SJT Royalty Income Dries Up, Trust Borrows $2M to Stay Afloat

TL;DR

**SJT is a dead trust walking; zero royalty income means no distributions and a desperate $2M loan to cover basic costs.**

AI Summary

SAN JUAN BASIN ROYALTY TRUST (SJT) reported no royalty income for the three and nine months ended September 30, 2025, a significant decline from $6,945,974 in royalty income for the nine months ended September 30, 2024. Total income for the nine months ended September 30, 2025, was only $11,608, down from $7,019,305 in the prior year period. This led to a distributable loss of $274,135 for the nine months ended September 30, 2025, compared to distributable income of $5,158,229 in the same period of 2024. The Trust's cash and short-term investments plummeted from $760,920 at December 31, 2024, to $29,160 at September 30, 2025. To cover administrative expenses, the Trust secured a $2,000,000 line of credit with Texas Bank on May 21, 2025, and utilized $274,135 from it by September 30, 2025. The Trust's ability to continue as a going concern is in substantial doubt due to the lack of royalty income and reliance on borrowed funds.

Why It Matters

This filing signals severe operational distress for SJT, directly impacting unit holders who received no distributions for the reported periods, a stark contrast to $0.110670 per unit in 2024. The reliance on a $2 million line of credit to cover administrative expenses, coupled with zero royalty income, indicates a fundamental challenge to the Trust's business model and raises significant going concern issues. For investors, this means a complete halt in distributions and a high risk of capital impairment. Competitively, other royalty trusts with active production and positive cash flow will appear far more attractive, potentially leading to further divestment from SJT.

Risk Assessment

Risk Level: high — The Trust reported no royalty income for the three and nine months ended September 30, 2025, and a distributable loss of $274,135 for the nine-month period. Cash and short-term investments decreased from $760,920 to $29,160, and the Trust had to utilize a $2,000,000 line of credit, drawing $274,135 by September 30, 2025, to cover administrative expenses, indicating severe liquidity issues and a substantial doubt about its ability to continue as a going concern.

Analyst Insight

Investors should immediately divest from SAN JUAN BASIN ROYALTY TRUST (SJT) given the complete absence of royalty income, the reliance on debt to cover basic expenses, and the explicit 'going concern' warning. This trust is no longer generating its core revenue, making it an unsustainable investment.

Financial Highlights

debt To Equity

N/A

revenue

$11,608

operating Margin

N/A

total Assets

N/A

total Debt

$274,135

net Income

N/A

eps

-$0.005882

gross Margin

N/A

cash Position

$29,160

revenue Growth

-99.8%

Revenue Breakdown

Key Numbers

• $0 — Royalty income (For the three and nine months ended September 30, 2025, indicating a complete cessation of core revenue.)
• $6,945,974 — Royalty income (For the nine months ended September 30, 2024, highlighting a drastic year-over-year decline.)
• $11,608 — Total income (For the nine months ended September 30, 2025, primarily from interest, insufficient to cover expenses.)
• $(274,135) — Distributable income (Loss) (For the nine months ended September 30, 2025, showing a significant loss compared to prior year's income.)
• $5,158,229 — Distributable income (For the nine months ended September 30, 2024, demonstrating the sharp reversal in financial performance.)
• $29,160 — Cash and short-term investments (As of September 30, 2025, a substantial decrease from $760,920 at December 31, 2024.)
• $2,000,000 — Line of credit (Established on May 21, 2025, to cover administrative expenses due to lack of royalty income.)
• 8.5% — Interest rate (On the Line of Credit at June 30, 2025 (prime plus 1%).)
• 46,608,796 — Units of beneficial interest (Outstanding at November 13, 2025.)
• $0.110670 — Distributions declared per Unit (For the nine months ended September 30, 2024, compared to $0 for the same period in 2025.)

Key Players & Entities

• SAN JUAN BASIN ROYALTY TRUST (company) — Registrant
• Argent Trust Company (company) — Trustee since February 15, 2024
• Hilcorp San Juan L.P. (company) — Owner of Subject Interests
• Texas Bank (company) — Lender for the $2,000,000 Line of Credit
• PNC Bank (company) — Former Trustee from October 8, 2021, to February 14, 2024
• Southland Royalty Company (company) — Original conveyer of the royalty interest
• New York Stock Exchange (regulator) — Where SJT Units are traded
• Securities and Exchange Commission (regulator) — Regulatory body for the filing
• $2,000,000 (dollar_amount) — Amount of the Line of Credit
• $274,135 (dollar_amount) — Line of credit utilization as of September 30, 2025

