San Juan Basin Royalty Trust Fails to Declare Monthly Distribution Due to Excess Production Costs and Low Gas Pricing

The San Juan Basin Royalty Trust, managed by the Argent Trust Company, announced that it will not declare a monthly cash distribution to its unit holders for June 2024. This decision is attributed to excessive production costs and low natural gas pricing, resulting in a revenue shortfall. The trust's subject interests experienced significant lease operating expenses and capital expenditures under Hilcorp's 2024 capital project plan, leading to a substantial gross revenue loss. The excess production costs for June 2024 are estimated at $8,456,506 gross, with $6,342,379 net to the trust.

Key Takeaways:

• The San Juan Basin Royalty Trust will not declare a monthly cash distribution for June 2024 due to excess production costs and low natural gas pricing.
• Hilcorp's 2024 capital project plan contributed to significant lease operating expenses and capital expenditures, resulting in a substantial gross revenue loss.
• Excess production costs for June 2024 amount to approximately $8,456,506 gross, with $6,342,379 net to the trust.
• The trust's total cash reserves were $1.8 million as of April 30, 2024, and have been utilized to cover trust administrative expenses in May, June, and July 2024.
• The Trustee plans to replenish the cash reserves and continue to increase the cash reserves to $2.0 million prior to any future distributions to unit holders.
• Gas volumes for the subject interests totaled 1,828,685 Mcf (2,031,872 MMBtu) in June 2024, with an average gas price of $1.41 per Mcf ($1.27 per MMBtu).
• The Trust's auditing process includes detailed analysis of Hilcorp's pricing and rates charged, ongoing comprehensive audit, and potential remedies for suspected non-compliance.

Statistics:

• Excess production costs for June 2024: $8,456,506 gross, $6,342,379 net to the trust.
• Total cash reserves as of April 30, 2024: $1.8 million.
• Cash reserves utilized to cover trust administrative expenses in May, June, and July 2024: $181,396.
• Planned increase in cash reserves to $2.0 million before future distributions to unit holders.
• June 2024 gas volumes: 1,828,685 Mcf (2,031,872 MMBtu).
• June 2024 average gas price: $1.41 per Mcf ($1.27 per MMBtu).

Sources:

• Argent Trust Company, "San Juan Basin Royalty Trust Announces Excess Production Costs and Low Gas Pricing Impacting Distribution," (no date provided).
• 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).