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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-Q    ☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
Quarterly Period Ended March 31, 2020 or  ☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 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)    Texas

75-6279898(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.) BBVA USA 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 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 or emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filer

☐

Accelerated filer

☒Non-accelerated filer

☐

Smaller reporting company

☒Emerging growth company

☐ 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.  ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes ☐    No ☒ Securities registered pursuant to
Section 12(b) of the Act:  Title of each class

Trading
Symbol(s)

Name of each exchange
on which registeredUnits

SJT

New York Stock Exchange Number of Units of beneficial interest outstanding at May 11, 2020: 46,608,796




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Table of Contents  PART I. FINANCIAL INFORMATIONItem 1

Financial Statements


1Item 2

Trustees Discussion and Analysis of Financial Condition and Results of Operations


5Item 3

Quantitative and Qualitative Disclosures about Market Risk


9Item 4

Controls and Procedures


9PART II. OTHER INFORMATIONItem 1

Legal Proceedings


10Item 1A

Risk Factors


10Item 2

Unregistered Sales of Equity Securities and Use of Proceeds


10Item 3

Defaults Upon Senior Securities


10Item 4

Mine Safety Disclosures


10Item 5

Other Information


10Item 6

Exhibits


11SIGNATURE  i




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SAN JUAN BASIN ROYALTY TRUST PART I FINANCIAL INFORMATION  Item 1.
Financial Statements. CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS   March 31,2020(Unaudited)


December 31,2019ASSETSCash and short-term investments

$
2,498,537


$
1,079,421Net overriding royalty interest in producing oil and natural gas properties (net of accumulated
amortization of $128,021,349 and $127,823,321 at March 31, 2020 and December 31, 2019, respectively)


5,254,179



5,452,207$
7,752,716


$
6,531,628LIABILITIES AND TRUST CORPUSDistribution payable to Unit Holders

$
1,498,537


$
79,421Cash reserves


1,000,000



1,000,000Trust corpus - 46,608,796 Units of beneficial interest authorized and outstanding


5,254,179



5,452,207$
7,752,716


$
6,531,628 CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)   Three Months EndedMarch 31,2020


2019Royalty income

$
5,068,407


$
6,549,564Interest income


3,562



8,051Total income


5,071,969



6,557,615Expenditures  General and Administrative


(453,707
)


(542,778
)Distributable income

$
4,618,262


$
6,014,837Distributable income per Unit (46,608,796 Units)

$
0.099085


$
0.129050 These Condensed Financial Statements should be read in conjunction with the accompanying Notes to Condensed Financial Statements included herein.  1




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CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)   Three Months EndedMarch 31,2020


2019Trust corpus, beginning of period

$
5,452,207


$
5,844,727Amortization of net overriding royalty interest


(198,028
)


(171,675
)Distributable income


4,618,262



6,014,837Distributions declared


(4,618,262
)


(6,014,837
)Trust corpus, end of period


5,254,179



5,673,052Distributions declared (per Unit)


0.099085



0.129050 These Condensed Financial Statements should be read in conjunction with the accompanying Notes to Condensed Financial Statements included herein.  2




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1.    Basis of Presentation The preceding (a) condensed statement of assets, liabilities and trust corpus as of December 31, 2019, which has been derived from
audited financial statements, and (b) 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, 2019. In the opinion of BBVA USA, the trustee of the Trust (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 originally owned by Southland Royalty Company (the Subject Interests) in properties located in the San Juan Basin of northwestern New Mexico (the Royalty Income), 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 March 31, 2020, and the distributable income and changes in trust corpus for the three-month periods ended
March 31, 2020 and 2019. 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 net proceeds attributable to the 75% net overriding royalty interest (the Royalty) that burdens
the Subject Interests recorded for a month is the amount computed and paid by Hilcorp to the Trustee for the Trust. Royalty Income consists of the proceeds received by Hilcorp from the sale of production less accrued production costs, development
and drilling costs, applicable taxes, operating charges, and other costs and deductions, multiplied by 75%. The calculation of net proceeds by Hilcorp for any month includes adjustments to proceeds and costs for prior months and impacts the Royalty
Income paid to the Trust and the distribution to Unit Holders for that month. See Item 2 Part I of this Quarterly Report on Form 10-Q entitled Gross Proceeds and Severance Tax Estimates for a more
detailed explanation of the estimate and true-up process for distributable income reporting and distributions to Unit Holders.  

