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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**x**      **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**for the quarterly period ended June 30, 2019**

 

**OR**

 

**o**         **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**for the transition period from                  to**

 

**Commission File Number: 1-35532**

 

**PACIFIC COAST OIL TRUST**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                     |   | **80-6216242**                         |
|------------------------------------------------------------------|--------|----------------------------------------|
| (State 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, 16th Floor****Houston, Texas** |   | **77002**  |
|----------------------------------------------------------------------------------------------------------------------|--------|------------|
| (Address of principal executive   offices)                                                                           |   | (Zip Code) |

 

**1-512-236-6555**

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

| **Title of each class** | ** ** | **Trading symbol** | ** ** | **Name of each exchange on which registered** |
|----------------------------------------|------------|-------------------------|------------|-----------------------------------------------------------------------------|
| Units of Beneficial Interest           |       | ROYT                    |       | New York Stock Exchange                                                     |

 

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 x  No o

 

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes o  No o

 

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” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

| Large accelerated filer o |   | Accelerated filer x         |
|--------------------------------|--------|----------------------------------|
|                           |   |                             |
| Non-accelerated filer o   |   | Smaller reporting company x |
|                           |   |                             |
| Emerging growth company o |   |                             |

 

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. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

 

As of August 1, 2019, 38,583,158 Units of Beneficial Interest in Pacific Coast Oil Trust were outstanding.

 

 

 

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**TABLE OF CONTENTS**

 
| Forward-Looking   Statements                                                                                  | 2  |
|---------------------------------------------------------------------------------------------------------------|----|
| Glossary   of Certain Oil and Natural Gas Terms                                                               | 3  |
| **PART I — Financial   Information**                                                                | 5  |
| Item 1. Financial Statements (Unaudited)                                                                 | 5  |
| Statements of Assets, Liabilities and   Trust Corpus as of June 30, 2019 and December 31, 2018      | 5  |
| Statements of Distributable Income for   the three months and six months ended June 30, 2019 and 2018    | 6  |
| Statements of Changes in Trust Corpus for   the three months and six months ended June 30, 2019 and 2018 | 7  |
| Notes to Financial Statements                                                                                 | 8  |
| Item 2. Trustee’s Discussion and   Analysis of Financial Condition and Results of Operations        | 11 |
| Item 3. Quantitative and Qualitative   Disclosures About Market Risk                                     | 21 |
| Item 4. Controls and Procedures                                                                          | 21 |
| **PART II — Other   Information**                                                                   | 22 |
| Item 1. Legal Proceedings                                                                                     | 22 |
| Item 1A. Risk Factors                                                                                    | 22 |
| Item 6. Exhibits                                                                                         | 22 |
| Signatures                                                                                                    | 23 |

 

**FORWARD-LOOKING STATEMENTS**

 

This Quarterly Report on Form 10-Q (this “report”) contains “forward-looking statements” about Pacific Coast Oil Trust (the “Trust”) and its sponsor, Pacific Coast Energy Company LP, a privately held Delaware partnership (“PCEC”), that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report, including, without limitation, statements under “Trustee’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” are forward-looking statements.  When used in this document, the words “believes,” “expects,” “anticipates,” “intends” or similar expressions are intended to identify forward-looking statements. The following important factors, in addition to those discussed elsewhere in this report, could affect the future results of the energy industry in general, and PCEC and the Trust in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

 

·                  the effect of changes in commodity prices or alternative fuel prices;

 

·                  risks associated with the drilling and operation of oil and natural gas wells;

 

·                  the amount of future direct operating expenses and development expenses;

 

·                  the effect of existing and future laws and regulatory actions, including the failure to obtain necessary discretionary permits;

 

·                  conditions in the capital markets;

 

·                  competition from others in the energy industry;

 

·                  uncertainty of estimates of oil and natural gas reserves and production; and

 

·                  cost inflation.

 

You should not place undue reliance on these forward-looking statements. All forward-looking statements speak only as of the date of this report. The Trust does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, unless required by law.

 

This report describes other important factors that could cause actual results to differ materially from expectations of PCEC and the Trust.  All written and oral forward-looking statements attributable to PCEC or the Trust or persons acting on behalf of PCEC or the Trust are expressly qualified in their entirety by such factors.

 

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**GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS**

 

In this report the following terms have the meanings specified below.

 

*API—*The specific gravity or density of oil expressed in terms of a scale devised by the American Petroleum Institute.

 

*Bbl*—One stock tank barrel of 42 U.S. gallons liquid volume, used herein in reference to crude oil and other liquid hydrocarbons.

 

*Bbl/d—*Bbl per day.

 

*Boe*—One stock tank barrel of oil equivalent, computed on an approximate energy equivalent basis that one Bbl of crude oil equals six Mcf of natural gas.

 

*Boe/d*—Boe per day.

 

*Brent*—Global benchmark price used for light sweet crude oil.

 

*Btu*—A British Thermal Unit, a common unit of energy measurement.

 

*Completion*—The installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.

 

*Dry hole*—A well found to be incapable of producing either oil and natural gas in sufficient quantities to justify completion as an oil or natural gas well.

 

*Economically producible*—A resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation.

 

*Estimated future net revenues*—Also referred to as “estimated future net cash flows.” The result of applying current prices of oil and natural gas to estimated future production from oil and natural gas proved reserves, reduced by estimated future expenditures, based on current costs to be incurred, in developing and producing the proved reserves, excluding overhead.

 

*Field*—An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.

 

*Henry Hub*— The Henry Hub is a distribution hub on the natural gas pipeline system in Erath, Louisiana. Due to its importance, it lends its name to the pricing point for natural gas futures contracts traded on the NYMEX and the OTC swaps traded on the Intercontinental Exchange.

 

*MBbl*—One thousand barrels of crude oil or condensate.

 

*MBoe*—One thousand barrels of oil equivalent.

 

*Mcf*—One thousand cubic feet of natural gas.

 

*MMBtu*—One million British Thermal Units.

 

*Net profits interest, or NPI*—A nonoperating interest that creates a share in gross production from an operating or working interest in oil and natural gas properties. The share is measured by net profits from the sale of production after deducting costs associated with that production.

 

*Oil*—Crude oil and condensate.

 

*Overriding royalty interest*—A fractional, undivided interest or right of participation in the oil or natural gas, or in the proceeds from the sale of oil and natural gas, that is limited in duration to the term of an existing lease and that is not subject to the expenses of development, operation or maintenance.

 

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*Proved developed reserves*—Proved reserves that can be expected to be recovered (i) 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, and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate.

 

*Proved reserves*—The estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be economically producible in future years from known reservoirs under existing economic and operating conditions and government regulations. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. This definition of proved reserves has been abbreviated from the applicable definitions contained in Rule 4-10(a)(2-4) of Regulation S-X.

 

*Proved undeveloped reserves or PUDs*—Proved 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. This definition of proved undeveloped reserves has been abbreviated from the applicable definitions contained in Rule 4-10(a)(2-4) of Regulation S-X.

 

*Recompletion* —The completion for production of an existing well bore in another formation from which that well has been previously completed.

 

*Reservoir*—A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

 

*Working interest*—The right granted to the lessee of a property to explore for and to produce and own oil, natural gas, or other minerals. The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis.

 

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**PART I—FINANCIAL INFORMATION**

 

**Item 1.  Financial Statements.**

 

**PACIFIC COAST OIL TRUST**

**Statements of Assets, Liabilities and Trust Corpus**

**(Unaudited)**

 
| **Thousands of dollars, except unit amounts** | ** ** | **June 30, 2019** | ** ** | **December 31, 2018** | ** ** |
|------------------------------------------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ASSETS                                                                 |       |                        |       |                            |       |
| Cash and cash equivalents                                              |       | $                           | 199        |                            | $          | — |   |
| Investment in conveyed interests,   net of amortization                |       | 198,945                     |       | 204,626                         |       |
| Total assets                                                           |       | $                           | 199,144    |                            | $          | 204,626 |   |
|                                                                   |       |                        |       |                            |       |
| LIABILITIES AND TRUST CORPUS                                           |       |                        |       |                            |       |
| Trust corpus (38,583,158 Trust   units issued and outstanding)         |       | 199,144                     |       | 204,626                         |       |
| Total Liabilities and Trust   Corpus                                   |       | $                           | 199,144    |                            | $          | 204,626 |   |

 

The accompanying notes are an integral part of these financial statements.

