No February payout as San Juan Basin Trust (SJT) tackles excess costs

Rhea-AI Filing Summary

San Juan Basin Royalty Trust reported that it will not declare a February 2026 cash distribution to unitholders. The Trust cited excess production costs from prior periods and continued low natural gas prices as the reasons.

Cumulative excess production costs total about $8,237,892 gross ($6,178,419 net to the Trust, and all net proceeds will be applied to this deficit until it is repaid. Before distributions can resume, future net proceeds must also replenish a $2,000,000 reserve and repay principal and interest on the Trust’s line of credit.

For December 2025 production, Hilcorp reported $3,672,728 of total revenue and $4,399,540 of production costs for the Subject Interests, resulting in no royalty income. The Trust’s line of credit balance is $566,848, and cash reserves stand at $17,558.

Positive

• None.

Negative

• Distributions suspended indefinitely: No February 2026 cash distribution, and no future distributions until excess production costs are repaid, a $2,000,000 reserve is rebuilt, and the line of credit is fully repaid.
• Large excess production cost deficit: Cumulative excess production costs are approximately $8,237,892 gross ($6,178,419 net to the Trust), with all net proceeds applied to this deficit instead of unitholder payments.
• Operations not covering costs: For December 2025, revenue of $3,672,728 from the Subject Interests was below production costs of $4,399,540, resulting in no royalty income for the Trust.
• Leverage and limited reserves: The Texas Bank line of credit balance stands at $566,848, while Trust cash reserves have been reduced to $17,558, indicating constrained financial flexibility.

Insights

Income-focused energy securities analyst

Cash distributions are suspended until significant cost deficits and debt are cleared.

San Juan Basin Royalty Trust has halted its February 2026 distribution because prior-period production costs now exceed revenues. Cumulative excess production costs are about $8,237,892 gross and $6,178,419 net to the Trust, so current net proceeds are fully absorbed.

Before unitholders receive income again, future net proceeds must first eliminate the excess cost balance, rebuild a $2,000,000 reserve, and repay principal and interest on the Texas Bank line of credit. The line of credit balance is $566,848, and cash reserves are $17,558, highlighting reliance on external funding for expenses.

December 2025 Subject Interests revenue was $3,672,728 against production costs of $4,399,540, underscoring that operations are not yet generating distributable cash. The Trust notes ongoing audits and reviews of Hilcorp’s reported revenues and costs, so future filings may further clarify the financial impact of adjustments and cost recovery.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report February 17, 2026

SAN JUAN BASIN ROYALTY TRUST

(Exact name of Registrant as Specified in Its Charter)

Texas			001-08032	75-6279898
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
Argent Trust Company, Trustee 3838 Oak Lawn Ave. Suite 1720 Dallas, Texas 75219
(Address of Principal Executive Offices, including zip code)

Registrant’s Telephone Number, Including Area Code: (855) 588-7839

(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:

☐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		New York Stock Exchange

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 February 17, 2026, 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 would not declare a monthly cash distribution to the holders of its units of beneficial interest ("Units") for February due to excess production costs for the Trust’s subject interests (“Subject Interests”) during prior periods, as well as continued low natural gas pricing.

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.

Exhibit No.		Description
99.1		Press Release dated February 17, 2026

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		By:	ARGENT TRUST COMPANY, AS TRUSTEE FOR THE SAN JUAN BASIN ROYALTY TRUST (Registrant)
Date:	February 17, 2026	By:	/S/ NANCY WILLIS
			Nancy Willis Director of Royalty Trust Services

News Release

San Juan Basin Royalty Trust Declares No Cash Distribution for February 2026

DALLAS, Texas, February 17, 2026 Argent Trust Company, as the trustee (the “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 incurred during prior periods for the Trust’s royalty interest burdening the subject interests (“Subject Interests”), as well as continued low natural gas pricing. Excess production costs occur when production costs and capital expenditures exceed the gross proceeds for a certain period. The balance of cumulative excess production costs is currently approximately $8,237,892 gross ($6,178,419 net to the Trust), an increase in the deficit of $726,812 gross ($545,109 net to the Trust) from last month’s reporting period. Hilcorp will continue to charge the balance of excess production costs to the Trust’s net proceeds each month. Until the balance is paid in full, the Trust will not receive royalty income as all net proceeds will be applied to the balance of excess production costs. No cash distributions will be made by the Trust until future net proceeds are sufficient to (a) repay the balance of excess production costs, accrued as a result of Hilcorp San Juan L.P.’s drilling of two new horizontal wells in 2024, (b) replenish a reserve in the amount of $2,000,000, and (c) repay the principal and interest on the Trust’s line of credit at Texas Bank (“Line of Credit”), after which time, the Trust will resume distributions of the royalty income to the holders of the Trust’s units of beneficial interest.

