850033--3/1/2010--BP_PRUDHOE_BAY_ROYALTY

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{operation, natural, condition}

{cost, contract, operation}

{interest, director, officer}

Royalty Production from the Prudhoe Bay field is projected to decline and will eventually cease. Construction of a proposed gas pipeline from the North Slope of Alaska could accelerate the decline in Royalty Production from the Prudhoe Bay field. Royalty Production from the Prudhoe Bay field may be adversely affected by the recent changes to the Alaska Production Tax Statutes. Royalty payments by BP Alaska to the Trust are unpredictable, because they depend on Cushing, Oklahoma WTI spot prices, which have been volatile in recent years, and on the volume of production from the 1989 Working Interests, which may vary from quarter to quarter in the future. Prudhoe Bay field oil production could be shut in partially or entirely from time to time as a result of damage to or failures of field pipelines or equipment. Oil production from the Prudhoe Bay Unit could be interrupted by damage to the Trans-Alaska Pipeline System from natural causes, accidents, deliberate attacks or declining oil flows. Production from the 1989 Working Interests may be interrupted or discontinued by BP Alaska. There are potential conflicts of interest between BP Alaska and the Trust that could affect the royalties paid to Unit holders.

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850033--3/1/2010--BP_PRUDHOE_BAY_ROYALTY_TRUST