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San Juan Basin Royalty Trust Declares No Cash Distribution for October 2024 and Announces Production Costs in Excess of Proceeds

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San Juan Basin Royalty Trust (NYSE: SJT) announced no cash distribution for October 2024 due to excess production costs and low natural gas pricing. Hilcorp reported $3,594,338 total revenue and $7,227,419 production costs for August 2024. Excess production costs of $15,150,449 gross will be charged to the next month's distribution. The Trust's administrative expenses were $87,522, partially covered by $4,959 interest income. Gas volumes totaled 1,922,538 Mcf with an average price of $1.79 per Mcf. The Trustee utilized $82,564 from cash reserves, leaving a balance of $1,017,135. The Trust plans to replenish and increase cash reserves to $2.0 million before future distributions.

Il San Juan Basin Royalty Trust (NYSE: SJT) ha annunciato nessuna distribuzione in contante per ottobre 2024 a causa di costi di produzione eccessivi e bassi prezzi del gas naturale. Hilcorp ha riportato 3.594.338 dollari di entrate totali e 7.227.419 dollari di costi di produzione per agosto 2024. I costi di produzione eccessivi pari a 15.150.449 dollari lordi saranno addebitati alla distribuzione del mese successivo. Le spese amministrative del Trust ammontavano a 87.522 dollari, parzialmente coperte da 4.959 dollari di proventi da interessi. I volumi di gas hanno totalizzato 1.922.538 Mcf con un prezzo medio di 1,79 dollari per Mcf. Il Trustee ha utilizzato 82.564 dollari dalle riserve di cassa, lasciando un saldo di 1.017.135 dollari. Il Trust prevede di reintegrare e aumentare le riserve di cassa a 2,0 milioni di dollari prima delle future distribuzioni.

El San Juan Basin Royalty Trust (NYSE: SJT) anunció ninguna distribución en efectivo para octubre de 2024 debido a costos de producción excesivos y bajos precios del gas natural. Hilcorp reportó 3,594,338 dólares de ingresos totales y 7,227,419 dólares de costos de producción para agosto de 2024. Los costos de producción excesivos de 15,150,449 dólares brutos se cargarán a la distribución del mes siguiente. Los gastos administrativos del Trust fueron de 87,522 dólares, parcialmente cubiertos por 4,959 dólares de ingresos por intereses. Los volúmenes de gas totalizaron 1,922,538 Mcf con un precio promedio de 1.79 dólares por Mcf. El fideicomisario utilizó 82,564 dólares de las reservas de efectivo, dejando un saldo de 1,017,135 dólares. El Trust planea reabastecer y aumentar las reservas de efectivo a 2.0 millones de dólares antes de futuras distribuciones.

산 후안 분지 로열티 신탁(NYSE: SJT)은 2024년 10월 현금 배당금이 없습니다라고 발표했습니다. 이는 과도한 생산 비용저조한 천연가스 가격 때문입니다. Hilcorp는 2024년 8월에 3,594,338달러의 총 수익7,227,419달러의 생산 비용을 보고했습니다. 15,150,449달러의 과잉 생산 비용은 다음 달 배당금에서 차감될 것입니다. 신탁의 관리 비용은 87,522달러였으며, 이는 4,959달러의 이자 수익으로 일부 충당되었습니다. 가스 총량은 1,922,538 Mcf이며 평균 가격은 1.79달러 per Mcf였습니다. 신탁 관리자는 82,564달러를 현금 준비금에서 사용하여 1,017,135달러의 잔액을 남겼습니다. 신탁은 향후 배당금을 위해 현금 준비금을 200만 달러로 보충하고 늘릴 계획입니다.

Le San Juan Basin Royalty Trust (NYSE: SJT) a annoncé aucune distribution en espèces pour octobre 2024 en raison de coûts de production excessifs et de bas prix du gaz naturel. Hilcorp a signalé 3,594,338 dollars de revenus totaux et 7,227,419 dollars de coûts de production pour août 2024. Les coûts de production excessifs de 15,150,449 dollars bruts seront imputés à la distribution du mois suivant. Les frais d'administration du Trust s'élevaient à 87,522 dollars, partiellement couverts par 4,959 dollars de revenus d'intérêts. Les volumes de gaz totalisaient 1,922,538 Mcf avec un prix moyen de 1,79 dollars par Mcf. Le fiduciaire a utilisé 82,564 dollars des réserves de trésorerie, laissant un solde de 1,017,135 dollars. Le Trust prévoit de reconstituer et d'augmenter les réserves de trésorerie à 2 millions de dollars avant les futures distributions.

