to a Trust Agreement
dated February 28, 1989 among the Standard Oil Company (Standard Oil), BP Exploration (Alaska) Inc. (BP Alaska), The Bank of New York Mellon, as trustee, and BNY Mellon Trust of Delaware (successor to The Bank of New
York (Delaware)), as co-trustee. On December 15, 2010, The Bank of New York Mellon resigned as trustee and was replaced by The Bank of New York Mellon Trust Company, N.A., a national banking association,
as successor trustee (the Trustee). Standard Oil and BP Alaska are indirect wholly owned subsidiaries of BP p.l.c. (BP). On February 28, 1989, Standard Oil conveyed an overriding royalty interest (the Royalty Interest) to the Trust. The Trust was
formed for the sole purpose of owning and administering the Royalty Interest. The Royalty Interest represents the right to receive, effective February 28, 1989, a per barrel royalty (the Per Barrel Royalty) of 16.4246% on the lesser
of (a) the first 90,000 barrels of the average actual daily net production of oil and condensate per quarter or (b) the average actual daily net production of oil and condensate per quarter from BP Alaskas working interest as of
February 28, 1989 in the Prudhoe Bay field, located on the North Slope of Alaska. Trust Unit holders will remain subject at all times to the risk that production will be interrupted or discontinued. BP has guaranteed the performance of BP
Alaska of its payment obligations with respect to the Royalty Interest. Effective January 1, 2000, BP Alaska and all other Prudhoe
Bay working interest owners cross-assigned interests in the Prudhoe Bay field pursuant to the Prudhoe Bay Unit Alignment Agreement. BP Alaska retained all rights, obligations, and liabilities associated with the Trust. The trustees of the Trust are The Bank of New York Mellon Trust Company, N.A. and BNY Mellon Trust of Delaware. BNY Mellon Trust of Delaware
serves as co-trustee in order to satisfy certain requirements of the Delaware Statutory Trust Act. The Bank of New York Mellon Trust Company, N.A. alone is able to exercise the rights and powers granted to the
Trustee in the Trust Agreement. The Per Barrel Royalty in effect for any day is equal to the price of West Texas Intermediate crude oil
(the WTI Price) for that day less scheduled Chargeable Costs (adjusted for inflation) and Production Taxes (based on statutory rates then in existence). The Trust is passive, with the Trustee having only such powers as are necessary for the collection and distribution of revenues, the payment of
Trust liabilities, and the protection of the Royalty Interest. The Trustee, subject to certain conditions, is obligated to establish cash reserves and borrow funds to pay liabilities of the Trust when they become due. The Trustee may sell Trust
properties only (a) as authorized by a vote of the Trust unit holders, (b) when necessary to provide for the payment of specific liabilities of the Trust then due (subject to certain conditions) or (c) upon termination of the Trust.
Each Trust Unit issued and outstanding represents an equal undivided share of beneficial interest in the Trust. Royalty payments are received by the Trust and distributed to Trust Unit holders, net of Trust expenses, in the month succeeding the end
of each calendar quarter. The Trust will terminate (i) upon a vote of Trust unit holders of not less than 60% of the outstanding Trust units, or (ii) at such time the net revenues from the Royalty Interest for two successive years are less
than $1,000,000 per year (unless the net revenues during such period are materially and adversely affected by certain events).  45




