San Juan Basin Royalty Trust Provides Update on Operations and Liquidity

The trustee did not pursue further recovery on the 2017–2020 audit adjustment after weighing the potential costs and recovery.

Rhea-AI Summary

San Juan Basin Royalty Trust (SJT) updated holders on administrative costs, royalty audits and its $2 million credit facility.

General and administrative expenses fell approximately $976,000 year over year, primarily because costs from the 2024 trustee transition did not recur. The facility had approximately $1,075,400 outstanding on September 18, 2026, and matures May 21, 2027. The trustee is discussing financing options. It has engaged a new royalty auditor, while a previously reported prior-period adjustment remains under review. Hilcorp controls development spending, which the trustee cannot direct or veto. The trustee plans more detailed expense disclosures and expects to restore national newswire distribution with the October 2026 monthly release.

Positive

• General and administrative expenses fell approximately $976,000 year over year, primarily as 2024 transition costs did not recur.
• Interim consultant duties have been absorbed by the trustee, eliminating those costs going forward.
• Sarbanes-Oxley testing expenses declined after the trustee replaced a consultant.
• New royalty auditor has been engaged for ongoing testing of joint interest billings.
• Expense disclosures will provide a category-level year-over-year breakdown beginning with the September 2026 quarterly report.
• National newswire distribution is expected to resume with the October 2026 monthly release.

Negative

• $1,075,400 in credit-facility principal was outstanding as of September 18, 2026; the $2 million facility matures May 21, 2027.
• Credit-facility extension, renewal or replacement remains under discussion with Texas Bank.
• 2017–2020 audit adjustment did not lead the trustee to pursue action beyond the adjustment reflected in the financial statements.
• Prior-period adjustment reported in 2026 remains under review by the royalty auditor.
• Hilcorp capital spending cannot be directed or vetoed by the trustee or unit holders.

News Explained

The Trustee says the 2017–2020 joint-interest audit is concluded, with no further dispute or recovery pursued because it judged the cost to outweigh the likelihood and magnitude of additional recovery; separately, the 2026 prior-period adjustment remains under review.

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Market Reaction – SJT

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On Sep 28, the day this news came out, the latest delayed price for SJT is 7.60% above the previous close. Our momentum scanner has recorded 16 alerts for this stock so far that day. The latest delayed price is $3.68. Relative volume is exceptionally heavy at 6.6x the average.

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Market Context

On Sep 28, the day this news came out, the latest delayed price for the stock is 7.6% above the prev...

Analysis

On Sep 28, the day this news came out, the latest delayed price for the stock is 7.6% above the previous close. The September 18 filing reported $12,553,466 gross in cumulative excess production costs, providing an operating-cost backdrop to this update’s financing discussions; the article described discussions, not a completed facility renewal.

Key Figures

Year-over-year G&A expense decrease: Approximately $976,000 Credit facility: $2,000,000 Credit facility maturity: May 21, 2027 +1 more

Year-over-year G&A expense decrease

Approximately $976,000

Primarily attributed to costs from the 2024 trustee transition

Credit facility

$2,000,000

Texas Bank facility

Credit facility maturity

May 21, 2027

Texas Bank facility

Outstanding principal balance

Approximately $1,075,400

As of September 18, 2026, on the Texas Bank facility

Key Terms

form 10-q, form 10-k, sarbanes-oxley, net overriding royalty interest, +1 more

5 terms

form 10-q regulatory

"Beginning with the Form 10-Q for the three- and nine-month periods ending September 30, 2026"

A Form 10-Q is a detailed report that publicly traded companies are required to file with regulators three times a year, providing an update on their financial health and business activities. It is important for investors because it offers timely insights into a company's performance, helping them make informed decisions about buying or selling stocks. Think of it as a regular check-up report that shows how well a company is doing.

form 10-k regulatory

"Trustee fees are disclosed in the Form 10-Q under Note 12 and in the Form 10-K under Item 11"

A Form 10-K is a comprehensive report that publicly traded companies are required to file annually with regulators. It provides a detailed overview of a company's financial health, operations, and risks, similar to a detailed health report. Investors use this information to assess the company's performance and make informed decisions about buying or selling its stock.

sarbanes-oxley regulatory

"required Sarbanes-Oxley ("SOX") testing"

A federal law that sets strict rules for corporate financial reporting, internal controls, and auditor independence to make company financial statements more reliable. For investors it acts like a safety inspection for a car: it aims to reduce fraud and errors, increase transparency, and boost confidence in the numbers companies publish, while also imposing compliance costs and oversight that can affect management and governance.

