BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUSINESS DESCRIPTION BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interest comprising a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope of Alaska. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change 1.23-11.62-35.91 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues 20.64 71.93-30.30 Net Income 21.59 74.83-30.50 EPS 20.28 74.75-30.54 RETURN ON EQUITY (%) Ind Avg S&P 500 Q3 2017 10,177.96 12.45 13.41 Q3 2016 5,543.59-4.05 11.79 Q3 2015 21,876.95 6.55 12.91 P/E COMPARISON 5.71 EPS ALYSIS¹ ($) 235.97 Ind Avg 25.35 S&P 500 HOLD Sector: Energy Sub-Industry: Oil & Gas Exploration & Production Source: S&P HOLD RATING SINCE 06/13/2017 Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History HOLD SELL HOLD SELL HOLD Volume in Millions 2016 2017 COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History RECOMMENDATION We rate () a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing nesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. HIGHLIGHTS Despite its growing revenue, the company underperformed as compared with the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 20.6%. Growth in the company's revenue appears to have helped boost the earnings per share. has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.02, which clearly demonstrates the ability to cover short-term cash needs. 45 40 35 30 25 20 15 10 10 5 0 Q1 2.69 Q2 1.00 Q3 1.47 2015 Q4 0.70 Q1 0.60 Q2 0.07 Q3 0.69 2016 = not available NM = not meaningful Q4 0.68 Q1 0.99 Q2 1.10 Q3 0.83 2017 1 Compustat fiscal year convention is used for all fundamental data items. The gross profit margin for is currently very high, coming in at 100.00%. has managed to maintain the profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, 's net profit margin of 97.78% significantly outperformed against the industry. The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Oil, Gas & Consumable Fuels industry average, but is greater than that of the S&P 500. The net income increased by 21.6% when compared to the same quarter one year prior, going from $14.66 million to $17.83 million. has underperformed the S&P 500 Index, declining 11.62% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time. PAGE 1
PEER GROUP ALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -50% 125% UNFAVORABLE PGH -150% EBITDA Margin (TTM) FAVORABLE ECR BCEI OBE PBT GPRK DMLP MPO EPE SJT 100% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $369.6 Million and $600 Million. Companies with or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -50% 125% UNFAVORABLE BCEI -1400% Earnings Yield (TTM) FAVORABLE GPRK SJT PBT ECR DMLP EPE MPO PGH OBE 400% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -40.8% and 120.8%. Companies with or NM values do not appear. INDUSTRY ALYSIS The Oil, Gas & Consumable Fuels industry is cyclical in nature and is one of the most important globally because it touches so many others. It is broken down into its component parts by the nature of activity performed. Upstream activities are related to finding and producing commodities; midstream refers to the transportation of product from the wellhead to intermediate customers; and, downstream includes the refining, transformation and marketing of related products. Coal producers are integrated, much like the players in alternative fuels like uranium. Some of the largest players in the industry are the integrated oil & gas producers (aka Big Oil). Close to two-thirds of the world s energyneeds are satisfied by hydrocarbons (crude oil and natural gas). Althoughconservation, increased efficiency and substitutes are gaining in prominence,they are not likely to significantly reduce this dependence in the near future.crude oil prices have moderated at present due to lagging economies and newsupplies coming online. In 2004, West Texas Intermediate (WTI) crude oil brokeout of its historic trading range of $10 to $40 per barrel on a steady climb tomore than $145 per barrel in June 2008 before crashing to under $40 by the endof 2008. Since then the price of spot crude has climbed back near the $90 to$110 range before falling again. Natural gas prices, responding to excesssupply, have retreated to the $2 to $4 range per million BTU (British thermalunit). Coal prices are dependent on the energy content of the type of coalconsidered and its location, but it, too, has climbed significantly over thepast few years. Following nearly 20 years of underinvestment,the supply of crude oil is now keeping pace with slackening demand. Longer term demandshould grow at about 1.8% per year, meaning it is expected to grow more than40% over the next 20 years. Natural gas demand is expected to rise over time,according to the American Petroleum Institute, as its cleaner-burningproperties increase in value for industry. Coal consumption is projected togrow at about 1.7% per year over the next 20 years, based on US EnergyInformation Administration forecasts. Analysis of companies in this industry beginsby forming a view of the global economy and geopolitics, which is combined witha supply and demand analysis that leads to commodity price forecasts. At theindividual firm level, how efficiently a company operates goes a long way indetermining its profitability. Supply management is an important factor, too,as high commodity prices are affected by how much supply the industry as awhole produces. Geographic positioning can also be important, as regionaleconomic cycles may not synch up well with each other. The so-called supermajor integrated oilcompanies include Exxon Mobil (XOM), BP Plc (BP), Chevron (CVX), Total SA(TOT), and ConocoPhillips (COP). Some of the other major Exploration &Production firms include Anadarko Petroleum (APC), DevonEnergy (DVN) and Apache (APA). On the Refining & Marketing