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BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  In order to ensure the Trust has the ability to pay future expenses, the Trust established a
cash reserve account which the Trustee believes is sufficient to pay approximately one years current and expected liabilities and expenses of the Trust.  (2)
Basis of Accounting The financial statements of the Trust are prepared on a modified cash basis and reflect the Trusts assets, liabilities, corpus, earnings,
and distributions, as follows:  a.
Revenues are recorded when received (generally within 15 days of the end of the preceding quarter) and
distributions to Trust unit holders are recorded when paid.  b.
Trust expenses (which include accounting, engineering, legal, and other professional fees, trustees fees,
and out-of-pocket expenses) are recorded on an accrual basis.  c.
Cash reserves may be established by the Trustee for certain contingencies that would not be recorded under
generally accepted accounting principles. While these statements differ from financial statements prepared in accordance
with accounting principles generally accepted in the United States of America, the modified cash basis of reporting revenues and distributions is considered to be the most meaningful because quarterly distributions to the Trust unit holders are
based on net cash receipts. The accompanying modified cash basis financial statements contain all adjustments necessary to present fairly the assets, liabilities and corpus of the Trust as of December 31, 2019 and 2018, and the modified cash
earning and distributions and changes in Trust corpus for the years ended December 31, 2019, 2018 and 2017. The adjustments are of a normal recurring nature and are, in the opinion of the Trustee, necessary to fairly present the results of
operations. As of December 31, 2019 and 2018, cash equivalents which represent the cash reserve consist of cash accounts and U.S.
Treasury Bills with original maturities of ninety days or less. Estimates and assumptions are required to be made regarding assets,
liabilities and changes in Trust corpus resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results
to differ, and the difference could be material.  (3)
Royalty Interest At inception in February 1989, the Royalty Interest held by the Trust had a carrying value of $535,000,000. In accordance with generally
accepted accounting principles, the Trust amortized the value of the Royalty Interest based on the units of production method. Such amortization was charged directly to the Trust corpus, and did not affect cash earnings. In addition, the Trust
periodically evaluated impairment of the Royalty Interest by comparing the undiscounted cash flows expected to be realized from the Royalty Interest to the carrying value, pursuant to the Financial Accounting Standards Board Accounting Standards
Codification (ASC) 360, Property, Plant, and Equipment. If the expected future undiscounted cash flows were less than the carrying value, the Trust recognized impairment losses for the difference between the carrying value and the estimated
fair value of the Royalty Interest. By December 31, 2010, the Trust had recognized accumulated amortization of $359,473,000 and aggregate impairment write-downs of $175,527,000 reducing the carrying value of the Royalty Interest to zero.  46




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  (4)
Income Taxes The Trust files its federal tax return as a grantor trust subject to the provisions of subpart E of Part I of Subchapter J of the Internal
Revenue Code of 1986, as amended, rather than as an association taxable as a corporation. The Trust unit holders are treated as the owners of Trust income and corpus, and the entire taxable income of the Trust will be reported by the Trust unit
holders on their respective tax returns. If the Trust were determined to be an association taxable as a corporation, it would be treated
as an entity taxable as a corporation on the taxable income from the Royalty Interest, the Trust unit holders would be treated as shareholders, and distributions to Trust unit holders would not be deductible in computing the Trusts tax
liability as an association.  (5)
Alaska Oil and Gas Production Tax On April 14, 2013, Alaskas legislature passed an oil-tax reform bill amending Alaskas
oil and gas production tax statutes, AS 43.55.10 et seq. (the Production Tax Statutes) with the aim of encouraging oil production and investment in Alaskas oil industry. On May 21, 2013, the Governor of Alaska signed
the bill into law as chapter 10 of the 2013 Session laws of Alaska (the Act). Among significant changes, the Act eliminated the monthly progressivity tax rate implemented by certain amendments to the Production Tax Statutes
in 2006 and 2007, increased the base rate from 25% to 35% and added a stair-step per-barrel tax credit for oil production. This tax credit is based on the gross value at the point of production per barrel of
taxable oil and may not reduce a producers tax liability below the minimum tax (which is a percentage, ranging from zero to 4%, of the gross value at the point of production of a producers taxable production during the
calendar year based on the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast for the year) under the Production Tax Statutes. These changes became effective on January 1, 2014. On January 15, 2014, the Trustee executed a letter agreement with BP Alaska dated January 15, 2014 (the 2014 Letter
Agreement) regarding the implementation of the Act with respect to the Trust. Pursuant to the 2014 Letter Agreement, Production Taxes for the Trusts Royalty Production will equal the tax for the relevant quarter, minus the allowable
monthly stair-step per-barrel tax credits for the Royalty Production during that quarter. If there is a minimum tax-related limitation on the amount of the stair-step
per-barrel tax credits that could otherwise be claimed for any quarter during the year, any difference between that limitation as preliminarily determined on a quarterly basis and the actual limitation for the
entire year will be reflected in the payment to the Trust for the first quarter Royalty Production in the following year. On July 6,
2015, BP Alaska and the Trustee signed a letter agreement (the 2014 Letter Agreement Amendment) amending the 2014 Letter Agreement to provide that if there is a minimum tax-related limitation on the amount of the stair-step per-barrel tax credits that could otherwise be claimed for any quarter during the year, any difference between that limitation as preliminarily determined on a quarterly basis and the actual limitation for the
entire year will be reflected in the payment to the Trust for the fourth quarter Royalty Production payment for such year rather than in the payment to the Trust for the first quarter Royalty Production in the following year.  47




