What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-31 · 53 added, 58 removed, 77 unchanged (59% of the section changed)

36 unchanged sentences

from the San Juan Basin heavily influences the amount of Trust income available for distribution to the Unit Holders by the Trust and, by extension, the price of the Units.

However, due to a variety of reasons, the market price index for natural gas

produced from the San Juan basin does not completely align with the market price paid to Hilcorp.

In addition, the market price paid for natural gas is seasonal because there is greater demand for natural gas used for heating purposes in the winter

months and more energy requirements for air conditioning in the summer months than during the rest of the year.

The primary function of the Trustee is to collect the Royalty Income, to pay all expenses and charges of the Trust and to distribute the

remaining available income to the Unit Holders.

The Trust received approximately $37.6 million and $8.8 million in Royalty Income from Hilcorp in each of the fiscal years ended December 31, 2021 and 2020, respectively.

After deducting

administrative expenses and accounting for interest income and any change in cash reserves, the Trust distributed approximately $36 million and $7.4 million to Unit Holders in each of the fiscal years ended December 31, 2021 and 2020,

respectively.

The Trusts corpus was approximately $3.7 million and $5.1 million as of December 31, 2021 and 2020, respectively.

Proceeds from production in the first month are generally received by Hilcorp in the second month, the Royalty Income is paid by Hilcorp to

the Trustee in the third month, and distribution by the Trustee to the Unit Holders is made in the fourth month.

Unit Holders of record as of the last business day of each month (the monthly record date) will be entitled to receive the

calculated monthly distribution amount for such month on or before ten business days after the monthly record date.

The amount of each monthly distribution will generally be determined and announced ten days before the monthly record date.

aggregate monthly distribution amount is the excess of (i) the Royalty Income paid to the Trustee, plus any decrease in cash reserves previously established for liabilities and contingencies of the Trust, over (ii) the expenses and

payments of liabilities of the Trust, plus any net increase in cash reserves.

The Trustee may, in its sole discretion, establish a cash

reserve for payment of Trust liabilities that are contingent or uncertain or otherwise not currently due and payable.

The market price paid for natural gas is seasonal because there is greater

demand for natural gas used for heating purposes in the winter months and more energy requirements for air conditioning in the summer months than during the rest of the year.

The primary function of the

Trustee is to collect the Royalty Income, to pay all expenses and charges of the Trust and to distribute the remaining available income to the Unit Holders.

The Trust received approximately $79.0 million and $37.6 million in Royalty Income

from Hilcorp in each of the fiscal years ended December 31, 2022 and 2021, respectively.

After deducting administrative expenses and accounting for interest income and any change in cash reserves, the Trust distributed approximately

$77.6 million and $36 million to Unit Holders in each of the fiscal years ended December 31, 2022 and 2021, respectively.

The Trusts corpus was approximately $3.0 million and $3.7 million as of December 31, 2022

and 2021, respectively.

Proceeds from production in the first month are generally received by Hilcorp in the second month, the Royalty

Income is paid by Hilcorp to the Trustee in the third month, and distribution by the Trustee to the Unit Holders is made in the fourth month.

Unit Holders of record as of the last business day of each month (the monthly record date) will

be entitled to receive the calculated monthly distribution amount for such month on or before ten business days after the monthly record date.

The amount of each monthly distribution will generally be determined and announced ten days before the

monthly record date.

The aggregate monthly distribution amount is the excess of (i) the Royalty Income paid to the Trustee, plus any decrease in cash reserves previously established for liabilities and contingencies of the Trust, over

(ii) the expenses and payments of liabilities of the Trust, plus any net increase in cash reserves.

The Trustee may, in its sole discretion, establish a cash reserve for payment of Trust

liabilities that are contingent or uncertain or otherwise not currently due and payable.

As of December 31, 2022, the Trustee had established cash reserves of $1.0 million.

In August 2021, the Trust utilized

cash reserves of $150,148 to pay Trust administrative expenses.

The Trustee replenished the cash reserves by $150,148 in September 2021 to bring the cash reserve balance to the previously established amount of $1.0 million.

does not anticipate any increase or decrease to the cash reserves in 2022.

Cash being held by the Trustee as cash reserves or pending

distribution may be placed, in the Trustees discretion, in obligations issued by (or unconditionally guaranteed by) the United States or any agency thereof, repurchase agreements secured by obligations issued by the United States or any agency

thereof, certificates of deposit of banks having capital, surplus and undivided profits in excess of $50 million or money market funds that have been rated at least AAm by Standard & Poors and at least Aa by Moodys,

subject, in each case, to certain other qualifying conditions.

The Trustee does not anticipate any increase or decrease to the

cash reserves in 2023.

