BP Prudhoe Bay Royalty Trust (the Trust) is a grantor trust. The Trust was formed for the sole purpose of owning and administering the Royalty Interest. The Royalty Interest is a non-operational interest in minerals. The Royalty Interest entitles the Trust to a royalty on 16.42% of the lesser of the first 90,000 barrels of the average actual daily net production of crude oil and condensate per quarter from the working interest of BP Exploration (Alaska) Inc. (BP Alaska), as of February 28, 1989, in the Prudhoe Bay oil field located on the North Slope in Alaska, or the average actual daily net production of crude oil and condensate per quarter from that working interest. The Prudhoe Bay field is one of four contiguous North Slope oil fields that are operated by BP Alaska and are known collectively as the Prudhoe Bay Unit.