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  (6)
Royalty Revenue Adjustments Certain royalty payments received by the Trust in 2019, 2018 and 2017 were adjusted by BP Alaska to compensate for underpayments or
overpayments of the royalties due with respect to the quarters ended prior to the dates of such payments. Average net production of crude oil and condensate from the proved reserves allocated to the Trust was less than 90,000 barrels per day during
certain quarters. Royalty payments by BP Alaska with respect to those quarters were based on estimates by BP Alaska of production levels because actual data was not available by the dates on which payments were required to be made to the Trust.
Subsequent recalculation by BP Alaska of royalty payments due based on actual production data resulted in the payment adjustments shown in the table below (in thousands).  2019 Payments ReceivedJanuary


April


July


OctoberRoyalty payment as calculated

$
21,361


$
7,732


$
12,152


$
7,291Adjustment for underpayment, plus accrued interest


398



16



12



10Net payment received

$
21,759


$
7,748


$
12,164


$
7,3012018 Payments ReceivedJanuary


April


July


OctoberRoyalty payment as calculated

$
26,520


$
27,610


$
30,427


$
29,305Adjustment for underpayment, plus accrued interest


19



1



65



422Net payment received

$
26,539


$
27,611


$
30,492


$
29,7272017 Payments ReceivedJanuary


April


July


OctoberRoyalty payment as calculated

$
21,475


$
23,814


$
18,230


$
14,627Adjustment for underpayment, plus accrued interest


7











40Net payment received

$
21,482


$
23,814


$
18,230


$
14,667  (7)
Subsequent Event In January 2020, the Trust received a payment of $9,336,990 from BP Alaska. This payment consisted of $9,321,400, representing the royalty
payment due with respect to the Trusts Royalty Interest for the quarter ended December 31, 2019, plus $15,590, representing the amount of an underpayment by BP Alaska, including interest on the underpayment, of the royalty payment due
with respect to the quarter ended September 30, 2019. On January 21, 2020, after deducting Trust administrative expenses and $33,750 to increase existing cash reserves, the Trustee distributed $9,078,734 to Unit holders of record on
January 17, 2020.  48




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BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  Subsequent events have been evaluated through the date these financial statements are issued.  (8)
Summary of Quarterly Results (Unaudited) A summary of selected quarterly financial information for the years ended December 31, 2019, 2018, and 2017 is as follows (in thousands,
except unit data):  2019 Fiscal QuarterFirst


Second


Third


FourthRoyalty revenues

$
21,759


$
7,748


$
12,164


$
7,301Interest income


9



10



8



8Trust administrative expenses


(326
)


(312
)


(341
)


(106
)Cash earnings

$
21,442


$
7,446


$
11,831


$
7,203Cash distributions

$
21,463


$
7,381


$
11,793


$
7,165Cash distributions per unit

$
1.0029


$
0.3449


$
0.5511


$
0.3348  2018 Fiscal QuarterFirst


Second


Third


FourthRoyalty revenues

$
26,539


$
27,611


$
30,492


$
29,727Interest income


6



11



8



9Trust administrative expenses


(215
)


(407
)


(297
)


