A Surprising Turn of Events: Argent Trust Company Announces Suspension of Cash Distributions to San Juan Basin Royalty Trust Unit Holders
DALLAS, TX, March 21, 2025 – In an unexpected move, Argent Trust Company, acting as trustee for the San Juan Basin Royalty Trust (SJT), announced today that no cash distribution will be made to the holders of its Units of beneficial interest. This decision comes as a result of Hilcorp San Juan L.P.’s (Hilcorp) recent drilling activities.
Background
The San Juan Basin Royalty Trust is a Delaware statutory trust created on October 1, 1981, for the benefit of the holders of record of its Units of beneficial interest as of the close of business on October 1, 1981. The Trust owns a net revenue interest in certain oil and natural gas properties in the San Juan Basin in New Mexico and Colorado. The Trustee is responsible for distributing the proceeds from the sale of oil and natural gas produced from these properties to the Unit Holders on a monthly basis.
The Unexpected Development
In a press release, Argent Trust Company explained that the Trustee will not declare a monthly cash distribution due to the application of net proceeds totaling $4,153,693 to the balance of excess production costs accrued as a result of Hilcorp’s drilling of two new horizontal wells in 2024. The Trustee stated that these costs exceeded the amount of royalty income available for distribution.
Impact on Unit Holders
For the Unit Holders, this means that they will not receive their usual monthly cash distribution. While this may be a disappointment, it is essential to understand that the Trust’s primary objective is to maximize the net income from the properties for the benefit of the Unit Holders over the long term. In this case, the Trustee’s decision to apply the net proceeds to production costs could ultimately lead to increased future income from the newly drilled wells.
- Unit Holders will not receive a monthly cash distribution for the current period.
- The Trustee’s decision aims to maximize long-term income from the properties.
Impact on the World
The decision to suspend monthly cash distributions to the San Juan Basin Royalty Trust Unit Holders may have minimal impact on the broader world. However, it could potentially influence investor sentiment towards similar trusts and the energy sector as a whole. Some investors might view this as a sign of financial instability or uncertainty in the energy industry.
- Minimal impact on the world
- Potential influence on investor sentiment towards similar trusts and the energy sector
Conclusion
Argent Trust Company’s decision to suspend monthly cash distributions to the San Juan Basin Royalty Trust Unit Holders due to the application of net proceeds to production costs is an unusual development. Although this news may be disappointing for Unit Holders in the short term, it is crucial to remember that the Trustee’s primary goal is to maximize the net income from the properties for the benefit of the Unit Holders in the long term. The impact on the world is expected to be minimal, but it could potentially influence investor sentiment towards similar trusts and the energy sector.
As always, Unit Holders and interested parties are encouraged to consult their financial advisors for personalized advice and information.