net overriding royalty interest technical

"its net overriding royalty interest (the "Conveyance")"

A net overriding royalty interest is a carved-out entitlement to a portion of oil or gas production or revenue that does not carry responsibility for drilling, operating, or most extraction costs; 'net' indicates the share is measured after applicable production burdens such as other royalties, taxes, or transportation fees. It functions like receiving a slice of revenue from a specific well without owning or running the well. Investors care because it creates a predictable income stream tied to production levels and commodity prices, but with different risk and cost exposure than owning the producing asset itself.

credit facility financial

"The Trust has a $2,000,000 credit facility with Texas Bank"

A credit facility is a flexible loan arrangement that allows a borrower to access funds up to a set limit whenever needed, similar to a company having an overdraft option on a bank account. It matters to investors because it indicates how easily a business can secure cash when required, affecting its ability to manage expenses, invest, or respond to financial challenges.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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DALLAS, Sept. 28, 2026 /PRNewswire/ -- Argent Trust Company, as the trustee (the "Trustee") of the San Juan Basin Royalty Trust (the "Trust") (NYSE: SJT), today is providing additional information in response to recent inquiries from holders of the Trust's units of beneficial interest ("Unit Holders"). The Trustee is providing this information so that all Unit Holders and the market receive the same information at the same time, and it supplements the disclosures in the Trust's reports and other filings with the Securities and Exchange Commission (the "SEC"), which are available at www.sec.gov and which Unit Holders are encouraged to review.

Administrative Expenses. Trustee fees are disclosed in the Form 10-Q under Note 12 and in the Form 10-K under Item 11, Executive Compensation. Related-party transactions are disclosed in the Form 10-K under Item 13. Beginning with the Form 10-Q for the three- and nine-month periods ending September 30, 2026, the Trustee will further break out the year-over-year change in general and administrative expenses by category including trustee fees, legal and professional fees, accounting and audit fees, Unit Holder servicing costs, and investor communication costs. Further, the Trustee will add a related-party disclosure to Note 12, as the only affiliated transactions currently are the trustee fees.

The year-over-year decrease of approximately $976,000 in general and administrative expenses is primarily attributable to costs associated with the 2024 trustee transition from PNC Bank to Argent Trust Company. That transition required an amendment to the Amended and Restated Royalty Trust Indenture, dated December 12, 2007 (as amended, the "Trust Indenture"), which in turn required a Unit Holder vote and generated legal fees, compliance costs, and other transition-related professional fees in the prior period that have not recurred. In addition, two consultants engaged to assist with preparing documents required for the audit of the financial statements and monthly reporting for PNC Bank were retained for an interim period following the transition. Those duties have since been fully absorbed by the Trustee, eliminating those costs going forward. Another consultant that performed required Sarbanes-Oxley ("SOX") testing that was engaged by PNC was replaced by one that Argent utilizes for the other royalty trusts for which Argent is trustee, resulting in a significant reduction of expenses associated with SOX testing.

2017–2020 Joint Interest Audit Adjustment. Argent inherited the 2017–2020 joint interest audit process from PNC Bank in a near-complete state at the time of the 2024 trustee transition. The audit underway at the time of the transition in 2024 continued, and Argent and the audit team remained in regular dialogue with Hilcorp regarding findings. In addition to the oil and gas royalty auditors, Argent engaged outside legal counsel previously engaged by PNC as trustee to review the audit and the resulting adjustment. Further, PNC Bank was separately consulted on the adjustment on several occasions, with its position, as well as historical information provided by PNC, taken into consideration by Argent and the professionals engaged to audit and review the audit on behalf of the Trust.

Upon conclusion of the audit, the Trustee concluded that the cost of pursuing further dispute or recovery outweighed the likelihood and magnitude of any additional recovery and did not pursue action beyond the adjustment reflected in the Trust's financial statements. Historically, the Trust's royalty auditor has audited Hilcorp's payments and identified exceptions, which were then reviewed with the Trust's legal counsel and the Trustee to determine the appropriate next steps. The recovery obtained in 2023 arose from an exception identified through that audit process and pursued from an early stage, whereas the audit underlying the 2017–2020 adjustment was already substantially complete when Argent inherited it. Regarding the related prior-period adjustment the Trust reported in 2026, the Trust's royalty auditor continues to review this matter, and the Trustee expects to provide additional information once available.

