UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

for the Quarterly Period Ended June 30, 2022

or

for the transition period from _____ to _____

Commission File No. 001-08032

SAN JUAN BASIN ROYALTY TRUST

(Exact name of registrant as specified in the Amended and Restated San Juan Basin Royalty Trust Indenture)

PNC Bank, National Association

PNC Asset Management Group

2200 Post Oak Blvd, Floor 18

Houston, Texas 77056

(Address of principal executive offices) (Zip Code)

(866) 809-4553

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☐    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒

Number of Units of beneficial interest outstanding at August 15,November 14, 2022: 46,608,796

Table of Contents

SAN JUAN BASIN ROYALTY TRUST

PART I

FINANCIAL INFORMATION

CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein.

1. Basis of Presentation

The preceding condensed statement of assets, liabilities and trust corpus as of December 31, 2021, which has been derived from audited financial statements, and the unaudited interim condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in San Juan Basin Royalty Trust (the “Trust”) Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of PNC Bank, National Association, the trustee of the Trust (“PNC Bank” or the “Trustee”), and based upon information provided to the Trust by Hilcorp San Juan L.P. (“Hilcorp”), the present owner of certain oil and gas interests (the “Subject Interests”) originally owned by Southland Royalty Company (“Southland”) in properties located in the San Juan Basin of northwestern New Mexico, all adjustments, consisting only of normal recurring adjustments, have been included that are necessary to fairly present the assets, liabilities and trust corpus of the Trust at JuneSeptember 30, 2022, and the distributable income and changes in trust corpus for the three-month and six-monthnine-month periods ended JuneSeptember 30, 2022 and 2021. The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year.

The financial statements of the Trust are prepared on the following basis and are not intended to present the financial position and results of operations of the Trust in conformity with U.S. generally accepted accounting principles (“GAAP”):

The financial statements of the Trust differ from financial statements prepared in accordance with GAAP because revenues are not accrued in the month of production; certain cash reserves may be established for liabilities and contingencies, which would not be accrued in financial statements prepared in accordance with GAAP; expenses are recorded when paid instead of when incurred; and amortization of the Royalty calculated on a unit-of-production basis is charged directly to trust corpus instead of as an expense. Most accounting pronouncements apply to entities whose financial statements are prepared in accordance with GAAP, directing such entities to accrue or defer revenues and expenses in a period other than when such revenues were received or when expenses were paid. Because the Trust’s financial statements are prepared on the modified cash basis, as described above, most accounting pronouncements are not applicable to the Trust’s financial statements. This comprehensive basis of accounting corresponds to the accounting permitted for royalty trusts by the SEC, as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

The Trustee routinely reviews the Trust’s royalty interests in natural gas and oil properties for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment event occurs and it is determined that the carrying value of the Trust’s royalty interests may not be recoverable, an impairment will be recognized as measured by the amount by which the carrying amount of the royalty interests exceeds the fair value of these assets, which would likely be measured by discounting projected cash flows and is charged directly to trust corpus instead of as an expense. There was no impairment of the Trust’s assets as of JuneSeptember 30, 2022.

2. Federal Income Taxes

For federal income tax purposes, the Trust constitutes a fixed investment trust that is taxed as a grantor trust. A grantor trust is not subject to tax at the trust level. The Unit Holders are considered to own the Trust’s income and principal as though no trust were in existence. The income of the Trust is deemed to have been received or accrued by each Unit Holder at the time such income is received or accrued by the Trust rather than when distributed by the Trust.

The Trust is a widely held fixed investment trust (“WHFIT”) classified as a non-mortgage widely held fixed investment trust (“NMWHFIT”) for federal income tax purposes. The Trustee is the representative of the Trust that will provide tax information in accordance with the applicable U.S. Treasury Regulations governing the information reporting requirements of the Trust as a WHFIT and a NMWHFIT.

The Royalty constitutes an “economic interest” in natural gas and oil properties for federal income tax purposes. Unit Holders must report their share of the production revenues of the Trust as ordinary income from natural gas and oil royalties and are entitled to claim depletion with respect to such income. The Royalty is treated as a single property for depletion purposes. The Trust has on file technical advice memoranda confirming such tax treatment.

