Company: MTR
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001104659-25-029944
Chunk: 17

Company: MESA ROYALTY TRUST/TX
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 17
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 compared to the year ended December 31, 2023. For the year ended December 31, 2024, Scout provided Process (as defined in the Conveyance) services for the Hugoton Royalty Properties, and such services are charged against the Royalty in accordance with the terms of the Conveyance.

San Juan Basin

Natural gas, oil, condensate and natural gas liquids produced from the San Juan Basin  -   New Mexico Royalty Properties accounted for the majority of the Royalty income of the Trust for the year ended December 31, 2024. Simcoe has informed the Trustee that a portion of the natural gas produced from the San Juan Basin  -   Colorado Royalty Properties is sold on the spot market, and some of the natural gas produced from the San Juan Basin  -   Colorado Properties is sold pursuant to fixed price contracts. Under such fixed price contractual arrangements, the Trust may not benefit from increases in commodity prices to the extent a variable or market-based price arrangement would otherwise increase revenues to the Trust.

Market for Natural Gas

The amount of cash distributions by the Trust is dependent on, among other things, the sales prices realized for natural gas produced from the Royalty Properties and the quantities of gas sold. According to the U. S. Energy Information Administration of the Department of Energy, the average Henry Hub Natural Gas Spot Prices were $2.53 per MMBtu in 2023 and decreased to $2.19 per MMBtu in 2024. Due to the seasonal nature of demand for natural gas and its effects on sales prices and production volumes, the amounts of cash distributions by the Trust may vary substantially on a seasonal basis. Generally, production volumes and prices are higher during the first and fourth quarters of each calendar year due primarily to peak demand in those periods. Because of the time lag between the date on which the Working Interest Owners receive payment for production from the Royalty Properties and the date on which distributions are

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made to unitholders, the seasonality that generally affects production volumes and prices is generally reflected in distributions to unitholders in later periods. Henry Hub Natural Gas Spot Prices are quoted in MMBtu, a commonly used energy measurement that has a conversion formula defined and published by the SEC for the purpose of estimating price per Mcf in the Reserve Report.

Competition

The production and sale of gas from the Royalty Properties are highly competitive, and the Working Interest Owners’