Mesa Royalty Trust reported its financial results for the second quarter of 2025, revealing a decline in both revenue and profitability compared to the same period in 2024. The Trust's royalty income for the quarter was $220,855, a decrease from $305,372 in the prior year. This decline was attributed to lower pricing for natural gas liquids and oil, as well as a decrease in net production for natural gas. The Trust's interest income also fell to $20,446 from $24,417 year-over-year. Overall, the distributable income available for distribution was $176,336, or $0.0946 per unit, down from $209,742, or $0.1125 per unit, in the previous year.
In terms of operational performance, the Trust's total assets increased to $3,320,558 as of June 30, 2025, compared to $3,187,975 at the end of 2024. The increase was primarily driven by a rise in cash and short-term investments, which reached $2,087,235, up from $1,930,126. However, distributions payable surged to $176,336 from $58,101, indicating a significant increase in obligations to unitholders. The Trust's corpus also saw a slight increase, ending the quarter at $3,144,222, compared to $3,129,874 at the end of 2024.
The Trust's operational challenges were highlighted by the lack of royalty income from the Hugoton Royalty Properties and the San Juan Basin—Colorado Properties, which reported zero income for both the current and prior quarter. This was largely due to operating costs exceeding revenues, a situation that has persisted for some time. The Trust is currently engaged with its operators, including Scout and Simcoe, to review past and current financials to address these discrepancies.
Looking ahead, the Trust's outlook remains cautious due to ongoing volatility in the oil and gas markets, influenced by geopolitical factors, trade policies, and fluctuating commodity prices. The Trustee has indicated plans to increase the Contingent Reserve to $2 million, which may further limit distributions to unitholders in the near term. The Trust's ability to generate sufficient royalty income to meet its obligations and fund the Contingent Reserve will be critical in determining future distributions. The Trustee emphasized that the Trust's financial health is closely tied to the performance of the Working Interest Owners and the broader market conditions affecting oil and gas prices.
About MESA ROYALTY TRUST/TX
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