level, majorplayers include Valero Energy (VLO), Sunoco (SUN), and Tesoro (TSO). The majoruranium producer is Cameco (CCJ). PEER GROUP: Oil, Gas & Consumable Fuels Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) BP PRUDHOE BAY ROYALTY TR 20.55 440 5.71 78.26 77.15 OBE OBSIDIAN ENERGY LTD 1.19 600 NM 446.00-258.00 ECR ECLIPSE RESOURCES CORP 2.18 573 NM 363.49-41.66 BCEI BONZA CREEK ENERGY INC 26.69 546 NM 189.20-63.93 GPRK GEOPARK LTD 8.60 515 NM 284.17-40.17 DMLP DORCHESTER MINERALS -LP 14.80 478 15.26 48.50 31.07 PBT PERMIAN BASIN ROYALTY TRUST 9.25 431 14.45 30.50 29.20 PGH PENGROWTH ENERGY CORP 0.78 431 NM 528.90-565.80 EPE EP ENERGY CORP 1.64 418 NM 1,030.00-262.00 MPO MIDSTATES PETROLEUM CO INC 16.00 403 0.26 238.45 1,577.60 SJT SAN JUAN BASIN ROYALTY TR 7.93 370 10.17 29.52 36.65 The peer group comparison is based on Major Oil & Gas Exploration & Production companies of comparable size. PAGE 2
Annual Dividend Rate COMPANY DESCRIPTION BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interest comprising a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope of Alaska. The Prudhoe Bay field extends approximately 12 miles by 27 miles and contains approximately 150,000 gross productive acres. As of December 31, 2016, its estimated proved reserves were 9.376 million barrels of oil and condensate of which 9.204 million barrels are proved developed reserves and 0.172 million barrels are proved undeveloped reserves. BP Prudhoe Bay Royalty Trust was founded in 1989 and is based in Houston, Texas. STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 1.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 10% of the stocks we rate. 601 Travis Street, Floor 16 Houston, TX 77002 USA Phone: 713-483-6020 Total Return 1.5 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 20% of the companies we cover. Efficiency 5.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 90% of the companies we review. Price volatility 1.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 10% of the stocks we monitor. Solvency 2.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 30% of the companies we analyze. Income 5.0 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 90% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3
Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINCIAL ALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. is extremely liquid. Currently, the Quick Ratio is 4.02 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow. During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 4.77% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) 18.23 15.11 EBITDA ($mil) 17.82 14.66 EBIT ($mil) 17.82 14.66 Net Income ($mil) 17.83 14.66 STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.thestreetratings.com. BALANCE SHEET Cash & Equiv. ($mil) 1.01 1.00 Total Assets ($mil) 1.01 1.00 Total Debt ($mil) 0.00 0.00 Equity ($mil) 0.76 0.80 PROFITABILITY Gross Profit Margin 100.00% 100.00% EBITDA Margin 97.77% 97.02% Operating Margin 97.77% 97.02% Sales Turnover 77.56 45.38 Return on Assets 7,646.08% 4,399.50% Return on Equity 10,177.96% 5,543.59% DEBT Current Ratio 4.02 4.85 Debt/Capital 0.00 0.00 Interest Expense 0.00 0.00 Interest Coverage SHARE DATA Shares outstanding (mil) 21 21 Div / share 0.83 0.69 EPS 0.83 0.69 Book value / share 0.04 0.04 Institutional Own % Avg Daily Volume 155,014 155,231 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4
RATINGS HISTORY Our rating for has not changed since 6/13/2017. As of 12/7/2017, the stock was trading at a price of which is 37.6% below its 52-week high of $32.95 and 37.0% above its 52-week low of $15.00. 2 Year Chart HOLD: $26.98 SELL: $13.27 2016 HOLD: $21.30 SELL: $19.70 HOLD: $20.85 $40 $30 $20 MOST RECENT RATINGS CHANGES Date Price Action From To 6/13/17 $20.85 Upgrade Sell Hold 3/30/17 $19.70 Downgrade Hold Sell 10/11/16 $21.30 Upgrade Sell Hold 4/4/16 $13.27 Downgrade Hold Sell 12/7/15 $26.98 No Change Hold Hold Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 12/7/2017) 45.41% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 30.81% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 23.78% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Research Contact: 212-321-5381 Sales Contact: 866-321-8726 VALUATION HOLD. 's P/E ratio indicates a significant discount compared to an average of 235.97 for the Oil, Gas & Consumable Fuels industry and a significant discount compared to the S&P 500 average of 25.35. For additional comparison, its price-to-book ratio of 580.51 indicates a significant premium versus the S&P 500 average of 3.22 and a significant premium versus the industry average of 4.85. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Price/Earnings 5.71 Peers 235.97 Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. is trading at a significant discount to its peers. Price/Projected Earnings Peers 34.94 Neutral. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth potential. Price/Book 580.51 Peers 4.85 Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a significant premium to its peers. Price/Sales 5.62 Peers 2.08 Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a significant premium to its industry. DISCLAIMER: Price/CashFlow Peers 9.67 Neutral. The P/CF ratio is the stock s price divided by the sum of the company's cash flow from operations. It is useful for comparing companies with different capital requirements or financing structures. Price to Earnings/Growth Peers 1.00 Neutral. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. Earnings Growth lower higher 74.75 Peers 152.97 Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher 71.93 Peers 26.85 Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share. has a sales growth rate that significantly exceeds its peers. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. PAGE 5