Although permitted under the Net Overriding Royalty Conveyance that transferred the Royalty to the Trust (the
Conveyance), Hilcorp has informed the Trust that, for wells operated by Hilcorp, it generally does not intend to accrue lease operating expenses to the Trust.  

Hilcorp has informed the Trust that oil revenue is typically reported to the Trust based on actual volumes and
pricing and that due to timing, Hilcorp reports accrued natural gas revenues to the Trust based on actual production volumes from the meters. Generally, Hilcorp reconciles the natural gas revenue accruals with the plant processing statements the
month following the previously reported financial information.  

Trust expenses recorded are based on liabilities paid and cash reserves established from Royalty Income for
liabilities and contingencies.  

Distributions to Unit Holders are recorded when declared by the Trustee.  

The Conveyance provides that any excess production costs applicable to the Subject Interests over gross proceeds
from such properties must be recovered from future net proceeds before Royalty Income is again paid to the Trust. The Trust is not obligated to reimburse Hilcorp for any excess production costs if future gross proceeds from the Subject Interests are
insufficient to cover such costs. 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 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, which include
the provisions of the new revenue recognition standard in ASU 2014-09. In addition, the Trust has evaluated the impact of ASC 842, Leases, and determined that this standard has no impact on the
Trusts financial statements. The Trustee has determined that there are no additional disclosures required based on the Trusts
method of accounting. 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.  3




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The Trustee routinely reviews the Trusts royalty interests in oil and natural gas
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 March 31, 2020. 2.    Federal Income Taxes For federal income tax purposes, the Trust constitutes a fixed investment trust which 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 oil and natural gas properties for federal income tax purposes. Unit Holders must
report their share of the production revenues of the Trust as ordinary income from oil and natural gas 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 current federal income tax law, the Trusts
production and sale of natural gas from coal seam wells does not qualify for a tax credit under Section 45K (the Section 45 Tax Credit) of the Internal Revenue Code of 1986, as amended (the Code). 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 March 31, 2020, the Trusts tax years 2016 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. 4.    Settlements and Litigation None. 5.    Subsequent
Events The Trustee has evaluated subsequent events for potential disclosure through the date that these financial statements were issued, and none were identified.  4




