Mesa Royalty Trust has announced its income distribution for December 2024, providing details about the payment structure and key financial metrics for the month. Unitholders of record on December 31, 2024, are set to receive a distribution of $0.022423076 per unit, payable on January 31, 2025. This distribution reflects income derived exclusively from the New Mexico segment of the Trust’s San Juan Basin properties, which are operated by Hilcorp San Juan LP, an affiliate of Hilcorp Energy Company.
Financial Highlights
In December 2024, the Trust received total proceeds of $47,632, all of which came from Hilcorp-operated properties. No income was reported from other working interest owners for this period. After covering administrative expenses, the distributable net profits available for unitholders amounted to $41,787.
The monthly income distribution serves as a reflection of the proceeds generated by the Trust’s royalty interests, which are tied to oil and gas properties in the Hugoton Field of Kansas and the San Juan Basin fields in New Mexico and Colorado. However, the amount distributed each month is subject to fluctuations based on a variety of factors, including oil and natural gas prices, production levels, and administrative costs incurred by the Trust.
Trust Overview
Mesa Royalty Trust was established to own an overriding royalty interest in net proceeds from certain producing oil and gas properties. These properties are located in two prominent fields: the Hugoton Field and the San Juan Basin. The income generated by the Trust depends on the operational performance of these properties, as well as the market conditions for oil and gas.
As detailed in the Trust’s public filings, distributions are expected to vary month to month. The variations are influenced by factors such as production volumes, commodity prices, and the expenses reported by the working interest owners. In some cases, these factors may lead to reduced distributions or even periods without distributions.
Currently, the Trust is working to build its cash reserves to a target of $2.0 million to ensure greater financial stability and liquidity. This initiative is expected to materially reduce distributions to unitholders until the reserve goal is met.
Challenges and Risks
The financial health of the Trust and its ability to sustain distributions face challenges tied to industry volatility. Historical operating data and reporting from working interest owners are critical in determining proceeds. However, substantial accumulated excess production costs have negatively impacted distributions, and such costs may continue to suppress income available for distribution in the future.
Proceeds from the Trust’s royalty interests are not necessarily indicative of future income. Development costs, production expenses, and other adjustments reported by working interest owners can result in fluctuating proceeds. Additionally, commodity price volatility, operational risks inherent to oil and gas production, and potential delays in drilling or production activities further contribute to the uncertainty surrounding distributions.
Forward-Looking Statements and Risks
This announcement contains forward-looking statements that reflect expectations about the Trust’s future performance and distributions. These statements are subject to a range of uncertainties and risks, including operational changes, pricing volatility, and adjustments or expenses accrued by working interest owners.
The Trustee acknowledges that historical data and projections may not fully account for potential inaccuracies, delays, or adjustments made by working interest owners. As such, there is no assurance that future royalty income or distributions will align with expectations. Unitholders are advised to refer to the Trust’s latest filings, including its Form 10-K for the year ending December 31, 2023, for a comprehensive discussion of risks.
Tax Considerations
Unitholders are encouraged to consult their tax advisors to understand how the distributions may impact their individual tax situations. The specifics of tax treatment can vary widely depending on personal circumstances, and professional advice can help unitholders navigate these complexities.