FAQ

Risk Factors

• Lack of Royalty Income and Going Concern Doubt [high — financial]: The Trust reported $0 royalty income for the nine months ended September 30, 2025, a drastic decline from $6,945,974 in the prior year. This has led to a distributable loss of $274,135 and a severe reduction in cash and short-term investments to $29,160 from $760,920.
• Reliance on Debt Financing [high — financial]: To cover administrative expenses, the Trust secured a $2,000,000 line of credit and had drawn $274,135 by September 30, 2025. This reliance on borrowed funds, coupled with no royalty income, raises significant financial instability concerns.
• Dependence on Third-Party Operators [medium — operational]: The Trust's royalty income is derived from oil and gas interests operated by third parties, such as Hilcorp. Any operational issues, production declines, or changes in the operator's strategy directly impact the Trust's revenue.
• Commodity Price Volatility [medium — market]: While not explicitly detailed in the provided text, the underlying oil and gas production is subject to volatile commodity prices. A sustained downturn in prices could further exacerbate the lack of royalty income.
• Environmental and Regulatory Compliance [low — regulatory]: As an entity tied to oil and gas interests, the Trust is indirectly exposed to environmental regulations and compliance costs associated with the production of oil and gas, which can impact operational efficiency and costs for the operators.

Industry Context

The San Juan Basin Royalty Trust operates in the oil and gas sector, specifically focused on royalty interests. This industry is characterized by significant capital intensity, price volatility of commodities (oil and natural gas), and dependence on third-party operators for production. Trends include the ongoing energy transition, regulatory scrutiny, and the need for efficient extraction technologies.

Regulatory Implications

The Trust's operations are indirectly affected by environmental regulations governing oil and gas production, such as emissions standards and land use. Changes in these regulations can impact the operational costs and efficiency of the third-party operators, potentially affecting royalty payments. Compliance with financial reporting standards is also critical.

What Investors Should Do

1. Monitor operator performance and production reports
2. Evaluate the terms and utilization of the line of credit
3. Assess the long-term viability of royalty income generation
4. Review the Trust's administrative expenses

Key Dates

• 1980-11-01: Trust established and Royalty conveyed — Marks the inception of the Trust and its core revenue-generating asset.
• 2025-05-21: Line of credit secured — Indicates the Trust's immediate need for liquidity to cover operational expenses due to lack of royalty income.
• 2025-09-30: Reporting period end — Shows a dire financial state with $0 royalty income and significant cash depletion.

Glossary

Royalty Income

Income received from the production of oil and gas, based on a percentage of the revenue or volume produced. (This is the primary revenue source for the Trust, and its absence is the core issue leading to financial distress.)

Distributable Income (Loss)

The income available for distribution to unit holders after deducting all expenses and reserves. (A negative distributable income (loss) means the Trust cannot pay distributions and is depleting its capital.)

Trust Corpus

The principal assets of the trust, which in this case is primarily cash and investments, intended to be preserved. (The Trust corpus is being depleted to cover operating expenses, indicating a potential erosion of the Trust's value.)

Units of beneficial interest

Represents ownership in the Trust, entitling holders to a share of distributable income. (The number of outstanding units is crucial for calculating per-unit metrics like distributable income per unit.)

Net Overriding Royalty Interest

A right to a share of the revenue from oil and gas produced from a specific property, overriding the working interest. (This is the specific type of interest that forms the basis of the Trust's revenue generation.)

Year-Over-Year Comparison

The financial performance of San Juan Basin Royalty Trust has deteriorated dramatically compared to the prior year. Total income for the nine months ended September 30, 2025, plummeted to $11,608 from $7,019,305 in the same period of 2024, driven by a complete loss of royalty income. Consequently, the Trust has shifted from a distributable income of $5,158,229 to a distributable loss of $274,135. Cash reserves have also shrunk from $760,920 at year-end 2024 to $29,160, necessitating a $2,000,000 line of credit to meet obligations.

Key Financial Figures

• $130,597,911 — ies (net of accumulated amortization of $130,597,911 at September 30, 2025 and December 31,
• $1.0 million — ch of two successive years is less than $1.0 million per year or (ii) the Unit Holders of at
• $133,275,528 — nitial carrying value of the Royalty of $133,275,528 represented Southland’s historic
• $28,946 — ed below). The cash reserve balance was $28,946 on September 30, 2025. The anticipate
• $2,000,000 — ine of Credit”) in the amount of $2,000,000 with Texas Bank, together with a mortga
• $29,932 — beneficial interest. The Trust utilized $29,932 in May 2025 to cover fees associated wi
• $132,851 — d with obtaining the Line of Credit and $132,851 in June 2025 to help cover Trust admini
• $18,565 — strative costs. Funds in the amounts of $18,565, $19,318, and $73,469 were utilized fro
• $19,318 — costs. Funds in the amounts of $18,565, $19,318, and $73,469 were utilized from the Lin
• $73,469 — in the amounts of $18,565, $19,318, and $73,469 were utilized from the Line of Credit i
• $1,059 — , and September 2025, in the amounts of $1,059, $1,292, and $1,450 respectively, such
• $1,292 — ptember 2025, in the amounts of $1,059, $1,292, and $1,450 respectively, such that the
• $1,450 — , in the amounts of $1,059, $1,292, and $1,450 respectively, such that the balance of
• $1,037,093 — Hilcorp’s payment of the sum of $1,037,093, which included the accumulated interes

