San Juan Basin Royalty Trust Announces February Cash Distribution and Hilcorp's 2024 Capital Plan

Rhea-AI Summary

Argent Trust Company, as the trustee of San Juan Basin Royalty Trust (SJT), declared a monthly cash distribution of $1,410,308.78 or $0.030258 per Unit for February 2024. Hilcorp reported net profits of $2,227,411 gross ($1,670,558 net royalty amount to the Trust) for December 2023. Hilcorp's 2024 Plan includes $36.0 million in capital expenditures for 39 projects, with a focus on new drill projects and recompletions in various formations.

Insights

Financial Analyst

The declared monthly cash distribution of $1,410,308.78 by San Juan Basin Royalty Trust represents a tangible return on investment for Unit Holders, reflecting the Trust's operational performance. The distribution figure, when analyzed against the reported net profits and production costs, provides insight into the Trust's efficiency and Hilcorp's operational effectiveness. The slight increase in average gas price from November to December 2023 may signal improving market conditions, which could have positive implications for future distributions. However, investors should monitor the Trust's comprehensive audit process and potential non-compliance issues, as these could affect future financial performance and trustworthiness.

Energy Sector Analyst

The detailed breakdown of production costs and revenues, particularly the allocation of capital expenditures in Hilcorp's 2024 Plan, is crucial for understanding the strategic direction of the Subject Interests. With a significant portion of the budget dedicated to new drill projects, there is an evident focus on expanding production capabilities. The shift towards the Mancos formation and dual completions in the Dakota/Mesaverde formations suggests an optimization of resources to exploit more profitable or promising reserves. However, the energy market's volatility necessitates a cautious approach, as future capital expenditures and project feasibilities could shift with market conditions.

Market Research Analyst

Investors should note the Trust's reliance on market-sensitive and customary agreements for the sale of produced gas and oil. This strategy can lead to fluctuating revenues contingent on market prices, as evidenced by the slight increase in gas prices from the previous month. The Trust's engagement with Hilcorp and the ongoing audits underscore the importance of transparency and accurate reporting in maintaining investor confidence. Additionally, the disclosed capital project plan for 2024 indicates a proactive approach to asset development, which could enhance the Trust's long-term value proposition if executed effectively amidst market dynamics.

DALLAS, Feb. 16, 2024 /PRNewswire/ -- Argent Trust Company, as the trustee (the "Trustee") of the San Juan Basin Royalty Trust (the "Trust") (NYSE: SJT), today declared a monthly cash distribution to the holders (the "Unit Holders") of its units of beneficial interest (the "Units") of $1,410,308.78 or $0.030258 per Unit, based primarily upon the reported production of the Trust's subject interests (the "Subject Interests") during the month of December 2023. The distribution is payable March 14, 2024, to the Unit Holders of record as of February 29, 2024.

For the production month of December 2023, the owner of the Subject Interests, Hilcorp San Juan L.P. and the operator of the Subject Interests, Hilcorp Energy Company (collectively, "Hilcorp"), reported to the Trust net profits of $2,227,411 gross ($1,670,558 net royalty amount to the Trust).

Hilcorp reported $5,870,154 of total revenue from the Subject Interests for the production month of December 2023, consisting of $5,710,019 of gas revenues and $160,135 of oil revenues. For the Subject Interests, Hilcorp reported $3,642,743 of production costs for the production month of December 2023, consisting of $2,411,535 of lease operating expense, $786,192 of severance taxes and $445,016 of capital costs.

Based upon information provided to the Trust by Hilcorp, gas volumes for the subject interests for December 2023 totaled 1,909,007 Mcf (2,121,119 MMBtu), as compared to 1,877,464 Mcf (2,086,071 MMBtu) for November 2023. Dividing gas revenues by production volume yielded an average gas price for December 2023 of $2.99 per Mcf ($2.69 per MMBtu), as compared to an average gas price for November 2023 of $2.96 per Mcf ($2.67 per MMBtu).

Production from the Subject Interests continues to be gathered, processed, and sold under market sensitive and customary agreements, as recommended for approval by the Trust's Consultant. The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and the Trust's third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments. The Trust's auditing process has also included detailed analysis of Hilcorp's pricing and rates charged. As previously disclosed in the Trust's filings, these revenues and costs (along with all costs) are the subject of the Trust's ongoing comprehensive audit process by our professional consultants and outside counsel to ensure full compliance with all the underlying operative Trust agreements and evaluating all available potential remedies in the event there is evidence of non-compliance.

Hilcorp has also provided the Trust with its 2024 capital project plan for the Subject Interests (the "2024 Plan"), and Hilcorp has estimated its 2024 capital expenditures for the Subject Interests to be $36.0 million.

Hilcorp informed the Trust that the 2024 Plan for the Subject Interests includes 39 projects. Approximately $27.0 million of the $36.0 million budget in the 2024 Plan will be allocated to three new drill projects, including one well planned to be dually completed in the Dakota/Mesaverde formations and two new wells planned to be completed in the Mancos formation. Approximately $8.0 million of the $36.0 million budget will be allocated to 36 projects for recompletions and workovers in the Mesaverde and Fruitland Coal formations, and approximately $1.0 million of the $36.0 million budget will be allocated to facilities projects related to natural gas compression and other facility projects. Hilcorp further informed the Trust that its planned project status for 2024 is subject to revision if Hilcorp revises its assumptions underlying the 2024 Plan, and that actual capital costs may vary from these estimates. 

Hilcorp's actual capital expenditures during its 2023 accounting period (which corresponds to the Trust's distribution months of March 2023 through February 2024) totaled approximately $2.2 million. These capital expenditures were allocated to 20 recompletion and workover projects completed during the period.

Forward Looking Statements. Except for historical information contained in this news release, the statements in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements generally are accompanied by words such as "estimates," "anticipates," "could," "plan," or other words that convey the uncertainty of future events or outcomes. Forward-looking statements and the business prospects of San Juan Basin Royalty Trust are subject to a number of risks and uncertainties that may cause actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, certain information provided to the Trust by Hilcorp, volatility of oil and gas prices, governmental regulation or action, litigation, and uncertainties about estimates of reserves. These and other risks are described in the Trust's reports and other filings with the Securities and Exchange Commission.

Contact:	San Juan Basin Royalty Trust
	Argent Trust Company, Trustee
	Nancy Willis, Director of Royalty Trust Services
	Toll-free: (855) 588-7839 or (866) 809-4553
	Fax: (214) 559-7010
	Website: www.sjbrt.com
	Email: royaltytrustgroup@argenttrust.com

 

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SOURCE San Juan Basin Royalty Trust

FAQ

What is the monthly cash distribution declared by Argent Trust Company for San Juan Basin Royalty Trust (SJT) in February 2024?

Argent Trust Company declared a monthly cash distribution of $1,410,308.78 or $0.030258 per Unit for February 2024.

How much were Hilcorp's net profits for December 2023, and what amount was reported to the Trust as net royalty?

Hilcorp reported net profits of $2,227,411 gross for December 2023, with $1,670,558 reported as the net royalty amount to the Trust.

What is Hilcorp's 2024 capital project plan for the Subject Interests, and how much are the estimated capital expenditures?

Hilcorp's 2024 Plan includes $36.0 million in estimated capital expenditures for 39 projects, with a focus on new drill projects and recompletions in various formations.