(202
)Cash earnings

$
26,330


$
27,215


$
30,203


$
29,534Cash distributions

$
26,325


$
27,282


$
30,122


$
29,534Cash distributions per unit

$
1.2302


$
1.2748


$
1.4076


$
1.3800  2017 Fiscal QuarterFirst


Second


Third


FourthRoyalty revenues

$
21,482


$
23,814


$
18,230


$
14,667Interest income


2



3



3



3Trust administrative expenses


(206
)


(311
)


(406
)


(242
)Cash earnings

$
21,278


$
23,506


$
17,827


$
14,428Cash distributions

$
21,277


$
23,504


$
17,825


$
14,425Cash distributions per unit

$
0.9943


$
1.0983


$
0.8329


$
0.6745  (9)
Supplemental Reserve Information and Standardized Measure of Discounted Future Net Cash Flow Relating to
Proved Reserves (Unaudited) Pursuant to Statement of FASB ASC 932, Extractive Activities  Oil and Gas,
the Trust is required to include in its financial statements supplementary information regarding estimates of quantities of proved reserves attributable to the Trust and future net cash flows. The following information in this note reflects the
adoption of Securities Exchange Act Release No. 59192, Modernization of Oil and Gas Reporting which became effective for financial statements for fiscal years ending on or after December 31, 2009. Estimates of proved reserves are inherently imprecise and subjective and are revised over time as additional data becomes available. Such
revisions may often be substantial. Information regarding estimates of proved reserves attributable to the combined interests of BP Alaska and the Trust were  49




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BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  based on reserve estimates prepared by BP Alaska. BP Alaskas reserve estimates are believed to be reasonable and consistent with presently known physical data concerning the size and
character of the Prudhoe Bay field. There is no precise method of allocating estimates of physical quantities of reserve volumes between
BP Alaska and the Trust, since the Royalty Interest is not a working interest and the Trust does not own and is not entitled to receive any specific volume of reserves from the Prudhoe Bay field. Reserve volumes attributable to the Trust were
estimated by allocating to the Trust its share of estimated future production from the field, based on the 12-month average WTI Price for 2019 ($55.69 per barrel), 2018 ($65.56 per barrel) and 2017 ($51.34 per
barrel). Because the reserve volumes attributable to the Trust are estimated using an allocation of reserve volumes based on the estimated future production and on the current WTI Price, a change in the timing of estimated production or a change in
the WTI price will result in a change in the Trusts estimated reserve volumes. Therefore, the estimated reserve volumes attributable to the Trust will vary if different production estimates and prices are used. In addition to production estimates and prices, reserve volumes attributable to the Trust are affected by the amount of Chargeable Costs that
will be deducted in determining the Per Barrel Royalty. Net proved reserves of oil and condensate attributable to the Trust as of December 31, 2019, 2018 and 2017, based on BP Alaskas latest reserve estimate at such times and the 12-month average WTI prices for 2019, 2018 and 2017, were estimated to be 4.465, 15.772 and 9.070 million barrels, respectively (of which 4.394, 15.638 and 9.047 million barrels, respectively, are proved
developed reserves). Under the provisions of FASB ASC 932, no consideration can be given to reserves not considered proved at the present time. The standardized measure of discounted future net cash flow relating to proved reserves disclosure required by FASB ASC 932 assigns monetary
amounts to proved reserves based on current prices. This discounted future net cash flow should not be construed as the current market value of the Royalty Interest. A market valuation determination would include, among other things, anticipated
price changes and the value of additional reserves not considered proved at the present time or reserves that may be produced after the currently anticipated end of field life. At December 31, 2019, 2018 and 2017, the standardized measure of
discounted future net cash flow relating to proved reserves attributable to the Trust (estimated in accordance with the provisions of FASB ASC 932), based on the 12-month average WTI Prices for 2019, 2018 and
2017 of $55.69, $65.56 and $51.34 per barrel, respectively, were as follows (in thousands):  December 31,2019


2018


2017Future cash inflows

$
5,785


$
154,662


$
73,82310% annual discount for estimated timing of cash flows


(269
)


(16,121
)


(5,147
)Standardized measure of discounted future net cash flow (a)