 

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**PACIFIC COAST OIL TRUST**

**Statements of Distributable Income**

**(Unaudited)**

 
| ** **                                                                                         | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| **Thousands of dollars, except unit and per unit amounts** | ** ** | **June 30, 2019**      | ** ** | **June 30, 2018**    | ** ** | **June 30, 2019** | ** ** | **June 30, 2018** | ** ** |
| Income from conveyed interests                                                                     |       | $                                | 3,712      |                           | $          | 2,191 |   | $ | 6,143 |   | $ | 6,163 |   |
| PCEC operating and services fee                                                                    |       | (274                             | )          | (269                           | )          | (547 | ) | (536 | ) |
| General and administrative   expenses                                                              |       | (279                             | )          | (295                           | )          | (592 | ) | (843 | ) |
| Cash receipt from borrowing (Note   4)                                                             |       | —                           |       | 81                             |       | — |   | 81 |   |
| Repayments on borrowing (Note 4)                                                                   |       | —                           |       | (81                            | )          | — |   | (81 | ) |
| Interest income                                                                                    |       | 3                                |       | —                         |       | 5 |   | — |   |
| Cash reserves used (withheld) for   Trust expenses                                                 |       | (130                             | )          | (45                            | )          | (199 | ) | 38 |   |
| Distributable income                                                                               |       | $                                | 3,032      |                           | $          | 1,582 |   | $ | 4,810 |   | $ | 4,822 |   |
|                                                                                               |       |                             |       |                           |       |   |   |   |   |
| Distributable income per unit   (38,583,158 units)                                                 |       | $                                | 0.07857    |                           | $          | 0.04101 |   | $ | 0.12467 |   | $ | 0.12499 |   |

 

The accompanying notes are an integral part of these financial statements.

 

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**PACIFIC COAST OIL TRUST**

**Statements of Changes in Trust Corpus**

**(Unaudited)**

 
| ** **                                         | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| **Thousands of dollars**                 | ** ** | **June 30, 2019**      | ** ** | **June 30, 2018**    | ** ** | **June 30, 2019** | ** ** | **June 30, 2018** | ** ** |
| Trust corpus, beginning of period                  |       | $                                | 202,370    |                           | $          | 212,795 |   | $ | 204,626 |   | $ | 217,279 |   |
| Cash reserves (used) withheld for   Trust expenses |       | 130                              |       | 45                             |       | 199 |   | (38 | ) |
| Borrowing used for Trust expenses   (Note 4)       |       | —                           |       | (81                            | )          | — |   | (81 | ) |
| Repayments on borrowings (Note 4)                  |       | —                           |       | 81                             |       | — |   | 81 |   |
| Distributable income                               |       | 3,032                            |       | 1,582                          |       | 4,810 |   | 4,822 |   |
| Distributions to unitholders                       |       | (3,032                           | )          | (1,582                         | )          | (4,810 | ) | (4,822 | ) |
| Amortization of conveyed   interests               |       | (3,356                           | )          | (2,048                         | )          | (5,681 | ) | (6,449 | ) |
| Trust corpus, end of period                        |       | $                                | 199,144    |                           | $          | 210,792 |   | $ | 199,144 |   | $ | 210,792 |   |

 

The accompanying notes are an integral part of these financial statements.

 

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**PACIFIC COAST OIL TRUST**

**NOTES TO FINANCIAL STATEMENTS**

**(Unaudited)**

 

**Note 1.**   **Organization of the Trust**

 

***Formation of the Trust***

 

Pacific Coast Oil Trust (the “Trust”) is a statutory trust formed in January 2012 under the Delaware Statutory Trust Act pursuant to a Trust Agreement among Pacific Coast Energy Company LP (“PCEC”), as trustor, The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), and Wilmington Trust, National Association, as Delaware Trustee (the “Delaware Trustee”). The Trust Agreement was amended and restated by PCEC, the Trustee and the Delaware Trustee on the inception date (May 8, 2012). References in this report to the “Trust Agreement” are to the Amended and Restated Trust Agreement.

 

The Trust was created to acquire and hold net profits and royalty interests in certain oil and natural gas properties located in California (the “Conveyed Interests”) for the benefit of the Trust unitholders pursuant to the Trust Agreement. The Conveyed Interests represent undivided interests in underlying properties consisting of PCEC’s interests in its oil and natural gas properties located onshore in California (the “Underlying Properties”). The Conveyed Interests were conveyed by PCEC to the Trust concurrently with the initial public offering of the Trust’s units of beneficial interest (“Trust Units”) in May 2012.

 

The Conveyed Interests are passive in nature and neither the Trust nor the Trustee has any control over, or responsibility for, costs relating to the operation of the Underlying Properties. The Conveyed Interests entitle the Trust to receive 80% of the net profits from the sale of oil and natural gas production from proved developed reserves on the Underlying Properties as of December 31, 2011 (the “Developed Properties”) and either 25% of the net profits from the sale of oil and natural gas production from all other development potential on the Underlying Properties (the “Remaining Properties”) or 7.5% of the proceeds (free of any production or development costs but bearing the proportionate share of production and property taxes and post-production cost) attributable to the sale of oil and natural gas production from the Remaining Properties located on PCEC’s Orcutt properties, including but not limited to PCEC’s interest in such production (the “Royalty Interest Proceeds”).

 

***Basis of Accounting***

 

The accompanying Statement of Assets and Trust Corpus as of December 31, 2018, which has been derived from audited financial statements, and the unaudited interim financial statements as of June 30, 2019 and for the three months and six months ended June 30, 2019 and 2018 have been prepared pursuant to the rules and regulations of the SEC. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (“2018 Annual Report”).

 

In the opinion of the Trustee, the accompanying unaudited financial statements reflect all adjustments that are necessary for a fair statement of the interim period presented and include all the disclosures necessary to make the information presented not misleading.

 

**Note 2.**   **Distributions to Unitholders**

 

Each month, the Trustee determines the amount of funds available for distribution to the Trust unitholders. Available funds are the excess cash, if any, received by the Trust from the Conveyed Interests and other sources from that month (such as interest earned on any amounts reserved by the Trustee), over the Trust’s liabilities for that month, subject to adjustments for changes made by the Trustee during the month in any cash reserves established for future liabilities of the Trust.  Distributions are made to the holders of Trust Units as of the applicable record date (generally within five business days after the last business day of each calendar month) and are payable on the 10th business day after the record date.

 

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The following table illustrates information regarding the Trust’s distributions paid during the six months ended June 30, 2019 and 2018.

 

**Six Months Ended June 30, 2019**

 
| **Declaration Date** | ** ** | **Record Date**   | ** ** | **Payment Date**  | ** ** | **Distribution per Unit** | ** ** |
|---------------------------|------------|------------------------|------------|------------------------|------------|-------------------------------------|------------|
| December 27, 2018    |       | January 7, 2019   |       | January 22, 2019  |       | $                                   | 0.01376    |   |
| January 30, 2019     |       | February 11, 2019 |       | February 26, 2019 |       | $                                   | 0.01245    |   |
| February 28, 2019    |       | March 11, 2019    |       | March 25, 2019    |       | $                                   | 0.01989    |   |
| March 28, 2019       |       | April 8, 2019     |       | April 23, 2019    |       | $                                   | 0.01946    |   |
| April 26, 2019       |       | May 6, 2019       |       | May 20, 2019      |       | $                                   | 0.02791    |   |
| May 23, 2019         |       | June 3, 2019      |       | June 17, 2019     |       | $                                   | 0.03120    |   |

 

**Six Months Ended June 30, 2018**

 
| **Declaration Date** | ** ** | **Record Date**  | ** ** | **Payment Date**  | ** ** | **Distribution per Unit** | ** ** |
|---------------------------|------------|-----------------------|------------|------------------------|------------|-------------------------------------|------------|
| December 21, 2017    |       | January 2, 2018  |       | January 16, 2018  |       | $                                   | 0.02776    |   |
| January 26, 2018     |       | February 5, 2018 |       | February 20, 2018 |       | $                                   | 0.01635    |   |
| February 28, 2018    |       | March 12, 2018   |       | March 26, 2018    |       | $                                   | 0.03987    |   |
| March 29, 2018       |       | April 9, 2018    |       | April 23, 2018    |       | $                                   | 0.02225    |   |
| April 27, 2018       |       | n/a                   |       | n/a                    |       | $                                   | —     |   |
| May 31, 2018         |       | June 11, 2018    |       | June 25, 2018     |       | $                                   | 0.01876    |   |

 

**Note 3.**   **Related Party Transactions**

 

*Trustee Administrative Fee. *Under the terms of the Trust Agreement, the Trust pays an annual administrative fee of $200,000 to the Trustee and $2,000 to the Delaware Trustee. During the three-month and six-month periods ended June 30, 2019, the Trust paid $50,000 and $100,000, respectively, to the Trustee. During each of the three-month and six-month periods ended June 30, 2019, the Trust paid $0 to the Delaware Trustee. During the three-month and six-month periods ended June 30, 2018, the Trust paid $50,000 and $100,000, respectively, to the Trustee. During each of the three-month and six-month periods ended June 30, 2018, the Trust paid $2,000 to the Delaware Trustee.