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Item 2.
Trustees Discussion and Analysis of Financial Condition and Results of Operations. 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 Royalty Company (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 involving the Trustee of the Trust, the current Trustee of the Trust is BBVA USA, which is a wholly-owned subsidiary of Banco
Bilbao Vizcaya Argentaria, S.A. The Conveyance and the Royalty Pursuant to the Net Overriding Royalty Conveyance (the 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 the common stock of Southland 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 common stock of Southland then held. Holders of Units in the Trust are referred to herein as Unit Holders. The Trustee The primary function of
the Trustee is to collect Royalty Income, to pay all expenses and charges of the Trust and distribute the remaining available income to the Unit Holders. The amount of income distributable to Unit Holders, which we refer to as Distributable
Income, depends on the amount of Royalty Income and interest received by the Trust, as well as the amount of expenses paid by the Trust and any change in cash reserves. The Trust has no employees, officers or directors. All administrative
functions of the Trust are performed by the Trustee. Effective June 10, 2019, Compass Bank changed its name to BBVA USA. Hilcorp Hilcorp is the principal operator of the majority of the Subject Interests. Hilcorp is also responsible, subject to the terms of a prior
agreement with the Trust, for marketing the oil and natural gas production from such properties, either under existing sales contracts or under future arrangements, at the best prices and on the best terms it shall deem reasonably obtainable in the
circumstances. A very high percentage of the Royalty Income is attributable to the production and sale by Hilcorp of natural gas from the Subject Interests. Accordingly, the market price for natural gas produced and sold from the San Juan Basin
heavily influences the amount of Royalty Income distributed by the Trust and, by extension, the price of the Units. Gross Proceeds and
Severance Tax Estimates.The sale of San Juan Basin assets, including the Subject Interests, from Burlington to Hilcorp closed on July 31, 2017. Hilcorp has advised the Trust that, since the closing of its purchase of the assets,
for certain months it reported estimates of cash revenues and expenses based on the best information available to it at the time instead of reporting actual amounts. Hilcorp further has informed the Trust that it believes that its estimates have
been prepared in accordance with the Conveyance, and the Trust and its advisors continue to review such estimates for compliance with the Conveyance. Hilcorps process of reconciling actual revenue and severance taxes to previously reported estimates (which the Trust refers to as true-ups) during fiscal years 2017, 2018, and 2019 are still occurring and being reported in 2020. Hilcorp has informed the Trust that as it continues to further refine its estimating and reporting
processes, Hilcorp will 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 will reverse and rebook revenue
for certain prior periods. Thus, distributions to the Trust from Hilcorp in any given month may be subject to adjustments based upon prior months true-ups and rebooking, plus interest. Hilcorp notified the Trust that as of the date of this quarterly report, it will still need to adjust the previously reported production and
financial information for the production months of January 2018 through December 2018, October 2019, and March 2019 through July 2019 and, therefore, possibly adjust future distributions of net proceeds to reflect such rebooking and true-ups plus interest on such amounts (as required by the Conveyance) to the extent an under or over-payment has occurred.   5




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During the first quarter of 2020, Hilcorp made
true-up and rebooking adjustments resulting in an additional $371,000 gross ($278,000 net) Royalty Income revenue to the Trust based on the production months of November 2017, December 2017, January 2019,
February 2019, and September 2019. Other Gross Proceeds Estimates.  The Trust has been advised by Hilcorp that during
the period following the closing of its purchase of the Subject Interests from Burlington, Hilcorp included an additional $1.0 million in Other revenue in the gross proceeds estimates in each of the December 2017 and January 2018
distribution months. This additional Other revenue was based on Hilcorps estimated increases in natural gas production that were subsequently offset by lower natural gas prices. As of the date of this quarterly report, Hilcorp has
not yet trued-up this $1.0 million in Other gross proceeds included in each of the December 2017 and January 2018 distributions. As a result, once Hilcorp has finalized its true-ups there could be a negative adjustment to the Other gross proceeds consisting of a reduction in Royalty Income to the Trust by Hilcorp of this estimated payment of up to $2.0 million,
consisting of $1.0 million for each of December 2017 and January 2018. The timing of this Other gross proceeds true-up may be affected by additional items identified by the Trustees
third party compliance auditors that are pending resolution with Hilcorp. Commodity Prices.  The Trusts income and
monthly distributions from the Subject Interests are heavily influenced by commodity prices. Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market
uncertainty and (iii) a variety of additional factors that are beyond the Trustees control. Recently, there has been a substantial decrease in oil and natural gas prices due in part to significantly decreased demand as a result of the novel
coronavirus (COVID-19) pandemic and an oversupply of crude oil driven by a dispute between members of the Organization of Petroleum Exporting Countries (OPEC) and Russia over production cuts. Although the above factors have
primarily negatively affected oil prices to date, the Trust cannot guarantee that the above factors will not negatively impact natural gas commodity prices. Results of Operations  for the Three Months Ended March 31, 2020 and 2019 Royalty Income Royalty Income
consists of monthly net proceeds attributable to the Royalty. Royalty Income for the three months ended March 31, 2020 and 2019 was determined as shown in the following table:  Three Months Ended March 31,2020


