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San Juan Basin Royalty Trust Announces Settlement Agreement
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PNC Bank, as trustee of San Juan Basin Royalty Trust, reaches agreement with Hilcorp resulting in a payment of $1,037,093.45 to resolve disputed expenses and amend Conveyance Agreement for saltwater disposal facilities.
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HOUSTON--(BUSINESS WIRE)--
PNC Bank, National Association, as the trustee (the “Trustee”) of the San Juan Basin Royalty Trust (the “Trust”) (NYSE: SJT), announced that an agreement between the Trustee and Hilcorp San Juan L.P. (“Hilcorp”), the owner of the Trust’s subject interests, will result in the payment of $1,037,093.45 to the Trust by Hilcorp to resolve the 2017-2020 Disputed Expenses exceptions and enter into an amendment to the Conveyance Agreement with respect to the expenses associated with the operator’s saltwater disposal facilities.
The Trustee routinely engages with Hilcorp regarding its ongoing accounting and reporting to the Trust with respect to revenue and expenses for operated wells, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments, as well as a detailed analysis of Hilcorp’s pricing and rates charged. These revenues and costs (along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by our professional consultants and outside counsel to ensure full compliance with all the underlying operative Trust agreements and evaluating all available potential remedies in the event there is evidence of non-compliance.
In the course of the most recent audit process by the Trustee, certain exceptions to the several different categories of expenses (specifically offsite labor, overhead, operator-owned compressors and saltwater disposal facilities) for the years 2017 through 2020 (the “2017-2020 Disputed Expenses”) were identified that the Trustee believed resulted in an underpayment of royalties owed to the Trust for those years. The Trustee engaged in extensive discussions with Hilcorp regarding these exceptions that culminated in Hilcorp’s agreement to pay the sum of $1,037,093.45, which includes the accumulated interest incurred as a result of the underpayment. Therefore, on August 30, 2023, the Trust and Hilcorp entered into a Compromise and Settlement Agreement whereby Hilcorp would (i) pay the sum of $1,037,093.45 to resolve the 2017-2020 Disputed Expenses that resulted in the underpayment of royalties and (ii) enter into an amendment to the Conveyance Agreement with respect to the expenses associated with the operator’s saltwater disposal facilities. The settlement amount includes the interest incurred over the time period of the underpayment. The payment is scheduled to be made in a future distribution.
San Juan Basin Royalty Trust
PNC Bank, National Association
PNC Asset Management Group
2200 Post Oak Blvd., Floor 18
Houston, TX 77056
website: www.sjbrt.com
e-mail: sjt@pnc.com
Ross Durr, RPL, Senior Vice President & Mineral Interest Director
Kaye Wilke, Investor Relations, toll-free: (866) 809-4553
san juan basin royalty trust operates as an express trust in texas. the company has a 75% net overriding royalty interest carved out of southland's oil and natural gas interests (the subject interests) in properties located in the san juan basin in northwestern new mexico. the subject interests consist of working interests, royalty interests, overriding royalty interests, and other contractual rights in 119,000 net producing acres in san juan, rio arriba, and sandoval counties of northwestern new mexico, as well as 826.3 net wells. bbva usa serves as the trustee of the san juan basin royalty trust. the company was founded in 1980 and is based in houston, texas.