SAN JUAN BASIN ROYALTY TRUST 10-K

ITEM 9A. 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 times 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 Royalty Income owed to the Trust. 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 Royalty Income 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 Annual Report on Form 10-K and the other periodic reports provided by the Trust to the SEC. 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 2018 and 2020 were still occurring and being reported in 2021. At the beginning of 2021, Hilcorp informed the Trust that planned to refine further its estimating and reporting processes, and that Hilcorp would 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 would reverse and rebook revenue for certain prior periods. Thus, distributions to the Trust from Hilcorp in any given month in 2021 could be subject to adjustments based upon prior months’ true-ups and rebooking, plus interest. The Trustee has evaluated the Trust’s internal disclosure controls and procedures as of December 31, 2021, and has concluded that such disclosure controls and procedures are effective, at the “reasonable assurance” level 29 Notes to Financial Statements — (Continued) (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 December 31, 2021, there were no changes to the Trust’s internal controls 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. Trustee’s Report on Internal Control over Financial Reporting PNC Bank, in its capacity as trustee of the Trust, is responsible for establishing and maintaining adequate internal control over financial reporting. The Trust’s internal control over financial reporting is a process designed under the supervision of the Trustee to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Trust’s financial statements for external purposes in accordance with a modified cash basis of accounting, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. As of December 31, 2021, the Trustee assessed the effectiveness of the Trust’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “ Internal Control – Integrated Framework ”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on the assessment, the Trustee determined that the Trust maintained effective internal control over financial reporting as of December 31, 2021, based on those criteria. 30 ITEM 9B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Trust is managed by a corporate trustee and has no directors, executive officers or employees. Accordingly, the Trust does not have an audit committee, audit committee financial expert, nominating committee or a code of ethics applicable to executive officers. The Trustee has adopted a policy regarding standards of conduct and conflicts of interest applicable to all directors, officers and employees of the Trustee. The Trustee is a corporate trustee which may be removed, with or without cause, at a meeting of the Unit Holders, by the affirmative vote of the holders of a majority of all the Units then outstanding. Delinquent Section 16(a) Reports The Trust has no directors or officers. Accordingly, only holders of more than 10% of the Trust’s Units are required to file with the SEC initial reports of ownership of Units and reports of changes in such ownership. Based solely on a review of these reports, the Trust believes that the applicable reporting requirements of Section 16(a) of the Exchange Act were complied with for all transactions that occurred in 2021. ITEM 11. EXECUTIVE COMPENSATION The Trust has no directors, executive officers or employees to whom it pays compensation. The Trust is administered by employees of the Trustee in the ordinary course of their employment who receive no compensation specifically related to their services to the Trust. Accordingly, the Trust does not have a compensation committee or maintain any equity compensation plans, and there are no Units reserved for issuance under any such plans. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY HOLDER MATTERS The Trust has no directors, executive officers or employees. Accordingly, the Trust does not maintain any equity compensation plans and there are no Units reserved for issuance under any such plans. Security Ownership of Certain Beneficial Owners The following table sets forth as of March 31, 2022, information with respect to the Unit Holders who were known to the Trustee to be the beneficial owners of more than five percent (5.0%) of the outstanding Units. Name and Address of Beneficial Owner Number of Units Beneficially Owned Percent Nevada Capital Corporation Ltd. 20 Eglinton Avenue West, Suite 1900 Toronto ON, Canada M4R 1K8 (1) 2,415,000 5.18% The K2 Principal Fund, L.P. 2 Bloor St West, Suite 801 Toronto, Ontario, M4W 3E2 (2) 2,339,968 5.02% (1) This information was provided in a Schedule 13G filed with the SEC on December 20, 2018 by Nevada Capital Corporation, Ltd., and which stated that Nevada Capital Corporation, Ltd. beneficially holds such Units on behalf of its investment advisory clients and is deemed to have sole voting power with respect to, and the sole power to dispose or to direct the disposition of, 2,415,000 Units. 