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

Rhea-AI Summary

Mesa Royalty Trust (NYSE: MTR) announced it will not distribute payments for August 2021, as costs exceeded revenues from oil and gas sales. This indicates ongoing financial difficulties due to substantial production costs and expected fluctuations in revenue. The Trust's monthly distributions are likely to remain unstable, with a possibility of no payments for the rest of 2021, as it aims to increase cash reserves for liquidity. The Trust cautions that future distributions may be affected by industry volatility, operational risks, and accumulated excess production costs.

Positive

• None.

Negative

• No distribution for August 2021 due to costs exceeding revenues.
• Potential for no material distributions for the remainder of 2021 and beyond.
• Substantial accumulated excess production costs may decrease future distributions.
• Volatility in oil and gas industry directly affects revenue and distribution capability.

Mesa Royalty Trust (the “Trust”) (NYSE: MTR) announced today that there will be no distribution paid for the month of August 2021 to holders of record as of the close of business on August 31, 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.

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FAQ

Why did Mesa Royalty Trust (MTR) not pay a distribution in August 2021?

Mesa Royalty Trust did not pay a distribution because costs, charges, and expenses related to its royalty properties exceeded the revenue received from oil and gas sales.

What is the outlook for future distributions from Mesa Royalty Trust (MTR)?

The outlook for future distributions is uncertain, with the Trust indicating that there may be no material distributions in the remainder of 2021 due to expected financial challenges.

How do production costs impact Mesa Royalty Trust's (MTR) distributions?

Production costs have resulted in substantial accumulated excess costs, which can lead to reduced or eliminated distributions to unitholders.

What factors affect the revenue of Mesa Royalty Trust (MTR)?

Revenue is affected by oil and gas prices, production costs, and operational risks inherent in the industry.

Is there any assurance for future distributions from Mesa Royalty Trust (MTR)?

No assurances can be given regarding future distributions, as they depend on various volatile factors affecting revenue and costs.