Under present law, the Trust’s production and sale of natural gas from Coal Seam Wells does not qualify for tax credit under Section 45K of the Code (the “Section 45 Tax Credit”). Congress has at various times since 2002 considered energy legislation, including provisions to reinstate the Section 45 Tax Credit in various ways and to various extents, but no legislation that would qualify the Trust’s current production for such credit has been enacted. No prediction can be made as to what future tax legislation affecting Section 45K of the Code may be proposed or enacted or, if enacted, its impact, if any, on the Trust and the Unit Holders.

The classification of the Trust’s income, for purposes of the passive loss rules, may be important to a Unit Holder. Royalty Income, such as that derived through the Trust, will generally be treated as portfolio income that may not be offset or reduced by passive losses.

Tax positions taken by the Trust related to the Trust’s pass-through status and state tax positions have been reviewed, and the Trustee is of the opinion that the material tax positions it has taken would more likely than not be sustained by examination. As of JuneSeptember 30, 2022, the Trust’s tax years 2018 and thereafter remain subject to examination.

Each Unit Holder should consult his or her own tax advisor regarding tax compliance matters related to such Unit Holder’s interest in the Trust.

3. Commitments and Contingencies

Contingencies related to the Subject Interests that are unfavorably resolved would generally be reflected by the Trust as reductions to future Royalty Income payments to the Trust with corresponding reductions to cash distributions to Unit Holders. See Note 1 Basis of Presentation, for a summary of the terms of the Conveyance with respect to recovery of costs.

Covid-19 Pandemic. The Trust continues to request periodic updates from Hilcorp as to its production and financial expectations with respect to the Subject Interests due to any effects caused by the ongoing Covid-19 pandemic and the recent fluctuations in oil and gas pricing. Hilcorp has informed the Trust that, given the current natural gas pricing environment, Hilcorp does not anticipate materially reducing any of the Subject Interests’ production or taking any of the Subject Interests’ wells offline; however, both the Trust and Hilcorp continue to monitor the impact that future Covid-19 restrictions or outbreaks may have on production, including as it relates to personnel availability in New Mexico and other Subject Interests’ areas. Hilcorp further informed the Trust that it does not anticipate that the current state ofhave anything specifically to comment on regarding the Covid-19 pandemic will have any material impact on its operation of the Subject Interests or on its payments of Royalty Income to the Trust. However, the impact of the continued Covid-19 pandemic, including a resurgence of COVID-19 lockdowns in Asia, may extend existing supply chain disruptions and order backlogs for materials or services needed to maintain production in the Subject Interest areas, or have other unknown impacts on Hilcorp and the Subject Interests, and any such impact could result in actual results being different from Hilcorp’s expectations.pandemic.

The amount of Gross Proceeds depends on the volumes of natural gas and oil produced from the Subject Interests. Under the terms of the Indenture, the Trust cannot acquire new natural gas and oil assets, and as a result, Royalty Income is dependent on the natural gas and oil volumes attributable to the Subject Interests. Although Hilcorp and other operators of the Subject Interests may conduct drilling operations or well recompletions in the near term, the Subject Interests are depleting assets; Hilcorp has informed the Trust that it is unable to estimate the productive life of the Subject Interests. The reduction in proved reserve quantities is a common measure of depletion. Hilcorp’s (or a future operator’s) capital investments in the Subject Interests will affect the quantity of proved reserves and can offset any reduction in proved reserves. Lower commodity prices may also cause Hilcorp to reduce drilling operations, workover, and/or recompletions, thus reducing the volume of natural gas and oil produced from the Subject Interests by Hilcorp. Hilcorp did not conduct any new drill projects or recompletions within the Subject Interests in 2021 or to date in 2022.

4. Settlements and Litigation

None.