Der San Juan Basin Royalty Trust (NYSE: SJT) hat keine Barauszahlung für Oktober 2024 angekündigt, aufgrund von übermäßigen Produktionskosten und niedrigen Preisen für Erdgas. Hilcorp berichtete von 3.594.338 Dollar Gesamteinnahmen und 7.227.419 Dollar Produktionskosten für August 2024. Die übermäßigen Produktionskosten von 15.150.449 Dollar brutto werden auf die Auszahlung des nächsten Monats angerechnet. Die Verwaltungskosten des Trusts betrugen 87.522 Dollar, zum Teil gedeckt durch 4.959 Dollar Zinserträge. Das Gasvolumen betrug 1.922.538 Mcf bei einem Durchschnittspreis von 1,79 Dollar pro Mcf. Der Treuhänder verwendete 82.564 Dollar aus den Barreserven, was einen Saldo von 1.017.135 Dollar hinterließ. Der Trust plant, die Barreserven auf 2 Millionen Dollar aufzufüllen und zu erhöhen, bevor zukünftige Auszahlungen erfolgen.

Positive
  • Interest income of $4,959 partially covered Trust administrative expenses
  • Gas volumes increased from 1,891,889 Mcf in July to 1,922,538 Mcf in August 2024
Negative
  • No cash distribution for October 2024 due to excess production costs
  • Total revenue ($3,594,338) significantly lower than production costs ($7,227,419)
  • Excess production costs of $15,150,449 gross to be charged to next month's distribution
  • Average gas price decreased from $1.94 per Mcf in June to $1.79 per Mcf in August 2024
  • Cash reserves decreased from $1.8 million in April to $1,017,135 in October 2024
  • No future distributions until Trust liabilities are paid and cash reserves replenished

Insights

This news is significantly negative for San Juan Basin Royalty Trust (SJT) and its unitholders. The Trust has declared no cash distribution for October 2024 due to excess production costs, primarily driven by high lease operating expenses and capital expenditures from Hilcorp's 2024 capital project plan.

Key points:

  • Total revenue: $3,594,338
  • Production costs: $7,227,419
  • Excess production costs: $15,150,449 gross ($11,362,837 net to Trust)
  • Average gas price: $1.79 per Mcf, down from $1.94 in June

The Trust's cash reserves have decreased to $1,017,135, down from $1.8 million in April. This financial situation suggests ongoing challenges for SJT, potentially impacting future distributions until production costs decrease or natural gas prices improve significantly.

The current situation for SJT reflects broader challenges in the natural gas market. With average gas prices at $1.79 per Mcf in August, down from $1.94 in June, we're seeing the impact of persistently low natural gas prices. This price environment, combined with Hilcorp's aggressive capital expenditure plan, is creating a perfect storm for the Trust.

The production increase (1,922,538 Mcf in August vs 1,891,889 Mcf in July) isn't sufficient to offset the lower prices and higher costs. Investors should watch for:

  • Natural gas price trends
  • Hilcorp's future capital expenditure plans
  • Potential operational efficiencies to reduce lease operating expenses

The Trust's ability to resume distributions will largely depend on these factors improving in the coming months.

DALLAS, Oct. 21, 2024 /PRNewswire/ -- Argent Trust Company, as the trustee (the "Trustee") of the San Juan Basin Royalty Trust (the "Trust") (NYSE: SJT), today reported that it will not declare a monthly cash distribution to the holders of its Units of beneficial interest (the "Unit Holders") due to excess production costs for the Trust's subject interests ("Subject Interests") during the production month of August 2024, as well as continued low natural gas pricing. Excess production costs occur when production costs and capital expenditures exceed the gross proceeds for a certain period. Excess production costs for this reporting period are due primarily to significant lease operating expenses and capital expenditures associated with Hilcorp San Juan L.P.'s ("Hilcorp") 2024 capital project plan.