2019Gross proceeds from the Subject Interests:Natural Gas

$
13,841,865


$
18,638,506Oil


385,646



443,206Other


408,033
(2)


507,000
(1)Total


14,635,544



19,588,712Production Costs:Severance tax  natural gas


860,596



2,133,318Severance tax  oil


31,712



36,782Other


-0-



-0-Lease operating expense and property tax


6,930,615



7,962,964Capital expenditures


54,745



722,896Total


7,877,668



10,855,960Net profits


6,757,876



8,732,752Net overriding royalty interest


75
%


75
%Royalty Income

$
5,068,407


$
6,549,564   (1)
Estimated revenue from non-operated properties. (2)
Estimated revenue from non-operated properties offset by Hilcorps
true-up of non-operated revenue from the February 2019 and September 2019 production months. The Royalty Income distributed to the Trust for the three months ended March 31, 2020 was lower than that distributed during the same
period of 2019 due primarily to decreased natural gas production and lower natural gas prices. The average natural gas price decreased from $2.52 per Mcf for the three months ended March 31, 2019 to $2.02 per Mcf for the three months ended
March 31, 2020. Production of natural gas from the Subject Interests decreased from 7,393,915 Mcf for the three months ended March 31, 2019 to 6,863,999 Mcf for the three months ended March 31, 2020.   6




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Lease Operating Expenses and Property Taxes.  Lease operating expenses and
property taxes decreased $1 million or approximately 13% for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The decrease is primarily due to decreased compression expenses and decreased gas
treating expenses. Gross Proceeds from Subject Interests.  Total Gross proceeds decreased approximately
$5.0 million or 25%for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The decrease was attributable to both lower natural gas volumes and lower natural gas prices. Capital Expenditures.  Capital expenditures by Hilcorp decreased $0.7 million or approximately 92% for the three months
ended March 31, 2020 compared to the three months ended March 31, 2019. The decrease was attributable to Hilcorps reduced capital spending plan, which the Trust announced on February 24, 2020 (the 2020 Plan). The
2020 Plan calls for total capital spending of $0.3 million. Severance Taxes.Aggregate severance taxes decreased
approximately $1.3 million or approximately 59% for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The decrease was primarily attributable to lower revenue in 2020. Severance taxes represented
approximately 6% of gross proceeds for the three months ended March 31, 2020, compared to approximately 11% for the same period of 2019. The decrease in percentage was primarily attributable to Hilcorps
true-ups of natural gas and oil severance tax during the first quarter of 2020. Monthly leaseoperating expenses of the Subject Interests, including property taxes, in first quarter 2020 averaged
approximately $2.3 million, as compared to $2.7 million in the first quarter of 2019. Distributable Income  Three Months EndedMarch 31,2020


2019Royalty income

$
5,068,407


$
6,549,564Interest income


3,562



8,051Total income


5,071,969



6,557,615Expenditures  General and Administrative


(453,707
)


(542,778
)Distributable income

$
4,618,262


$
6,014,837Distributable income per Unit (46,608,796 Units)

$
0.099085


$
0.129050 Distributable Income.  Distributable Income decreased from $6.0 million ($0.129050 per
Unit) for the three months ended March 31, 2019 to $4.6 million ($0.099085 per Unit) for the three months ended March 31, 2020. The decrease in Distributable Income was primarily attributable to lower natural gas production and lower
natural gas prices in 2020 offset by lower production costs, resulting in lower Royalty income. Based on 46,608,796 Units outstanding,
the per-Unit distributions during the first quarter of 2020 were as follows:  January