5. Subsequent Events

On July 19,October 21, 2022, the Trust announced a cash distribution of $6,766,905.11$16,272,132.13 or $0.145185$0.349121 per Unit, based primarily upon production during the month of MayAugust 2022, which waswill be paid on November 15, 2022. Hilcorp reported $26,014,687 of total revenue from the Subject Interests consisting of $15,653,743 of gas revenues, $282,139 of oil revenues, $21,790 of additional interest related to prior month’s granted audit exceptions. The Trust has been advised by Hilcorp that for the production month of August 12, 2022.2022, the operator of the Trust’s subject interests, Hilcorp San Juan, L.P., reported to the Trust gross profits of $21,815,782. Included in this amount is $10,057,015 of other revenue and interest related to adjustments associated with Hilcorp process reviews of FY 2021 and YTD July 2022 data. Items identified as part of these adjustments include underpayment resulting from the treatment of keep whole reimbursements and overpayment resulting from contract settlement differences. Interest related to the subject adjustments totaled $625,455.

Overview

The Trust is an express trust created under the laws of the state of Texas by the San Juan Basin Royalty Trust Indenture entered into on November 1, 1980, between Southland and The Fort Worth National Bank (the “Original Indenture”). The Original Indenture was amended and restated on September 30, 2002, and further amended and restated on December 12, 2007, which the Trust refers to as the “Indenture” in this Quarterly Report on Form 10-Q. As a result of a series of mergers and other transactions, the current Trustee of the Trust is PNC Bank.

The Conveyance and the Royalty

Pursuant to the Net Overriding Royalty Conveyance effective November 1, 1980, Southland conveyed the Royalty that burdens the Subject Interests in properties located in the San Juan Basin of northwestern New Mexico to the Trust. Subsequent to the Conveyance of the Royalty, through a series of sales, assignments and mergers, Southland’s successor became Hilcorp, which acquired the Subject Interests from Burlington Resources Oil & Gas Company LP (“Burlington”), an indirect wholly owned subsidiary of ConocoPhillips, on July 31, 2017.

The Royalty constitutes the principal asset of the Trust. The beneficial interest in the Royalty is divided into 46,608,796 units (the “Units”), representing undivided fractional interests in the beneficial interest of the Trust, equal to the number of shares of Southland common stock outstanding as of the close of business on November 3, 1980. Each stockholder of Southland of record at the close of business on November 3, 1980, received one freely tradable Unit for each share of the Southland common stock then held. Holders of Units in the Trust are referred to herein as “Unit Holders.”

Natural Gas and Oil. The sale of San Juan Basin assets, including the Subject Interests, from Burlington to Hilcorp closed on July 31, 2017. Under the terms of the sale, Hilcorp is required to make payments to Burlington if natural gas prices are above a certain price. Hilcorp has confirmed that in accordance with the Conveyance, Hilcorp will not charge the Trust any portion of such payments.

Gross Proceeds and Severance Tax Estimates.Estimates. Hilcorp’s process of reconciling actual revenue and severance taxes to previously reported estimates (which the Trust refers to as “true-ups”) were still occurring and being reported in 2021.2021 and 2022. At the beginning of 2021, Hilcorp informed the Trust that it planned to refine further its estimating and reporting processes, and that Hilcorp would review prior periods to ensure greater accuracy and consistency, both for prior periods as well as future reporting periods. As part of that review process, Hilcorp informed the Trust that it may reverse and rebook revenue for certain prior periods. Thus, distributions to the Trust from Hilcorp in certain months during 2021 and 2022 were subject to adjustments based upon prior months’ true-ups and rebooking, plus interest.

Hilcorp informed the Trust that it completed the transition to its new accounting system and began to report actual, not estimated, revenue and expenses for operated wells beginning with the June 2021 production month (August 2021 reporting month) and that it has reversed and rebooked revenue for certain prior periods. As of December 31, 2021, Hilcorp believes that all prior month true-ups have been completed for operated wells. The true-ups of revenues for non-operated properties for the 2021 distribution periods were completed in the February and March 2022 reporting months.