Filing Documents

• sjt_10q_93025.htm (10-Q) — 650KB
• sjt-ex31.htm (EX-31) — 15KB
• sjt-ex32.htm (EX-32) — 14KB
• 0001193125-25-279441.txt ( ) — 681KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1

Financial Statements

Financial Statements 1 Item 2 Trustee’s Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 18 Item 4

Controls and Procedures

Controls and Procedures 18

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 19 Item 1A

Risk Factors

Risk Factors 19 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 19 Item 3 Defaults Upon Senior Securities 19 Item 4 Mine Safety Disclosures 19 Item 5 Other Information 19 Item 6 Exhibits 20 SIGNATURE Table of Contents SAN JUAN BASIN ROYALTY TRUST PA RT I FINANCIAL INFORMATION

Fin ancial Statements

Item 1. Fin ancial Statements. CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS September 30, December 31, 2025 2024 (Unaudited) (Audited) ASSETS Cash and short-term investments $ 29,160 $ 760,920 Net overriding royalty interest in producing oil and gas properties (net of accumulated amortization of $130,597,911 at September 30, 2025 and December 31, 2024) 2,677,617 2,677,617 $ 2,706,777 $ 3,438,537 LIABILITIES AND TRUST CORPUS Distribution payable to Unit Holders $ — $ — Cash reserves (1) 29,160 760,920 Line of credit utilization 274,135 — Trust corpus – 46,608,796 Units of beneficial interest authorized and outstanding 2,403,482 2,677,617 $ 2,706,777 $ 3,438,537 (1) The Trustee is authorized to determine the amount of cash reserves it retains from distributions received by the Trust to be used in the event cash on hand is not sufficient to pay ordinary course general and administrative expenses and to provide for future liabilities of the Trust. These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein

Notes to Financial Statements included herein. 1 Table of Contents CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Royalty income $ — $ — $ — $ 6,945,974 Interest income 385 18,463 11,608 73,331 Total income 385 18,463 11,608 7,019,305 General and administrative expenses (115,539 ) (386,507 ) (1,017,505 ) (2,161,377 ) Change in cash reserves 3,802 368,044 731,762 300,301 Distributable income (Loss) $ (111,352 ) $ — $ (274,135 ) $ 5,158,229 Distributable income (Loss) per Unit (46,608,796 Units) $ (0.002389 ) $ — $ (0.005882 ) $ 0.110670 These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein

Notes to Financial Statements included herein. 2 Table of Contents CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Trust corpus, beginning of period $ 2,514,834 $ 2,677,617 $ 2,677,617 $ 2,753,249 Amortization of net overriding royalty interest — — — (75,632 ) Distributable income (Loss) (111,352 ) — (274,135 ) 5,158,229 Distributions declared — — — (5,158,229 ) Trust corpus, end of period $ 2,403,482 $ 2,677,617 $ 2,403,482 $ 2,677,617 Distributions declared (per Unit) $ — $ — $ — $ 0.110670 These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein

Notes to Financial Statements included herein. 3 Table of Contents

Notes to Financial Statements

Notes to Financial Statements 1. Trust Organization and Administration The San Juan Basin Royalty Trust (the “Trust”) was established on November 1, 1980 when Southland Royalty Company (“Southland”) conveyed to the Trust a 75% net overriding royalty interest (the “Royalty”) that burdens certain oil and gas interests (the “Subject Interests”) in properties owned by Southland and located in the San Juan Basin of northwestern New Mexico. Subsequent to the conveyance of the Royalty, through a series of sales, assignments and mergers, Southland’s successor became Hilcorp San Juan L.P. (“Hilcorp”), which acquired the Subject Interests from Burlington Resources Oil & Gas Company LP (“Burlington”) on July 31, 2017. Through an acquisition completed on March 24, 2006, Compass Bank succeeded TexasBank as trustee of the Trust. On September 7, 2007, Compass Bancshares, Inc. was acquired by Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”) and became a wholly-owned subsidiary of BBVA. Effective June 10, 2019, Compass Bank changed its name to BBVA USA. On June 1, 2021, The PNC Financial Services Group, Inc. (“PNC”) announced that it had completed the purchase of BBVA USA Bancshares, Inc., a financial holding company, including its U.S. banking subsidiary, BBVA USA, an Alabama-chartered bank and trustee of the Trust (“BBVA USA”). On October 8, 2021, PNC Bank, an indirect wholly-owned subsidiary of PNC, succeeded BBVA USA as the trustee of the Trust following BBVA USA’s merger with and into PNC Bank. On February 15, 2024, Argent Trust Company succeeded PNC Bank as the trustee of the Trust following the resignation of PNC Bank. The defined term “Trustee” as used herein shall refer to PNC Bank for periods from October 8, 2021 through February 14, 2024, and shall refer to Argent Trust Company for periods on and after February 15, 2

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