San Juan Basin Royalty Trust(US:SJT)2025-11-13 16:36Financial Performance - Total income for the three months ended September 30, 2025, was $385, a significant decrease from $18,463 in the same period of 2024, indicating a decline of 97.9%[11] - Distributable income for the nine months ended September 30, 2025, showed a loss of $274,135 compared to a distributable income of $5,158,229 in 2024, reflecting a decrease of 105.3%[11] - Royalty Income for the three months ended September 30, 2025, was $0, compared to $6,945,974 for the nine months ended September 30, 2024, reflecting a significant decrease due to higher capital project spending[79] - Distributable Income for the three months ended September 30, 2025, was a loss of $111,352, with no Royalty Income distributed during this period[91] - Interest income decreased for the three and nine months ended September 30, 2025, primarily due to the decrease in Royalty Income and cash reserves[92] Cash and Investments - As of September 30, 2025, cash and short-term investments decreased to $29,160 from $760,920 as of December 31, 2024, representing a decline of approximately 96.2%[8] - Total cash reserves were $29,160 as of September 30, 2025, with plans to increase reserves to $2,000,000[94] - The Trust did not receive any Royalty Income from May 2024 through September 2025, relying on cash reserves and a Line of Credit to cover administrative expenses[96] Expenses and Costs - General and administrative expenses for the nine months ended September 30, 2025, totaled $1,017,505, a decrease from $2,161,377 in 2024, representing a reduction of about 53.0%[11] - General and administrative expenses decreased by $270,968 (70.1%) for the three months ended September 30, 2025, and by $1,143,872 (52.9%) for the nine months ended September 30, 2025[93] - Severance taxes increased approximately $0.5 million, or 48%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to higher Gross Proceeds[85] Production and Revenue - Natural gas production increased from 5,691,025 Mcf for the three months ended September 30, 2024, to 6,918,497 Mcf for the same period in 2025, and from 16,743,796 Mcf to 21,624,972 Mcf for the nine months ended September 30, 2024, to 2025[81] - Natural gas production volumes increased by 1,227,472 Mcf (21.6%) for the three months ended September 30, 2025, compared to the same period in 2024[105] - Oil production volumes decreased by 3,336 Bbls (30.0%) for the three months ended September 30, 2025, compared to the same period in 2024[106] Capital Expenditures - Hilcorp's 2025 capital expenditures for the Subject Interests are estimated to be approximately $9.0 million, with $4.0 million allocated to new vertical drill projects[47] - Hilcorp's capital expenditures for the Subject Interests are estimated at approximately $9.0 million for 2025, with $7.70 million already spent as of September 30, 2025[69] - Hilcorp's capital expenditures for the three months ended September 30, 2025, were $3,941,821, reflecting a decrease of $6,947,777 compared to the same period in 2024[74] - Capital expenditures decreased by $6,947,777 for the three months ended September 30, 2025, but increased by $7,788,545 for the nine months ended September 30, 2025, primarily due to drilling two new horizontal wells in 2024[83] Trust Structure and Governance - The Trust's financial statements raise substantial doubt about its ability to continue as a going concern within one year after the issuance date[29] - The Trust's distribution of income to Unit Holders is funded by Royalty Income after payment of Trust expenses, with no obligation to return overpayments[95] - The Trust does not have any directors or officers, resulting in no adoption of insider trading policies[127] Debt and Credit - The Trust established a Line of Credit of $2,000,000 with Texas Bank on May 21, 2025, bearing an interest rate of 8.5% as of June 30, 2025, maturing on May 21, 2027[29] - The outstanding balance on the Line of Credit was $274,135 as of September 30, 2025[98] - The Trust entered into a line of credit of $2,000,000 on May 21, 2025, to cover operating expenses, with an outstanding balance of $274,135 as of September 30, 2025[88][90] Market Conditions - The Trust's income is heavily influenced by natural gas and oil prices, which can fluctuate widely due to supply and demand changes[76] - The average realized natural gas price per Mcf increased to $2.11 for the three months ended September 30, 2025, compared to $1.49 in 2024[107] - The average realized oil price per Bbl decreased to $54.66 for the three months ended September 30, 2025, compared to $70.63 in 2024[108] Regulatory and Compliance - The Trust's financial statements are prepared on a modified cash basis, which differs from GAAP, affecting revenue recognition and expense recording[23] - Hilcorp's ongoing accounting and reporting to the Trust is subject to third-party compliance audits to ensure accuracy[72] - The Trust's production and sale of natural gas from coal seam wells does not qualify for tax credit under Section 45K of the Code, with no current legislation reinstating such credits[36]