San Juan Basin Royalty Trust Files 2023 Annual Report on Form 10-K

TL;DR

<b>San Juan Basin Royalty Trust has filed its 2023 10-K report, detailing its operations and financial status.</b>

AI Summary

SAN JUAN BASIN ROYALTY TRUST (SJT) filed a Annual Report (10-K) with the SEC on April 1, 2024. San Juan Basin Royalty Trust filed its annual report on Form 10-K for the fiscal year ended December 31, 2023. The Trust's units are registered and traded on the New York Stock Exchange under the ticker symbol SJT. The filing indicates the Trust is a non-accelerated filer and a smaller reporting company. Argent Trust Company serves as the Trustee for the San Juan Basin Royalty Trust. The Trust is incorporated in Texas and has an IRS Employer Identification No. of 75-6279898.

Why It Matters

For investors and stakeholders tracking SAN JUAN BASIN ROYALTY TRUST, this filing contains several important signals. This 10-K filing provides a comprehensive overview of the Trust's performance and financial health for the fiscal year 2023, which is crucial for investors to assess the Trust's stability and future prospects. As a publicly traded entity on the NYSE, adherence to SEC filing requirements like this 10-K is essential for maintaining transparency and investor confidence.

Risk Assessment

Risk Level: low — SAN JUAN BASIN ROYALTY TRUST shows low risk based on this filing. The filing is a standard annual report (10-K) and does not contain immediate, significant financial or operational disclosures that would alter the risk profile beyond what is typical for a reporting entity.

Analyst Insight

Review the full 10-K filing for detailed financial statements, risk factors, and management discussion to understand the Trust's performance and outlook.

Key Numbers

• 2023-12-31 — Fiscal Year End (Period covered by the report)
• 2024-04-01 — Filing Date (Date the report was filed)
• 001-08032 — Commission File Number (SEC file number for the Trust)
• 75-6279898 — IRS Number (IRS Employer Identification No.)

Key Players & Entities

• San Juan Basin Royalty Trust (company) — Registrant name
• SJT (company) — Trading Symbol
• New York Stock Exchange (company) — Exchange where units are traded
• Argent Trust Company (company) — Trustee
• Texas (company) — State of incorporation

FAQ

Industry Context

The San Juan Basin Royalty Trust is involved in the oil and gas industry, specifically focused on royalty interests in the San Juan Basin. This filing is a standard disclosure for such entities.

Regulatory Implications

The filing is made in accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, requiring annual reports from public companies.

What Investors Should Do

1. Analyze the financial statements within the 10-K for revenue, expenses, and net income.
2. Review the 'Risk Factors' section for any new or evolving risks affecting the Trust.
3. Examine the 'Management's Discussion and Analysis of Financial Condition and Results of Operations' for insights into performance drivers.

Key Dates

• 2023-12-31: Fiscal Year End — Marks the end of the reporting period for the 10-K.
• 2024-04-01: Filing Date — Date the 10-K was officially submitted to the SEC.

Year-Over-Year Comparison

This is the initial 10-K filing provided for analysis; no prior filing data is available for comparison.

Key Financial Figures

• $346,303,354 b — cond fiscal quarter), was approximately $346,303,354 based on the closing price as quoted on t
• $53.2 million — lders. The Trust received approximately $53.2 million and $79.0 million in Royalty Income fro
• $79.0 million — eceived approximately $53.2 million and $79.0 million in Royalty Income from Hilcorp in each
• $51.6 million — es, the Trust distributed approximately $51.6 million and $77.6 million to Unit Holders in ea
• $77.6 million — ributed approximately $51.6 million and $77.6 million to Unit Holders in each of the fiscal y
• $2.8 million — ly. The Trusts corpus was approximately $2.8 million and $3.0 million as of December 31, 202
• $3.0 million — rpus was approximately $2.8 million and $3.0 million as of December 31, 2023 and 2022, respe
• $1.0 million — rustee had established cash reserves of $1.0 million. The Trustee anticipates increasing the
• $2.0 million — established amount of cash reserves to $2.0 million in 2024, in response to the substantial
• $50.0 million — plus and undivided profits in excess of $50.0 million or money market funds that have been ra
• $15,000,000 — r prior to its appointment) of at least $15,000,000 to serve as successor trustee of the Tr

Filing Documents

• d551272d10k.htm (10-K) — 422KB
• d551272dex23.htm (EX-23) — 6KB
• d551272dex31.htm (EX-31) — 9KB
• d551272dex32.htm (EX-32) — 5KB
• d551272dex97.htm (EX-97) — 21KB
• d551272dex991.htm (EX-99.1) — 25KB
• 0001193125-24-083035.txt (&nbsp;) — 488KB

BUSINESS

BUSINESS 1 ITEM 1A.

RISK FACTORS

RISK FACTORS 4 ITEM 1B. UNRESOLVED STAFF COMMENTS 11 ITEM 1C. CYBERSECURITY 12 ITEM 2.