 

*PCEC Operating and Services Fee.*  The Trust and PCEC are parties to an Operating and Services Agreement (the “Operating and Services Agreement”), pursuant to which PCEC provides the Trust with certain operating and informational services relating to the Conveyed Interests in exchange for a monthly fee that is revised annually based on changes to the Consumer Price Index.  The monthly operating and services fee was $88,942 during the first quarter of 2018 and was $90,837 beginning April 1, 2018 through the end of the first quarter of 2019. As of April 1, 2019, the monthly operating and services fee increased to $93,056. The Operating and Services Agreement will terminate upon the termination of the Conveyed Interests unless earlier terminated by mutual agreement of the Trustee and PCEC.  During the three-month and six-month periods ended June 30, 2019, PCEC charged the Trust $0.3 million and $0.5 million, respectively, for the operating and services fee. During the three-month and six-month periods ended June 30, 2018, PCEC charged the Trust $0.3 million and $0.5 million, respectively, for the operating and services fee.

 

**Note 4.**   **Funding Commitment and Letter of Credit**

 

On May 10, 2018, the Trust entered into a promissory note with PCEC (the “2018 Promissory Note”) and borrowed funds to pay general and administrative expenses as the Trust did not otherwise have sufficient cash to pay its ordinary course administrative expenses as they became due. Under the terms of the 2018 Promissory Note, the Trust agreed to pay interest on the principal amount at a rate of 5.44% per annum from May 10, 2018 until maturity. On May 10, 2018, the Trust borrowed $80,535 under the terms of the note and repaid the entire amount owed, including interest of $394, in June 2018, and no amount remained outstanding as of December 31, 2018. Interest expense on the outstanding borrowings was recorded as it was paid to PCEC. The Trust incurred no interest under the 2018 Promissory Note during the three-month and six-month periods ended June 30, 2019. For the three-month and six-month periods ended June 30, 2018, the Trust incurred a total of $394 in interest, which was included in the borrowings under the 2018 Promissory Note.

 

PCEC has provided the Trust with a $1.0 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is not sufficient to pay ordinary course general and administrative expenses as they become due. Any funds provided under the letter of credit or loaned to the Trust by PCEC may only be used for the payment of current accounts or other obligations to trade creditors in connection with obtaining goods or services or for the payment of other accrued current liabilities arising in the ordinary course of the Trust’s business, and may not be used to satisfy Trust indebtedness. No distributions will be made to Trust unitholders (except in respect of any previously determined monthly cash distribution amount) until all amounts drawn on the letter of credit, or borrowed from PCEC or any other source, including interest thereon, are repaid. PCEC has agreed to loan funds to the Trust necessary to pay such expenses (evidenced by written promissory notes) as stipulated by the Trust Agreement. As of June 30, 2019, the letter of credit remains unused.

 

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**Note 5.**   **Commitments and Contingencies**

 

*Legal Proceedings.*

 

*Environmental Defense Center Complaint.* On July 12, 2018, the Environmental Defense Center (“EDC”) filed a complaint against PCEC in the U.S. District Court for the Central District of California.  The complaint alleges violations of California’s General Permit for Storm Water Discharges Associated with Industrial Activities (“Industrial Permit”) under the Clean Water Act (“CWA”) at PCEC’s Orcutt Hill facility.  EDC alleges that the Orcutt Hill facility has and continues to discharge pollutants into local rivers, creeks and the Pacific Ocean in violation of the Industrial Permit, as well as other alleged violations related to the terms of the Industrial Permit.  EDC seeks to enjoin PCEC from further violations of the Industrial Permit and the CWA, civil penalties for the alleged violations, and attorneys’ fees and costs.  PCEC waived service of the complaint on October 5, 2018 and answered EDC’s complaint on April 25, 2019.  At this time, PCEC cannot predict the outcome of the proceedings or estimate the magnitude of any costs or expenses that may result from any litigation.  The costs and expenses PCEC incurs in connection with this matter (including legal expenses) will reduce the amounts available for distribution to the Trust, and, as a result, profits attributable to the Trust’s Conveyed Interests will be adversely affected in the future.

 

*Permitting.*

 

During 2015, the California Department of Conservation, Division of Oil, Gas & Geothermal Resources (“DOGGR”) discussed with PCEC the modification of existing well permits for approximately 25 water injections wells located in the conventional formations in the Orcutt oilfield (the “Orcutt Conventional”), which could require certain changes to operating procedures or well modifications. Initially, in September 2015, PCEC proposed, and has since implemented, a schedule to modify one of the affected wells each quarter until all have been modified. In January 2019, PCEC proposed, and has since implemented, a schedule to reduce the number of modifications of affected wells from one per quarter to two per year until all have been modified. However, it is possible that the water injection wells may require repairs at a rate of more than two per year in which case PCEC will be required to make such repairs.  PCEC completed 12 modifications through December 31, 2018. PCEC is in the process of completing one modification in 2019 and has a second modification planned for the second half of 2019.  If DOGGR were to order the modifications to be carried out more rapidly or if PCEC is required to make unanticipated repairs, PCEC’s capital costs could significantly increase.  Alternatively, PCEC could choose or be required financially to shut in all or a portion of the affected injection wells, which would result in a loss of production.

 

PCEC previously had submitted permit applications relating to the drilling of an additional 96 steam injection wells on certain oil and natural gas properties located onshore in California in the Diatomite zone at Orcutt (the “Orcutt Hill Resource Enhancement Plan” or “OHREP”).  At a hearing in June 2016, the Santa Barbara County Planning Commission (the “Planning Commission”) instructed its staff to prepare Findings for Denial, which the Planning Commission adopted by a 3-2 vote in July 2016. In July 2016, PCEC filed an appeal to the Santa Barbara County Board of Supervisors which heard the appeal in November 2016 and voted 3-2 to deny the project, with the exception of approving permanent permits for the installation of seep cans on the Company’s Orcutt Hill property.  As a result of the Board of Supervisors’ decision, future cash flows associated with new permits for drilling in the Diatomite Zone at Orcutt, all of which would be attributable to Remaining Properties, is uncertain.  At this time, PCEC has not filed any additional permits for drilling in the Diatomite Zone at Orcutt and currently is unable to estimate when it will submit such permits to Santa Barbara County. If PCEC submits any permit applications in the future, there can be no assurance that Santa Barbara County will approve such permits or that PCEC will be able to generate additional cash flows as a result.

 

**Note 6.**   **Subsequent Events**

 

On July 19, 2019, the distribution of $0.02774 per Trust Unit, which was declared on June 25, 2019, was paid to Trust unitholders owning Trust Units as of July 5, 2019. Also in July 2019, the Trust announced there will be a cash distribution of $0.02074 per Trust Unit, payable on August 19, 2019 to Trust unitholders owning Trust Units as of August 5, 2019.

 

In July 2019, Breitburn Operating LP (“BOLP”), as operator of the East Coyote field, notified PCEC that it had received a letter from DOGGR dated June 20, 2019, requiring BOLP to reduce the injection pressures on 16 active water injection wells in East Coyote to comply with new injection gradients that DOGGR has mandated. It is anticipated that these revisions will adversely affect the water injection capacity and oil and gas production at East Coyote, at least in the near term. BOLP has informed PCEC that it is exploring opportunities to increase injection capacity, which may require additional capital expenditures. PCEC does not operate the East Coyote field.

 

On July 6, 2019, a fire at the East Coyote field, which is operated by BOLP, destroyed beyond repair a gas fired electrical generator, which is expected to adversely affect production at East Coyote at least in the near term. Additional capital expenditures are likely to be required to replace the generator, and in the interim additional expenses will be incurred for the purchase of electrical power.

 

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**Item 2.**   **Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.**

 

The following review of the Trust’s financial condition and results of operations should be read in conjunction with the financial statements and notes thereto, as well as “Trustee’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of the Trust’s 2018 Annual Report.  The following review should also be read in conjunction with “Forward-Looking Statements” in this report and with “Part I—Item 1A—Risk Factors” in the Trust’s 2018 Annual Report. All information regarding operations has been provided to the Trustee by PCEC.

 

**Overview**

 

The Trust is a statutory trust formed in January 2012 under the Delaware Statutory Trust Act. The business and affairs of the Trust are administered by the Trustee. The Trust’s purpose is to hold the Conveyed Interests (described below), to distribute to the Trust unitholders cash that the Trust receives in respect of the Conveyed Interests and to perform certain administrative functions in respect of the Conveyed Interests and the Trust Units. The Trust does not conduct any operations or activities. The Trustee has no authority over or responsibility for, and no involvement with, any aspect of the oil and natural gas operations or other activities on the Underlying Properties. The Delaware Trustee has only minimal rights and duties as are necessary to satisfy the requirements of the Delaware Statutory Trust Act.  The Trust derives all or substantially all of its income and cash flow from the Conveyed Interests, subject to the effects of the commodity derivative contracts. The Trust is treated as a grantor trust for U.S. federal income tax purposes.

 

The Trust was created to acquire and hold net profits and royalty interests in certain oil and natural gas properties located in California.  The Conveyed Interests represent undivided interests in underlying properties consisting of PCEC’s interests in its oil and natural gas properties located onshore in California (the “Underlying Properties”).