$
5,516


$
138,541


$
68,676  50




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  (a)
The following are the principal sources of the change in the standardized measure of discounted future net cash
flows (in thousands):  December 31,2019


2018


2017Net changes in prices and production costs

$
(109,850)


$
176,825


$
90,114Net change in production taxes


5,437



(5,029
)


(2,973
)Other


52



845



58(104,361
)


172,641



87,199Royalty revenues received (b)


(36,550
)


(109,588
)


(83,250
)Accretion of discount


7,886



6,812



5,541Net increase (decrease) during the year

$
(133,025)


$
69,865


$
9,490  (b)
For the purpose of this calculation, royalty income received for 2019, 2018 and 2017 includes the following (in
thousands):  Period October 1, 2019 through December 31, 2019

$
9,337Period October 1, 2018 through December 31, 2018

$
21,759Period October 1, 2017 through December 31, 2017

$
26,539
 The above royalty income was received by the Trust in January 2020, 2019 and 2018, respectively. The changes in estimated quantities of proved oil and condensate were as follows:  Proved developed and undeveloped reserves (thousands of barrels) as of:December 31, 2016


9,376Revisions of previous estimates (1)


4,617Production


(4,923
)December 31, 2017


9,070Revisions of previous estimates (2)


11,311Production


(4,609
)December 31, 2018


15,772Revisions of previous estimates (3)


(6,916
)Production


(4,391
)December 31, 2019


4,465Proved developed reserves (thousands of barrels) as of:December 31, 2017


9,047December 31, 2018


15,638December 31, 2019


4,394
  51




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##### Table of Contents

BP Prudhoe Bay Royalty Trust Notes to Financial Statements (Prepared on a modified cash basis) December 31, 2019  Proved undeveloped reserves (thousands of barrels) as of:December 31, 2017


23December 31, 2018


134December 31, 2019


71
  (1)
The positive revision in year-end 2017 reserves reflects an increase in
the WTI Price from $42.75 per barrel for 2016 to $51.34 per barrel for 2017 using the 12-month average of the first-day-of-the-month price for each month in the years ended December 31, 2016 and 2017, respectively. Under the economic conditions and production forecast at year end 2014, the per-barrel royalty was forecast to be zero following the year 2028. Under the economic conditions and production forecast at year end 2015, the per-barrel royalty was forecast
to be zero following the year 2020. Under the economic conditions and production forecast at year end 2016, the per-barrel royalty was forecast to be zero following the year 2018. Under the economic conditions
and production forecast at year end 2017, the per-barrel royalty was forecast to be zero following the year 2019. This increase in economic life from year-end 2016 to year-end 2017 results in a positive revision in reserve volumes. (2)
The positive revision in year-end 2018 reserves reflects an increase in
the WTI Price from $51.34 per barrel for 2017 to $65.56 per barrel for 2018 using the 12-month average of the first-day-of-the-month price for each month in the years ended December 31, 2017 and 2018, respectively. Under the economic conditions and production forecast at year end 2014, the per-barrel royalty was forecast to be zero following the year 2028. Under the economic conditions and production forecast at year end 2015, the per-barrel royalty was forecast
to be zero following the year 2020. Under the economic conditions and production forecast at year end 2016, the per-barrel royalty was forecast to be zero following the year 2018. Under the economic conditions
and production forecast at year end 2017, the per-barrel royalty was forecast to be zero following the year 2019. Under the economic conditions and production forecast at year end 2018, the per-barrel royalty was forecast to be zero following the year 2022. This increase in economic life from year-end 2017 to year-end 2018
results in a positive revision in reserve volumes. (3)
The negative revision in year-end 2019 reserves reflects a decrease in
the WTI Price from $65.56 per barrel for 2018 $55.69 per barrel for 2019 using the 12-month average of the first-day-of-the-month price for each month in the years ended December 31, 2018 and 2019, respectively. Under the economic conditions and production forecast at year end 2014, the per-barrel royalty was forecast to be zero following the year 2028. Under the economic conditions and production forecast at year end 2015, the per-barrel royalty was forecast
to be zero following the year 2020. Under the economic conditions and production forecast at year end 2016, the per-barrel royalty was forecast to be zero following the year 2018. Under the economic conditions
and production forecast at year end 2017, the per-barrel royalty was forecast to be zero following the year 2019. Under the economic conditions and production forecast at year end 2018, the per-barrel royalty was forecast to be zero following the year 2022. Under the economic conditions and production forecast at year end 2019, the per-barrel royalty was forecast
to be zero following the year 2020. This decrease in economic life from year-end 2018 to year-end 2019 results in a negative revision in reserve volumes.  52




