Mesa Royalty Trust Announces Trust Income for March 2025

Rhea-AI Summary

Mesa Royalty Trust (NYSE: MTR) has announced its March 2025 income distribution, with unitholders of record on March 31, 2025, receiving $0.030174584 per unit, payable on April 30, 2025.

The Trust received $60,532 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 $56,233.

The Trust warns that monthly distributions are expected to be materially reduced until it builds cash reserves of $2.0 million. Additionally, substantial accumulated excess production costs will decrease Trust distributions and may result in no distributions in some periods. The Trust's income is affected by various factors including volatility in industry revenues, expenses, and production costs.

Positive

• Trust received $60,532 in total income for March 2025
• Distributable net profits of $56,233 after expenses

Negative

• Trust received no income from properties other than New Mexico's San Juan Basin
• Distributions to be materially reduced until $2.0M cash reserves are built
• Substantial accumulated excess production costs affecting distribution amounts
• Risk of zero distributions in some periods due to production costs

Insights

Financial Analyst

Mesa's March 2025 distribution announcement reveals significant concerns for unitholders. The announced $0.030174584 per unit distribution (payable April 30) represents a modest monthly yield of approximately 0.47% based on the current share price, but even this small return appears unsustainable according to the Trust's own forward guidance.

The most consequential disclosure is Mesa's stated intention to materially reduce future distributions until it builds cash reserves to $2 million. For context, this reserve target represents approximately 16.9% of Mesa's entire market capitalization, indicating substantial capital that won't flow to unitholders for the foreseeable future.

Even more concerning is the explicit acknowledgment of "substantial accumulated excess production costs" which will further decrease distributions and potentially result in zero distributions during some periods. This signals fundamental economic challenges with the Trust's royalty interests, not merely temporary setbacks.

This month's revenue structure demonstrates these underlying weaknesses. Income of $60,532 came exclusively from New Mexico properties operated by Hilcorp, while the Kansas and Colorado assets generated no revenue. After expenses, distributable income was just $56,233, reflecting extremely thin operational margins.

For income-focused investors, this announcement represents a material deterioration in Mesa's investment case. As royalty trusts exist primarily to distribute income, Mesa's explicit warning about reduced future payouts directly undermines its core value proposition.

HOUSTON--(BUSINESS WIRE)-- Mesa Royalty Trust (the “Trust”) (NYSE: MTR) announced today the Trust income distribution for the month of March 2025. Unitholders of record on March 31, 2025 will receive distributions amounting to $0.030174584 per unit, payable on April 30, 2025. The Trust received $60,532, 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 March 2025 from any other working interest owner. This month, after the Trust’s payment of administrative expenses, income from the distributable net profits was $56,233.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250321586696/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

What is the March 2025 distribution amount per unit for Mesa Royalty Trust (MTR)?

Mesa Royalty Trust (MTR) will distribute $0.030174584 per unit to unitholders of record on March 31, 2025, payable on April 30, 2025.

How much income did MTR receive from its properties in March 2025?

MTR received $60,532 in total income, all from the New Mexico portion of the Trust's San Juan Basin properties operated by Hilcorp San Juan LP.

Why are MTR's distributions expected to be reduced in upcoming periods?

Distributions will be materially reduced until the Trust builds its cash reserves to $2.0 million, and substantial accumulated excess production costs may result in decreased or no distributions.

Which properties generated income for MTR in March 2025?

Only the New Mexico portion of the San Juan Basin properties operated by Hilcorp San Juan LP generated income; no income was received from other working interest owners.