Hilcorp reported $3,594,338 of total revenue from the Subject Interests for the production month of August 2024, consisting of $3,442,328 of gas revenues and $152,010 of oil revenues. For the Subject Interests, Hilcorp reported $7,227,419 of production costs (excluding excess production costs) for the production month of August 2024, consisting of $2,408,163 of lease operating expenses, $463,668 of severance taxes, and $4,355,588 of capital costs.

Hilcorp will charge the excess production costs of approximately $15,150,449 gross ($11,362,837 net to the Trust) to the next month's distribution. No cash distributions will be made by the Trust until future net proceeds are sufficient to pay Trust liabilities and replenish cash reserves. This month's Trust administrative expenses totaled $87,522. The decrease in administrative expenses was attributable to differences in timing of the receipt and payment of certain expenses by the Trust. Interest income received by the Trust in the amount of $4,959 will be applied to cover a portion of this month's Trust administrative expenses, with cash reserves utilized to pay the remaining administrative expenses.

Based upon information provided to the Trust by Hilcorp, gas volumes for the subject interests for August 2024 totaled 1,922,538 Mcf (2,136,153 MMBtu), as compared to 1,891,889 Mcf (2,102,099 MMBtu) for July 2024. Dividing gas revenues by production volume yielded an average gas price for August 2024 of $1.79 per Mcf ($1.61 per MMBtu), as compared to an average gas price for June 2024 of $1.94 per Mcf ($1.75 per MMBtu).

Pursuant to the Amended and Restated Royalty Trust Indenture, dated December 12, 2007 (as amended on February 15, 2024, by the First Amendment to the Amended and Restated Royalty Trust Indenture), the Trustee is authorized to retain, in its sole discretion, a cash reserve for payment of Trust liabilities that are contingent or uncertain or otherwise not currently due and payable. To cover Trust expenses during any period of revenue shortfall, which has resulted and may continue to result from lower commodity prices and increased capital expenditures and lease operating expenses under Hilcorp's 2024 capital project plan for the Subject Interests, the Trustee increased the cash reserves in March and April of 2024, such that total cash reserves were $1.8 million as of April 30, 2024. Interest income and cash reserves were utilized to pay Trust administrative expenses each month from May through September of 2024. This month, cash reserves in the amount of $82,564 will be utilized to cover the balance of Trust administrative expenses which will bring the balance of cash reserves maintained by the Trustee to $1,017,135. Prior to any future distributions to Unit Holders, the Trustee plans to replenish the cash reserves and continue to increase the cash reserves to $2.0 million.

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 the Trust's professional consultants and outside counsel to analyze compliance with all the underlying operative Trust agreements and evaluate potential remedies in the event there is suspected non-compliance.

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: trustee@sjbrt.com

Cision View original content:https://www.prnewswire.com/news-releases/san-juan-basin-royalty-trust-declares-no-cash-distribution-for-october-2024-and-announces-production-costs-in-excess-of-proceeds-302281319.html

SOURCE San Juan Basin Royalty Trust

FAQ

Why is San Juan Basin Royalty Trust (SJT) not declaring a cash distribution for October 2024?

SJT is not declaring a cash distribution for October 2024 due to excess production costs for the Trust's subject interests during August 2024 and continued low natural gas pricing.

What were the total revenues and production costs reported by Hilcorp for SJT's subject interests in August 2024?

Hilcorp reported total revenues of $3,594,338 and production costs of $7,227,419 for SJT's subject interests in August 2024.

How much are the excess production costs for SJT in August 2024?

The excess production costs for SJT in August 2024 are approximately $15,150,449 gross ($11,362,837 net to the Trust).

What was the average gas price for SJT's subject interests in August 2024?

The average gas price for SJT's subject interests in August 2024 was $1.79 per Mcf ($1.61 per MMBtu).

What is the current balance of cash reserves maintained by SJT's Trustee?

The current balance of cash reserves maintained by SJT's Trustee is $1,017,135 after utilizing $82,564 to cover Trust administrative expenses.

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