Mesa Royalty Trust Announces There Will Be No Distribution for November 2021

Rhea-AI Summary

Mesa Royalty Trust (NYSE: MTR) announced no distribution for November 2021, as operational costs surpassed revenue from oil and gas sales. The Trust intends to increase cash reserves from $1 million to $2 million, impacting potential distributions through 2021 and beyond. The monthly distribution amounts may fluctuate based on production proceeds and administrative expenses. Excess production costs are expected to limit distributions, with the Trust warning of potential future months with no payments due to industry volatility and rising expenses.

Positive

• None.

Negative

• No November 2021 distribution due to expenses exceeding revenue.
• Plans to increase cash reserves from $1 million to $2 million restrict future distributions.
• Substantial accumulated production costs will continue to decrease future Trust distributions.
• Potential for no distributions to unitholders in upcoming periods.

HOUSTON--(BUSINESS WIRE)-- Mesa Royalty Trust (the “Trust”) (NYSE: MTR) announced today that there will be no distribution paid for the month of November 2021 to holders of record as of the close of business on November 30, 2021, as costs, charges and expenses attributable to the Trust’s royalty properties, and applicable reserves, exceeded the revenue received from the sale of oil, natural gas and other hydrocarbons produced from such properties, as reported by the working interest owners.

The Trust was formed to own an overriding royalty interest of the net proceeds attributable to certain producing oil and gas properties located in the Hugoton field of Kansas and the San Juan Basin fields of New Mexico and Colorado. As described in the Trust's public filings, the amount of the monthly distributions is expected to fluctuate from month to month, depending on the proceeds, if any, received by the Trust as a result of production, oil and natural gas prices and the amount of the Trust’s administrative expenses, among other factors. In addition, as further described in the Trust’s most recent filing on Form 10-Q, unitholders may not receive any material distributions during the remainder of 2021 and beyond, because the Trust intends to increase cash reserves from $1.0 million to a total of $2.0 million to provide added liquidity.

Proceeds reported by the working interest owners for any month are not generally representative of net proceeds that will be received by the Trust in future periods. As further described in the Trust’s Form 10-K and Form 10-Q filings, production and development costs for the royalty interest have resulted in substantial accumulated excess production costs, which will decrease Trust distributions, and in some periods may result in no Trust distributions. The amount of proceeds, if any, received or expected to be received by the Trust (and its ability to pay distributions to unitholders) has been and will continue to be directly affected, among other things, by volatility in the industry and revenues and expenses reported to the Trust by working interest owners. Any additional expenses and adjustments, among other things, will reduce proceeds to the Trust, which will reduce the amount of cash available for distribution to unitholders and in certain periods could result in no distributions to unitholders.

This press release contains forward-looking statements. No assurances can be given that the expectations contained in this press release will prove to be correct. The working interest owners alone control historical operating data, and handle receipt and payment of funds relating to the royalty properties and payments to the Trust for the related royalty. The Trustee cannot assure that errors or adjustments or expenses accrued by the working interest owners, whether historical or future, will not affect future royalty income and distributions by the Trust. Other important factors that could cause these statements to differ materially include delays in actual results of drilling operations, risks inherent in drilling and production of oil and gas properties, declines in commodity pricing, prices received by working interest owners and other risks described in the Trust’s Form 10-K for the year ended December 31, 2020, Form 10-Q for the quarter ended March 31, 2021, Form 10-Q for the quarter ended June 30, 2021 and Form 10-Q for the quarter ended September 30, 2021. Statements made in this press release are qualified by the cautionary statements made in such risk factors. The Trust does not intend, and assumes no obligations, to update any of the statements included in this press release. Each unitholder should consult its own tax advisor with respect to its particular circumstances.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211118006187/en/

Mesa Royalty Trust

The Bank of New York Mellon Trust Company, N.A., as Trustee

Elaina Rodgers

713-483-6020

http://mtr.q4web.com/home/default.aspx

Source: Mesa Royalty Trust

FAQ

Why is Mesa Royalty Trust not paying a distribution in November 2021?

Mesa Royalty Trust will not pay a distribution in November 2021 because costs and expenses related to its royalty properties exceeded the revenue from oil and gas sales.

What is the current cash reserve plan for Mesa Royalty Trust?

Mesa Royalty Trust plans to increase its cash reserves from $1 million to $2 million to ensure additional liquidity.

Will Mesa Royalty Trust have distributions in 2021?

Mesa Royalty Trust indicated that unitholders may not receive any material distributions during the remainder of 2021.

How do production costs affect Mesa Royalty Trust's distributions?

Increased production and development costs are resulting in substantial accumulated costs, leading to reduced or potentially no distributions for the Trust.

What factors could impact future distributions for Mesa Royalty Trust?

Future distributions for Mesa Royalty Trust could be impacted by oil and gas price volatility, operational costs, and adjustments reported by working interest owners.