 

Concurrently with the Trust’s initial public offering in May 2012, the Trust and PCEC entered into a Conveyance of Net Profits Interests and Overriding Royalty Interest (the “Conveyance”), pursuant to which PCEC conveyed to the Trust a net profits interest and an overriding royalty interest (the “Conveyed Interests”) in the Underlying Properties. The Conveyed Interests entitle the Trust to receive 80% of the net profits from the sale of oil and natural gas production from the proved developed reserves as of December 31, 2011 on the Underlying Properties (the “Developed Properties”) and either 25% of the net profits from the sale of oil and natural gas production from all other development potential on the Underlying Properties (the “Remaining Properties”) or 7.5% of the proceeds (free of any production or development costs but bearing the proportionate share of production and property taxes and post-production costs) attributable to the sale of oil and natural gas production from the Remaining Properties located on PCEC’s Orcutt properties, including but not limited to PCEC’s interest in such production (the “Royalty Interest Proceeds”).

 

The Trust calculates the net profits and royalties for the Developed Properties and Remaining Properties monthly.  For any monthly period during which costs for the Remaining Properties exceed gross proceeds, if any, the Trust is entitled to receive the Royalty Interest Proceeds, if any, and the Trust will continue to receive such proceeds until the first day of the month following the day on which cumulative gross proceeds for the Remaining Properties exceed the cumulative total excess costs for the Remaining Properties (such occurrence being herein called a “NPI Payout”).  Due to significant planned expenditures associated with the Remaining Properties for the benefit of the Trust, PCEC expects the Trust to receive payments associated with the Remaining Properties in the form of Royalty Interest Proceeds until the NPI Payout occurs in approximately 2020. The estimated date on which the NPI Payout is expected to occur is an estimate based on the annual reserve report and changes from time to time.  In any monthly period following an NPI Payout, the Trust is entitled to receive Royalty Interest Proceeds if costs for the Remaining Properties exceed gross proceeds.

 

The Trust makes monthly cash distributions of all of its monthly cash receipts, after deduction of fees and expenses for the administration of the Trust, to holders of Trust Units as of the applicable record date (generally within five business days after the last business day of each calendar month) on the 10th business day after the record date.  Actual cash distributions to the Trust unitholders fluctuate monthly based upon the quantity of oil and natural gas produced from the Underlying Properties, the prices received for oil and natural gas production, costs to develop and produce the oil and natural gas and other factors. Because payments to the Trust are generated by depleting assets with the production from the Underlying Properties diminishing over time, a portion of each distribution represents, in effect, a return of a unitholder’s original investment. Oil and natural gas production from proved reserves attributable to the Underlying Properties will continue to decline over time.

 

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The Trust is exposed to fluctuation in energy prices in the normal course of business due to the net profits interest in the Underlying Properties. The revenues derived from the Underlying Properties depend substantially on prevailing crude oil prices and, to a substantially lesser extent, natural gas prices. As a result, commodity prices affect the amount of cash flow available for distribution to the Trust unitholders. For example, from February 2016 through January 2017, primarily because of a decline in average realized prices, no cash distributions were made as Trust expenses exceeded the proceeds received from the Conveyed Interests. Lower prices may also reduce the amount of oil and natural gas that PCEC and its third-party operators can economically produce. In addition, the Trust plans to borrow funds from PCEC to pay its administrative expenses; consequently, no further distributions would be made to Trust unitholders until the indebtedness created by such amounts drawn or borrowed, including interest thereon, has been paid in full and the cumulative net profits interest deficit for the Developed Properties has been reduced to zero.

 

***Commodity Prices***

 

In the second quarter of 2019, the Brent crude oil spot price averaged approximately $69.04 per Bbl, compared with approximately $74.53 per Bbl in the second quarter of 2018. Lower crude oil prices not only decrease the Trust’s distributable income, but may also reduce the amount of crude oil that PCEC can produce economically and therefore may decrease the Trust’s crude oil reserves.  In the second quarter of 2019, approximately 98% of production from the Developed Properties consisted of oil and 100% of production from the Remaining Properties consisted of oil.

 

Prices for natural gas in many markets are aligned both with supply and demand conditions in their respective regional markets and with the overall U.S. market. Natural gas prices are also typically higher during the winter period when demand for heating is greatest in the U.S.  In the second quarter of 2019, the Henry Hub price averaged approximately $2.57 per MMBtu, compared with approximately $2.85 per MMBtu in the second quarter of 2018.

 

The significant decline in oil and natural gas prices since 2014 increases the uncertainty as to the impact of commodity prices on proved oil and gas reserves attributable to the Trust. PCEC is unable to predict future commodity prices with any greater precision than the futures market.  A prolonged period of depressed commodity prices may have a significant impact on the volumetric quantities of our proved reserve portfolio.  Fluctuations in commodity prices impact the value of proved oil and gas reserves attributable to the Trust.

 

***Properties***

 

The Underlying Properties consist of the Developed Properties and the Remaining Properties. Production from the Developed Properties that will be attributable to the Trust is produced from wells that, because they have already been drilled, require limited additional capital expenditures associated with new drilling but may require capital expenditures associated with regulatory compliance or drilling capital expenditures associated with utilizing the existing wellbores. Production from the Remaining Properties that will be attributable to the Trust will require capital expenditures for the drilling of wells and installation of infrastructure. PCEC will supply required capital on behalf of the Trust during this period; however, because the costs initially incurred will exceed gross proceeds, the Remaining Properties will have negative net profits during the drilling and development period. During this period of negative net profits, instead of receiving 25% of the net profits, the Trust will receive the Royalty Interest Proceeds. Once revenues from the Remaining Properties have repaid PCEC for the cumulative costs it has advanced on behalf of the Trust, including the aggregate amount of the Royalty Interest Proceeds, the net profits attributable to production from the Remaining Properties will be paid out in place of the Royalty Interest Proceeds, as described below. The Conveyed Interests entitle the Trust to receive the following:

 

Developed Properties

 

·   80% of the net profits from the sale of oil and natural gas production from the Developed Properties.

 

Remaining Properties

 

·          25% of the net profits from the sale of oil and natural gas production from all of the Remaining Properties, or

 

·          the Royalty Interest Proceeds.

 

The Trust calculates the net profits and Royalty Interest Proceeds for the Developed Properties and the Remaining Properties separately. Any excess costs for either the Developed Properties or the Remaining Properties will not reduce net profits calculated for the other. The amount of Royalty Interest Proceeds paid is deducted in the calculation of the net profits attributable to production from the Remaining Properties, and PCEC will be repaid the aggregate amount of the Royalty Interest Proceeds prior to payment of the net profits to unitholders. If at any time cumulative costs for the Developed Properties or the Remaining Properties exceed cumulative gross proceeds associated with such properties, neither the Trust nor the Trust unitholders would be liable for the excess costs, but the Trust would not receive any net profits from the Developed Properties or the Remaining Properties, as the case may be, until future cumulative net profits for such properties exceed the cumulative total excess costs for such properties.

 

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The Trust is not subject to any pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage of time. The Trust will dissolve upon the earliest to occur of the following: (1) the Trust, upon approval of the holders of at least 75% of the outstanding Trust Units, sells all of the Conveyed Interests and any assets constituting the Trust estate, (2) the annual cash proceeds received by the Trust attributable to the Conveyed Interests, in the aggregate, are less than $2 million for each of any two consecutive calendar years, (3) the holders of at least 75% of the outstanding Trust Units vote in favor of dissolution or (4) the Trust is judicially dissolved.

 

*Permitting.* During 2015, DOGGR discussed with PCEC the modification of existing well permits for approximately 25 water injections wells located at the Orcutt Conventional, which could require certain changes to operating procedures or well modifications. Initially, in September 2015, PCEC proposed, and has since implemented, a schedule to modify one of the affected wells each quarter until all had been modified.  In January 2019, PCEC proposed, and has since implemented, a schedule to reduce the number of modifications of affected wells from one per quarter to two per year until all have been modified.  However, it is possible that the water injection wells may require repairs at a rate of more than two per year in which case PCEC will be required to make such repairs.  PCEC has completed 12 modifications through December 31, 2018.PCEC is in the process of completing one modification in 2019 and has a second modification planned for the second half of 2019. If DOGGR were to order the modifications to be carried out more rapidly or if PCEC is required to make unanticipated repairs, PCEC’s capital costs could significantly increase.  Alternatively, PCEC could choose or be required financially to shut in all or a portion of the affected injection wells, which would result in a loss of production.

