No June payout as San Juan Basin (NYSE: SJT) faces $9.3M deficit
Rhea-AI Filing Summary
San Juan Basin Royalty Trust will pay no cash distribution for June 2026. The trustee reports that excess production costs and continued low natural gas prices left the Trust with a cumulative excess production cost balance of about $9.26 million gross ($6.94 million net to the Trust).
For April 2026 production, Hilcorp reported revenue from the subject interests of $3.02 million against production costs of $3.80 million (excluding the excess cost balance), so costs exceeded revenues. The average gas price was $1.28 per Mcf, slightly higher than March but still low.
All net proceeds will continue to be applied to the excess cost balance. No distributions will resume until excess costs are repaid, a $2.0 million reserve is replenished, and the Trust’s line of credit—whose outstanding principal will be $944,470 after a new draw—is fully repaid.
Positive
- None.
Negative
- Monthly cash distributions suspended: The Trust will not pay a June 2026 distribution and will continue to apply all net proceeds to excess production costs, a $2.0 million reserve, and repayment of its line of credit before any future unitholder payouts resume.
Insights
Distributions are suspended until a sizeable cost deficit and debt are cleared.
San Juan Basin Royalty Trust is currently in a deficit position: cumulative excess production costs stand near $9.26 million gross, or $6.94 million net to the Trust. April 2026 production generated $3.02 million of revenue versus $3.80 million of costs, so operations did not cover expenses.
No royalty income will be available to unitholders until net proceeds first eliminate excess production costs tied to 2024 drilling, then rebuild a $2.0 million reserve and fully repay the Texas Bank line of credit, whose principal will be $944,470 after the latest draw. This structure channels cash toward balance-sheet repair before restoring income.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Excess production costs (gross): $9,258,749
Excess production costs (net to Trust): $6,944,062
Increase in excess costs (net): $580,950
+5 more
8 metrics
Excess production costs (gross)
$9,258,749
Cumulative balance, latest reporting
Excess production costs (net to Trust)
$6,944,062
Cumulative balance, latest reporting
Increase in excess costs (net)
$580,950
Change from prior month
April 2026 revenue
$3,023,335
Total revenue from Subject Interests
April 2026 production costs
$3,797,936
Production costs excluding excess costs
Average gas price
$1.28 per Mcf
April 2026, up from $1.20 per Mcf in March
Line of credit balance
$944,470
Outstanding principal after June draw
Trust cash reserve
$3,891
Balance of reserves maintained by the Trust
Key Terms
excess production costs, line of credit, MMBtu, severance taxes, +1 more
5 terms
excess production costs financial
"Excess production costs occur when production costs and capital expenditures exceed the gross proceeds for a certain period."
Extra money a company spends when making more goods than needed, producing under inefficient conditions, or when materials and labor are wasted during manufacturing. Like baking too many cakes that go stale or using an expensive oven for a small batch, these costs raise the price of each item and tie up cash in unsold inventory. Investors care because higher excess production costs reduce profit margins, can signal poor planning, and may pressure future earnings and cash flow.
line of credit financial
"a draw of $48,781 from the Line of Credit will be used to pay the balance of Trust administrative expenses"
A line of credit is a flexible borrowing arrangement that lets a company draw money up to a preset limit, repay it, and borrow again as needed—similar to a business credit card or an emergency tap on a savings account. It matters to investors because it shows how a firm manages short-term cash needs and growth funding without taking a single large loan; access, cost, and attached conditions can affect liquidity, interest expenses and financial risk.
MMBtu financial
"gas volumes for the Subject Interests for April 2026 totaled 2,065,583 Mcf (2,295,092 MMBtu)"
A MMBtu is a unit of energy equal to one million British thermal units, commonly used to measure natural gas and other fuel quantities for trading and contracts. For investors, it translates raw energy into a standardized price metric—think of it like gallons for gasoline—so changes in the MMBtu price affect producer revenues, utility costs, commodity derivatives, and the profitability of energy-related investments.
severance taxes financial
"Hilcorp reported $3,797,936 of production costs ... consisting of $2,940,273 of lease operating expenses, $341,260 of severance taxes"
Severance taxes are charges governments levy when natural resources like oil, gas, coal or minerals are extracted from the ground; think of it as a toll for taking nonrenewable materials out of a region. They matter to investors because they directly raise the cost of production, reduce project returns, and influence where companies choose to operate, while also providing a predictable revenue stream for local and state budgets that can affect broader economic conditions.
forward-looking statements regulatory
"the statements in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions"
Forward-looking statements are predictions or plans that companies share about what they expect to happen in the future, like estimating sales or profits. They matter because they help investors understand a company's outlook, but since they are based on guesses and assumptions, they can sometimes be wrong.
FAQ
Why is San Juan Basin Royalty Trust (SJT) paying no June 2026 distribution?
The Trust is not declaring a June 2026 cash distribution because production costs and capital expenditures have exceeded gross proceeds, creating excess production costs and a deficit position, combined with continued low natural gas pricing, leaving no royalty income available for unitholders.
How large are San Juan Basin Royalty Trust’s excess production costs?
Cumulative excess production costs are approximately $9,258,749 gross, or $6,944,062 net to the Trust. This deficit increased by $774,601 gross and $580,950 net from the prior reporting period, and all future net proceeds will be applied to reducing this balance before distributions resume.
What revenues and costs did San Juan Basin Royalty Trust report for April 2026?
For April 2026, Hilcorp reported $3,023,335 of total revenue from the subject interests and $3,797,936 of production costs, excluding the excess cost balance. Costs exceeded revenues, contributing to the ongoing deficit and preventing royalty income from being available for distribution to unitholders.
What was the average natural gas price for San Juan Basin’s April 2026 production?
Dividing gas revenues by production volume yields an average April 2026 gas price of $1.28 per Mcf, or $1.15 per MMBtu. This reflects an increase of $0.08 per Mcf and $0.07 per MMBtu compared to March 2026, but prices remain relatively low overall.
When can San Juan Basin Royalty Trust resume cash distributions to unitholders?
Distributions can resume only after future net proceeds fully repay excess production costs, replenish a $2,000,000 cash reserve, and repay principal and interest on the Texas Bank line of credit. Until these conditions are met, all net proceeds will be applied to obligations rather than paid out.
What is the status of San Juan Basin Royalty Trust’s line of credit?
To cover June administrative expenses, the Trust recorded $48,800 of expenses, $19 of interest income, and a $48,781 draw on its Texas Bank line of credit. This draw will bring the outstanding principal balance on the line of credit to $944,470, increasing leverage that must be repaid before distributions restart.
AI-generated analysis. How Rhea-AI works. Not financial advice.
