Company: MTR
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001104659-25-029944
Chunk: 27

Company: MESA ROYALTY TRUST/TX
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 27
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Item 1A. Risk Factors.

Although risk factors are described elsewhere in this Form 10-K together with the Disclosures Regarding Forward-looking Statements, the following is a summary of the principal risks associated with an investment in the Trust’s units.

BUSINESS AND OPERATIONAL RISKS

Oil and natural gas prices fluctuate due to a number of factors, and declines in commodity prices will reduce Net Proceeds available to the Trust and distributions to Trust unitholders.

Net Proceeds and the Trust’s quarterly distributions are highly dependent upon the prices realized from the sale of natural gas, and any material decrease in such prices could reduce the amount of Trust distributions. Natural gas prices can fluctuate widely on a month-to-month basis in response to a variety of factors that are beyond the control of the Trust and the Working Interest Owners. Factors that contribute to price fluctuation include, among others:

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political conditions worldwide, in particular political disruption, war or other armed conflicts that affect oil supply;

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worldwide economic conditions, including conditions affecting interest rates and availability of financing;

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weather conditions;

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the supply and price of foreign natural gas;

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the level of consumer demand;

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the price and availability of alternative fuels;

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trade barriers and tariffs;

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the proximity to, and capacity of, transportation facilities;

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the effect of worldwide energy conservation measures; and

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the occurrence or threat of epidemic or pandemic diseases or any government response to such occurrence or threat.

Moreover, government regulations, such as regulation of natural gas transportation, regulation of greenhouse gas and other emissions associated with fossil fuel combustion, and price controls, can affect product prices in the long-term.

Crude oil prices have been historically volatile and fell sharply during the pandemic. Oil demand rebounded in the second half of 2020, and prices increased in 2021 and 2022, decreased in 2023 and increased slightly in 2024. The NYMEX crude oil spot prices per Bbl were $71.72 and $71.65 as of December 31, 2024 and December 30, 2023, respectively. As of March 25, 2025, the price was $69.00 per Bbl. The Trust cannot predict the timing or the duration of any economic cycle or other adverse events and, depending on the prices realized, the financial condition of the Trust could be materially adversely affected. When natural gas prices decline, the Trust is affected in two ways. First, net royalties are reduced. Second, exploration and development activity on