Hilcorp reported $3,672,728 of total revenue from the Subject Interests for the production month of December 2025, consisting of $6,974,582 of gas revenues, $170,374 of oil revenues, and ($3,472,228) of other revenues. Other revenue consists of a ($3,472,228) gross (($2,604,171) net to the Trust) prior period adjustment from the 2017 through 2020 joint venture audit. The Trust’s joint interest auditors are reviewing that negative prior period adjustment.

For the Subject Interests, Hilcorp reported $4,399,540 of production costs (excluding the balance of excess production costs) for the production month of December 2025, consisting of $3,555,614 of lease operating expenses, $724,638 of severance taxes, and $119,288 of capital costs.

Based upon information provided to the Trust by Hilcorp, gas volumes for the Subject Interests for December 2025 totaled 2,117,242 Mcf (2,352,491 MMBtu), as compared to 2,129,654 Mcf (2,366,282 MMBtu) for November 2025. Dividing gas revenues by production volume yielded an average gas price for December 2025 of $3.29 per Mcf ($2.96 per MMBtu), an increase of $0.99 per Mcf ($0.89 per MMBtu) as compared to the average gas price for November 2025 of $2.30 per Mcf ($2.07 per MMBtu).

This month’s Trust administrative expenses totaled $93,008. The increase in administrative expenses was attributable to differences in timing of the receipt and payment of certain expenses by the Trust. Interest income in the amount of $75 and a draw of $89,865 from the Line of Credit will be used to pay the balance of Trust administrative expenses for the month of December, which will bring the outstanding principal balance on the Line of Credit to $566,848.

Pursuant to the Amended and Restated Royalty Trust Indenture, dated December 12, 2007 (as amended on February 15, 2024, by the First Amendment to the Amended and Restated Royalty Trust Indenture), the Trustee is authorized to retain, in its sole discretion, a cash reserve for payment of Trust liabilities that are contingent or uncertain or otherwise not currently due and payable. Cash reserves were utilized to pay interest accrued on the Line of Credit each month from July 2025 through January 2026. In February 2026, cash reserves in the amount of $3,068 will be utilized to pay interest on the Line of Credit, which will bring the balance of cash reserves maintained by the Trust to $17,558.

Production from the Subject Interests continues to be gathered, processed, and sold under market sensitive and customary agreements, as recommended for approval by the Trust’s Consultant. The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and 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. The Trust’s auditing process has also included detailed analysis of Hilcorp’s pricing and rates charged. As previously disclosed in the Trust’s filings, these revenues and costs

(along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by the Trust’s professional consultants and outside counsel to analyze compliance with all the underlying operative Trust agreements and evaluate potential remedies in the event there is suspected non-compliance.

As of July 21, 2025, the Trust self-publishes monthly press releases on its website, www.sjbrt.com, and the release will not be included in any wire distribution. The self-publication is due to the depletion of the Trust’s cash reserves and conservation of the Line of Credit resources. The Trust will continue to furnish unitholders with information through its website and Form 8-K filings with the Securities and Exchange Commission, which are available at www.sec.gov. If anyone would like to receive the press release via email, please contact the Trustee to be placed on the monthly press release email list.

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

FAQ

Why is San Juan Basin Royalty Trust (SJT) paying no February 2026 distribution?

San Juan Basin Royalty Trust will pay no February 2026 cash distribution because excess production costs from prior periods and low natural gas prices have eliminated royalty income. All current net proceeds are being applied to the accumulated excess cost balance instead of going to unitholders.

How large are San Juan Basin Royalty Trust’s excess production costs?

Cumulative excess production costs are about $8,237,892 gross, or $6,178,419 net to San Juan Basin Royalty Trust. This deficit must be fully repaid from future net proceeds before any royalty income can again be distributed to unitholders as monthly cash distributions.

What conditions must be met before SJT resumes cash distributions?

Before resuming distributions, future net proceeds must repay excess production costs, restore a $2,000,000 reserve, and repay principal and interest on the Trust’s Texas Bank line of credit. Only after those three conditions are satisfied will royalty income again be distributed to unitholders.

What were San Juan Basin Royalty Trust’s revenues and costs for December 2025?

For December 2025 production, Hilcorp reported $3,672,728 of total revenue from the Subject Interests and $4,399,540 of production costs. Because costs exceeded revenues, no royalty income flowed to San Juan Basin Royalty Trust for that month, reinforcing the current distribution suspension.

How leveraged is San Juan Basin Royalty Trust through its line of credit?

The Trust reported an outstanding principal balance of $566,848 on its Texas Bank line of credit. Cash reserves stood at $17,558 after using reserves to pay interest, indicating reliance on the facility to cover administrative expenses while distributions remain suspended.

Is San Juan Basin Royalty Trust reviewing Hilcorp’s reported revenues and costs?

Yes. The Trust states that its joint interest auditors and professional consultants continue to audit Hilcorp’s payments, including sales revenues, production costs, capital expenditures, and adjustments. This review includes a negative prior-period adjustment from a 2017–2020 joint venture audit affecting reported revenues.

Filing Exhibits & Attachments

1 document

Press Releases

• EX-99.1 EX-99.1 18.2 KB