Mesa Royalty Trust Announces Trust Income for January 2025

Rhea-AI Summary

Mesa Royalty Trust (NYSE: MTR) has announced its January 2025 income distribution. Unitholders of record on January 31, 2025, will receive $0.000453223 per unit, payable on April 30, 2025. The Trust received a total of $18,282 exclusively from the New Mexico portion of its San Juan Basin properties operated by Hilcorp San Juan LP.

After administrative expenses, the distributable net profits amounted to $845. The Trust warns that monthly distributions are expected to fluctuate and will be materially reduced until the Trust increases its cash reserves to $2.0 million. Substantial accumulated excess production costs continue to impact distributions, potentially resulting in no distributions in some periods.

Positive

• None.

Negative

• Extremely low distribution of $0.000453223 per unit
• Only $18,282 in total revenue received
• Net distributable profits of just $845 after expenses
• Distributions to be materially reduced until $2.0M cash reserve is built
• Substantial accumulated excess production costs affecting distributions
• Risk of zero distributions in some periods

Insights

Financial Analyst

The announced distribution of $0.000453223 per unit for January 2025 is extremely low and concerning. The Trust only received $18,282 in total income, exclusively from New Mexico properties, with a mere $845 available for distribution after expenses. This continues a pattern of minimal distributions that reflects severe operational challenges.

The most critical revelation is the Trust's need to build $2.0 million in cash reserves, which will significantly impact unitholder distributions moving forward. The accumulated excess production costs are creating a substantial burden on the Trust's ability to generate meaningful distributions. This structural issue, combined with the Trust's dependence on a single revenue source (Hilcorp San Juan LP), creates a precarious financial position.

For retail investors, it's important to understand that royalty trusts typically decline over time as their underlying resources deplete. The minimal distribution amount, representing an annualized yield far below industry standards, suggests the Trust's assets are in advanced stages of depletion. The requirement to build cash reserves signals potential liquidity concerns that could further strain future distributions.

HOUSTON--(BUSINESS WIRE)-- Mesa Royalty Trust (the “Trust”) (NYSE: MTR) announced today the Trust income distribution for the month of January 2025. Unitholders of record on January 31, 2025 will receive distributions amounting to $0.000453223 per unit, payable on April 30, 2025. The Trust received $18,282, all of which came from the New Mexico portion of the Trust’s San Juan Basin properties operated by Hilcorp San Juan LP, an affiliate of Hilcorp Energy Company. No income was received in January 2025 from any other working interest owner. This month, after the Trust’s payment of administrative expenses, income from the distributable net profits was $845.

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, distributions to unitholders are expected to be materially reduced, until the Trust increases its cash reserves to a total of $2.0 million in order 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, 2023. 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.

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

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Mesa Royalty Trust

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

Elaina Rodgers

713-483-6020

Source: Mesa Royalty Trust

FAQ

What is Mesa Royalty Trust's (MTR) January 2025 distribution amount per unit?

Mesa Royalty Trust's distribution amount for January 2025 is $0.000453223 per unit, payable on April 30, 2025, to unitholders of record on January 31, 2025.

How much total income did MTR receive in January 2025?

MTR received total income of $18,282 in January 2025, all from the New Mexico portion of the Trust's San Juan Basin properties operated by Hilcorp San Juan LP.

What is MTR's target cash reserve requirement?

MTR aims to build its cash reserves to $2.0 million, during which time distributions to unitholders will be materially reduced.

Why might MTR unitholders receive no distributions in some periods?

Due to substantial accumulated excess production costs and the need to build cash reserves, along with various operational expenses and adjustments, MTR may have periods with no distributions to unitholders.