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San Juan Basin Royalty Trust Reports Operating Results (10-Q)

August 06, 2010 | About:
10qk

10qk

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San Juan Basin Royalty Trust (SJT) filed Quarterly Report for the period ended 2010-06-30.

San Juan Basin Royalty Trust has a market cap of $1.21 billion; its shares were traded at around $26.02 with and P/S ratio of 38.1. The dividend yield of San Juan Basin Royalty Trust stocks is 6.3%. San Juan Basin Royalty Trust had an annual average earning growth of 3.1% over the past 10 years.SJT is in the portfolios of Jean-Marie Eveillard of First Eagle Investment Management, LLC, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

The Trust received Royalty income of $22,450,139 and interest income of $4,776 during the second quarter of 2010. There was no change in cash reserves. After deducting administrative expenses of $774,334, distributable income for the quarter was $21,680,581 ($0.465161 per Unit). In the second quarter of 2009, Royalty income was $2,474,109, interest income was $806, administrative expenses were $686,688 and distributable income was $1,788,227 ($0.038367 per Unit). Based on 46,608,796 Units outstanding, the per-Unit distributions during the second quarter of 2010 were as follows:

The capital costs attributable to the Underlying Properties for the second quarter of 2010 and deducted by BROG in calculating Royalty income were approximately $2.2 million as compared to approximately $11 million of capital costs in the second quarter of 2009. BROG has informed the Trust that its budget for capital expenditures for the Underlying Properties in 2010 is estimated at $17.9 million. In addition, BROG estimates that during 2010 it will incur capital expenses in the amount of approximately $6.8 million attributable to the capital budgets for 2009 and prior years. BROG reports that based on its actual capital requirements, the pace of regulatory approvals, the mix of projects and swings in the price of natural gas, the actual capital expenditures for 2010 could range from $10 million to $45 million.

BROG anticipates 305 projects in 2010. Approximately $7.2 million of the $17.9 million budget is allocable to 43 new wells, including 41 wells scheduled to be dually completed in the Mesaverde and Dakota formations. BROG indicates that two of the new wells are projected to be drilled to Fruitland Coal or Pictured Cliffs formations. Approximately $3.8 million will be spent on workovers and facilities projects. Of the $6.8 million attributable to the budgets for prior years, approximately $4.4 million is allocable to new wells and the $2.4 million balance will be applied to miscellaneous capital projects such as workovers and operated facility projects. BROG mentioned that the possible implementation of new air quality rules and rules requiring the minimization of surface disturbances, implementation of closed-loop systems for the disposal of drilling fluids and cuttings, and the restricted use of open reserve pits could reduce the number of projects due to increased compliance costs.

BROG has informed the Trust that lease operating expenses and property taxes were $7,842,642 and $270,213 respectively, for the second quarter of 2010, as compared to $7,813,298 and $213,289, respectively, for the second quarter of 2009. Many joint operating agreements call for the increase or decrease in rates charged for the drilling and operation of wells based upon an overhead adjustment factor published annually by the Council for Petroleum Accountants Societies. That factor was set at +1.9% effective as of April 1, 2010.

For the six months ended June 30, 2010, the Trust received Royalty income of $44,452,655 and interest income of $213,089. There was no change in cash reserves. After deducting administrative expenses of $1,455,845, distributable income was $43,209,899 ($0.927076 per Unit) for the six months ended June 30, 2010. For the six months ended June 30, 2009, the Trust received Royalty income of $12,024,685 and interest income of $3,411. There was no change in cash reserves. After deducting administrative expenses of $1,270,433, distributable income was $10,757,663 ($0.230807 per Unit) for the six months ended June 30, 2009.

Capital expenditures incurred by BROG, attributable to the Underlying Properties, for the first six months of 2010 amounted to approximately $5.7 million. Capital expenditures were approximately $20.9 million for the first six months of 2009. Lease operating expenses and property taxes totaled $15,642,446 and $483,502, respectively, for the first six months of 2010, as compared to $16,806,125 and $490,021, respectively, for the first six months of 2009.

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