The amount of Gross Proceeds also depends on the volumes of natural gas and oil produced from the Subject Interests. Under the terms of the Indenture, the Trust cannot acquire new natural gas and oil assets, and as a result, Royalty Income is dependent on the natural gas and oil volumes attributable to the Subject Interests. Although Hilcorp and other operators of the Subject Interests may conduct drilling operations or well recompletions in the near term, the Subject Interests are depleting assets; Hilcorp has informed the Trust that it is unable to estimate the productive life of the Subject Interests. The reduction in proved reserve quantities is a common measure of depletion. Hilcorp’s (or a future operator’s) capital investments in the Subject Interests will affect the quantity of proved reserves and can offset any reduction in proved reserves. Lower commodity prices may also reduce the volume of natural gas and oil produced from the Subject Interests by Hilcorp. Hilcorp did not conduct any new drill projects or recompletions within the Subject Interests in 2021 orbut, Hilcorp provided the Trust with its 2022 capital project plan for the Subject Interests, the (“2022 Plan”), and informed the Trust that its 2022 Plan will allocate approximately $1.5 million of the 2022 Plan’s budget towards 24 well recompletions and workovers scheduled to datebe completed in 2022.the Mesaverde, Pictured Cliffs and Fruitland Coal formations. Approximately $300,000 of the 2022 Plan’s budget will be allocated to facilities projects related to natural gas compression, and approximately $100,000 will be spent for permitting and Hilcorp further informed the Trust that its planned project status for 2022 is subject to revision if it revises its assumptions underlying the 2022 Plan, and that in any event actual capital costs may vary from these estimates.

Relatedly, because of Hilcorp’s prior process of providing production estimates rather than actual production, a simple year-over-year comparison from the prior distribution reports from Hilcorp will not reflect the actual comparable production amounts. For example, a comparison of the AprilMay 2021 estimated production with the AprilMay 2022 actual production on the JuneJuly 2022 Distribution Report would reflect a decline of approximately 7.1%25%. However, comparing the AprilMay 2021 actual production from the NovemberAugust 2021 Distribution Report actualization to AprilMay 2022, actual production would reflect an,increasea decrease of 14.7%7.7%. In reviewing the Distribution Reports on a year-to-date basis, the total MMBtu production was 14,689,89621,813,179 as of JuneSeptember 2021 compared to the total MMBtu production of 13,672,17720,375,229 as of JuneSeptember 2022, which results in a year-to-date decline of 6.93%6.59%.

On February 17, 2022, the Trust announced that Hilcorp had provided the Trust with its 2022 capital project plan for the Subject Interests (the “2022 Plan”), and Hilcorp has estimated its 2022 capital expenditures for the Subject Interests to be $1.9 million. The objective of this capital project plan is to address the natural depletion of oil and gas assets. Specifically, Hilcorp informed the Trust that its 2022 Plan will allocate approximately $1.5 million of the 2022 Plan’s budget towards 24 well recompletions and workovers scheduled to be completed in the Mesaverde, Pictured Cliffs and Fruitland Coal formations. Approximately $300,000 of the 2022 Plan’s budget will be allocated to facilities projects related to natural gas compression, and approximately $100,000 will be spent for permitting and surveying costs for future new drill projects that are being considered for 2023 and 2024. Hilcorp further informed the Trust that its planned project status for 2022 is subject to revision if it revises its assumptions underlying the 2022 Plan, and that in any event actual capital costs may vary from these estimates.

The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and the Trust’s third-party compliance auditors continue to audit all payments made by Hilcorp to the Trust, including adjustments, true-ups, and recoupments. In addition, the Trustee continues to consult with outside counsel to review the rights of the Trust with respect to these matters and to evaluate any available potential legal remedies.

Factors that Affect Net Proceeds. Proceeds. Generally, Net Proceeds are affected by (a) disruptions caused by weather, particularly winter storms that disrupt access to the production fields, (b) the timing and size of Hilcorp’s capital expenditures, and (c) commodity prices.

Weather. Hilcorp has advised the Trust that it is possible for it to experience disruptions during the winter months that could impact Hilcorp’s ability to access fields and maintain production.

Capital Expenditures.Expenditures. The timing and size of capital expenditures by Hilcorp may impact Net Proceeds. Capital expenditures by Hilcorp decreasedincreased approximately $56,100,$254,591, or 34.47%241.53%, from a credit of $(105,409) for the three-months ended September 30, 2021 to a cost of $149,182 for the three months ended JuneSeptember 30, 2022. The increase is due primarily to a credit of $171,049 received from Hilcorp in the third quarter of 2021 as a result of true-ups for capital costs for the production months of January through April 2021. Capital expenditures incurred for projects worked during the three months ended September 30, 2022 increased by 127% from $65,640 for the three months ended September 30, 2021 to $149,182 for the three months ended September 30, 2022.