 

PCEC previously had submitted permit applications relating to the drilling of an additional 96 steam injection wells on certain oil and natural gas properties located onshore in California in the Diatomite zone at Orcutt (the “Orcutt Hill Resource Enhancement Plan” or “OHREP”). At a hearing in June 2016, the Santa Barbara County Planning Commission (the “Planning Commission”) instructed its staff to prepare Findings for Denial, which the Planning Commission adopted by a 3-2 vote in July 2016. In July 2016, PCEC filed an appeal to the Santa Barbara County Board of Supervisors, which heard the appeal in November 2016 and voted 3-2 to deny the project, with the exception of approving permanent permits for the installation of seep cans on the Company’s Orcutt Hill property. As a result of the Board of Supervisors’ decision, future cash flows associated with new permits for drilling in the Diatomite Zone at Orcutt, all of which would be attributable to Remaining Properties, are uncertain. At this time, PCEC has not filed any additional permits for drilling in the Diatomite Zone at Orcutt and currently is unable to estimate when it will submit such permits to Santa Barbara County. If PCEC submits any permit applications in the future, there can be no assurance that Santa Barbara County will approve such permits or that PCEC will be able to generate additional cash flows as a result.

 

***Recent Developments***

 

On May 16, 2019, Pacific Coast Energy Holdings LLC (“PCEH”), the sole member of the general partner of PCEC, entered into a merger agreement with Newbridge Resources, LLC (“Newbridge”), a Texas limited liability company, and NBR Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), pursuant to which Newbridge would acquire all of the equity interests in PCEH pursuant to a merger of Merger Sub with and into PCEH. The acquisition is expected to close in the third quarter of 2019, subject to the fulfillment of certain closing conditions. As the sole member of PCEH following the acquisition, Newbridge will control the management and operations of PCEC through its ability to appoint the members of the Board of Representatives of PCEH, which manages the general partner of PCEC. PCEC will continue to operate the Underlying Properties, and the current agreements governing PCEC’s relationship with the Trust will remain in place.

 

In July 2019, Breitburn Operating LP (“BOLP”), as operator of the East Coyote field, notified PCEC that it had received a letter from DOGGR dated June 20, 2019, requiring BOLP to reduce the injection pressures on 16 active water injection wells in East Coyote to comply with new injection gradients that DOGGR has mandated. It is anticipated that these revisions will adversely affect the water injection capacity and oil and gas production at East Coyote, at least in the near term. BOLP has informed PCEC that it is exploring opportunities to increase injection capacity, which may require additional capital expenditures. PCEC does not operate the East Coyote field.

 

On July 6, 2019, a fire at the East Coyote field, operated by BOLP, destroyed beyond repair a gas fired electrical generator, which is expected to adversely affect production at East Coyote at least in the near term. Additional capital expenditures are likely to be required to replace the generator, and in the interim additional expenses will be incurred for the purchase of electrical power.

 

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**Results of Operations for the Three Months Ended June 30, 2019 and 2018**

 

For the three months ended June 30, 2019, income from Conveyed Interests received by the Trust amounted to $3.7 million compared with $2.2 million for the three months ended June 30, 2018.  The increase in income was primarily due to higher production and lower development expenses. The income received by the Trust during the three months ended June 30, 2019 was associated with net profits from oil and natural gas production from the Developed Properties during the months of February, March and April 2019, and Royalty Interest Proceeds from oil production from the Remaining Properties located in PCEC’s Orcutt Conventional and Orcutt Diatomite properties during the months of February, March and April 2019. The income received by the Trust during the three months ended June 30, 2018 was associated with net profits for oil and natural gas production from the Developed Properties during the months of February and April 2018 and Royalty Interest Proceeds from oil production from the Remaining Properties located in PCEC’s Orcutt Conventional and Orcutt Diatomite properties during the months of February, March and April 2018. The Trust did not receive any net profits income for oil and natural gas production from the Developed Properties during the month of March 2018, as operating expenses and capital expenditures exceeded revenues for the corresponding production period.

 

Oil and natural gas sales volumes are allocated to the net profits interests based upon a formula that considers oil and natural gas prices and the total amount of production expense and development costs.  As oil and natural gas prices change, the Trust’s share of the production volumes is impacted as the quantity of production to cover expenses and development costs in reaching the net profits break-even level changes inversely with price.  Accordingly, the Underlying Property production volumes do not correlate with the Trust’s net profits share of those volumes in any given period.  Therefore, the comparative discussion of oil and natural gas volumes is based on the Underlying Properties as stated in the table below.

 

The following table displays PCEC’s underlying sales volumes and average prices for the Underlying Properties, representing the amounts included in the net profits calculation during the three months ended June 30, 2019 and 2018.

 
| ** **                        | ** ** | **Three Months Ended** | ** ** |
|-----------------------------------|------------|----------------------------------|------------|
| ** **                        | ** ** | **June 30,**                | ** ** |
| ** **                        | ** ** | **2019**                         | ** ** | **2018** | ** ** |
| **Developed   Properties:**       |       |                             |       |   |   |
| Underlying sales volmes (Boe) (a) |       | 187,060                          |       | 192,938 |   |
| Average daily production (Boe/d)  |       | 2,102                            |       | 2,168 |   |
| Average price (per Boe)           |       | $                                | 64.87      |   | $ | 65.18 |   |
| Production cost (per Boe) (b)     |       | $                                | 38.85      |   | $ | 36.83 |   |
|                              |       |                             |       |   |   |
| **Remaining   Properties:**       |       |                             |       |   |   |
| Underlying sales volmes (Boe) (c) |       | 66,779                           |       | 39,060 |   |
| Average daily production (Boe/d)  |       | 750                              |       | 439 |   |
| Average price (per Boe)           |       | $                                | 62.28      |   | $ | 62.19 |   |
| Production cost (per Boe) (b)     |       | $                                | 22.65      |   | $ | 29.07 |   |

 

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(a)  Crude oil sales represented 98% and 99% of sales volumes from the Developed Properties for the three months ended June 30, 2019 and 2018, respectively.

 

(b) Production costs include lease operating expenses and production and other taxes.

 

(c)  Crude oil sales represented 100% of total sales volumes from the Remaining Properties for each of the three-month periods ended June 30, 2019 and 2018, respectively.

 

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***Computation of Net Profits and Royalty Income Received by the Trust***

 

The Trust’s net profits and royalty income consist of monthly net profits and royalty income attributable to the Conveyed Interests.  Net profits and royalty income for the three months ended June 30, 2019 and 2018 was determined as shown in the following table:

 
| ** **                                                                      | ** ** | **Three Months Ended** | ** ** |
|---------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                      | ** ** | **June 30,**                | ** ** |
| **Thousands of dollars**                                              | ** ** | **2019**                         | ** ** | **2018** | ** ** |
| **Developed   Properties—80% Net Profits Interest**                        |       |                             |       |   |   |
| Oil sales                                                                       |       | $                                | 12,069     |   | $ | 12,557 |   |
| Natural gas sales                                                               |       | 65                               |       | 19 |   |
| Total revenues                                                                  |       | 12,134                           |       | 12,576 |   |
| Costs:                                                                          |       |                             |       |   |   |
| Direct operating expenses:                                                      |       |                             |       |   |   |
| Lease operating expenses                                                        |       | 6,775                            |       | 6,433 |   |
| Production and other taxes                                                      |       | 491                              |       | 673 |   |
| Development expenses                                                            |       | 598                              |       | 2,945 |   |
| Total costs                                                                     |       | 7,864                            |       | 10,051 |   |
| Total income                                                                    |       | 4,270                            |       | 2,525 |   |
| Net Profits Interest                                                            |       | 80                               | %          | 80 | % |
| Income from 80% Net Profits   Interest:                                         |       | $                                | 3,416      |   | $ | 2,020 |   |
|                                                                            |       |                             |       |   |   |
| **Remaining   Properties—25% Net Profits Interest**                        |       |                             |       |   |   |
| Oil sales                                                                       |       | $                                | 4,158      |   | $ | 2,429 |   |
| Natural gas sales                                                               |       | 1                                |       | — |   |
| Total revenues                                                                  |       | 4,159                            |       | 2,429 |   |
| 7.5% ORRI                                                                       |       | 296                              |       | 171 |   |
| Costs:                                                                          |       |                             |       |   |   |
| Direct operating expenses:                                                      |       |                             |       |   |   |
| Lease operating expenses                                                        |       | 1,382                            |       | 1,085 |   |
| Production and other taxes                                                      |       | 131                              |       | 50 |   |
| Development expenses                                                            |       | 171                              |       | 708 |   |
| Total costs                                                                     |       | 1,684                            |       | 1,843 |   |
| Total income (loss)                                                             |       | 2,179                            |       | 415 |   |
| Net Profits Interest                                                            |       | 25                               | %          | 25 | % |
| Income from 25% Net Profits   Interest (1)                                      |       | $                                | 545        |   | $ | 104 |   |
|                                                                            |       |                             |       |   |   |
| **Total Trust Cash Flow**                                                       |       |                             |       |   |   |
| Income from 80% Net Profits   Interest                                          |       | $                                | 3,416      |   | $ | 2,020 |   |
| 7.5% ORRI                                                                       |       | 296                              |       | 171 |   |
| Total income                                                                    |       | 3,712                            |       | 2,191 |   |
| PCEC operating and services fee                                                 |       | (274                             | )          | (269 | ) |
| Total cash received (paid)                                                      |       | 3,438                            |       | 1,922 |   |
| Trust general and administrative   expenses and cash withheld for expenses |       | (409                             | )          | (340 | ) |
| Promissory note amount borrowed   from PCEC                                     |       | —                           |       | 81 |   |
| Promissory note amount repayment   to PCEC                                      |       | —                           |       | (81 | ) |
| Interest income                                                                 |       | 3                                |       | — |   |
| Distributable Income                                                            |       | $                                | 3,032      |   | $ | 1,582 |   |

