FORM 10-Q: Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Mesa Royalty Trust reported its quarterly financial results for the period ended June 30, 2026. The trust’s net income was $[insert amount], a decrease of [insert percentage] compared to the same period last year. The trust’s total revenues were $[insert amount], primarily driven by oil and gas production from its underlying properties. The trust’s expenses were $[insert amount], including operating expenses, taxes, and interest. As of June 30, 2026, the trust had cash and cash equivalents of $[insert amount] and total assets of $[insert amount]. The trust’s Units of Beneficial Interest outstanding as of August 14, 2026, were 1,863,590.
Summary of Royalty Income, Production and Average Prices
Royalty income is computed after deducting the Trust’s proportionate share of capital costs, operating costs and interest on any cost carryforward from the Trust’s proportionate share of “Gross Proceeds,” as defined in the Conveyance. The Trust’s royalty income from the Royalty Properties and its distributions to unitholders are heavily influenced by commodity prices received by Working Interest Owners.
Three Months Ended June 30, 2026 and 2025
Financial Review
Royalty income was $155,031 for Q2 2026, down from $220,855 in Q2 2025. The decrease was primarily due to lower prices for natural gas and natural gas liquids, decreased production, higher operating expenses, and increased capital expenditures, partially offset by higher oil and condensate prices and lower operating costs for oil and condensate.
Interest income was $17,744 in Q2 2026 compared to $20,446 in Q2 2025. General and administrative expense, including Trustee’s fees, was $42,184 in Q2 2026 versus $45,484 in Q2 2025.
Distributable income available for distribution was $130,591 ($0.0701 per unit) in Q2 2026 compared to $195,817 ($0.1051 per unit) in Q2 2025.
Operational Review
Global economic and geopolitical uncertainty continued to impact oil and gas markets, with volatility in commodity prices and increased costs for the Working Interest Owners.
For the Hugoton Royalty Properties, there was no royalty income in Q2 2026 or Q2 2025 due to expenses exceeding revenues.
For the San Juan Basin - Colorado Properties, there was no royalty income in Q2 2026 or Q2 2025 due to prior period adjustments and a true-up process.
For the San Juan Basin - New Mexico Properties, royalty income was $155,031 in Q2 2026, down from $220,855 in Q2 2025, primarily due to lower prices and production, higher operating costs, and increased capital expenditures.
Six Months Ended June 30, 2026 and 2025
Financial Review
Royalty and other income was $206,719 for the first half of 2026, down from $331,385 in the same period of 2025. The decrease was primarily due to lower prices, decreased production, higher operating costs, and increased capital expenditures.
Interest income was $35,698 in the first half of 2026 compared to $40,607 in the first half of 2025. General and administrative expense was $111,226 in the first half of 2026 versus $95,177 in the first half of 2025.
Distributable income available for distribution was $134,203 ($0.0720 per unit) in the first half of 2026 compared to $237,942 ($0.1277 per unit) in the first half of 2025.
Operational Review
For the Hugoton Royalty Properties, there was no royalty income in the first half of 2026 or 2025 due to expenses exceeding revenues.
For the San Juan Basin - Colorado Properties, there was no royalty income in the first half of 2026 or 2025 due to prior period adjustments and a true-up process.
For the San Juan Basin - New Mexico Properties, royalty income was $206,719 in the first half of 2026, down from $331,818 in the first half of 2025, primarily due to lower prices, decreased production, higher operating costs, and increased capital expenditures.
Liquidity and Capital Resources
The Trustee intends to increase the Contingent Reserve to $2.0 million, which will reduce net proceeds available for distribution. There can be no assurance the Trust will receive adequate royalty income to fund the Contingent Reserve and provide sufficient liquidity. Future distributions may be limited if royalty income is insufficient.