To provide additional testing and oversight of the Trust's joint interest billings on an ongoing basis, the Trustee has engaged a new royalty auditor. As previously disclosed, the Trust's third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments.

Hilcorp Capital Expenditures. Hilcorp, as operator, controls the pace and scope of development under the conveyance that created the Trust's net overriding royalty interest (the "Conveyance"). Neither the Trustee nor the Unit Holders have authority to direct or veto Hilcorp's capital program. The Trustee maintains regular, constructive communication with Hilcorp and receives periodic updates on development activity, production trends, and excess costs, but does not have visibility into Hilcorp's internal well-level economics. The Trustee has exercised its rights to receive updates and to raise questions with Hilcorp regarding the pace and economics of its spending. The Trustee continues to monitor Hilcorp's capital expenditures and the sale prices for natural gas, with consideration to Hilcorp's obligation to act as a prudent operator under Section 6.01 of the Conveyance. The Trust's disclosure of its rights regarding Hilcorp's level of development is set out in Item 1A, Risk Factors, of the 2025 Form 10-K and subsequent filings.

Liquidity and Credit Facility. The Trust has a $2,000,000 credit facility with Texas Bank (the "Line of Credit") that matures on May 21, 2027. As reported in the Trust's most recent monthly press release, the outstanding principal balance on the Line of Credit was approximately $1,075,400 as of September 18, 2026. The Trustee is in discussions with Texas Bank regarding an extension, renewal, or replacement of the facility, and is evaluating other financing sources, including, but not limited to, other commercial lenders, Unit Holders, and private lenders. Any financing arrangement would need to be consistent with the Trust Indenture and applicable securities laws, and fully disclosed to Unit Holders.

The material terms of the Line of Credit are disclosed in the Form 8-K filed May 28, 2025, and in the Trust's subsequent Forms 10-Q and 10-K, and the Trustee will continue to update these disclosures each quarter. The Trustee remains closely focused on the Trust's liquidity position and the status of the Texas Bank credit facility in advance of its May 2027 maturity.

Investor Communications. The Trustee has given careful consideration to the distribution of the Trust's monthly press releases and other material communications, and has determined that reinstating national newswire distribution is a reasonable and worthwhile step to ensure Unit Holders, prospective investors, analysts, and financial media all continue to receive consistent, timely, and broadly accessible information about the Trust.

Accordingly, the Trustee will restore national newswire distribution of the Trust's monthly press releases. This is in addition to the channels the Trust already uses: publication on the Trust's website, www.sjbrt.com, distribution to its existing email list, and inclusion of each release as an exhibit to the Trust's monthly Form 8-K filed with the SEC. The Trustee expects to begin newswire distribution with the release for the month of October 2026.

Forward Looking Statements. Except for historical information contained in this news release, the statements in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements generally are accompanied by words such as "estimates," "anticipates," "could," "plan," or other words that convey the uncertainty of future events or outcomes. Forward-looking statements and the business prospects of San Juan Basin Royalty Trust are subject to a number of risks and uncertainties that may cause actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, certain information provided to the Trust by Hilcorp, volatility of oil and gas prices, governmental regulation or action, litigation, and uncertainties about estimates of reserves. These and other risks are described in the Trust's reports and other filings with the Securities and Exchange Commission.

Contact: San Juan Basin Royalty Trust

Argent Trust Company, Trustee

Nancy Willis, Director of Royalty Trust Services

Toll-free: (855) 588-7839

Fax: (214) 559-7010

Website: www.sjbrt.com

Email: trustee@sjbrt.com 

View original content:https://www.prnewswire.com/news-releases/san-juan-basin-royalty-trust-provides-update-on-operations-and-liquidity-302891746.html

SOURCE San Juan Basin Royalty Trust

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How much does San Juan Basin Royalty Trust owe on its credit facility, and when does it mature?

The $2,000,000 Texas Bank credit facility had an outstanding principal balance of approximately $1,075,400 as of September 18, 2026, and matures May 21, 2027.

What financing options is San Juan Basin Royalty Trust considering before its credit facility matures?

The trustee is discussing an extension, renewal or replacement with Texas Bank and evaluating other commercial lenders, unit holders and private lenders. Any financing arrangement would need to comply with the Trust Indenture and applicable securities laws and be fully disclosed to unit holders.

What information does San Juan Basin Royalty Trust receive about Hilcorp's development spending?

The trustee receives periodic updates on development activity, production trends and excess costs, but does not have visibility into Hilcorp's internal well-level economics. It has exercised its rights to request updates and raise questions about the pace and economics of spending.