Chesapeake Granite Wash Trust Announces Distribution of $0.0467 Per Common Unit

Rhea-AI Summary

Chesapeake Granite Wash Trust (CHKR) announced a quarterly distribution of $0.0467 per common unit for the period ending March 31, 2021, to be paid on June 1, 2021. This payment is based on production from December 1, 2020, through February 28, 2021. The Trust reported total sales volumes of 9 mbbl of oil, 285 mmcf of natural gas, and 31 mbbl of natural gas liquids during this period. Total oil equivalent volumes reached 88 mboe. Revenue less production taxes was $2,359,000, leading to a distributable income of $2,182,000, equating to a calculated distributable income per unit of $0.0467.

Positive

• Quarterly distribution of $0.0467 per common unit demonstrates ongoing cash generation.
• Reported total sales volumes include 9 mbbl oil and 285 mmcf natural gas, indicating continued operational activity.

Negative

• Natural gas prices spiked due to extreme weather in February 2021, creating an unsustainable revenue increase.
• Administrative expenses and cash withheld for reserves could pressure future distributions.

Chesapeake Granite Wash Trust (OTC Markets Group, Inc.:CHKR) (the “Trust”) today announced that its common unit distribution for the quarter ended March 31, 2021 (which primarily relates to production attributable to the Trust’s royalty interests from December 1, 2020 through February 28, 2021) will be $0.0467 per common unit. The distribution will be paid on June 1, 2021 to common unitholders of record at the close of business on May 20, 2021.

The following table provides supporting documentation, for the calculation of distributable income available to unitholders for the production period from December 1, 2020 through February 28, 2021.

	Sales volumes:
		Oil (mbbl)		9
		Natural gas (mmcf)		285
		Natural gas liquids (mbbl)		31
		Total oil equivalent volumes (mboe)		88
	Average price received per production unit:(1)
		Oil		$	46.01
		Natural gas(2)		$	5.25
		Natural gas liquids		$	19.87
	Distributable income calculation (in thousands except per unit income):
		Revenue less production taxes(1)		$	2,359
		Trust administrative expenses		(95		)
		Cash withheld to increase cash reserves(3)		(83		)
		Distributable income available to unitholders		$	2,182
		Calculated distributable income per unit(4)		$	0.0467

(1)		Includes the effect of certain marketing, gathering and transportation deductions.
(2)		An extreme weather event occurred in February 2021 in the midcontinent region of the United States creating a confluence of supply and demand drivers which significantly impacted natural gas prices. Significant demand, coupled with freeze related natural gas production curtailment resulted in supply shortages prompting natural gas prices to spike in mid-February causing an increase in production revenue that is not a normal or recurring event. For reference the average realized natural gas price for the combined months of December 2020 and January 2021 was $0.67/mcf and February 2021 realized price was $18.13/mcf.
(3)		Commencing with the distribution to unitholders payable in first quarter 2019, the Trustee began withholding the greater of $70,000 or 3.5% of the funds otherwise available for distribution each quarter to gradually increase existing cash reserves. The Trustee may increase or decrease the targeted amount at any time, and may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance notice to the unitholders. Cash held in reserve will be invested as required by the trust agreement. Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities eventually will be distributed to unitholders, together with interest earned on the funds.
(4)		Based on 46,750,000 common units issued and outstanding.

Due to the timing of the payment of production proceeds to the Trust, quarterly distributions generally include royalties attributable to sales of oil, natural gas liquids and natural gas for three months, including the first two months of the quarter just ended and the last month of the prior quarter.

The Trust owns royalty interests in certain oil and natural gas properties in the Colony Granite Wash play in Washita County, Oklahoma. The Trust is entitled to receive proceeds from the sale of production attributable to the royalty interests. As described in the Trust’s filings with the Securities and Exchange Commission (the “SEC”), the amount of Trust revenues and the quarterly distributions to Trust unitholders will fluctuate from quarter to quarter, depending on the sales volume of oil, natural gas liquids and natural gas attributable to the Trust’s royalty interests and the prices received for such sales and the amount of the Trust’s administrative expenses, among other factors.

For additional information regarding the Trust and its results of operations and financial condition, please refer to the Trust’s SEC filings.

ABOUT CHESAPEAKE GRANITE WASH TRUST:

Pursuant to IRC Section 1446, withholding tax on income effectively connected to a U.S. trade or business allocated to foreign partners should be made at the highest marginal rate. Under Section 1441, withholding tax on fixed, determinable, annual, periodic income from U.S. sources allocated to foreign partners should be made at 30% of gross income unless the rate is reduced by treaty. This release is intended to be a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b) by the Trust, and while specific relief is not specified for Section 1441 income, this disclosure is intended to suffice. For distributions made to foreign partners, nominees and brokers should withhold at the highest effective tax rate.

This news release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this news release, other than statements of historical facts, are “forward-looking statements” for purposes of these provisions. The anticipated distribution discussed herein is based, in part, on the amount of cash received or expected to be received by the Trust with respect to the relevant quarterly period. Any differences in actual cash receipts by the Trust could affect this distributable amount. Other important factors that could cause actual results to differ materially include the COVID-19 pandemic and related economic turmoil, expenses of the Trust and reserves for anticipated future expenses. The Trustee neither intends and neither assumes any obligation, to update any of the statements included in this news release. An investment in common units issued by the Trust is subject to the risks described in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2020, as well as other risks identified in the Trust’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. The Trust’s annual, quarterly and other filed reports are or will be available at the SEC’s website at www.sec.gov. The Trust does not intend, and assumes no obligations, to update any of the statements included in this news release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210505006032/en/

FAQ

What is the quarterly distribution amount for CHKR?

The quarterly distribution for Chesapeake Granite Wash Trust (CHKR) is $0.0467 per common unit.

When will the CHKR distribution be paid?

The distribution will be paid on June 1, 2021, to common unitholders of record by May 20, 2021.

What was the total revenue for CHKR during the last quarter?

Chesapeake Granite Wash Trust reported total revenue less production taxes of $2,359,000.

What factors affected natural gas prices for CHKR?

Natural gas prices were significantly impacted by extreme weather in February 2021, leading to supply shortages.

How much distributable income was reported for CHKR?

The distributable income for Chesapeake Granite Wash Trust was $2,182,000 for the quarter.