TEL Offshore Trust: No Fourth Quarter 2009 Distribution

TEL Offshore Trust announced that there will be no trust distribution for the fourth quarter of 2009 for unitholders of record on December 31, 2009. The financial and operating information included herein for the Trust’s fourth quarter of 2009 reflects financial and operating information with respect to the royalty properties for the months of August, September and October 2009.

Gas revenues recorded by the Working Interest Owners on the royalty properties increased approximately 1,230% to $421,721 in the fourth quarter of 2009 from $31,709 in the third quarter of 2009. Natural gas volumes during the fourth quarter of 2009 increased approximately 1,387% to 122,763 Mcf from 8,255 Mcf during the third quarter of 2009. There was very limited gas production during the third quarter of 2009 as a result of the continued existence of damages to infrastructure caused by Hurricane Ike in September 2008. Limited production continued in the fourth quarter of 2009, although production sales continued to increase at Ship Shoal 182/183. The average price received for natural gas decreased approximately 11% to $3.44 per Mcf in the fourth quarter of 2009 as compared to $3.84 per Mcf received in the third quarter of 2009.

Crude oil revenues recorded by the Working Interest Owners on the royalty properties increased approximately 48% to $4,024,763 in the fourth quarter of 2009 from $2,716,744 in the third quarter of 2009. Oil volumes during the fourth quarter of 2009 increased approximately 30% to 58,916 barrels, compared to 45,222 barrels of oil produced in the third quarter of 2009. The increase in revenue was primarily due to the continued increase in production levels at Ship Shoal 182/183 after damages caused by Hurricane Ike as well as an increase in oil prices. The average price received for oil increased approximately 14% to $68.31 per barrel in the fourth quarter of 2009 as compared to $60.08 per barrel received in the third quarter of 2009.

The Trust's share of capital expenditures decreased by $350,949 in the fourth quarter of 2009 to $122,566, as compared to $473,515 in the third quarter of 2009. The higher capital expenditures in the third quarter related primarily to repairs made on Ship Shoal 182/183. Trust's share of operating expenses decreased by $1,780,322 in the fourth quarter of 2009 to $6,412,333 as compared to $8,192,655 for the third quarter of 2009. The operating expenditures relate primarily to the ongoing abandonment costs associated with Eugene Island 339.

For the fourth quarter of 2009, under the terms of the conveyance for the royalty properties, production costs for the royalty properties exceeded gross proceeds thereof, with the Trust's portion of such excess equal to approximately $590,000. For 2009, the Trust's portion of the amount by which production costs exceeded gross proceeds is approximately $5.5 million. No funds were released or escrowed from the Trust's Special Cost Escrow in the fourth quarter of 2009. The Trust's Special Cost Escrow balance was $4,306,275 as of the end of the Trust's fourth quarter.
 

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