San Juan Basin Royalty Trust Suspends February Distribution Amid Rising Deficit and Low Gas Prices
SJT sits 22% above its 52-week low of $4.38.
Summary
San Juan Basin Royalty Trust will not declare a February cash distribution, marking the second consecutive month, due to an increasing deficit from excess production costs, low natural gas prices, and a new negative audit adjustment.
Key Events · Earnings and Guidance · SJT
-
No February Distribution Declared
The Trust will not declare a monthly cash distribution to unitholders for February 2026, following a similar announcement for January, due to excess production costs and continued low natural gas pricing.
-
Increasing Cumulative Deficit
The balance of cumulative excess production costs net to the Trust has risen to approximately $6.18 million, an increase of $545,109 from the previous month's reporting period.
-
Conditions for Distribution Resumption
Distributions will not resume until the $6.18 million net excess production costs, a $2 million reserve, and the $566,848 outstanding balance on the Trust's line of credit are fully repaid.
-
Significant Negative Audit Adjustment
A negative prior period adjustment of $2.60 million net to the Trust was reported from a 2017-2020 joint venture audit, which is currently under review by the Trust's auditors.
Analysis · SJT · Energy & Transportation
The Trust announced a second consecutive month without a cash distribution, citing an increased cumulative deficit from excess production costs and continued low natural gas prices. The deficit has grown to over $6.1 million net to the Trust, and distributions will not resume until this, a $2 million reserve, and a $0.57 million line of credit are repaid. Further compounding the financial strain, a significant negative prior period adjustment of $2.6 million net to the Trust from a joint venture audit was reported. The Trust's decision to self-publish press releases due to depleted cash reserves highlights its precarious financial position, indicating a prolonged period without unitholder distributions.
At the time of this filing, SJT was trading at $5.34 on NYSE in the Energy & Transportation sector, with a market capitalization of approximately $265.2M. The 52-week trading range was $4.38 to $7.22. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.