Cautionary Statement
This report contains forward looking statements (that is, statements anticipating future events or conditions and not statements of historical fact). Words such as "anticipate," "expect," "believe," "intend," "plan" or "project," and "should," "would," "could," "potentially," "possibly" or "may," and other words that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements in this report are subject to a number of risks and uncertainties beyond the control of the Trustee. These risks and uncertainties include such matters as future changes in oil prices, oil production levels, economic activity, domestic and international political events and developments, legislation and regulation, and certain changes in expenses of the Trust.
The actual results, performance and prospects of the Trust could differ materially from those expressed or implied by forward-looking statements. Descriptions of some of the risks that could affect the future performance of the Trust appear in Item 1A, "Risk Factors," of the Trust's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the "2008 Annual Report"). There may be additional risks of which the Trustee is unaware or which are currently deemed immaterial.
In the light of these risks, uncertainties and assumptions, you should not rely unduly on any forward-looking statements. Forward-looking events and outcomes discussed in the 2008 Annual Report and in this report may not occur or may transpire differently. The Trustee undertakes no obligation to update forward-looking statements after the date of this report, except as required by law, and all such forward-looking statements in this report are qualified in their entirety by the preceding cautionary statements. Liquidity and Capital Resources
The Trust is a passive entity. The Trustee's activities are limited to collecting and distributing the revenues from the Royalty Interest and paying liabilities and expenses of the Trust. Generally, the Trust has no source of liquidity and no capital resources other than the revenue attributable to the Royalty Interest that it receives from time to time. (See the discussion under "THE ROYALTY INTEREST" in Part I, Item 1 of the 2008 Annual Report for a description of the calculation of the Per Barrel Royalty, and the discussion under "THE PRUDHOE BAY UNIT AND FIELD - Reserve Estimates" and "INDEPENDENT OIL AND GAS CONSULTANTS' REPORT" in Part I, Item 1 of the 2008 Annual Report for information concerning the estimated future net revenues of the Trust.) However, the Trustee has a limited power to borrow, establish a cash reserve, or dispose of all or part of the Trust Estate, under limited circumstances pursuant to the terms of the Trust Agreement. See the discussion under "THE TRUST" in Part I, Item 1 of the 2008 Annual Report.
Since 1999, the Trustee has maintained a $1,000,000 cash reserve to provide liquidity to the Trust during any future periods in which the Trust does not receive a distribution. The Trustee will draw funds from the cash reserve account during any quarter in which the quarterly distribution received by the Trust does not exceed the liabilities and expenses of the Trust, and

will replenish the reserve from future quarterly distributions, if any. The Trustee anticipates that it will keep this cash reserve program in place until termination of the Trust.
Amounts set aside for the cash reserve are invested by the Trustee in U.S. government or agency securities secured by the full faith and credit of the United States. Interest income received by the Trust from the investment of the reserve fund is added to the distributions received from BP Alaska and paid to the holders of Units with each quarterly distribution.
As discussed under "CERTAIN TAX CONSIDERATIONS" in Part I, Item 1 of the 2008 Annual Report, amounts received by the Trust as quarterly distributions are income to the holders of the Units, (as are any earnings on investment of the cash reserve) and must be reported by the holders of the Units, even if such amounts are used by the Trustee to repay borrowings or replenish the cash reserve and are not received by the holders of the Units. Results of Operations
Relatively modest changes in oil prices significantly affect the Trust's revenues and results of operations. Crude oil prices are subject to significant changes in response to fluctuations in the domestic and world supply and demand and other market conditions as well as the world political situation as it affects the members of OPEC and other producing countries. The effect of changing economic and political conditions on the demand for and supply of energy throughout the world and future prices of oil cannot be accurately projected.
Under the terms of the Conveyance of the Royalty Interest to the Trust, the Per Barrel Royalty for any day is the WTI Price for the day less the sum of
(i) Chargeable Costs multiplied by the Cost Adjustment Factor and
(ii) Production Taxes. The narrative under the captions "THE TRUST - Trust Property" and "THE ROYALTY INTEREST" in the 2008 Annual Report explains the meanings of the terms "Conveyance," "Royalty Interest," "Per Barrel Royalty," "WTI Price, "Chargeable Costs" and "Cost Adjustment Factor" and should be read in conjunction with this report. Royalty revenues are generally received on the fifteenth day of the month following the end of the calendar quarter in which the related Royalty Production occurred (the "Quarterly Record Date"). The Trustee, to the extent possible, pays all accrued expenses of the Trust on each Quarterly Record Date from the royalty payment received. Revenues and Trust expenses presented in the statement of cash earnings and distributions are recorded on a modified cash basis and, as a result, royalty revenues and distributions shown in such statements for the three and nine-month periods ended September 30, 2009 and 2008, respectively, are attributable to BP Alaska's operations during the three and nine-month periods ended June 30, 2009 and 2008, respectively. The following table summarizes the factors which determined the Per Barrel Royalties used to calculate the payments received by the Trust in January, April and July 2009 and 2008 (see Note 1 of Notes to Financial Statements (Unaudited) in Part I, Item 1). The information in the table has been furnished by BP Alaska.

