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San Juan Basin Royalty Trust (SJT) operates as an express trust in Texas, focusing primarily on oil and natural gas extraction. The Trust holds a 75% net overriding royalty interest carved out from Southland's oil and gas interests located in the San Juan Basin of northwestern New Mexico. The Trust's interests extend over 119,000 net producing acres across San Juan, Rio Arriba, and Sandoval counties, and include approximately 826.3 net wells.
San Juan Basin Royalty Trust, founded in 1980 and based in Houston, Texas, garners nearly 98% of its revenue from natural gas, with the remaining 2% from oil. BBVA USA serves as the trustee, overseeing the financial operations and ensuring compliance with the Trust's agreements.
Recent Achievements and Updates:
- For January 2024, Hilcorp reported $6,667,167 in total revenue from the Trust's interests, with $6,585,684 from gas and $81,483 from oil.
- The Trust declared a monthly cash distribution of $1,065,685.42 to its unit holders in April 2024.
- Due to excess production costs and lower natural gas prices, the Trust did not declare a monthly cash distribution for May 2024.
Current Projects: The Trust is focusing on maintaining and increasing its cash reserves to cover trust expenses during periods of revenue shortfall due to fluctuating commodity prices and increased capital expenditures. The Trustee has increased cash reserves to $2.0 million to ensure financial stability.
Financial Condition: The Trust experienced fluctuations in gas prices and production volumes, influencing its revenue and distributions. For March 2024, the average gas price was $1.50 per Mcf compared to $3.06 per Mcf in February 2024. The Trust continues to engage with Hilcorp for accurate accounting and reporting, ensuring comprehensive audits of payments and compliance with underlying agreements.
Partnerships and Compliance: The Trust works closely with Hilcorp San Juan L.P. and Hilcorp Energy Company, the operators of the interests, to manage production and financial reporting. The Trust's third-party compliance auditors rigorously review production costs, capital expenditures, pricing, and rates to ensure full compliance with all trust agreements.
San Juan Basin Royalty Trust, with its significant holdings in natural gas and oil, plays a vital role in the energy sector. Despite the volatility in commodity prices, the Trust's strategic financial management and partnerships aim to provide steady returns to its unit holders while maintaining compliance and operational efficiency.
Argent Trust Company, as the trustee of the San Juan Basin Royalty Trust (SJT), announced no cash distribution for May 2024 due to excessive production costs and lower natural gas pricing. For March 2024, Hilcorp San Juan L.P. reported revenues of $3,161,533 and production costs of $3,593,830, leading to a shortfall. Gas volumes increased from February to March 2024, but average gas prices dropped significantly. The Trustee will use cash reserves of $249,344 to cover administrative expenses, aiming to replenish reserves to $2.0 million before future distributions. An ongoing audit process ensures compliance with Trust agreements.
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