San Juan Basin Royalty Trust (SJT) Q2 2024 earnings summary

Executive summary

• Royalty income and distributable income for Q2 and H1 2024 declined sharply year-over-year due to lower natural gas prices and increased production costs, including capital expenditures and lease operating expenses.

• No monthly cash distributions were declared for May, June, and July 2024 as production costs exceeded proceeds, with excess production costs to be recovered from future periods.

• The Trust increased cash reserves to $1.47 million as of June 30, 2024, to cover expenses during revenue shortfalls.

Financial highlights

• Q2 2024 royalty income: $1.85 million, down from $8.52 million in Q2 2023; H1 2024: $6.95 million, down from $44.94 million in H1 2023.

• Distributable income for Q2 2024: $1.07 million ($0.022864/unit), down 87% year-over-year; H1 2024: $5.16 million ($0.110671/unit), down 88%.

• Average natural gas price Q2 2024: $1.92/Mcf vs $3.69/Mcf in Q2 2023; H1 2024: $2.56/Mcf vs $7.19/Mcf in H1 2023.

• Production costs exceeded gross proceeds by $1.66 million in Q2 and H1 2024; no such excess in 2023.

• Capital expenditures for Q2 2024: $829,872, up 579% year-over-year; H1 2024: $1.82 million, up 968%.

Outlook and guidance

• Hilcorp's 2024 capital plan estimates $34 million in expenditures, with $25 million for Mancos drilling, $8 million for recompletions/workovers, and $1 million for compression facilities.

• Actual capital costs may vary as project status is subject to revision.

• Trustee expects to replenish and increase cash reserves to $2 million before resuming distributions.