San Juan Basin Royalty Trust Reports No Royalty Income and Financial Challenges for Quarter Ending June 30, 2025

The San Juan Basin Royalty Trust reported significant financial challenges in its latest 10-Q filing for the quarter ending June 30, 2025. The Trust recorded no royalty income during the quarter, a stark contrast to the $1.85 million generated in the same period last year. For the six months ending June 30, 2025, the Trust similarly reported no royalty income, down from $6.95 million in the prior year. Total income for the quarter was $2,985, primarily from interest, compared to $1.89 million in the previous year. The Trust's general and administrative expenses decreased to $391,330 from $758,699, reflecting cost-cutting measures amid declining revenues.

The Trust's financial position has deteriorated, with total assets dropping to $2.71 million as of June 30, 2025, down from $3.44 million at the end of 2024. The Trust's corpus also fell to $2.51 million, a decrease from $2.68 million. The Trust's cash reserves were significantly reduced to $32,968, down from $760,920, as it utilized these funds to cover administrative expenses during a period of no royalty income. The Trust has also drawn on a line of credit, with an outstanding balance of $162,783 as of June 30, 2025, to manage its operational costs.

Operationally, the Trust faced increased capital expenditures, which rose to $2.51 million for the three months ending June 30, 2025, compared to $829,872 in the same period last year. This increase is attributed to Hilcorp's drilling of two new horizontal wells, which has led to significant excess production costs. As of June 30, 2025, cumulative excess production costs amounted to approximately $14.77 million gross, which must be recovered before any royalty income can be distributed to unit holders. The Trust's production of natural gas increased to 7.09 million Mcf for the quarter, up from 5.46 million Mcf in the previous year, although oil production saw a decline.

Looking ahead, the Trust's ability to continue as a going concern is in question due to the anticipated deficit in income to cover its liabilities. The Trust has indicated that it will not declare any cash distributions to unit holders until it can recover the balance of excess production costs, replenish cash reserves, and repay its line of credit. The Trust's future financial performance will heavily depend on market conditions, including natural gas prices and production volumes, as well as Hilcorp's operational decisions regarding capital expenditures and drilling activities.