$
0.029963February


0.036971March


0.032151Quarter Total

$
0.099085 Interest Income.Interest income was lower for the three months ended March 31, 2020 as
compared to the same period in 2019 due to lower yields on short-term investments. General& Administrative
Expenses.  General and administrative expenses decreased approximately $0.1 million or 16% for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The decrease was primarily
attributable to differences in timing in the receipt and payment of certain expenses by the Trust. Cash Reserves.  Total
cash reserves were $1.0 million as of March 31, 2020. The primary purpose of the cash reserves is to have sufficient funds to cover monthly general and administrative expenses in the event that there is insufficient Royalty Income to cover
such expenses. The Trustee does not anticipate any increase or decrease to the cash reserves in 2020, although it cannot guarantee that the Trustee will not increase such cash reserves in the future.   7




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Liquidity and Capital Resources The Trusts principal source of liquidity and capital is Royalty Income. The Trusts distribution of income to Unit Holders is funded
by Royalty Income after payment of Trust expenses. The Trust is not liable for any production costs or liabilities attributable to the Royalty. If at any time the Trust receives more than the amount due under the Royalty, it is not obligated to
return such overpayment, but the amounts payable to it for any subsequent period are reduced by such amount, plus interest, at a rate specified in the Conveyance. If the Trustee determines that the Trust does not have sufficient funds to pay the
Trusts liabilities, the Trustee may borrow funds on behalf of the Trust, in which case no distributions will be made to Unit Holders until such borrowings are repaid in full. The Trustee may not sell or dispose of any part of the assets of the
Trust without the affirmative vote of 75% of all of the Units outstanding; however, the Trustee may sell up to 1% of the value of the Royalty (as determined pursuant to the Indenture) during any 12-month
period without the consent of the Unit Holders. The Trust requested additional updates from Hilcorp as to its production and financial
expectations with respect to the Subject Interests due to 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. Hilcorp further informed the Trust that it does not anticipate that Covid-19 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 Covid-19
pandemic on Hilcorp and the Subject Interests is still unknown and any such impact could result in actual results being different than Hilcorps expectations. Oil and Natural Gas Production The
natural gas volumes reported to the Trust by Hilcorp are based on plant residue gas volumes plus equivalent volumes for natural gas liquids. Hilcorp converts one barrel of natural gas liquids to six Mcf of natural gas using industry
standards. Royalty Income for the quarter ended March 31, 2020 is associated with oil and natural gas production during November 2019
through January 2020 from the Subject Interests. Production of oil and natural gas and related average sales prices attributable to each of the Subject Interests and the Royalty for the three months ended March 31, 2020 and 2019 were as
follows:  For the Three Months Ended March 31,2020


2019Natural Gas(Mcf)


Oil andCondensate(Bbls)


Natural Gas(Mcf)


Oil andCondensate(Bbls)ProductionSubject Interests


6,863,999



7,425



7,393,915



10,821Royalty


2,378,674



4,442



2,624,050



5,237Average Price (per Mcf/Bbl)

$
2.02


$
51.94


$
2.52


$
40.96 The Trust recognizes production during the month in which the related net proceeds attributable to the Royalty
are paid to the Trust. Royalty Income for a calendar year is based on the actual natural gas and oil production during the period beginning with November of the preceding calendar year through October of the current calendar year. Sales volumes
attributable to the Royalty are determined by dividing the net profits by the Trust from the sale of oil and natural gas, respectively, by the prices received by Hilcorp for sales of such volumes from the Subject Interests, taking into consideration
production taxes attributable to the Subject Interests. Because the oil and natural gas sales attributable to the Royalty are based upon an allocation formula dependent on such factors as price and cost, including Hilcorps capital
expenditures and the timing of Hilcorps true-ups of prior reported estimated oil and natural gas production data, the aggregate sales amounts from the Subject Interests may not provide a meaningful
comparison to sales attributable to the Royalty. Future true-ups will impact future royalty proceeds, but will not change the reported amounts due to the accounting basis used. The fluctuations in natural gas production that have occurred during the three-month period ended March 31, 2020 and 2019, respectively,
generally resulted from changes in the demand for natural gas during that time, market conditions, and variances in capital spending to generate production from new and existing wells, as offset by the natural production decline curve. Also,
production from the Subject Interests is influenced by the line pressure of the natural gas gathering systems in the San Juan Basin. As noted above, oil and natural gas sales attributable to the Royalty are based on an allocation formula dependent
on many factors, including oil and natural gas prices and capital expenditures. Marketing There were no changes to the contracts pursuant to which Hilcorp sells production from the Subject Interests and for the gathering and
processing of production during the first quarter of 2020. Off-Balance Sheet Arrangements None.  8




