San Juan Basin Royalty Trust Declares Cash Distribution for January 2024
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Insights
The declaration of a monthly cash distribution by the San Juan Basin Royalty Trust represents a tangible financial event that directly affects Unit Holders' income streams. The distribution amount of $0.016270 per Unit is a critical figure that investors use to calculate yield and assess the investment's performance against market benchmarks. From a financial perspective, the reported production costs and revenues are essential for evaluating the Trust's profitability and efficiency. The increase in average gas price from October to November 2023 suggests a favorable market condition that could positively impact the Trust's revenue. However, investors should also consider the reported decrease in gas volumes, which could offset some of the benefits from higher gas prices.
Long-term implications include the Trust's ability to sustain distributions, which depend on the ongoing performance of Hilcorp in managing the Subject Interests. The Trust's engagement in a comprehensive audit process indicates a focus on transparency and compliance, which is crucial for maintaining investor confidence. However, if the audit uncovers any discrepancies or non-compliance, it could have a negative impact on the Trust's financial health and, consequently, on Unit Holders' future distributions.
The disclosed financial results provide insights into the energy sector's performance, particularly in the natural gas and oil markets. The average gas price increase from $2.14 per Mcf in October to $2.96 per Mcf in November 2023 indicates a significant month-over-month price fluctuation, which could be attributed to market demand, geopolitical influences, or changes in production levels. Such price volatility is a critical factor for energy companies and investors, as it affects revenue predictions and investment strategies.
Furthermore, the report of production costs, including lease operating expenses, severance taxes and capital costs, offers a detailed view of the operational efficiency within the Trust's Subject Interests. The costs associated with production directly impact the net profits and, consequently, the distributions to Unit Holders. Investors and analysts closely monitor these figures to gauge the company's cost management and potential for profitability amidst fluctuating energy prices.
The Trust's mention of an ongoing comprehensive audit process, involving professional consultants and outside counsel, highlights the importance of due diligence in the oversight of financial reporting and compliance with operative agreements. This process is vital to ensure that the Unit Holders' interests are protected and that the Trust adheres to legal and regulatory standards. Any findings of non-compliance could lead to legal actions, adjustments in reported financials and potentially impact the Trust's reputation and financial integrity.
Investors should be aware that such legal processes can have both immediate and long-term effects on the Trust's operations and financial standing. The legal scrutiny could result in either reinforcing investor confidence through demonstrated compliance or causing concern if issues are identified. In the latter case, potential remedies may include financial restatements, changes in operational practices, or even legal disputes, all of which could influence the Trust's market valuation and Unit Holders' returns.
For the production month of November 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
Hilcorp reported
Based upon information provided to the Trust by Hilcorp, gas volumes for the subject interests for November 2023 totaled 1,877,464 Mcf (2,086,071 MMBtu), as compared to 1,997,743 Mcf (2,219,715 MMBtu) for October 2023. Dividing gas revenues by production volume yielded an average gas price for November 2023 of
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.
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.
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San Juan Basin Royalty Trust
PNC Bank, National Association
PNC Asset Management Group
2200 Post Oak Blvd., Floor 18
website: www.sjbrt.com
e-mail: sjt@pnc.com
Ross Durr, RPL, Senior Vice President & Mineral Interest Director
Kaye Wilke, Investor Relations, toll-free: (866) 809-4553
Source: San Juan Basin Royalty Trust
FAQ
What is the monthly cash distribution declared by San Juan Basin Royalty Trust (SJT)?
Who reported the total revenue from the Subject Interests for the production month of November 2023?
What was the average gas price for November 2023?
