Compass Bank, as Trustee of the San Juan Basin Royalty Trust (NYSE:SJT),
today declared a monthly cash distribution to the holders of its Units
of beneficial interest of $3,835,364.26 or $0.082288 per Unit, based
principally upon production during the month of September 2014. The
distribution is payable December 12, 2014, to Unit Holders of record as
of November 28, 2014.
Gas production for the properties from which the royalty was carved (the
“Underlying Properties”) totaled approximately 2,472,524 Mcf (2,713,759
MMBtu). Dividing revenues by production volume yielded an average gas
price for September 2014 of $4.08 per Mcf ($3.71 per MMBtu) as compared
to $4.02 per Mcf ($3.58 per MMBtu) for August 2014.
In February 2014 Burlington informed the Trustee it had discovered a
failure by Burlington to properly allocate approximately $4.3 million of
severance taxes to the calculation of the Royalty during a period
commencing in 2007 until the allocation was corrected in 2012, which
resulted in what it characterized as an overpayment to the Trust in the
amount of approximately $3.25 million. Burlington proposed and has begun
to recoup the overpayment in installments of $361,215 commencing in
March 2014 and continuing in equal installments through November 2014.
Burlington has elected not to charge interest on the overpayment,
although it has reserved the right to do so. The Trust and its advisors
are analyzing the facts and circumstances and will continue
communication with Burlington on this claim.
The average monthly gas price Burlington reports to the Trust is a
calculated price. It is determined by dividing gross monthly revenue by
production volume, therefore, it does not represent an average of actual
sales prices. The average gas price may vary from the posted index price
for the San Juan Basin. The index price is a gross sales price, and the
revenues used in the calculation of average gas prices are net of
transportation, processing and gathering costs. Furthermore, the
distribution to the Trust in any given month may include significant
volume adjustments for sales in prior months that reflect pricing for
those prior months. Capital costs for the month were $903,431. Lease
operating expenses were $2,730,947 and taxes were $1,581,132.
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