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Critical Accounting Policies and Estimates For a discussion of significant accounting policies and estimates that impact the Trusts financial statements, see Part I, Item 1.
Unaudited Financial Statements, Note 1 Basis of Presentation and Part II, Item 8. Financial Statements and Supplemental Data contained in the Trusts Annual Report on Form 10-K for the year ended
December 31, 2019. Information Regarding Forward-Looking Information Certain information included in this Quarterly Report on Form 10-Q contains, and other materials filed
or to be filed by the Trust with the SEC (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended (the Exchange Act) and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements may involve or may concern, among other things, the amount and variability
in capital expenditures by Hilcorp, drilling activity, development activities, production efforts and volumes, hydrocarbon prices, estimated future net revenues, estimates of reserves, the results of the Trusts activities, the differences
between Hilcorps estimated revenue and actual revenue, and regulatory matters. Such forward-looking statements generally are accompanied by words such as may, will, based, estimate,
expect, predict, project, anticipate, believe, plan, intend, or other words that convey the uncertainty of future events or outcomes. Such statements are based on
certain assumptions of BBVA USA, the Trustee, and by Hilcorp, with respect to future events; are based on an assessment of, and are subject to, a variety of factors deemed relevant by the Trustee and Hilcorp; and involve risks and uncertainties.
However, whether actual results and developments will conform with such expectations and predictions is subject to a number of risks and uncertainties which could affect the future results of the energy industry in general, and the Trust and Hilcorp
in particular, and could cause those results to differ materially from those expressed in such forward-looking statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the
expected consequences to or effects on Hilcorps business and the Trust. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in such forward-looking statements.
The Trust undertakes no obligation to publicly update or revise any forward-looking statements, except as required by applicable law. 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. There have been no material
changes to the Trusts market risk during 2020. For information on the Trusts exposure to market risk, please see Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk contained in the Trusts
Annual Report on Form 10-K for the year ended December 31, 2019.  Item 3.
Quantitative and Qualitative Disclosures about Market Risk. None.  Item 4.
Controls and Procedures. The Trust maintains a system of internal disclosure controls and procedures that is designed to ensure that the information required to be
disclosed in the Trusts filings under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms. In its evaluation of its disclosure controls and procedures, the
Trustee has relied, to the extent considered reasonable, on information provided by Hilcorp, the owner of the properties. Consequently, the Trusts ability to timely and accurately disclose relevant information in its periodic reports is
dependent upon Hilcorps timely delivery of accurate oil and gas revenue and production cost information and, therefore, the net proceeds owed to the Trust. The Net Overriding Royalty Conveyance (the Conveyance) that transferred the royalty to the Trust obligates Hilcorp to provide the
Trust with certain financial and operational information, including information concerning calculations of net proceeds owed to the Trust. Once the Trust receives the financial information from Hilcorp, the Trust engages independent public
accountants, compliance auditors, attorneys and petroleum engineers in order to assist the Trustee to ensure the accuracy and completeness of the information required to be disclosed in the Trusts periodic reports. These outside professionals
advise the Trustee in its review and compilation of this information for inclusion in this Form 10-Q and the other periodic reports provided by the Trust to the SEC.  9




