News Release
San Juan Basin Royalty Trust Declares No Cash Distribution for October 2025
DALLAS, Texas, October 21, 2025 Argent Trust Company, as the trustee (the “Trustee”) of the San Juan Basin Royalty Trust (the “Trust”) (NYSE: SJT), today reported that it will not declare a monthly cash distribution to the holders of its units of beneficial interest (the “Unit Holders”) due to excess production costs for the Trust’s subject interests (“Subject Interests”) incurred during prior periods, as well as continued low natural gas pricing. Excess production costs occur when production costs and capital expenditures exceed the gross proceeds for a certain period. The balance of cumulative excess production costs is currently approximately $11,630,625 gross ($8,722,969 net to the Trust), a decrease in the deficit of $1,963,109 gross ($1,472,331 net to the Trust) from last month’s reporting period. Hilcorp will continue to charge the balance of excess production costs to the Trust’s net proceeds each month. Until the balance is paid in full, the Trust will not receive royalty income as all net proceeds will be applied to the balance of excess production costs. No cash distributions will be made by the Trust until future net proceeds are sufficient to (a) repay the balance of excess production costs, accrued as a result of Hilcorp San Juan L.P.’s drilling of two new horizontal wells in 2024, (b) replenish a reserve in the amount of $2,000,000, and (c) repay the principal and interest on the Trust’s line of credit at Texas Bank (“Line of Credit”), after which time, the Trust will resume distributions of the royalty income to the holders of the Trust’s units of beneficial interest.
Hilcorp reported $5,384,015 of total revenue from the Subject Interests for the production month of August 2025, consisting of $5,225,259 of gas revenues and $158,756 of oil revenues. For the Subject Interests, Hilcorp reported $3,420,906 of production costs (excluding the balance of excess production costs) for the production month of August 2025, consisting of $2,946,406 of lease operating expenses, $479,939 of severance taxes, and ($5,439) of capital costs credits.
Based upon information provided to the Trust by Hilcorp, gas volumes for the Subject Interests for August 2025 totaled 2,283,656 Mcf (2,537,396 MMBtu), as compared to 2,297,364 Mcf (2,552,627 MMBtu) for July 2025. Dividing gas revenues by production volume yielded an average gas price for August 2025 of $2.29 per Mcf ($2.06 per MMBtu), a decrease of $0.19 per Mcf ($0.17 per MMBtu) as compared to the average gas price for July 2025 of $2.48 per Mcf ($2.23 per MMBtu).
This month’s Trust administrative expenses totaled $21,200. The decrease in administrative expenses was attributable to differences in timing of the receipt and payment of certain expenses by the Trust. Interest income in the amount of $97 and a draw of $19,305 from the Line of Credit will be used to pay the balance of Trust administrative expenses for the month of October, which will bring the outstanding principal balance on the Line of Credit to $293,440.
Pursuant to the Amended and Restated Royalty Trust Indenture, dated December 12, 2007 (as amended on February 15, 2024, by the First Amendment to the Amended and Restated Royalty Trust Indenture), the Trustee is authorized to retain, in its sole discretion, a cash reserve for payment of Trust liabilities that are contingent or uncertain or otherwise not currently due and payable. Cash reserves were utilized to pay interest accrued on the Line of Credit for the months of July, August, and September. In October 2025, cash reserves in the amount of $1,798 will be utilized to pay interest on the Line of Credit, which will bring the balance of cash reserves maintained by the Trust to $27,243.
Production from the Subject Interests continues to be gathered, processed, and sold under market sensitive and customary agreements, as recommended for approval by the Trust’s Consultant. The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and the Trust’s third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments. The Trust’s auditing process has also included detailed analysis of Hilcorp’s pricing and rates charged. As previously disclosed in the Trust’s filings, these revenues and costs (along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by the Trust’s professional