                                                                   Data for Quarter
              Is Based on
                Data for                                        Cost          Adjusted         Average         Average
Royalty         Quarter         Average      Chargeable      Adjustment      Chargeable      Production      Per Barrel
Payment in       Ended         WTI Price        Costs          Factor           Costs           Taxes          Royalty
Jul. 2009      06/30/2009      $  59.74      $    13.25           1.647       $   21.82      $    11.03      $    26.89
Apr. 2009      03/31/2009      $  43.20      $    13.25           1.634       $   21.65      $     5.43      $    16.13
Jan. 2009      12/31/2008      $  58.03      $    13.00           1.636       $   21.26      $    11.42      $    25.35

Jul. 2008      06/30/2008      $ 124.34      $    13.00           1.668       $   21.68      $    52.37      $    50.29
Apr. 2008      03/31/2008      $  97.78      $    13.00           1.630       $   21.19      $    33.58      $    43.01
Jan. 2008      12/31/2007      $  90.93      $    12.75           1.618       $   20.63      $    22.29      $    48.01

"Royalty Production" for each day in a calendar quarter is 16.4246% of the first 90,000 barrels of the actual average daily net production of oil and condensate for the quarter from the BP Working Interests. So long as BP Alaska's average daily net production from the BP Working Interests exceeds 90,000 barrels, the principal factors affecting the Trust's revenues and distributions to Unit holders are changes in WTI Prices, scheduled annual increases in Chargeable Costs, changes in the Consumer Price Index and changes in Production Taxes. Average daily net production of oil and condensate from the BP Working Interests has been below 90,000 barrels per day during certain quarterly periods since 2006, due to a BP Alaska program of field wide infrastructure renewal, pipeline replacement and well mechanical improvements.
BP Alaska estimates Royalty Production from the BP Working Interests for purposes of calculating quarterly royalty payments to the Trust because complete actual field production data for the preceding calendar quarter generally is not available by the Quarterly Record Date. To the extent that average net production from the BP Working Interests is below 90,000 barrels per day in any quarter, recalculation by BP Alaska of actual Royalty Production data may result in revisions of prior Royalty Production estimates. Revisions by BP Alaska of its Royalty Production calculations cause BP Alaska to adjust its quarterly royalty payments to the Trust to compensate for overpayments or underpayments of royalties with respect to prior quarters. Such adjustments, if material, may adversely affect certain Unit holders who buy or sell Units between the Quarterly Record Dates for the Quarterly Distributions affected.
The Quarterly Distributions received by the Trust from BP Alaska in January 2009 and 2008, were adjusted by BP Alaska to compensate for underpayment of royalties due to the Trust with respect to the quarters ended December 31, 2008 and 2007, respectively. See Note 7 of Notes to Financial Statements (Unaudited) in Item 1. Because the statements of cash earnings and distributions of the Trust are prepared on a modified cash basis, royalty revenues for the three-month periods ended March 31, 2009 and 2008 reflect the amounts of the adjustments with respect to the earlier fiscal periods.
The Trustee anticipates that the Trust will receive a lump sum payment during the fourth quarter of 2009, consisting of $29,469,081 plus accrued interest from an escrow account established in connection with a settlement agreement between BP Alaska and the Trustee, if an order and final judgment entered on October 21, 2009 by the Delaware Chancery Court approving the settlement

