San Juan Basin Royalty Trust Reports No Distribution Due to Excess Production Costs

The San Juan Basin Royalty Trust has announced that it will not declare a monthly cash distribution to its unit holders due to excess production costs and low natural gas pricing. The trust's subject interests, operated by Hilcorp, reported $3,594,338 in total revenue for August 2024, but production costs exceeded gross proceeds by approximately $15,150,449. This has resulted in the Trust depleting its cash reserves and utilizing interest income to cover administrative expenses.

Key Takeaways:

The San Juan Basin Royalty Trust will not declare a monthly cash distribution due to excess production costs of approximately $15,150,449 gross ($11,362,837 net to the Trust) for its subject interests in August 2024.
Hilcorp reported $3,594,338 in total revenue from the subject interests for August 2024, consisting of $3,442,328 in gas revenues and $152,010 in oil revenues.
Production costs for the subject interests in August 2024 totaled $7,227,419, consisting of $2,408,163 in lease operating expenses, $463,668 in severance taxes, and $4,355,588 in capital costs.
The Trust's cash reserves decreased to $1,017,135, and interest income was utilized to cover $82,564 of administrative expenses.
The Trust plans to replenish its cash reserves to $2.0 million and continue to increase the cash reserves.
The Trust's subject interests continue to be operated by Hilcorp, and the Trust is engaging with Hilcorp regarding ongoing accounting and reporting.

Statistics:

$3,594,338: Total revenue from subject interests for August 2024
$15,150,449 (gross): Excess production costs for August 2024
$11,362,837 (net): Net excess production costs to the Trust for August 2024
$7,227,419: Production costs for subject interests in August 2024
$2,408,163: Lease operating expenses for August 2024
$463,668: Severance taxes for August 2024
$4,355,588: Capital costs for August 2024
$1,022,591: Decrease in cash reserves

Sources:

San Juan Basin Royalty Trust, "San Juan Basin Royalty Trust Reports No Distribution Due to Excess Production Costs" (October 21, 2024)