To Fellow Unitholders of Pacific Coast Oil Trust (ROYTL),
We are at a critical juncture for the Pacific Coast Oil Trust, and we are joining the ongoing battle to protect the value of our investments. For years, unitholders have watched as the operator of the trust, Pacific Coast Energy Company (PCEC), along with the passive complicity of the Trustee, Sarah Newell from the Bank of New York Mellon, have mismanaged our Trust. Since 2019, weve received no distributions, no accountability, and no meaningful communication. PCEC has grown increasingly bold, taking advantage of the Trustees inaction to further erode the Trusts value. Theyve exploited loopholes to inflate costs, such as abruptly assessing Asset Retirement Obligations (AROs) to trigger a dissolution. Even worse, they continue to use wells that dont belong to the Trust to further inflate liabilitiesall while the Trustee remains inactive.
Key Issues:
1. The Trustees Complete Failure to Act:
PCEC has taken two calculated steps to undermine the Trust:
o Sudden and Massive ARO Claims: PCEC has abruptly inflated environmental and ARO liabilities to push the Trust toward dissolution by driving net profits below the $2 million threshold, which would trigger liquidation within two years. This is a deliberate move to strip unitholders of the assets future value.
o Inflating Costs with Inactive and Plugged Wells: A major unitholder uncovered that PCEC has included inactive and plugged wells in its ARO calculations, artificially inflating costs to further weaken the Trusts financial position.
The Trustee has allowed these manipulations to go unchecked, showing a complete disregard for unitholders interests.
2. A Clear Scheme to Dissolve the Trust:
The evidence is clear: PCEC is systematically inflating liabilities to push the Trust into dissolution, leaving unitholders with nothing. Every Form 8-K is filled with misstatements, merely repeating PCECs narrative with no oversight from the Trustee.
3. Lack of Financial Transparency:
Since 2019, PCEC has failed to provide accurate financials and is hiding behind endless audits. The Trustee, instead of demanding transparency, continues to parrot flawed data. If they missed an 70+ well discrepancy, what else are they overlooking?
4. Dismissive Responses from the Trustee:
When unitholders raise valid concerns, the Trustee offers only a dismissive response: Weve done all we can. This is not acceptable. Even after a majority vote to remove them, the Trustee has failed to take any corrective action.
Our Vision for the Future:
We are not just here to highlight problemswe are here to join the fight to restore accountability and protect unitholders interests. Together, we can:
Reinstate Distributions: We will work to recover the $40-45 million in rightful distributions that have been unjustly withheld.
Demand Full Transparency: We must hold PCEC and the Trustee accountable for every misstatement and financial discrepancy. Full transparency and governance reform are necessary to ensure the Trust is properly managed.
Hold the Trustee Accountable: If the Trustee continues to neglect its duties, we will take the necessary steps to ensure they are held responsible for their inaction.
We are joining the fight to protect whats rightfully ours. The time for inaction is over. Lets work together to reclaim our distributions, demand accountability, and ensure the future success of the Pacific Coast Oil Trust.
Sincerely,
Moe Shaltout & Ravi Desai
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