agreement has not been appealed within 30 days from the entry of the order. For additional information, see Note 6 of Notes to Financial Statements (Unaudited) in Item 1, the Trust's Current Report on Form 8-K dated May 8, 2009 and the Settlement Agreement dated May 8, 2009, which is filed as Exhibit 10.1 to this report. If the escrowed settlement funds are received by the Trust on or before the date on which the Trustee receives the quarterly royalty distribution scheduled to be made by BP Alaska in January 2010, the Trustee intends to add such funds to the distribution received from BP Alaska and distribute the total amount to holders of Units on the Quarterly Record Date for such distribution. Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008
As explained above, Trust royalty revenues received during the third quarter of the fiscal year are based on Royalty Production during the second quarter of the fiscal year. Royalty revenues received by the Trust in the quarter ended September 30, 2009 decreased approximately 45% from the corresponding quarter of 2008, reflecting a 52% period-to-period decrease in the Average WTI Price from $124.34 per barrel during the quarter ended June 30, 2008 to $59.74 per barrel during the quarter ended June 30, 2009. The average Per Barrel Royalty, however, decreased by only 47%, principally due to a 79% period-to-period decrease in average Production Taxes which fell from $52.37 per barrel in the quarter ended June 30, 2008 to $11.03 per barrel in the quarter ended June 30, 2009 as a consequence of lower tax rates on production resulting from the progressivity feature of the Alaska oil and gas production tax statutes. Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008
Trust royalty revenues decreased 51% in the nine months ended September 30, 2009 from the corresponding period of 2008, reflecting the cumulative effect of a 49% decrease in Average WTI Price during the nine-month period ended June 30, 2009 from the nine-month period ended June 30, 2008. The average Per Barrel Royalty payable with respect to the nine months ended June 30, 2009 reflected a corresponding decrease of 52% from the nine-month period ended June 30, 2008. Average Production Taxes chargeable with respect to the nine-month period ended June 30, 2009 decreased 74% from average Production Taxes chargeable with respect to the nine months ended June 30, 2008, as a result of the lower WTI Prices during the latter period and lower tax rates applicable to production during the period under the progressivity provisions of the Alaska oil and gas production tax statutes. Trust administrative expenses fell 23% during the nine months ended September 30, 2009 from the corresponding period in 2008, primarily due to decreases in on-going legal fees and expenses related to issues arising from the August 2006 shutdown of the Prudhoe Bay field. Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Trust is a passive entity and except for the Trust's ability to borrow money as necessary to pay liabilities of the Trust that cannot be paid out of cash on hand, the Trust is prohibited from engaging in borrowing transactions. The Trust periodically holds short-term investments acquired with funds held by the Trust pending distribution to Unit holders and funds held in reserve for the payment of Trust expenses and liabilities. Because of the short-term nature of these investments and limitations on the types of investments which may be held by the Trust, the Trust is not subject to any material interest rate risk. The Trust does not engage in

transactions in foreign currencies which could expose the Trust or Unit holders to any foreign currency related market risk or invest in derivative financial instruments. It has no foreign operations and holds no long-term debt instruments.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Trustee has disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. These controls and procedures include but are not limited to controls and procedures designed to ensure that information required to be disclosed by the Trust in the reports that it files or submits under the Exchange Act is accumulated and communicated to the responsible trust officers of the Trustee to allow timely decisions regarding required disclosure.
Under the terms of the Trust Agreement and the Conveyance, BP Alaska has significant disclosure and reporting obligations to the Trust. BP Alaska is required to provide the Trust such information concerning the Royalty Interest as the Trustee may need and to which BP Alaska has access to permit the Trust to comply with any reporting or disclosure obligations of the Trust pursuant to applicable law and the requirements of any stock exchange on which the Units are listed. These reporting obligations include furnishing the Trust a report by February 28 of each year containing all information of a nature, of a standard and in a form consistent with the requirements of the SEC respecting the inclusion of reserve and reserve valuation information in filings under the Exchange Act and with applicable accounting rules. The report is required to set forth, among other things, BP Alaska's estimates of future net cash flows from proved reserves attributable to the Royalty Interest, the discounted present value of such proved reserves, the assumptions utilized in arriving at the estimates contained in the report, and the estimate of the quantities of proved reserves (including reductions of proved reserves as a result of modification of BP Alaska's estimates of proved reserves from prior years) added during the preceding year to the total proved reserves allocated to the BP Working Interests as of December 31, 1987.
In addition, the Conveyance gives the Trust and its independent accountants certain rights to inspect the books and records of BP Alaska and discuss the affairs, finances and accounts of BP Alaska relating to the BP Working Interests with representatives of BP Alaska; it also requires BP Alaska to provide the Trust with such other information as the Trustee may reasonably request from time to time and to which BP Alaska has access.
The Trustee's disclosure controls and procedures include ensuring that the Trust receives the information and reports that BP Alaska is required to furnish to the Trust on a timely basis, that the appropriate responsible personnel of the Trustee examine such information and reports, and that information requested from and provided by BP Alaska is included in the reports that the Trust files or submits under the Exchange Act.
As of the end of the period covered by this report, the trust officers of the Trustee responsible for the administration of the Trust conducted an evaluation of the Trust's disclosure controls and

procedures. Their evaluation considered, among other things, that the Trust Agreement and the Conveyance impose enforceable legal obligations on BP Alaska, and that BP Alaska has provided the information required by those agreements and other information requested by the Trustee from time to time on a timely basis. The officers concluded that the Trust's disclosure controls and procedures are effective.
Internal Control Over Financial Reporting There has not been any change in the Trust's internal control over financial reporting identified in connection with the evaluation required by paragraph
(d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the Trust's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 4T. Controls and Procedures.
Not applicable.