Mesa Royalty Trust Announces Trust Income for July 2021

Rhea-AI Summary

Mesa Royalty Trust (NYSE: MTR) announced a distribution of $0.003925566 per unit for July 2021, payable on October 29, 2021. Total proceeds received from the San Juan Basin properties were $33,763, primarily from SIMCOE LLC. Future distributions are uncertain and may fluctuate based on production, oil, and gas prices, alongside administrative expenses. Significant excess production costs may further reduce distributions, and adjustments by the operator could lead to lower proceeds. Forward-looking statements highlight risks including operational delays and commodity price declines.

Positive

• Distribution of $0.003925566 per unit indicates ongoing cash flow for unitholders.
• Total proceeds of $33,763 from San Juan Basin properties reflect continued operations.

Negative

• Future distributions may decrease or cease due to excess production costs.
• Adjustments by the operator could further reduce income available for distributions.

Mesa Royalty Trust (the “Trust”) (NYSE: MTR) announced today the Trust income distribution for the month of July 2021. Unitholders of record on July 30, 2021 will receive distributions amounting to $0.003925566 per unit, payable on October 29, 2021. The Trust received $33,763, all of which came from the Colorado portion of the Trust’s San Juan Basin properties operated by SIMCOE LLC, an affiliate of IKAV Energy Inc. (“Operator”). No income was received in July 2021 from any other working interest owner. 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. Distributions to unitholders are also impacted by the amount of the Trust’s administrative expenses, among other factors, which may vary significantly from month to month. On February 28, 2020, BP Amoco Company (“BP”) completed the sale of all of its interest in the San Juan Basin—Colorado properties to Operator. Following Operator’s acquisition of BP’s interest in the San Juan Basin—Colorado properties, there was a transition period to transfer historical information, knowledge and processes from one owner to the other. Operator has informed the Trustee that the amount paid to the Trust, included in the July 2021 distribution calculation, is subject to further adjustment in future periods for certain expenses that Operator is entitled to deduct under the conveyance. Operator is expected to recover such expense amounts by withholding a portion or all of the net proceeds that would otherwise be payable to the Trust in future periods. Any reduction in income paid to the Trust for these properties may materially reduce or eliminate distributions to the Trust’s unitholders in future periods.

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

What is the distribution amount per unit for Mesa Royalty Trust in July 2021?

The distribution amount per unit for July 2021 is $0.003925566.

When will the next distribution for Mesa Royalty Trust be paid?

The next distribution will be payable on October 29, 2021.

What were the total proceeds received by Mesa Royalty Trust for July 2021?

Total proceeds for July 2021 were $33,763.

Which operator is responsible for the San Juan Basin properties' income?

The operator for the San Juan Basin properties is SIMCOE LLC.

What factors could impact future distributions for Mesa Royalty Trust?

Future distributions may be impacted by production costs, oil and gas prices, and administrative expenses.