The San Juan Basin Royalty Trust (NYSE:SJT) (the "Trust") today
announced the capital project plan for 2016 as delivered to it by
Burlington Resources Oil & Gas Company LP ("Burlington"). Capital
expenditures for 2016 for properties subject to the Trust’s royalty
interest are estimated to be $4.8 million.
The principal asset of the Trust is a 75% net overriding royalty
interest carved out of certain oil and gas leasehold and royalty
interests in properties now owned by Burlington (the “Underlying
Properties”) located in the San Juan Basin and more particularly in San
Juan, Rio Arriba and Sandoval counties of northwestern New Mexico.
Burlington is the operator of the majority of the Underlying Properties.
Burlington’s announced 2016 plan for the Underlying Properties includes
40 facilities projects. No new drilling activity is planned for 2016. Of
the $4.8 million, approximately $1.4 million will be allocated to 20
maintenance and facilities projects attributable to the capital budgets
for 2015 and prior years. Burlington will be the operator of all the
projects included in the 2016 plan.
In light of the challenged price environment for natural gas and natural
gas liquids, Burlington plans to suspend its drilling program in the San
Juan Basin in 2016. However, Burlington reported that it continually
monitors natural gas prices and plans to restart the program at some
point in the future, dependent upon such gas prices. Existing wells will
continue to be operated. Burlington reports that based on its actual
capital requirements, the pace of regulatory approvals, the mix of
projects and swings in the price of natural gas, the current estimated
capital expenditures for 2016 are subject to change.
Capital expenditures of approximately $12.8 million were included in
calculating royalty income paid to the Trust in calendar year 2015.
Approximately $5.2 million covered 38 projects budgeted for prior years,
including continued work on 5 new wells commenced prior to 2015, all
operated by Burlington, and 33 maintenance and facilities projects. The
$7.6 million balance for 2015 expenditures was attributable to 6
operated new drill projects and 34 projects for the maintenance and
improvement of production facilities.
As stated above, the capital expenditures reported by Burlington in
calculating royalty income for 2015 included approximately $5.2 million
attributable to the capital budgets for prior years. This occurs because
capital expenditures are deducted in calculating royalty income in the
month they are accrued, and projects within a given year's budget often
extend into subsequent years. Further, Burlington's accounting period
for capital expenditures runs through November 30 of each calendar year,
such that capital expenditures incurred in December of each year are
actually accounted for as part of the following year's capital
expenditures. Also, for wells not operated by Burlington, Burlington's
share of capital expenditures may not actually be paid by it until the
year or years after those expenses were incurred by the operator.
Except for historical information contained in this news release, the
statements in this news release are forward-looking statements that are
made pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements and the
business prospects of San Juan Basin Royalty Trust are subject to a
number of risks and uncertainties that may cause actual results in
future periods to differ materially from the forward-looking statements.
These risks and uncertainties include, among other things, volatility of
oil and gas prices, governmental regulation or action, litigation, and
uncertainties about estimates of reserves. These and other risks are
described in the Trust’s reports and other filings with the Securities
and Exchange Commission.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160122005083/en/
Copyright Business Wire 2016
Source: Business Wire
(January 22, 2016 - 9:00 AM EST)
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