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

Rhea-AI Summary

Mesa Royalty Trust (MTR) announced no distribution for October 2021 due to costs exceeding revenue from oil and gas sales. Unitholders of record by October 29, 2021, will not receive payments as the Trust aims to bolster cash reserves for liquidity. With fluctuating monthly distributions based on production proceeds and administrative expenses, the Trust warns of potential future non-distributions. Substantial accumulated production costs and price volatility are expected to impact distributions moving forward.

Positive

• The Trust aims to increase cash reserves to enhance liquidity.

Negative

• No distribution for October 2021 due to costs surpassing revenue.
• Future distributions may be limited or non-existent as the Trust builds cash reserves.
• Accumulated excess production costs could significantly decrease future distributions.
• Volatility in oil and gas prices may adversely affect the Trust's financial outlook.

HOUSTON--(BUSINESS WIRE)-- Mesa Royalty Trust (the “Trust”) (NYSE symbol-MTR) announced today that there will be no distribution paid for the month of October 2021 to holders of record as of the close of business on October 29, 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 expects to increase cash reserves 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, and other factors described in the Trust’s Form 10-K for the year ended December 31, 2020 under “Part I, Item 1A. Risk Factors.” 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/20211019006156/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 will Mesa Royalty Trust not pay a distribution in October 2021?

Mesa Royalty Trust will not pay a distribution for October 2021 because expenses exceeded the revenue received from oil and gas sales.

What is the impact of accumulated production costs on Mesa Royalty Trust?

Accumulated production costs may lead to lower future distributions, and in some periods, result in no distributions.

How does price volatility affect Mesa Royalty Trust distributions?

Price volatility in the oil and gas market directly impacts the revenues and consequently the distributions of Mesa Royalty Trust.

When will Mesa Royalty Trust announce its next distribution?

Mesa Royalty Trust has indicated that future distributions are uncertain and contingent on future production proceeds and expenses.

What should unitholders expect regarding future distributions from Mesa Royalty Trust?

Unitholders should prepare for the possibility of limited or no distributions in the future as the Trust increases cash reserves.