PROPERTIES

PROPERTIES 12 ITEM 3.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 22 ITEM 4. MINE SAFETY DISCLOSURES 22 PART II 23 ITEM 5. MARKET FOR REGISTRANTS UNITS, RELATED UNIT HOLDER MATTERS AND ISSUER PURCHASES OF UNITS 23 ITEM 6. RESERVED 23 ITEM 7. TRUSTEES DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23 ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 30 ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 31 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 41 ITEM 9A.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 41 ITEM 9B. OTHER INFORMATION 43 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 43 PART III 43 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 43 ITEM 11.

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 43 ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY HOLDER MATTERS 43 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 44 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 44 PART IV 45 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 45 Table of Contents Information Regarding Forward-Looking Statements Certain information included in this Annual Report on Form 10-K contains, and other materials filed or to be filed by the San Juan Basin Royalty Trust (the Trust) with the Securities and Exchange Commission (the SEC) (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) and Section 27A of the Securities Act of 1933, as amended (the Securities Act). Such forward-looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices, estimated future net revenues, estimates of reserves, the results of the Trusts activities, and regulatory matters. Such forward-looking statements generally are accompanied by words such as may, will, estimate, expect, predict, project, anticipate, should, assume, believe, plan, intend, or other words that convey the uncertainty of future events or outcomes. Such statements are based on certain assumptions of Argent Trust Company (as the Trustee (as hereinafter defined)) and certain assumptions of information provided to the Trust by Hilcorp San Juan L.P. (Hilcorp), the owner of the Subject Interests (as defined herein). Such statements also are based on an assessment of, and are subject to, a variety of factors deemed relevant by the Trustee and Hilcorp that involve risks and uncertainties. However, whether actual results and devel

BUSINESS

BUSINESS The Trust is an express trust created under the laws of the State of Texas by the San Juan Basin Royalty Trust Indenture entered into on November 1, 1980, between Southland Royalty Company (Southland) and The Fort Worth National Bank. Effective as of September 30, 2002, the original indenture was amended and restated, and, effective as of December 12, 2007, the restated indenture was amended and restated (such amended and restated indenture, as further amended by the First Amendment to the Amended and Restated Royalty Trust Indenture dated February 15, 2024, the Indenture). As a result of a series of mergers and other transactions, PNC Bank, National Association (PNC Bank), served as the previous Trustee of the Trust from October 8, 2021, through February 14, 2024. Effective February 15, 2024, Argent Trust Company, a Tennessee chartered trust company (Argent), became the Trustee of the Trust. The principal office of the Trust is 3838 Oak Lawn Avenue, Suite 1720, Dallas, Texas 75219 (telephone number (866) 809-4553). Argent Trust Company, as successor trustee of the Trust, is subject to the terms and conditions of the Indenture. The defined term Trustee as used herein shall refer to PNC Bank (which maintains its offices at 2200 Post Oak Blvd., Floor 18, Houston, TX 77056) for periods from October 8, 2021, until February 14, 2024, and shall refer to Argent Trust Company (which maintains its offices at 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas 75219) for periods on and after February 15, 2024. Prior to October 8, 2021, other entities served as Trustee of the Trust. See Item 8. Financial Statements and Supplementary Data, Note 5. For any time period prior to October 8, 2021, use of the defined term Trustee herein shall refer to the entity serving as Trustee during the applicable time period. The Conveyance and the Royalty Pursuant to the Net Overriding Royalty Conveyance (the Conveyance) effective November 1, 1980, Southland conveyed to the Trust a

business

business 1 Table of Contents on November 3, 1980. Each stockholder of Southland of record at the close of business on November 3, 1980, received one freely tradable Unit for each share of the common stock of Southland then held. Holders of Units are referred to herein as Unit Holders. As of December 31, 2023, 98.4% of the Trusts estimated proved reserves consisted of natural gas reserves, and 97.5% of the Gross Proceeds from the Subject Interests in 2023 were attributable to the production and sale of natural gas by Hilcorp as well as other proceeds. Accordingly, the market price for natural gas produced and sold from the San Juan Basin heavily influences the amount of Trust income available for distribution to the Unit Holders by the Trust and, by extension, the price of the Units. The market price paid for natural gas is seasonal because there is greater demand for natural gas used for heating purposes in the winter months and more energy requirements for air conditioning in the summer months than during the rest of the year. The Trustee The primary function of the Trustee is to collect the Royalty Income, to pay all expenses and charges of the Trust and to distribute the remaining available income to the Unit Holders. The Trust received approximately $53.2 million and $79.0 million in Royalty Income from Hilcorp in each of the fiscal years ended December 31, 2023 and 2022, respectively. After deducting administrative expenses and accounting for interest income and any change in cash reserves, the Trust distributed approximately $51.6 million and $77.6 million to Unit Holders in each of the fiscal years ended December 31, 2023 and 2022, respectively. The Trusts corpus was approximately $2.8 million and $3.0 million as of December 31, 2023 and 2022, respectively. Proceeds from production in the first month are generally received by Hilcorp in the second month, the Royalty Income is paid by Hilcorp to the Trustee in the third month, and distribution by

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