The San Juan Basin Royalty Trust reported a significant decline in financial performance for the fiscal year ending December 31, 2024, with total revenue dropping to $7.03 million from $53.39 million in 2023. This decrease of approximately 87% was primarily driven by a substantial reduction in natural gas prices, which fell from an average of $4.69 per Mcf in 2023 to $2.07 per Mcf in 2024. The Trust's Royalty Income also reflected this downturn, decreasing to $6.95 million from $53.24 million in the previous year. The Trust's total production costs surged to $60.88 million, up from $43.49 million in 2023, leading to a net loss of $11.99 million for the year.
In terms of operational changes, the Trust's capital expenditures increased dramatically to $23.94 million in 2024, compared to just $2.20 million in 2023. This rise was attributed to Hilcorp's focus on drilling projects and workovers, which included two new horizontal wells in the Mancos formation. The Trust's total proved reserves as of December 31, 2024, were reported at 62,095 MMcf of natural gas and 132 MBbls of crude oil, reflecting a decrease in proved undeveloped reserves, which were previously reported at 9,135 MMcf in 2023.
The Trust's operational metrics indicated a challenging environment, with production costs exceeding gross proceeds by $21.25 million, resulting in a cumulative excess production cost balance of $21.25 million as of December 31, 2024. This situation has led to the Trust not receiving any Royalty Income since April 2024, and it is expected that no distributions will be made to unit holders until these excess costs are recovered. The Trust's cash reserves were reported at $760,919, down from $1.57 million in 2023, raising concerns about its ability to continue as a going concern.
Looking ahead, Hilcorp has outlined a capital project plan for 2025, estimating expenditures of approximately $9 million, which includes funding for new drilling projects and facility upgrades. However, the Trust's ability to generate future income remains uncertain, as it is contingent on the recovery of excess production costs and the stabilization of natural gas prices. The Trust's trustee is currently evaluating commercial lending options to cover liabilities, indicating a cautious outlook for the upcoming fiscal year.
About SAN JUAN BASIN ROYALTY TRUST
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