Capital expenditures incurred increased approximately $56,058, or 20.07%, to $335,325 for the nine months ended September 30, 2022, compared to the threenine months ended June 30, 2021, and decreased approximately $198,500, or 51.61%, for the six months ended June 30, 2022, compared to the six months ended JuneSeptember 30, 2021. The decreaseincrease was primarily attributable to differences in timing in the payment of these expenditures along withand capital expenditures attributable to the prior year’s budget.

Commodity Prices.Prices. The Trust’s income and monthly distributions from the Subject Interests are heavily influenced by the price of natural gas and oil. These prices may fluctuate widely in response to relatively minor changes in the supply of and demand for natural gas and oil based on market uncertainty or a variety of additional factors that are beyond the Trustee’s control. Prices for goods and services have risen over the last 12 months, and inflationary pressures have accelerated in the first halfthree quarters of 2022, as regional and global commodity prices have risen in response to the conflict in Ukraine. The impact of ongoing or extended conflict on Hilcorp’s ability to produce from the Subject Interests or on commodity prices is unknown.

Hilcorp has multiple gas purchase agreements that set forth the prices that it will receive for the natural gas and oil produced from the Subject Interests. There is a differential in the prices reflected in the market indices and the prices received and reported, because the prices received and reported vary by purchase agreement and are after deducting gathering, processing, and marketing costs for both gas and natural gas liquids. These purchase agreements and costs are subject to a comprehensive audit process by professional accountants and consultants.

On January 20, 2021, President Biden signed an executive order that reversed the United StatesStates’ withdrawal from the Paris Agreement, and the United States formally rejoined the Paris Agreement on February 19, 2021. At the federal regulatory level, both the Environmental Protection Agency and the Bureau of Land Management have adopted regulations for the control of methane emissions, which also include leak detection and repair requirements, from the oil and gas industry. Additionally, President Biden has issued an executive order seeking to adopt new regulations and policies to address climate change and suspend, revise or rescind prior agency actions that are identified as conflicting with the Biden Administration’sadministration’s climate policies. In addition, President Biden has declared that he supports federal government efforts to limit or prohibit hydraulic fracturing and banning new leases for production of minerals on federal properties, including onshore lands. Any of these actions could require Hilcorp to increase capital expenditures for the Subject Interests, decrease demand for natural gas and oil production, or limit the Subject Interests’ ability to produce natural gas or oil production. The Trust is unable to determine what, if any, the effects of such actions will have on the Subject Interests’ ability to produce natural gas and oil and on Hilcorp’s ability to pay Royalty Income to the Trust.

Hilcorp previously informed the Trust that it does not believe that recent actions undertaken by the Biden’sBiden administration to curtail future leases for natural gas and oil drilling on federally owned land will impact the Subject Interests because, as currently enacted, they do not impact current leases.

Results of Operations – for the Three and SixNine Months Ended JuneSeptember 2022 and 2021

Royalty Income

Royalty Income consists of 75% of the monthly Net Proceedsnet proceeds attributable to the Royalty. Royalty Income for the three and sixnine months ended JuneSeptember 30, 2022, and 2021 was determined as shown in the following table:

The Royalty Income distributed to the Trust for both the three and sixnine months ended JuneSeptember 30, 2022, was higher than that distributed during the same periodperiods of 2021 due primarily to higher natural gas prices. The average natural gas price increased from $2.77$2.74 per Mcf for the three months ended JuneSeptember 30, 2021, to $4.54$6.32 per Mcf for the three months ended JuneSeptember 30, 2022, and the average natural gas price increased from $2.71$2.72 per Mcf for the sixnine months ended JuneSeptember 30, 2021, to $4.67$5.21 per Mcf for the sixnine months ended JuneSeptember 30, 2022. Production of natural gas from the Subject Interests decreased from 7,517,0566,410,955 Mcf for the three months ended JuneSeptember 30, 2021, to 6,073,8836,032,747 Mcf for the three months ended JuneSeptember 30, 2022, and decreased from 13,220,90619,631,861Mcf for the nine months ended September 30, 2021, to 18,337,706 Mcf for the sixnine months ended June 30, 2021, to 12,304,960 Mcf for the six months ended JuneSeptember 30, 2022.