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ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in accountants and no disagreements with accountants on any matter of accounting
principles or practices or financial statement disclosures during the two fiscal years ended December 31, 2019.  ITEM 9A.
CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Trustee has disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by the Trust in the reports that it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SECs rules and forms. These controls and procedures include but are not limited to controls and procedures designed to ensure that information required to be disclosed by the Trust in the
reports that it files or submits under the Exchange Act is accumulated and communicated to the responsible trust officers of the Trustee to allow timely decisions regarding required disclosure. Under the terms of the Trust Agreement and the Conveyance, BP Alaska has significant disclosure and reporting obligations to the Trust. BP
Alaska is required to provide the Trust such information concerning the Royalty Interest as the Trustee may need and to which BP Alaska has access to permit the Trust to comply with any reporting or disclosure obligations of the Trust pursuant to
applicable law and the requirements of any stock exchange on which the Units are issued. These reporting obligations include furnishing the Trust a report by February 28 of each year containing all information of a nature, of a standard and in
a form consistent with the requirements of the SEC respecting the inclusion of reserve and reserve valuation information in filings under the Exchange Act and with applicable accounting rules. The report is required to set forth, among other things,
BP Alaskas estimates of future net cash flows from proved reserves attributable to the Royalty Interest, the discounted present value of such proved reserves and the assumptions utilized in arriving at the estimates contained in the report. In addition, the Conveyance gives the Trust certain rights to inspect the books and records of BP Alaska and discuss the affairs,
finances and accounts of BP Alaska relating to the 1989 Working Interests with representatives of BP Alaska; it also requires BP Alaska to provide the Trust with such other information as the Trustee may reasonably request from time to time and to
which BP Alaska has access. The Trustees disclosure controls and procedures include ensuring that the Trust receives the
information and reports that BP Alaska is required to furnish to the Trust on a timely basis, that the appropriate responsible personnel of the Trustee examine such information and reports, and that information requested from and provided by BP
Alaska is included in the reports that the Trust files or submits under the Exchange Act. As of the end of calendar year 2019, the trust
officers of the Trustee responsible for the administration of the Trust conducted an evaluation of the Trusts disclosure controls and procedures. Their evaluation considered, among other things, that the Trust Agreement and the Conveyance
impose enforceable legal obligations on BP Alaska, and that BP Alaska has provided the information required by those agreements and other information requested by the Trustee from time to time on a timely basis. The officers concluded that the
Trusts disclosure controls and procedures were effective, as of December 31, 2019.  53




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Internal Control Over Financial Reporting Managements Annual Report on Internal Control Over Financial Reporting. The Bank of New York Mellon Trust Company, N.A., as Trustee of the Trust, is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act. The Trusts internal control over financial reporting is defined as a process designed by or
under the supervision of the Trustee to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Trusts financial statements for external reporting purposes in accordance with the modified cash
basis of accounting. The Trusts internal control over financial reporting includes policies and procedures that pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of
assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with the modified cash basis of accounting, and that receipts and expenditures are being made only in
accordance with authorizations of the Trustee; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Trusts assets that could have a material effect on the Trusts
financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projection of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. The Trustee conducted an evaluation of the effectiveness of the Trusts internal control over financial reporting based
on the criteria established in Internal ControlIntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on the Trustees evaluation under
the COSO criteria, the Trustee concluded that the Trusts internal control over financial reporting was effective as of December 31, 2019. The effectiveness of the Trusts internal control over financial reporting as of December 31, 2019 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in their report set forth in full above on page 43. Changes in Internal
Control Over Financial Reporting. There has not been any change in the Trusts internal control over financial reporting
identified in connection with the Trustees evaluation of the Trusts internal control over financial reporting that occurred during the Trusts fourth fiscal quarter that has materially affected, or is reasonably likely to materially
affect, the Trusts internal control over financial reporting.  ITEM 9B.
OTHER INFORMATION Not applicable. PART III  ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The Trust has no directors or executive officers. The Trust is administered by the Trustee under the authority granted it in the Trust
Agreement. The Trust Agreement grants the Trustee only the rights and powers necessary to achieve the purposes of the Trust. See THE TRUST  Duties and Powers of Trustee in Item 1.  54




