Mesa Royalty Trust Announces Trust Income for June 2021

Rhea-AI Summary

Mesa Royalty Trust (NYSE: MTR) announced a June 2021 distribution of $0.017151226 per unit for unitholders of record on June 30, 2021, payable July 30, 2021. The income of $33,859 was solely from Colorado properties operated by SIMCOE LLC. The Trust noted that future distributions may fluctuate based on production, oil and gas prices, and administrative expenses. It warned that adjustments by the Operator could materially reduce future payments. Historical production costs have accrued, potentially leading to fewer or no distributions in some periods.

Positive

• Trust announced a distribution of $0.017151226 per unit for June 2021.
• Received income of $33,859 from San Juan Basin properties.

Negative

• Future distributions may be subject to adjustments, reducing payments.
• Potential for no distributions due to accumulated excess production costs.

Mesa Royalty Trust (the “Trust”) (NYSE: MTR) announced today the Trust income distribution for the month of June 2021. Unitholders of record on June 30, 2021 will receive distributions amounting to $0.017151226 per unit, payable on July 30, 2021. The Trust received $33,859, 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 June 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 and the amount of the Trust’s administrative expenses, among other factors. 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 in the month of June 2021 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 June 2021 distribution amount for Mesa Royalty Trust (MTR)?

The distribution amount is $0.017151226 per unit.

When is the payment date for the June 2021 distribution from MTR?

The payment date is July 30, 2021.

What portion of income did MTR receive in June 2021?

MTR received $33,859 solely from Colorado properties.

Why might future distributions from MTR decrease?

Adjustments and accrued production costs could reduce future distributions.