Gross Proceeds from Subject Interests. Interests. Total Gross Proceeds increased approximately $6.8$20.5 million, or 31.6%107%, for the three months ended JuneSeptember 30, 2022, compared to the three months ended JuneSeptember 30, 2021, and increased approximately $22.4$43 million, or 60%76%, for the sixnine months ended JuneSeptember 30, 2022, compared to the sixnine months ended JuneSeptember 30, 2021. The increase was primarily due to higher natural gas prices.

Capital Expenditures. Capital expenditures by Hilcorp decreasedincreased approximately $56,000$254,591, or 241.53%, from a credit of $(105,409) for the three-months ended September 30, 2021 to a cost of $149,182 for the three months ended JuneSeptember 30, 2022. The increase is due primarily to a credit of $171,049 received from Hilcorp in the third quarter of 2021 as a result of true-ups for capital costs for the production months of January through April 2021. Capital expenditures incurred for projects worked during the three months ended September 30, 2022 increased by 127% from $65,640 for the three months ended September 30, 2021 to $149,182 for the three months ended September 30, 2022.

Capital expenditures incurred increased approximately $56,058, or 20.07%, to $335,325 for the nine months ended September 30, 2022, compared to the threenine months ended June 30, 2021, and decreased approximately $198,500 for the six months ended June 30, 2022, compared to the six months ended JuneSeptember 30, 2021. The decreaseincrease was primarily attributable to differences in timing in the payment of these expenditures along withand capital expenditures attributable to the prior year’s budget.

As referenced above, on February 17, 2022,Hilcorp provided the Trust announced Hilcorp’swith its 2022 capital project plan for the Subject Interests. TheInterests, the ( “2022 Plan”), and informed the Trust that its 2022 Plan calls for total capital spending of $1.9 million. Hilcorp’s accounting period for capital expenditures runs from January through December 31 of each calendar year, which corresponds and is reported in Trust distributions made for the months from Marchwill allocate approximately $1.5 million of the same calendar year through February2022 Plan’s budget towards 24 well recompletions and workovers scheduled to be completed in the Mesaverde, Pictured Cliffs and Fruitland Coal formations. Approximately $300,000 of the following calendar year. Hilcorp’s2022 Plan’s budget will be allocated to facilities projects related to natural gas compression, and approximately $100,000 will be spent for permitting and Hilcorp further informed the Trust that its planned project status for 2022 is subject to revision if it revises its assumptions underlying the 2022 Plan, and that in any event actual capital expenditures for 2021 were $0.3 million.costs may vary from these estimates.

Based on 46,608,796 Units outstanding, the per-Unit distributions during the secondthird quarter of 2022 were as follows:

Interest Income. Income. Interest income was higher for the three and sixnine months ended JuneSeptember 30, 2022, as compared to the same periods in 2021 due primarily to increased funds available for investment and to higher yields on short-term investments.

Production of natural gas and oil and related average sales prices attributable to each of the Subject Interests and the Royalty for the sixnine months ended JuneSeptember 30, 2022, and 2021 were as follows:

Hilcorp Information

As a holder of a net overriding royalty interest, the Trust’s reporting of financial information is reliant upon Hilcorp to accurately and timely report information regarding Hilcorp and its affiliates; the Subject Interests, including the operations, acreage, well and completion count, working interests, production volumes, sales revenues, capital expenditures, operating expenses, reserves, drilling plans, drilling results and leasehold terms related to the Subject Interests; and factors and circumstances that have or may affect the foregoing. See Part I, Item 4. Controls and Procedures.

PART II

OTHER INFORMATION

None.

Not required.

None.

None.

Not applicable.

None.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 15,November 14, 2022

(The Trust has no directors or executive officers.)

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