# San Juan Basin Royalty Trust > Clarifo company profile — qualitative business description generated from > the company's filings. Financial statements, charts and ratios are > available on Clarifo (https://www.clarifo.com/fi/companies/San Juan Basin Royalty Trust). ## Overview San Juan Basin Royalty Trust is a U.S. royalty trust that holds a net overriding royalty interest in oil and natural gas properties in the San Juan Basin of northwestern New Mexico. The trust does not operate wells itself; it receives royalty income from production on the subject interests and distributes available cash to unit holders after expenses. ## Products & services • Net overriding royalty interest in San Juan Basin oil and gas properties • Royalty income distributions to unit holders • Exposure to natural gas and oil production from subject interests • Administrative trust services through the trustee - **Royalty income from natural gas** (75%) — Cash flows derived from the trust's royalty interest in natural gas production from the subject properties. - **Royalty income from oil** (20%) — Cash flows derived from the trust's royalty interest in oil production from the subject properties. - **Interest income and cash reserves** (5%) — Interest earned on trust cash balances and temporary reserves held by the trustee. - Net overriding royalty interest in San Juan Basin oil and gas properties - Royalty income distributions to unit holders - Exposure to natural gas and oil production from subject interests - Administrative trust services through the trustee ## Customers The trust's economic beneficiaries are its unit holders, who receive distributions from royalty income rather than purchasing a conventional product or service. The underlying cash generation depends on Hilcorp's production and marketing of oil and natural gas from the subject interests, so the trust is economically tied to energy end markets and commodity pricing. The trustee also interacts with Hilcorp for reporting, expense allocation, and royalty administration. - **Unit holders** (primary) — Investors who own trust units and receive cash distributions from royalty income. - **Hilcorp Energy Company** (primary) — Operator of the subject interests that produces, markets, and reports the oil and gas volumes used to calculate royalty income. - **Energy commodity market participants** (secondary) — Natural gas and oil market conditions determine the value of production underlying the trust's distributions. - Unit holders receive distributable cash from royalty income - Hilcorp markets production and reports operating data to the trust - Energy market exposure comes from natural gas and oil end demand - Cash distributions depend on production, prices, and expenses - Trustee administers payments and expenses for the benefit of holders ## Geography The trust's assets are located in the San Juan Basin of northwestern New Mexico, so its cash flows are tied to a single producing region in the United States. Production, gathering, and marketing are concentrated in that basin, making local infrastructure, line pressure, and regional pricing important to results. The trust has no operating footprint outside this U.S. asset base. - **United States** (100%) — Royalty trust assets and operations are concentrated in the San Juan Basin of New Mexico. - San Juan Basin assets are located in northwestern New Mexico - Production is tied to a single U.S. operating basin - Regional gas pricing affects royalty income directly - Gathering-system conditions in the basin influence volumes - No meaningful international operating diversification ## Strategy The trust's structure is designed to collect royalty income, pay trust expenses, and distribute available cash to unit holders. Its strategic position is therefore not about growth investment or expansion, but about preserving the royalty stream, monitoring operator performance, and maintaining accurate reporting and expense administration. - **Preserve and administer the royalty interest** (long-term) — The trust's value comes from the underlying net overriding royalty interest and the cash it generates. - **Depend on operator execution and reporting** (short-term) — Production volumes, costs, and sales data from Hilcorp determine distributable income. - **Manage exposure to basin pricing and production costs** (medium-term) — Natural gas pricing, oil pricing, and production costs directly affect royalty income. - Maximize distributable cash from the royalty interest - Rely on operator drilling and production performance - Monitor commodity pricing and basin-level market conditions - Administer expenses and reserves to support distributions - Maintain accurate reporting from the operator and trustee ## Risks The trust is highly exposed to commodity prices, basin-specific production trends, and the operator's cost structure because royalty income is calculated from net proceeds. It also faces concentration risk in a single asset base and reliance risk on Hilcorp's reporting, operations, and marketing decisions, which can materially affect distributions. - **Commodity price volatility** [high] — Royalty income depends on realized natural gas and oil prices in the San Juan Basin. - **Single-asset geographic concentration** [high] — The trust's principal asset is tied to one producing basin in New Mexico. - **Excess production costs** [high] — Production costs must be recovered before royalty income is again paid to the trust. - **Operator dependence** [medium] — Hilcorp controls production, marketing, and reporting for the subject interests. - Natural gas and oil prices directly drive royalty income - Single-basin concentration limits diversification - Excess production costs can delay royalty payments - Trust depends on Hilcorp for operations and reporting - Regional infrastructure and line pressure affect volumes ## Accounting The trust's accounting is driven by royalty income recognition, expense allocation, and the timing of cash receipts from the operator. Because production is recognized in the month the related royalty income is paid and because excess production costs can offset future net proceeds, reported results can be uneven and may not track underlying production volumes in a simple way. - **Royalty income recognition timing** — Can create quarter-to-quarter volatility in reported income - **Excess production cost recovery** — Can suppress distributable income even when production exists - **Operator-reported estimates and settlements** — Audit settlements and reporting adjustments can affect income - **Interest income on cash reserves** — Affects distributable income when royalty income is low - Royalty income is recognized when paid to the trust - Production costs can offset net proceeds before distributions resume - Cash reserves and interest income affect distributable income - Operator-reported data drives production and revenue recognition - Quarterly results can be distorted by timing of payments and settlements --- *Last updated: 2026-04-29T04:54:27.509403+00:00*