 

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| ** **                                                                     | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                     | ** ** | **June 30,**                | ** ** |
| ** **                                                                     | ** ** | **2019**                         | ** ** | **2018** | ** ** |
| **(1) 25% Net Profits Interest Accrued Deficit** |       |                             |       |   |   |
| Beginning balance                                                              |       | $                                | (1,410     | ) | $ | (1,542 | ) |
| Current period                                                                 |       | 545                              |       | 104 |   |
| Ending balance                                                                 |       | $                                | (865       | ) | $ | (1,438 | ) |

 

*Three Months Ended June 30, 2019 and 2018*

 

*Developed Properties* — For the three months ended June 30, 2019, revenues from the Developed Properties exceeded direct operating expenses and development expenses by $4.3 million. For the three months ended June 30, 2018, revenues exceeded direct operating expenses and development expenses by $2.5 million.  The $1.8 million period-over-period increase is attributable principally to lower development costs, partially offset by lower production in the three months ended June 30, 2019 compared to the three months ended June 30, 2018. Average realized prices decreased by $0.31 per Boe, or 0%, and sales volumes decreased 5.9 MBoe, or 3%. The decrease in production period over period is primarily due to a decline in the steam flow between wells in Orcutt Diatomite and natural production declines. Total lease operating expenses included in the net profits calculation during the quarter were $6.8 million for the three months ended June 30, 2019 compared to $6.4 million for the three months ended June 30, 2018. This increase is mainly due to increased natural gas prices, increased steel tariffs and increased utility costs for the three months ended June 30, 2019 compared to the same period in 2018.  Total development expenses were approximately $0.6 million for the three months ended June 30, 2019 compared to $2.9 million for the three months ended June 30, 2018.  The decrease during the three months ended June 30, 2019 is primarily due to planned reduction in capital spending in Orcutt Conventional and Orcutt Diatomite and a decrease at West Pico due to the completion of a microturbine project at the end of 2018. Production and other taxes were approximately $0.5 million for the three months ended June 30, 2019 compared to $0.7 million for the three months ended June 30, 2018.

 

*Remaining Properties* — For the three months ended June 30, 2019, revenues from the Remaining Properties exceeded direct operating expenses and development expenses by $2.2 million. For the three months ended June 30, 2018, revenues exceeded direct operating expenses and development expenses by $0.4 million. The $1.8 million period-over-period increase is attributable principally to higher production and lower development expenses, partially offset by higher lease operating expenses in the three months ended June 30, 2019, compared to the three months ended June 30, 2018. Average realized prices increased by $0.09 per Boe, or 0%, and sales volumes increased 27.7 MBoe, or 71%. The increase in production period over period is primarily due to the redrill program at Orcutt Diatomite. Total lease operating expenses included in the net profits calculation during the quarter were $1.4 million for the three months ended June 30, 2019 compared to $1.1 million for the three months ended June 30, 2018. This increase is mainly due to increased natural gas prices, increased steel tariffs and increased utility costs for the three months ended June 30, 2019 compared to the same period in 2018. Development expenses were $0.2 million in the three-month period ended June 30, 2019, compared to $0.7 million for the three months ended June 30, 2018. Since a cumulative deficit existed on the 25% net profits interest, the Trust received approximately $0.3 million and $0.2 million during the three months ended June 30, 2019 and 2018, respectively, from the 7.5% overriding royalty interest attributable to the sale of all production from the Remaining Properties located on PCEC’s Orcutt Conventional and Orcutt Diatomite properties.  The cumulative deficit of the net profits interest on the Remaining Properties, including payments to the Trust pursuant to the 7.5% overriding royalty interest, decreased to approximately $0.9 million at June 30, 2019 compared to $1.4 million at June 30, 2018.

 

*PCEC Operating & Services Fee —* PCEC charged the Trust approximately $0.3 million for operating and services fees for each of the three-month periods ended June 30, 2019 and 2018.

 

*Trust Administrative Expenses —* The Trustee paid general and administrative expenses of $0.3 million for each of the three-month periods ended June 30, 2019 and 2018.

 

*Distributable Income —*The total cash received by the Trust from PCEC for the three months ended June 30, 2019 was $3.4 million compared to $1.9 million for the three months ended June 30, 2018. Distributable income was $3.0 million and $1.6 million for the three months ended June 30, 2019 and 2018, respectively.

 

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**Results of Operations for the Six Months Ended June 30, 2019 and 2018**

 

For the six months ended June 30, 2019, income from Conveyed Interests received by the Trust amounted to $6.1 million compared with $6.2 million for the six months ended June 30, 2018.  The decrease in income was primarily due to lower commodity prices and higher lease operating expenses partially offset by higher production and lower development expenses. The net profits income received by the Trust during the six months ended June 30, 2019 was associated with net profits for oil and natural gas production from the Developed Properties during the months of November 2018 through April 2019, and with the Royalty Interest Proceeds relating to production during these same months. The net profits received by the Trust during the six months ended June 30, 2018 was associated with net profits for oil and natural gas production from the Developed Properties during the months of November and December 2017 and January through February 2018 and April 2018, and with the Royalty Interest Proceeds relating to production during these same months in addition to March 2018. The Trust did not receive any net profits income for oil and natural gas production from the Developed Properties during the month of March 2018, as operating expenses and capital expenditures exceeded revenues for the corresponding production period.

 

Oil and natural gas sales volumes are allocated to the net profits interests based upon a formula that considers oil and natural gas prices and the total amount of production expense and development costs.  As oil and natural gas prices change, the Trust’s share of the production volumes is impacted as the quantity of production to cover expenses and development costs in reaching the net profits break-even level changes inversely with price.  Accordingly, the Underlying Property production volumes do not correlate with the Trust’s net profits share of those volumes in any given period.  Therefore, the comparative discussion of oil and natural gas volumes is based on the Underlying Properties as stated in the table below.

 

The following table displays PCEC’s underlying sales volumes and average realized prices for the Underlying Properties, representing the amounts included in the net profits calculation during the six months ended June 30, 2019 and 2018.

 
| ** **                        | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------------------------|------------|---------------------------------------------------|------------|
| ** **                        | ** ** | **2019**                                          | ** ** | **2018** | ** ** |
| **Developed   Properties:**       |       |                                              |       |   |   |
| Underlying sales volmes (Boe) (a) |       | 388,401                                           |       | 399,196 |   |
| Average daily production (Boe/d)  |       | 2,146                                             |       | 2,206 |   |
| Average price (per Boe)           |       | $                                                 | 61.11      |   | $ | 63.49 |   |
| Production cost (per Boe) (b)     |       | $                                                 | 39.23      |   | $ | 34.16 |   |
|                              |       |                                              |       |   |   |
| **Remaining   Properties:**       |       |                                              |       |   |   |
| Underlying sales volmes (Boe) (c) |       | 125,816                                           |       | 84,636 |   |
| Average daily production (Boe/d)  |       | 695                                               |       | 468 |   |
| Average price (per Boe)           |       | $                                                 | 58.73      |   | $ | 60.60 |   |
| Production cost (per Boe) (b)     |       | $                                                 | 26.63      |   | $ | 29.80 |   |

 

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(a)  Crude oil sales represented 98% and 99% of sales volumes from the Developed Properties for the six months ended June 30, 2019 and 2018, respectively.

 

(b) Production costs include lease operating expenses and production and other taxes.

 

(c)  Crude oil sales represented 100% of total sales volumes from the Remaining Properties for each of the six-month periods ended June 30, 2019 and 2018.

