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
August 20, 2021
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.) |
BBVA USA, Trust Department
2200 Post Oak Blvd., Floor 18
Houston, TX 77056
(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)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Units | SJT | NYSE |
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 August 20, 2021, 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 to the holders of its Units of beneficial interest (the “Unit Holders”) due to excess production costs for the June 2021 production 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 August 20, 2021. | |
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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.
| BBVA USA, AS TRUSTEE FOR THE SAN JUAN BASIN ROYALTY TRUST (Registrant) | ||||||
| Date: August 20, 2021 | By: | /s/ Joshua R. Peterson | ||||
| Joshua R. Peterson | ||||||
| Head of Trust Real Assets & Mineral Resources and Senior Vice President | ||||||
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Exhibit 99.1
San Juan Basin Royalty Trust
News Release
San Juan Basin Royalty Trust Declares No Cash Distribution for August 2021
HOUSTON, Texas, August 20, 2021 – BBVA USA, 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”) due to excess production costs for the June 2021 production month. Excess production costs occur when production costs exceed the gross proceeds for a certain period.
For the production month of June 2021, the operator of the Trust’s subject interests, Hilcorp San Juan L.P. (“Hilcorp”), reported to the Trust profits of $1,850,948.35 gross ($1,388,211.26 net to the Trust), which was negatively offset by Hilcorp’s true-ups and corrections of prior period true-ups causing excess production costs.
More specifically, Hilcorp informed the Trust that the true-ups that occurred last month to the lease operating and capital cost categories for the January 2021 through April 2021 production months resulting in additional profits were made in error. Based on information provided by Hilcorp, the June 2021 reporting month includes a reduction of $2,043,557.99 gross profits ($1,532,668.49 net to the Trust) due to corrections for those periods.
In addition, Hilcorp has informed the Trust that the June 2021 reporting month includes a reduction of $899,139.46 gross profits ($674,354.60 net to the Trust) based on true-ups to the revenue, severance tax, and expense categories for the May 2021 production month. As previously announced, Hilcorp is waiving interest on any overpayments to the Trust in 2021.
Cash reserves will be utilized to pay Trust administrative expenses of $150,148. Hilcorp will charge the excess production costs of $1,091,749.10 gross ($818,811.83 net to the Trust) 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.
The Trustee will continue to communicate with Hilcorp regarding these reporting issues and the Trust’s third-party compliance auditors will continue to audit all payments made by Hilcorp to the Trust, including adjustments, true-ups, and recoupments. In addition, the Trustee is consulting with outside counsel to review the rights of the Trust in respect of these ongoing reporting issues and to evaluate any potential legal remedies that may be available under the Conveyance.
Based upon information provided to the Trust by Hilcorp (including true-ups), gas production for the subject interests totaled 1,568,223 Mcf (1,742,470 MMBtu) for June 2021, as compared to 2,695,014 Mcf (2,994,460 MMBtu) for May 2021. Dividing revenues by production volume yielded an average gas price for June 2021 of $3.46 per Mcf ($3.12 per MMBtu), as compared to an average gas price for May 2021 of $1.88 per Mcf ($1.69 per MMBtu).
Hilcorp also reported that for the reporting month of June 2021, revenue included an estimated $100,000 for non-operated revenue and approximately $400,000 from the settlement of audit exceptions. For the month ended June 2020, Hilcorp reported to the Trust (including true-ups) capital costs of $29,335, lease operating expenses and property taxes of $6,140,851, and severance taxes of $1,048,749.
| Contact: | San Juan Basin Royalty Trust |
BBVA USA, Trustee
2200 Post Oak Blvd., Floor 18
Houston, TX 77056
website: www.sjbrt.com e-mail: sjt.us@bbva.com
Joshua R. Peterson, Head of Trust Real Assets & Mineral Resources
and Senior Vice President
Kaye Wilke, Investor Relations, toll-free: (866) 809-4553
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