31 (2) This information was provided in a Schedule 13G filed with the SEC on January 18, 2022 by Shawn Kimel Investments, Inc., an Ontario corporation (“SKI”), The K2 Principal Fund, L.P., an Ontario limited partnership (the “Fund”), K2 Genpar 2017 Inc., an Ontario corporation and the General Partner to the Fund (“Genpar 2017”), and K2 & Associates Investment Management Inc., an Ontario corporation (“K2 & Associates”). Together SKI, the Fund, Genpar2017, and K2 & Associates are the “Reporting Persons”. The Fund is the record holder of 2,339,968 Units, and each of the Reporting Persons may be deemed to be beneficial owners of the 2,339,968 Units that are held by the Fund. Mr. Daniel Gosselin is vice president of SKI, Secretary of GenPar 2017 and President of K2 & Associates, and exercises ultimate voting and investment powers over the 2,339,968 Units that are held of record by the Fund. Security Ownership of Trustee PNC Bank, N.A. serves as agent and custodian for certain customer accounts. As of March 31, 2021, BBVA USA could be deemed to beneficially own 40,000 Units related to these accounts, or less than one percent of the outstanding Units. BBVA USA has no voting or disposal power over the 40,000 Units. BBVA USA does not have a pecuniary interest in any of these Units. Changes in Control The Trustee knows of no arrangement, including any pledge by any person of Units of the Trust, the operation of which may at a subsequent date result in a change of control of the Trust. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The Trust has no directors or executive officers; therefore, no determination been made relative to director independence. See Item 11 for the remuneration received by the Trustee during the year ended December 31, 2021 and Item 12 for information concerning Units owned by the Trustee. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table presents fees for professional audit services rendered by Weaver and Tidwell, L.L.P., the Trust’s principal accountants, for the audit of the Trust’s annual financial statements for the fiscal years ended December 31, 2021 and 2020 and fees billed for other services rendered to the Trust by Weaver and Tidwell, L.L.P. during those periods. 2021 2020 Audit Fees $ 76,350 $ 74,450 Audit-Related Fees - - Tax Fees 345 2,550 All Other Fees - - Total $ 76,875 $ 77,000 Audit Fees consist of fees billed for professional services rendered for the audit of the Trust’s annual financial statements, review of the interim financial statements included in the Trust’s quarterly reports and services that are normally provided by Weaver and Tidwell, L.L.P. in connection with statutory and regulatory filings or engagements. Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Trust’s financial statements. This category includes fees related to audit and attest services not required by statute or regulations and consultations concerning financial accounting and reporting standards. 32 Tax Fees consist of fees for professional services billed for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance. All Other Fees consist of fees billed for products and services other than the services reported above. The Trust has no directors or executive officers. Accordingly, the Trust does not have an audit committee and there are no audit committee pre-approval policies or procedures relating to services provided by the Trust’s independent accountants. Pursuant to the terms of the Indenture, the Trustee engages and approves all services rendered by the Trust’s independent accountants. PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as a part of this Annual Report on Form 10-K: Financial Statements Included in Part II of this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm Statements of Assets, Liabilities and Trust Corpus Statements of Distributable Income Statements of Changes in Trust Corpus Notes to Financial Statements Financial Statement Schedules Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. 33 Exhibits Exhibit Number 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 3, 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, 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 TexasBank, 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, incorporated herein by reference.* 4(d) Description of San Juan Basin Royalty Trust’s Securities, filed as Exhibit 4(d) to the Trust’s Annual Report on Form 10-K file with the SEC for the year ended December 31, 2019, incorporated herein by reference.* 10 Indemnification Agreement, dated May 13, 2003, with effectiveness as of July 30, 2002, by and between Lee Ann Anderson and San Juan Basin Royalty Trust, heretofore filed as Exhibit 10(a) to the Trust’s Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2003, is incorporated herein by reference.* 23 Consent of Cawley, Gillespie & Associates, Inc., reservoir engineer.** 31 Certification required by Rule 13a-14(a), dated March 31, 2022, by James R. Wilharm, Senior Vice President and Director of Trust Real Estate Services of PNC Bank, the Trustee of the Trust.** 32 Certification required by Rule 13a-14(b), dated March 31, 2022, by James R. Wilharm, Senior Vice President and Director of Trust Real Estate Services of PNC Bank, on behalf of PNC Bank, the Trustee of the Trust.*** 99.1 Independent Petroleum Engineers’ Report prepared by Cawley, Gillespie & Associates, Inc., dated March 1, 2022.** * A copy of this Exhibit is available to any Unit Holder (free of charge) upon written request to the Trustee, PNC Bank, National Association, 2200 Post Oak Blvd., Floor 18, Houston, Texas 77056. ** Filed herewith. *** Furnished herewith. 34 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) 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. PNC BANK, NATIONAL ASSOCIATION, AS TRUSTEE OF THE SAN JUAN BASIN ROYALTY TRUST By: /s/ James R. Wilharm Name: James R. Wilharm Title: Senior Vice President Director of Trust Real Estate Services Date: March 31, 2022 (The Trust has no directors or executive officers) 35