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The Trustee may be removed with or without cause by vote of holders of a majority of the
Units at a meeting called and held as provided in the Trust Agreement. At the meeting the Unit holders may appoint a successor trustee meeting the requirements set forth in the Trust Agreement. See THE TRUST  Resignation or Removal of
Trustee in Item 1. The Trust has not adopted a code of ethics. The standards of conduct governing the Trustee are set forth in the
Trust Agreement and Delaware law. Ethical standards applicable to the employees of the Trustee are set forth in the Code of Conduct which may be found at http://www.bnymellon.com/ethics. There is no audit committee or committee performing comparable functions responsible for reviewing the audited financial statements of the
Trust.  ITEM 11.
EXECUTIVE COMPENSATION The Trust has no directors, officers or employees to whom it pays compensation. The Trust is administered by employees of the Trustee in the
ordinary course of their employment who receive no compensation specifically related to their services to the Trust. Under the Trust
Agreement, the Trustee is entitled to receive on each Quarterly Record Date a quarterly fee, currently consisting of the sum of (i) a quarterly administrative fee of $.0011 per Unit outstanding on the Quarterly Record Date plus (ii) $10.00 for
each payment by wire transfer to a Unit holder. The administrative service fee is subject to increase in each calendar year by the proportionate increase, if any, during the preceding calendar year in the Consumer Price Index (as defined in the
Conveyance; see THE ROYALTY INTEREST  Cost Adjustment Factor in Item 1) during the preceding calendar year. The Trustee also bills the Trust for certain reimbursable expenses. There is no compensation committee or committee
performing similar functions with authority to determine any compensation of the Trustee other than the fees and reimbursable expenses provided for in the Trust Agreement. The compensation received by the Trustee from the Trust during the three fiscal years ended December 31, 2019 was as follows:  Year ended December 31,

Trustees Fees


Transfer Agentand RegistrarFees2017

$
234,716



2018

$
223,755



2019

$
213,378



  ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS Securities Authorized for Issuance under Equity Compensation Plans No Units are authorized for issuance under any form of equity compensation plan.  55




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Unit Ownership of Certain Beneficial Owners As of February 24, 2020, there were no persons known to the Trustee to be the beneficial owners of more than five percent of the Units. Unit Ownership of Management Neither BP Alaska, Standard Oil, nor BP owns any Units. No Units are owned by The Bank of New York Mellon Trust Company, N.A., as Trustee or in
its individual capacity, or by BNY Mellon Trust of Delaware, as co-trustee or in its individual capacity. Changes in Control The Trustee knows of
no arrangement, including the pledge of Units, the operation of which may at a subsequent date result in a change in control of the Trust.  ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE There has been no transaction by the Trust since the beginning of 2019, or any currently proposed transaction in which a related person (as
defined in Item 404 of Regulation S-K) had or will have a direct or indirect material interest, except for payment to the Trustee of the fees and reimbursement for expenses prescribed in the Trust Agreement.
See Item 11 above. The Trust has no independent directors. See Item 10 above.  ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES Fees for services performed by KPMG LLP for the years ended December 31, 2019 and 2018 are:  2019