Cash being held by the Trustee as cash reserves or pending distribution may be placed, per the Trustees

discretion, in obligations issued by (or unconditionally guaranteed by) the United States or any agency thereof, repurchase agreements secured by obligations issued by the United States or any agency thereof, certificates of deposit of banks having

capital, surplus and undivided profits in excess of $50.0 million or money market funds that have been rated at least AAm by Standard & Poors and at least Aa by Moodys, subject, in each case, to certain other qualifying

Currently, such funds are placed in interest-bearing money market accounts.

The other powers and duties of the Trustee are set forth in the Indenture and include the prosecution and defense of claims by and against the

Trust, the engagement of consultants and professionals and the payment of Trust liabilities.

If the Trustee determines that the Trust does not have sufficient funds to pay its 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 from the Unit Holders 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 if it

determines such a sale is in the best interest of the Unit Holders.

The Trust does not operate the Subject Interests and is not empowered to carry on any business activity.

The other powers and duties of the Trustee are

set forth in the Indenture and include the prosecution and defense of claims by and against the Trust, the engagement of consultants and professionals and the payment of Trust liabilities.

If the Trustee determines that the Trust does not have

sufficient funds to pay its 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 from the Unit Holders 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 if it determines such a sale is in the best interest of the Unit Holders.

The Trust does not operate the Subject Interests and is not empowered to carry on any

business activity.

The Trust has no employees, officers, or directors.

All administrative

functions of the Trust are performed by the Trustee.

Under the Indenture, the Trustee may act in its discretion in carrying out its

powers and performing its duties and is liable only for fraud or for acts and omissions in bad faith.

The Trustee is not liable for any act or omission of its agents or employees unless the Trustee acted in bad faith in its selection and retention

of such agents or employees.

The Indenture provides that the Trustee and its officers, agents and employees must be indemnified and receive reimbursement of expenses from the assets of the Trust for liabilities and claims incurred in the

administration of the Trust, except for liabilities and claims arising from the Trustees fraud or bad faith.

All administrative functions of the Trust are performed by the Trustee.

Under the Indenture, the Trustee may act in its discretion in carrying out its powers and performing its duties and is liable only for fraud

or for acts and omissions in bad faith.

The Trustee is not liable for any act or omission of its agents or employees unless the Trustee acted in bad faith in its selection and retention of such agents or employees.

The Indenture provides that the

Trustee and its officers, agents and employees must be indemnified and receive reimbursement of expenses from the assets of the Trust for liabilities and claims incurred in the administration of the Trust, except for liabilities and claims arising

from the Trustees fraud or bad faith.

The Trust has no employees, directors, or executive officers, and thus does not have a

27 unchanged sentences

The Trust does not have insurance or indemnification to protect against losses or delays in receiving proceeds from such events.

also is responsible, subject to the terms of an agreement with the Trust, for marketing the 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.

Additionally, Hilcorp is obligated under the Conveyance to maintain books and records sufficient to determine the amounts payable to the Trustee.

Hilcorp is responsible, subject to the terms of an agreement with the Trust, for marketing

the 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.

Additionally, Hilcorp is obligated under the

Conveyance to maintain books and records sufficient to determine the amounts payable to the Trustee.

Additional Information

The principal

office of the Trust is located at 2200 Post Oak Blvd., Floor 18, Houston, Texas 77056 (toll-free telephone number (866) 809-4553).

The Trust makes available (free of charge) its annual, quarterly and current

reports (and any amendments thereto) filed with the SEC through its website at www.sjbrt.com as soon as reasonably practicable after electronically filing or furnishing such material with or to the SEC.

The Trusts materials filed with

the SEC are available at the SECs internet site, www.sec.gov .

This site contains reports and,

as applicable, proxy and information statements, and other information regarding the Trust and other issuers that file electronically with the SEC.

The principal office of the Trust is located at 2200 Post Oak Blvd., Floor 18, Houston, Texas 77056 (toll-free telephone number 866-809-4553).

The Trust makes available (free of charge) its annual, quarterly, and current reports (and any amendments thereto) filed with the SEC through its website at

www.sjbrt.com as soon as reasonably practicable after electronically filing or furnishing such material with or to the SEC.

The Trusts materials filed with the SEC are available at the SECs internet site, www.sec.gov .

site contains reports and, as applicable, proxy and information statements, and other information regarding the Trust and other issuers that file electronically with the SEC.

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, 2200 Post Oak Blvd., Floor 18, Houston, Texas 77056 (toll-free telephone number (866) 809-4553, email

The Trustee, 2200 Post Oak Blvd., Floor 18, Houston, Texas 77056 (toll-free telephone number

866-809-4553, email address:

sjt@pnc.com ), 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.

Regulations governing the information reporting requirements of the Trust as a WHFIT and a NMWHFIT.

The tax information is generally posted by the Trustee on the Trusts website:

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business