UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18, 2018
San Juan Basin Royalty Trust
(Exact name of registrant as specified in its charter)
| Texas | 1-8032 | 75-6279898 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
Compass Bank, Trust Department
300 W. 7th Street, Suite B
Fort Worth, Texas 76102
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code): (866) 809-4553
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On September 18, 2018, the San Juan Basin Royalty Trust (the “Trust”) issued a press release, a copy of which is attached hereto as Exhibit 99.1, announcing that it will not declare a monthly cash distribution for September 2018 to the holders of its Units of beneficial interest based primarily upon excess capital expenditures for the July 2018 reporting month.
In accordance with general instruction B.2 to Form 8-K, the information in this Form 8-K shall be deemed “furnished” and not “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise, subject to the liabilities of that section.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
The following exhibits are filed in accordance with the provisions of Item 601 of Regulation S-K:
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated September 18, 2018. |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| COMPASS BANK, AS TRUSTEE FOR THE SAN JUAN BASIN ROYALTY TRUST (Registrant) | ||||||
| Date: September 18, 2018 | By: | /s/ Joshua R. Peterson | ||||
| Joshua R. Peterson | ||||||
| Vice President and Senior Trust Officer | ||||||
4
Exhibit 99.1
San Juan Basin Royalty Trust
News Release
San Juan Basin Royalty Trust Declares No Cash Distribution for September, Announces
Capital Expenditures In Excess of Plan, and Announces Progress in Transition Reporting
FORT WORTH, Texas, September 18, 2018 – Compass Bank, as 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”) based primarily upon excess capital expenditures. Excess production costs occur when production costs and capital expenditures exceed the gross proceeds for a certain period. Excess production costs for this reporting month are due to a significant increase in capital expenditures for well recompletions, with the majority occurring in the San Juan 29-5 unit.
Cash reserves will be utilized to pay Trust administrative expenses of $97,909. Hilcorp San Juan L.P. (“Hilcorp”) will charge the excess production costs to the next month’s distribution. No cash distributions will be distributed by the Trust until future net proceeds are sufficient to pay then-current Trust liabilities and replenish cash reserves.
Based upon information provided to the Trust by the present owner of the Subject Interests (as defined in the Net Overriding Royalty Conveyance), Hilcorp, gas production for the Subject Interests totaled 3,038,035 Mcf (3,375,595 MMBtu) for July 2018, as compared to 2,541,236 Mcf (2,823,595 MMBtu) for June 2018. Dividing revenues by production volume yielded an average gas price for July 2018 of $1.77 per Mcf ($1.59 per MMBtu), as compared to an average gas price for June 2018 of $1.84 per Mcf ($1.65 per MMBtu).
For the month ended July 2018, Hilcorp reported to the Trust capital costs of $2,721,872, lease operating expenses and property taxes of $2,287,676, and severance taxes of $910,070.
Capital Expenditures In Excess of Plan
Hilcorp’s original 2018 capital expenditures plan delivered to the Trust in February 2018 reported estimated capital expenditures of $547,800 for the Subject Interests, which included two facility projects and seven well recompletions. Hilcorp incurred increased capital expenditures of $2,721,872 in the reporting month of July 2018. Hilcorp has informed the Trust that it has increased its capital spending activity with the majority of this spending, including the capital expenditures in the reporting month of July, occurring in the second and third quarters of 2018.
Progress in Transition Reporting
Hilcorp has advised the Trust that for the reporting month of July 2018, oil production was actualized while gas revenues were accrued based on actual production volumes, including an estimate of $169,000 for non-operated revenue. In addition, Hilcorp has advised the Trust that it has actualized gas volumes for the October 2017 production month, which totaled a net decrease of $92,000, but has not actualized the $1 million in other income reported in October 2017.
Hilcorp has further advised the Trust that it intends to actualize gas production for April, May and June 2018 and oil and gas production for November 2017.
| Contact: | San Juan Basin Royalty Trust Compass Bank, Trustee 300 West Seventh St., Suite B, Fort Worth, Texas 76102 website: www.sjbrt.com e-mail: sjt.us@bbva.com
Joshua R. Peterson, Vice President & Senior Trust Officer Kaye Wilke, Investor Relations, toll-free: (866) 809-4553 |