2018Audit

$
196,500


$
193,100Audit related


24,500



24,000Tax


221,000



220,000Other






$
442,000


$
437,100 The Trust has no audit committee, and as a consequence, has no audit committee
pre-approval policy with respect to fees paid to KPMG LLP.  ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  (a)
FINANCIAL STATEMENTS The following financial statements of the Trust are included in Part II, Item 8: Reports of Independent Registered Public Accounting Firm Statements of Assets, Liabilities and Trust Corpus as of December 31, 2019 and 2018 Statements of Cash Earnings and Distributions for the years ended December 31, 2019, 2018 and 2017  56




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Statements of Changes in Trust Corpus for the years ended December 31, 2019, 2018 and
2017 Notes to Financial Statements  (b)
FINANCIAL STATEMENT SCHEDULES All financial statement schedules have been omitted because they are either not applicable, not required or the information is set forth in the
financial statements or notes thereto.  (c)
EXHIBITS  4.1

BP Prudhoe Bay Royalty Trust Agreement dated February 
28, 1989 among The Standard Oil Company, BP Exploration (Alaska) Inc., The Bank of New York Trustee, and F. James Hutchinson, Co-Trustee. Incorporated by reference to the correspondingly numbered exhibit to the Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-10243).4.2

Overriding Royalty Conveyance dated February 
27, 1989 between BP Exploration (Alaska) Inc. and The Standard Oil Company. Incorporated by reference to the correspondingly numbered exhibit to the Registrants Annual Report on Form 10-K for the fiscal year
 ended December 31, 2006 (File No. 1-10243).4.3

Trust Conveyance dated February 
28, 1989 between The Standard Oil Company and BP Prudhoe Bay Royalty Trust. Incorporated by reference to the correspondingly numbered exhibit to the Registrants Annual Report on Form 10-K for the fiscal year
 ended December 31, 2006 (File No. 1-10243).4.4

Support Agreement dated as of February 28, 1989, as amended May 
8, 1989, among The British Petroleum Company p.l.c., BP Exploration (Alaska) Inc., The Standard Oil Company and BP Prudhoe Bay Royalty Trust. Incorporated by reference to the correspondingly numbered exhibit to the Registrants Annual Report on Form
 10-K for the fiscal year ended December 31, 2006 (File No. 1-10243).4.5

Letter agreement executed October 
13, 2006 between BP Exploration (Alaska) Inc. and The Bank of New York, as Trustee. Incorporated by reference to the correspondingly numbered exhibit to the Registrants Quarterly Report on Form 10-Q for the
 quarter ended September 30, 2006 (File No. 1-10243).4.6

Letter agreement executed January 
11, 2008 between BP Exploration (Alaska) Inc. and The Bank of New York, as Trustee. Incorporated by reference to the correspondingly numbered exhibit to the Registrants Current Report on Form 8-K dated January 11,
 2008 (File No. 1-10243).10.1

Settlement Agreement, dated May 
8, 2009, among BP Exploration (Alaska) Inc., The Bank of New York Mellon, as Trustee, and BNY Mellon Trust Company of Delaware, as Co-Trustee. Incorporated by reference to the correspondingly numbered exhibit to the
 Registrants Current Report on Form 8-K dated May 8, 2009 (File No. 1-10243).  57




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10.2

Agreement of Resignation, Appointment and Acceptance dated as of December 
15, 2010 among BP Exploration (Alaska) Inc., The Bank of New York Mellon and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference to the correspondingly numbered exhibit to the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 1-10243).31*

Rule 13a-14(a) certification.32*

Section 1350 certification.99*

Report of Miller and Lents, Ltd., dated February 21, 2020.101

Explanatory note: An Interactive Data File is not submitted with this filing pursuant to Item 601(101) of Regulation S-K, because the Trust does not prepare its financial statements in
accordance with generally accepted accounting principles as used in the United States. See Note 2 of Notes to Financial Statements in Part II, Item 8.  *
Filed herewith.  58




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.  BP PRUDHOE BAY ROYALTY TRUSTBy:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as TrusteeBy:

/s/ Elaina C. RodgersElaina C. RodgersVice President
 March 2, 2020 The Registrant is a trust and has no officers, directors, or persons performing similar functions. No additional signatures are available and
none have been provided.  59