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Manufacturing costs

San Juan Basin Royalty Trust Reports No Monthly Cash Distribution due to Excess Production Costs

Strategic Insights

— 2 min read

San Juan Basin Royalty Trust has announced that it will not declare a monthly cash distribution to its unit holders for the production month of June 2024 due to excess production costs. The excess production costs are primarily attributed to significant lease operating expenses and capital expenditures associated with Hilcorp's 2024 capital project plan. The trust's subject interests reported $2,851,950 of total revenue in June 2024, consisting of $2,577,981 of gas revenues and $273,969 of oil revenues. However, the production costs for the same period totaled $6,419,934, with $2,444,154 of lease operating expenses, $323,890 of severance taxes, and $3,651,890 of capital costs.

Key Takeaways:

  • The San Juan Basin Royalty Trust will not declare a monthly cash distribution to its unit holders for June 2024 due to excess production costs.
  • The excess production costs are primarily attributed to significant lease operating expenses and capital expenditures associated with Hilcorp's 2024 capital project plan.
  • The trust's subject interests reported $2,851,950 of total revenue in June 2024, including $2,577,981 of gas revenues and $273,969 of oil revenues.
  • Production costs for the same period totaled $6,419,934, with $2,444,154 of lease operating expenses, $323,890 of severance taxes, and $3,651,890 of capital costs.
  • Hilcorp will charge the excess production costs of approximately $8,456,506 gross to the next month's distribution.
  • The trust's administrative expenses totaled $187,698 in June 2024, with interest income of $6,302 used to cover a portion of these expenses.
  • Cash reserves were utilized to pay Trust administrative expenses, with the balance of cash reserves decreased to $1,239,141.
  • The trust plans to replenish the cash reserves and increase them to $2.0 million prior to any future distributions to unit holders.

Statistics:

  • Total revenue from the trust's subject interests for June 2024: $2,851,950.
  • Total production costs for the same period: $6,419,934.
  • Excess production costs charged to the next month's distribution: $8,456,506 gross.
  • June 2024 gas volumes for the trust's subject interests: 1,828,685 Mcf (2,031,872 MMBtu).
  • Average gas price for June 2024: $1.41 per Mcf ($1.27 per MMBtu).
  • Trust administrative expenses for June 2024: $187,698.
  • Interest income received by the trust in June 2024: $6,302.
  • Cash reserves maintained by the trustee as of April 30, 2024: $1.8 million.
  • Planned cash reserves by the trustee: $2.0 million.

Sources:

  • "San Juan Basin Royalty Trust Reports No Monthly Cash Distribution due to Excess Production Costs" (Source: Argent Trust Company, as the trustee of the San Juan Basin Royalty Trust)
  • "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)" (Source: San Juan Basin Royalty Trust)

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