10-Q

10-Q 1 sjt_10q_93024.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ________ to ________

Commission File Number: 001-08032

SAN JUAN BASIN ROYALTY TRUST

(Exact name of registrant as specified in its charter)


Texas	75-6279898
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Argent Trust Company, Trustee 3838 Oak Lawn Ave, Suite 1720 Dallas, Texas 75219-4518
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (855) 588-7839

Securities registered pursuant to Section 12(b) of the Act:


	Trading Symbol(s)	Name of each exchange on which registered
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units	SJT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No ☒

Number of Units of beneficial interest outstanding at November 14, 2024: 46,608,796


PART I. FINANCIAL INFORMATION
Item 1	Financial Statements	1
Item 2	Trustee’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4	Controls and Procedures	16
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	17
Item 1A	Risk Factors	17
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3	Defaults Upon Senior Securities	17
Item 4	Mine Safety Disclosures	17
Item 5	Other Information	17
Item 6	Exhibits	18
SIGNATURE


	September 30,		December 31,
	2024		2023
	(Unaudited)		(Audited)
ASSETS
Cash and short-term investments	$	1,099,699	$	1,574,347
Net overriding royalty interest in producing oil and gas properties (net of accumulated amortization of $130,597,911 and $130,522,279 at September 30, 2024 and December 31, 2023, respectively)		2,677,617		2,753,249
	$	3,777,316	$	4,327,596
LIABILITIES AND TRUST CORPUS
Distribution payable to Unit Holders	$	—	$	574,347
Cash reserves(1)		1,099,699		1,000,000
Trust corpus – 46,608,796 Units of beneficial interest authorized and outstanding		2,677,617		2,753,249
	$	3,777,316	$	4,327,596


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Royalty income	$	—		$	4,320,039		$	6,945,974		$	49,256,075
Interest income		18,463			19,773			73,331			119,075
Total income		18,463			4,339,812			7,019,305			49,375,150
General and administrative expenses		(386,507	)		(392,762	)		(2,161,377	)		(1,369,320	)
Cash reserves (withheld) used for Trust expenses		368,044			—			300,301			—
Distributable income	$	—		$	3,947,050		$	5,158,229		$	48,005,830
Distributable income per Unit (46,608,796 Units)	$	—		$	0.084685		$	0.110670		$	1.029974


	For the Three Months Ended September 30,							For the Nine Months Ended September 30,
.	2024			2023				2024				2023
Gross proceeds from the Subject Interests:
Natural gas	$	8,490,465		$	12,221,864			$	36,807,035			$	94,688,225
Oil		784,756			1,072,190				1,783,702				2,068,949
Other		—			1,382,791		(1)		182,978		(2)		1,492,304		(3)
Total		9,275,221			14,676,845				38,773,715				98,249,478
Production Costs:
Severance tax – gas		1,042,670			1,835,573				4,762,762				11,238,501
Severance tax – oil		86,811			116,995				195,701				224,060
Lease operating expense and property tax		7,550,762			6,524,847				23,361,057				20,516,908
Capital expenditures		10,889,598			439,378				12,710,264				595,242
Total Production Costs		19,569,841			8,916,793				41,029,784				32,574,711
Royalty profits (losses)		(10,294,620	)		5,760,052				(2,256,069	)			65,674,767
Cumulative Excess Production Costs(4)		10,294,620			—				11,517,368				—
Net profits		—			5,760,052				9,261,299				65,674,767
Net overriding royalty interest		75	%		75	%			75	%			75	%
Royalty Income	$	—		$	4,320,039			$	6,945,975			$	49,256,075


	For the Three Months Ended September 30,
	2024					2023
	Natural Gas (Mcf)			Oil and Condensate (Bbls)		Natural Gas (Mcf)		Oil and Condensate (Bbls)
Production
Subject Interests		5,691,025			11,111		5,989,625		17,292
Royalty		(6,683,813	)		6,460		1,426,197		12,025
Average Price (per Mcf/Bbl)	$	1.49		$	70.63	$	2.04	$	62.00


	For the Nine Months Ended September 30,
	2024					2023
	Natural Gas (Mcf)			Oil and Condensate (Bbls)		Natural Gas (Mcf)		Oil and Condensate (Bbls)
Production
Subject Interests		16,743,796			25,574		17,466,457		32,001
Royalty		(5,396,654	)		15,212		7,373,169		21,299
Average Price (per Mcf/Bbl)	$	2.20		$	69.26	$	5.42	$	64.65


Exhibit Number		Description

(4)(a)		San Juan Basin Amended and Restated Royalty Trust Indenture, dated December 12, 2007, filed as Exhibit 99.2 to the Trust’s Current Report on Form 8-K filed with the SEC on December 14, 2007, and incorporated herein by reference. *

(4)(b)		Net Overriding Royalty Conveyance from Southland Royalty Company to The Fort Worth National Bank, as Trustee, dated November 1, 1980 (without Schedules), filed as Exhibit 4(b) to the Trust’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2006, on March 1, 2007, and incorporated herein by reference. *

(4)(c)		Assignment of Net Overriding Interest (San Juan Basin Royalty Trust), dated September 30, 2002, between Bank One, N.A. and Texas Bank, filed as Exhibit 4(c) to the Trust’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended September 30, 2002, and incorporated herein by reference. *

(4)(f)		First Amendment to the San Juan Basin Amended and Restated Royalty Trust Indenture, dated February 15, 2024, filed as Exhibit 4(f) to the Trust's Current Report on Form 8-K filed with the SEC on February 15, 2024, and incorporated herein by reference*
31		Certification required by Rule 13a-14(a), dated November 14, 2024, by Nancy Willis, Director of Royalty Trust Services of the Trustee of the Trust**

32		Certification required by Rule 13a-14(b), dated November 14, 2024, by Nancy Willis, Director of Royalty Trust Services of the Trustee of the Trust***


ARGENT TRUST COMPANY, AS TRUSTEE OF THE SAN JUAN BASIN ROYALTY TRUST

	/s/ Nancy Willis
By:	Nancy Willis
	Director of Royalty Trust Services

SEC Form 10-Q filed by San Juan Basin Royalty Trust