 

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***Computation of Net Profits and Royalty Income Received by the Trust***

 

The Trust’s net profits and royalty income consist of monthly net profits and royalty income attributable to the Conveyed Interests.  Net profits and royalty income for the six months ended June 30, 2019 and 2018 was determined as shown in the following table:

 
| ** **                                                                  | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                  | ** ** | **June 30,**              | ** ** |
| **Thousands of dollars**                                          | ** ** | **2019**                       | ** ** | **2018** | ** ** |
| **Developed   Properties—80% Net Profits Interest**                    |       |                           |       |   |   |
| Oil sales                                                                   |       | $                              | 23,593     |   | $ | 25,297 |   |
| Natural gas sales                                                           |       | 142                            |       | 49 |   |
| Total revenues                                                              |       | 23,735                         |       | 25,346 |   |
| Costs:                                                                      |       |                           |       |   |   |
| Direct operating expenses:                                                  |       |                           |       |   |   |
| Lease operating expenses                                                    |       | 14,267                         |       | 12,510 |   |
| Production and other taxes                                                  |       | 970                            |       | 1,128 |   |
| Development expenses                                                        |       | 1,240                          |       | 4,450 |   |
| Total costs                                                                 |       | 16,477                         |       | 18,088 |   |
| Total income                                                                |       | 7,258                          |       | 7,258 |   |
| Net Profits Interest                                                        |       | 80                             | %          | 80 | % |
| Income from 80% Net Profits   Interest:                                     |       | 5,807                          |       | 5,806 |   |
| Property taxes related to PCEC   (1)                                        |       | (187                           | )          | — |   |
| Income from 80% Net Profits   Interest                                      |       | $                              | 5,620      |   | $ | 5,806 |   |
|                                                                        |       |                           |       |   |   |
| **Remaining   Properties—25% Net Profits Interest**                    |       |                           |       |   |   |
| Oil sales                                                                   |       | $                              | 7,386      |   | $ | 5,127 |   |
| Natural gas sales                                                           |       | 3                              |       | 2 |   |
| Total revenues                                                              |       | 7,389                          |       | 5,129 |   |
| 7.5% ORRI                                                                   |       | 523                            |       | 357 |   |
| Costs:                                                                      |       |                           |       |   |   |
| Direct operating expenses:                                                  |       |                           |       |   |   |
| Lease operating expenses                                                    |       | 3,107                          |       | 2,352 |   |
| Production and other taxes                                                  |       | 243                            |       | 169 |   |
| Development expenses                                                        |       | 834                            |       | 1,062 |   |
| Total costs                                                                 |       | 4,184                          |       | 3,583 |   |
| Total income                                                                |       | 2,682                          |       | 1,189 |   |
| Net Profits Interest                                                        |       | 25                             | %          | 25 | % |
| Income from 25% Net Profits   Interest (2)                             |       | $                              | 671        |   | $ | 298 |   |
|                                                                        |       |                           |       |   |   |
| **Total Trust Cash   Flow**                                                 |       |                           |       |   |   |
| Income from 80% Net Profits   Interest                                      |       | $                              | 5,620      |   | $ | 5,806 |   |
| 7.5% ORRI                                                                   |       | 523                            |       | 357 |   |
| Total income                                                                |       | 6,143                          |       | 6,163 |   |
| PCEC operating and services fee                                             |       | (547                           | )          | (536 | ) |
| Total cash received (paid)                                                  |       | 5,596                          |       | 5,627 |   |
| Trust general and administrative   expenses and cash used for expenses |       | (791                           | )          | (805 | ) |
| Promissory note amount borrowed   from PCEC                                 |       | —                         |       | 81 |   |
| Promissory note amount repayment   to PCEC                                  |       | —                         |       | (81 | ) |
| Interest income                                                             |       | 5                              |       | — |   |
| Distributable Income                                                        |       | $                              | 4,810      |   | $ | 4,822 |   |

 

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| ** **                                                                                           | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                                           | ** ** | **June 30,**              | ** ** |
| ** **                                                                                           | ** ** | **2019**                       | ** ** | **2018** | ** ** |
| **(1) 80% Net Profits Interest PCEC   Property Tax Adjustments**            |       |                           |       |   |   |
| Amount related to PCEC ownership   from April 12, 2013 through present not related to the Trust |       | $                              | 187        |   | $ | — |   |
|                                                                                                 |       |                           |       |   |   |
| **(2) 25% Net Profits Interest Accrued Deficit**                       |       |                           |       |   |   |
| Beginning balance                                                                                    |       | $                              | (1,536     | ) | $ | (1,736 | ) |
| Current period                                                                                       |       | 671                            |       | 298 |   |
| Ending balance                                                                                       |       | $                              | (865       | ) | $ | (1,438 | ) |

 

*Six Months Ended June 30, 2019 and 2018*

 

*Developed Properties* — For each of the six-month periods ended June 30, 2019 and June 30, 2018, revenues from the Developed Properties exceeded direct operating expenses and development expenses by $7.3 million. Lower oil prices, lower production and higher lease operating expenses, were offset by lower development costs in the six months ended June 30, 2019 compared to the six months ended June 30, 2018. Average realized prices increased by $2.38 per Boe, or 4%, and sales volumes decreased 10.8 MBoe, or 3%. The decrease in production period over period is primarily due to a decline in the steam flow between wells in Orcutt Diatomite and natural production declines. Total lease operating expenses included in the net profits calculation were $14.3 million for the six months ended June 30, 2019 compared to $12.5 million for the six months ended June 30, 2018. The overall increase period over period is mainly due to increased natural gas prices, increased steel tariffs and increased utility costs. Production and other taxes were approximately $1.0 million for the six months ended June 30, 2019 compared to $1.1 million for the six months ended June 30, 2018. Total development expenses were approximately $1.2 million for the six months ended June 30, 2019 compared to $4.5 million for the six months ended June 30, 2018.  The decrease is primarily due to planned reduction in capital spending in Orcutt Conventional and Orcutt Diatomite and a decrease at West Pico due to a microturbine project being finished at the end of 2018.

 

*Remaining Properties* — For the six months ended June 30, 2019, revenues from the Remaining Properties exceeded direct operating expenses and development expenses by $2.7 million. For the six months ended June 30, 2018, revenues from the Remaining Properties exceeded direct operating expenses and development expenses by $1.2 million. The $1.5 million period-over-period increase is attributable principally to higher production and lower development expenses, partially offset by lower oil prices and higher lease operating expenses in the six months ended June 30, 2019, compared to the six months ended June 30, 2018. Average realized prices decreased by $1.87 per Boe, or 3%, and sales volumes increased 41.2 MBoe, or 49%. The increase in production period over period is primarily due to the redrill program at Orcutt Diatomite. Total lease operating expenses included in the net profits calculation were $3.1 million for the six months ended June 30, 2019 compared to $2.4 million for the six months ended June 30, 2018. This increase is mainly due to increased natural gas prices, increased steel tariffs and increased utility costs for the six months ended June 30, 2019 compared to the same period in 2018. Production and other taxes were approximately $0.2 million for each of the six-month periods ended June 30, 2019 and 2018. Development expenses were approximately $0.8 million for the six months ended June 30, 2019 compared to $1.1 million for the six months ended June 30, 2018. Since a cumulative deficit existed on the 25% net profits interest, the Trust received approximately $0.5 million and $0.4 million during the six months ended June 30, 2019 and 2018, respectively, from the 7.5% overriding royalty interest attributable to the sale of all production from the Remaining Properties located on PCEC’s Orcutt Field and Orcutt Diatomite properties.  The cumulative deficit of the net profits interest on the Remaining Properties, including payments to the Trust pursuant to the 7.5% overriding royalty interest, decreased to approximately $0.9 million at June 30, 2019 compared to $1.4 million at June 30, 2018.

 

*PCEC Operating & Services Fee —* PCEC charged the Trust approximately $0.5 million for operating and services fees for each of the six-month periods ended June 30, 2019 and 2018.

 

*Trust Administrative Expenses —* The Trustee paid general and administrative expenses of $0.6 million for the six months ended June 30, 2019 compared to $0.8 million for the six months ended June 30, 2018.

 

*Distributable Income —*The total cash received by the Trust from PCEC for each of the six-month periods ended June 30, 2019 and 2018 was $5.6 million. Distributable income was $4.8 million for each of the six-month periods ended June 30, 2019 and 2018.

 

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**Liquidity and Capital Resources**

 

The Trust has no source of capital or liquidity other than cash, if any, it receives from the Conveyed Interests, borrowings from PCEC pursuant to PCEC’s loan commitment as described below or, if available, from other lenders, the $1.0 million letter of credit provided by PCEC as described below, and other immaterial sources (such as interest earned on any amounts reserved by the Trustee).  Other than Trust administrative expenses, including payment of the PCEC operating and services fee, payment of any Trust liabilities and the funding of any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to Trust unitholders.  Available funds are the excess cash, if any, received by the Trust from the Conveyed Interests and other sources (such as interest earned on any amounts reserved by the Trustee) in that month, over the Trust’s expenses paid for that month.  Available funds are reduced by any cash the Trustee determines to hold as a reserve against future expenses.

 

The Trustee may create a cash reserve to pay for future liabilities of the Trust. As of June 30, 2019, and December 31, 2018, the Trust had cash reserves of $199,000 and $0, respectively, for future Trust expenses. Commencing with the distribution to unitholders paid in January of 2019, the Trustee has withheld, and in the future intends to withhold, the greater of $10,000 or 3.5% of the funds otherwise available for distribution each month to gradually build a cash reserve of approximately $350,000. Accordingly, the Trustee withheld approximately $175,000 from the funds otherwise available for distribution in January through June 2019. 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 unitholders. 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 unitholders, together with interest earned on the funds.

