Capital Expenditures - Hilcorp's estimated capital expenditures for 2024 are projected to be 34.0million,downfromaninitialestimateof36.0 million[28]. - Approximately 25.0millionofthe2024capitalbudgetwillbeallocatedtotwodrillingprojectsintheMancosformation[28].−Hilcorp′scapitalexpendituresincreasedbyapproximately10,450,220 for the three months and 12,115,022fortheninemonthsendedSeptember30,2024,comparedtothepreviousyear[28].−Capitalexpendituresincreasedbyapproximately10,450,220 for Q3 2024 and 12,115,022fortheninemonthsendedSeptember30,2024,primarilyduetoHilcorp′ssignificantlyhighercapitalprojectspendingbudgetfor2024[32].ProductionandRevenue−RoyaltyIncomeforQ32024was0, a decrease from 4,320,039inQ32023,andfortheninemonthsendedSeptember30,2024,itwas6,945,975 compared to 49,256,075inthesameperiodof2023[31].−TotalGrossProceedsdecreasedbyapproximately5.4 million, or 36.8%, for Q3 2024 compared to Q3 2023, and by approximately 59.5million,or60.52.04 per Mcf in Q3 2023 to 1.49perMcfinQ32024,andfrom5.42 per Mcf for the nine months ended September 30, 2023 to 2.20perMcfforthesameperiodin2024[31].−Productionofnaturalgasdecreasedfrom5,989,625McfinQ32023to5,691,025McfinQ32024,andfrom17,466,457McffortheninemonthsendedSeptember30,2023to16,743,796Mcfforthesameperiodin2024[31].−DistributableIncomeforQ32024was0, down from 3,947,050inQ32023,andfortheninemonthsendedSeptember30,2024,itwas5,158,229 compared to 48,005,830inthesameperiodof2023,representingadecreaseofapproximately891.0 million, or 15.7%, for Q3 2024 compared to Q3 2023, and by approximately 2.8million,or13.9792,057, or 57.8%, for the nine months ended September 30, 2024 compared to the same period in 2023, due to timing differences and transition expenses[35]. - Excess Production Costs for Q3 2024 were 10,294,620and11,517,368 for the nine months ended September 30, 2024, with a cumulative balance of excess Production Costs of 11,517,368asofSeptember30,2024[32].TrustandAudit−TheTrustreceivedapaymentof1,037,093.45 from Hilcorp due to underpayment of royalties for the years 2017 through 2020[27]. - The Trust's income and distributions are heavily influenced by natural gas and oil prices, which can fluctuate widely due to market conditions[28]. - Hilcorp's production costs are deducted from gross proceeds to calculate net proceeds, which are then multiplied by 75% to determine royalty income[28]. - The Trust's gross proceeds depend on the volumes of natural gas and oil produced from the Subject Interests, which are depleting assets[28]. - The Trust's ongoing audit process includes detailed analyses of Hilcorp's pricing and rates charged for production[28]. - The Trust cannot acquire new natural gas and oil assets, making its royalty income dependent on existing production volumes[28]. - The Trust's ability to disclose relevant information is dependent upon Hilcorp's timely delivery of accurate oil and gas revenue and production cost information[49]. Market Conditions - The decrease in natural gas production was influenced by market conditions and a decrease in demand[41]. - Average realized natural gas price per Mcf decreased to 1.49forthethreemonthsendedSeptember30,2024,from2.04 in the same period in 2023[39]. - Average realized oil price per Bbl increased to 70.63forthethreemonthsendedSeptember30,2024,comparedto62.00 in the same period in 2023[39]. - Royalty Income for the three months ended September 30, 2024, was associated with natural gas and oil production during the period from May 2024 through July 2024[39]. - There were no changes to the contracts for the sale of production from the Subject Interests during the three months ended September 30, 2024[44].