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Despite the Trusts internal controls and procedures ensuring the accuracy of the
Trusts reporting based upon the financial information received from Hilcorp, Hilcorps process of reconciling actual revenue and severance taxes to previously reported estimates and reversing and rebooking periods during fiscal 2017,
2018, and 2019 are still occurring and being reported in 2020. Thus, distributions to the Trust from Hilcorp in any given month may be subject to adjustment based upon prior months true-ups and
rebooking, plus interest. Hilcorp notified the Trust that as of the date of this quarterly report, it will still need to adjust the previously reported production and financial information for the production months of January 2018 through December
2018, October 2019, and March 2019 through July 2019 and, therefore, possibly adjust future distributions of net proceeds to reflect such rebooking and true-ups plus interest on such amounts (as required by
the Conveyance) to the extent an under or over-payment has occurred. The Trustee has evaluated the Trusts internal disclosure
controls and procedures as of March 31, 2020, and has concluded that such disclosure controls and procedures are effective, at the reasonable assurance level (as such term is used in Rule
13a-15(f) of the Exchange Act), to ensure that material information received from Hilcorp is gathered on a timely basis to be included in the Trusts periodic reports and recorded, processed, summarized
and reported within the time periods specified in the SECs rules and forms. Additionally, during the quarter ended March 31,
2020, there were no changes in the Trusts internal control over financial reporting (as such term is used in Rule 13a-15(f) of the Exchange Act) that materially affected, or are reasonably likely to
materially affect, the Trusts internal control over financial reporting. Because the Trust does not have, nor does the Indenture provide for, officers, a board of directors or an independent audit committee, the Trustee has reviewed neither
the Trusts disclosure controls and procedures nor the Trusts internal control over financial reporting in concert with management, a board of directors or an independent audit committee. PART II OTHER INFORMATION  Item 1.
Legal Proceedings. None.  Item 1A.
Risk Factors. Not required.  Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds. None.  Item 3.
Defaults Upon Senior Securities. None.  Item 4.
Mine Safety Disclosures. Not applicable.  Item 5.
Other Information. None.  10




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Item 6.
Exhibits.  ExhibitNumber

Description(4)(a)

San Juan Basin Amended and Restated Royalty Trust Indenture, dated December 
12, 2007, filed as Exhibit 99.2 to the Trusts Current Report on Form 8-K filed with the SEC on December 14, 2007, and incorporated herein by reference.*(4)(b)

Net Overriding Royalty Conveyance from Southland Royalty Company to The Fort Worth National Bank, as Trustee, dated November 
1, 1980 (without Schedules), filed as Exhibit 4(b) to the Trusts Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2006 on March 
1, 2007, and incorporated herein by reference.*(4)(c)

Assignment of Net Overriding Interest (San Juan Basin Royalty Trust), dated September 
30, 2002, between Bank One, N.A. and Texas Bank, filed as Exhibit 4(c) to the Trusts Quarterly Report on Form 10-Q filed with the SEC for the quarter ended September 
30, 2002, and incorporated herein by reference.*31

Certification required by Rule 13a-14(a), dated May 11, 2020, by Joshua R. Peterson, Head of Trust Real Assets 
& Mineral Resources and Senior Vice President of BBVA USA, the Trustee of the Trust.**32

Certification required by Rule 13a-14(b), dated May 11, 2020, by Joshua R. Peterson, Head of Trust Real Assets 
& Mineral Resources and Senior Vice President of BBVA USA, on behalf of BBVA USA, the Trustee of the Trust.***  *
A copy of this exhibit is available to any Unit Holder (free of charge) upon written request to the Trustee,
BBVA USA, 2200 Post Oak Blvd., Floor 18, Houston, Texas 77056.  **
Filed herewith.  ***
Furnished herewith.  11




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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.  BBVA USA, AS TRUSTEE OF THE
SAN JUAN BASIN ROYALTY TRUSTBy:

/s/ Joshua R. PetersonJoshua R. Peterson
Head of Trust Real Assets & Mineral Resources and Senior Vice President
 Date: May 11, 2020 (The Trust has no directors or executive officers.)  12