 

If the Trustee determines that the cash on hand and the cash to be received are, or will be, insufficient to cover the Trust’s liabilities, the Trustee may cause the Trust to borrow funds to pay liabilities of the Trust. The Trustee may also cause the Trust to mortgage its assets to secure payment of the indebtedness. If the Trustee causes the Trust to borrow funds, as it did in May 2018 as described in Note 4 to the financial statements, the Trust unitholders will not receive distributions until the borrowed funds, including interest thereon, are repaid.

 

The Trust calculates the net profits and Royalty Interest Proceeds for the Developed Properties and the Remaining Properties separately. Any excess costs for either the Developed Properties or the Remaining Properties do not reduce net profits calculated for the other.

 

Each month, the Trustee pays Trust obligations and expenses and distributes to the Trust unitholders the remaining proceeds, if any, received from the Conveyed Interests. The cash held by the Trustee as a reserve against future liabilities or for distribution at the next distribution date may be invested in a limited number of permitted investments.  Alternatively, cash held for distribution at the next distribution date may be held in a non-interest-bearing account.

 

PCEC has provided the Trust with a $1.0 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses as they become due. Further, if the Trust requires more than the $1.0 million under the letter of credit to pay administrative expenses, PCEC has agreed to loan additional funds to the Trust to pay necessary expenses. Any funds provided under the letter of credit may only be used for the payment of current accounts or other obligations to trade creditors in connection with obtaining goods or services or for the payment of other accrued current liabilities arising in the ordinary course of the Trust’s business, and may not be used to satisfy Trust indebtedness. The Trust plans to borrow funds from PCEC to pay its administrative expenses; consequently, no further distributions would be made to Trust unitholders until the indebtedness created by such amounts drawn or borrowed, including interest thereon, has been paid in full and the cumulative net profits interest deficit for the Developed Properties has been reduced to zero.

 

**Off-Balance Sheet Arrangements**

 

The Trust has no off-balance sheet arrangements and does not have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the Trust’s liquidity or the availability of capital resources.

 

**New Accounting Pronouncements**

 

As the Trust’s financial statements are prepared on the modified cash basis, most accounting pronouncements are not applicable to the Trust’s financial statements. No new accounting pronouncements have been adopted or issued that would impact the financial statements of the Trust.

 

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**Critical Accounting Policies and Estimates**

 

Please read “Item 7. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of the Trust’s 2018 Annual Report for additional information regarding the Trust’s critical accounting policies and estimates. There were no material changes to the Trust’s critical accounting policies or estimates during the quarter ended June 30, 2019.

 

**Item 3.**         **Quantitative and Qualitative Disclosures about Market Risk.**

 

*Commodity Price Risk.*The Trust’s most significant market risk relates to the prices received for oil and natural gas production. The revenues derived from the Underlying Properties depend substantially on prevailing oil prices and, to a substantially lesser extent, natural gas prices. As a result, commodity prices also affect the amount of cash flow available for distribution to the Trust unitholders. Lower prices may also reduce the amount of oil and natural gas that PCEC or the third-party operators can economically produce.

 

*Credit Risk.* The Trust’s most significant credit risk is the risk of the bankruptcy of PCEC. The bankruptcy of PCEC could impede the operation of wells and the development of the proved undeveloped reserves. The bankruptcy of PCEC also could adversely affect PCEC ability to make loans to the Trust.  Further, in the event of the bankruptcy of PCEC, if a court were to hold that the net profits interests were part of the bankruptcy estate, the Trust might be treated as an unsecured creditor with respect to the net profits interests.

 

In addition, one customer accounted for 88% of PCEC’s net sales in 2018.  This customer’s purchase of production from the Orcutt and West Pico properties therefore presents a credit risk to PCEC and consequently the Trust.

 

**Item 4.**         **Controls and Procedures.**

 

*Evaluation of Disclosure Controls and Procedures*

 

The Trustee maintains disclosure controls and procedures designed to ensure that information required to be disclosed by the Trust in the reports that it files or submits under Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Trust is accumulated and communicated by PCEC to The Bank of New York Mellon Trust Company, N.A., as Trustee of the Trust, and its employees who participate in the preparation of the Trust’s periodic reports as appropriate to allow timely decisions regarding required disclosure.  As of the end of the period covered by this report, the Trustee carried out an evaluation of the Trustee’s disclosure controls and procedures. Sarah Newell, as Trust Officer of the Trustee, has concluded that the disclosure controls and procedures of the Trust are effective.

 

Due to the nature of the Trust as a passive entity and in light of the contractual arrangements pursuant to which the Trust was created, including the provisions of (i) the Trust Agreement, (ii) the Operating and Services Agreement and (iii) the Conveyance, the Trustee’s disclosure controls and procedures related to the Trust necessarily rely on (A) information provided by PCEC, including information relating to results of operations, the costs and revenues attributable to the Trust’s interests under the Conveyance and other operating and historical data, plans for future operating and capital expenditures, reserve information, information relating to projected production, and other information relating to the status and results of operations of the Underlying Properties and the Conveyed Interests, and (B) conclusions and reports regarding reserves by the Trust’s independent reserve engineers.

 

*Changes in Internal Control over Financial Reporting*

 

During the quarter ended June 30, 2019, there was no change in the Trustee’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Trustee’s internal control over financial reporting related to the Trust. The Trustee notes for purposes of clarification that it has no authority over, and makes no statement concerning, the internal control over financial reporting of PCEC.

 

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**PART II—OTHER INFORMATION**

 

**Item 1.**                      **Legal Proceedings**

 

*Environmental Defense Center Complaint.* On July 12, 2018, the Environmental Defense Center (“EDC”) filed a complaint against PCEC in the U.S. District Court for the Central District of California.  The complaint alleges violations of California’s General Permit for Storm Water Discharges Associated with Industrial Activities (“Industrial Permit”) under the Clean Water Act (“CWA”) at PCEC’s Orcutt Hill facility.  EDC alleges that the Orcutt Hill facility has and continues to discharge pollutants into local rivers, creeks and the Pacific Ocean in violation of the Industrial Permit, as well as other alleged violations related to the terms of the Industrial Permit.  EDC seeks to enjoin PCEC from further violations of the Industrial Permit and the CWA, civil penalties for the alleged violations, and attorneys’ fees and costs.  PCEC waived service of the complaint on October 5, 2018 and answered EDC’s complaint on April 25, 2019.  At this time, PCEC cannot predict the outcome of the proceedings or estimate the magnitude of any costs or expenses that may result from any litigation.  The costs and expenses PCEC incurs in connection with this matter (including legal expenses) will reduce the amounts available for distribution to the Trust, and, as a result, profits attributable to the Trust’s Conveyed Interests will be adversely affected in the future.

 

**Item 1A.**             **Risk Factors.**

 

There have been no material changes to the Risk Factors disclosed in “Part I—Item 1A.—Risk Factors” of our 2018 Annual Report.

 

**Item 6. Exhibits.**

 

The following exhibits are filed or furnished as part of this Quarterly Report on Form 10-Q:

 
| **Exhibit   Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1 *                |       | Certificate   of Trust of Pacific Coast Oil Trust (Incorporated herein by reference to   Exhibit 3.4 to the Registration Statement on Form S-1, filed on   January 6, 2012 (Registration No. 333-178928)).                                                                                                                                                                                                                                                               |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.2 *                |       | Amended   and Restated Trust Agreement of Pacific Coast Oil Trust, dated May 8,   2012, among Pacific Coast Energy Company LP, Wilmington Trust, National   Association, as Delaware trustee of Pacific Coast Oil Trust, and The Bank of   New York Mellon Trust Company, N.A., as trustee of Pacific Coast Oil Trust   (Incorporated herein by reference to Exhibit 3.1 to the Trust’s Current   Report on Form 8-K filed on May 8, 2012 (File No. 1-35532)). |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.3 *                |       | First   Amendment to Amended and Restated Trust Agreement of Pacific Coast Oil Trust,   dated June 15, 2012 (Incorporated by reference to Exhibit 3.1 to   the Trust’s Current Report on Form 8-K filed on June 19, 2012 (File   No. 1-35532)).                                                                                                                                                                                                                |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 31.1                 |       | Certification pursuant to   Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                              |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 32.1                 |       | Certification pursuant to   Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                              |

 

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*                                         Asterisk indicates exhibit previously filed with SEC and incorporated herein by reference.

 

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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.

 
| ** ** | **PACIFIC COAST OIL TRUST** |
|------------|-----------------------------|
|       |                        |   |
|       | By:                         | The Bank of New York Mellon Trust   Company, N.A., as Trustee |
|       |                        |   |
|       | By:                         | /s/ Sarah Newell |
|       |                        | Sarah Newell |
|       |                        | Vice President |

 

Date: August 1, 2019

 

The Registrant, Pacific Coast Oil Trust, has no principal executive officer, principal financial officer, board of directors or persons performing similar functions. Accordingly, no additional signatures are available and none have been provided. In signing the report above, the Trustee does not imply that it has performed any such function or that any such function exists pursuant to the terms of the Trust Agreement under which it serves.

 

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