Executive Summary

Q3 2019 distribution was $0.0374 per common unit, up sequentially from $0.0323 in Q2 2019, with distributable income of $1.749M driven by 157 Mboe sales and modest administrative expenses; average realized prices were mixed with weak NGLs and gas, while production taxes benefited from prior-period refunds .
Year-over-year, modified-cash-basis Q3 results showed lower royalty income ($2.157M vs. $3.171M) and distributable income per unit ($0.0323 vs. $0.0626) on continued natural production declines and lower average price per boe ($13.83 vs. $16.10) .
The Trust received an NYSE notice of non-compliance (average closing price < $1.00) and does not plan a reverse split; units continue trading with a “.BC” designation during the six-month cure period .
Chesapeake disclosed substantial doubt about its ability to continue as a going concern if depressed commodity prices persist, a risk factor for the Trust given dependence on Chesapeake’s operations and support .
No earnings call was held; consensus estimates via S&P Global were unavailable, limiting beat/miss context for investors this quarter.

What Went Well and What Went Wrong

What Went Well

Sequential distribution increased to $0.0374 per unit, supported by total sales of 157 Mboe and very low reported administrative expenses for the production period (only $14k cash advance included in the calculation) .
Production taxes for the Jun–Aug production period were net-reduced by prior-period refunds (offsetting $129k current taxes with ~$157k refunds), aiding distributable income .
Management reaffirmed the distribution policy (substantially all cash receipts less expenses) and maintained disciplined cash-reserve building ($70k quarterly), supporting liquidity for trust operations .

What Went Wrong

Year-over-year Q3 royalty income fell 32% ($2.157M vs. $3.171M) and distributable income per unit fell 48% ($0.0323 vs. $0.0626) due to lower volumes and prices driven by natural production declines .
Average realized price per boe declined to $13.83 from $16.10, reducing royalty income by ~$354k; lower volumes reduced royalty income by ~$660k in the period-over-period analysis .
The Trust was notified by the NYSE of non-compliance with the $1.00 minimum average closing price and does not intend to attempt a reverse split, increasing listing risk near term .

Financial Results

Press-Release Distribution Metrics (Production Periods; oldest → newest)

Metric	Q4 2018 (Sep–Nov)	Q1 2019 (Dec–Feb)	Q2 2019 (Mar–May)	Q3 2019 (Jun–Aug)
Distribution per unit ($)	$0.0631	$0.0303	$0.0323	$0.0374
Distributable income ($MM)	$2.952	$1.417	$1.511	$1.749
Revenue less production taxes ($MM)	$3.122	$2.328	$2.026	$1.805
Trust administrative expenses ($MM)	$(0.063)	$(0.841)	$(0.445)	$0.014
Cash withheld for reserve ($MM)	$(0.107)	$(0.070)	$(0.070)	$(0.070)

Volumes and Realized Prices (Press Releases; oldest → newest)

Metric	Q4 2018 (Sep–Nov)	Q1 2019 (Dec–Feb)	Q2 2019 (Mar–May)	Q3 2019 (Jun–Aug)
Oil sales volumes (mbbl)	25	23	23	21
Natural gas sales volumes (mmcf)	618	546	515	558
NGL sales volumes (mbbl)	51	45	48	43
Total volumes (mboe)	179	158	156	157
Avg Oil price ($/bbl)	$61.22	$46.43	$54.68	$49.94
Avg Gas price ($/mcf)	$1.09	$1.34	$0.47	$0.55
Avg NGL price ($/bbl)	$23.02	$16.30	$14.49	$9.28

Modified Cash Basis Quarterly (10-Q) vs Prior Year

Metric	Q3 2018	Q3 2019
Royalty income ($USD Thousands)	$3,171	$2,157
Production taxes ($USD Thousands)	$212	$131
Trust administrative expenses ($USD Thousands)	$34	$445
Cash reserves withheld ($USD Thousands)	$0	$70
Distributable income ($USD Thousands)	$2,925	$1,511
Distributable income per unit ($)	$0.0626	$0.0323
Total average price received ($/boe)	$16.10	$13.83

KPIs and margins: For this royalty trust, relevant KPIs are volumes, average realized prices, production taxes per boe, and distributable income per unit. Production taxes per boe declined to $0.84 from $1.08 in Q3 on refunds; note Oklahoma’s rate increase in Q3 2018 impacted year-to-date tax per boe .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cash reserve build	Quarterly (2019)	Withhold greater of $70k or 3.5% per quarter	Maintained $70k per quarter in 2019	Maintained
Distribution policy	Ongoing	Distribute substantially all cash receipts less expenses	Policy reiterated, unchanged	Maintained
NYSE listing status	Aug 28, 2019 notice; 6-month cure	N/A	Below-compliance; cure period; no reverse split planned at this time	New risk disclosure
Chesapeake credit outlook	Next 12 months	N/A	Substantial doubt about going concern if prices persist; pursuing transactions/cost cuts	New risk disclosure

Earnings Call Themes & Trends

No earnings call transcript found for Q3 2019; the Trust typically communicates via filings and press releases [ListDocuments returned none].

Topic	Previous Mentions (Q1 & Q2 2019)	Current Period (Q3 2019)	Trend
Commodity price volatility	Q1: “Sales volumes and realized prices were both lower than initial Trust estimates.” Q2: Lower gas/NGL prices vs prior periods	Avg $/boe down YoY to $13.83; NGLs and gas particularly weak	Deteriorating
Production declines	Noted ongoing natural declines affecting distributions through 2018–2019	“Adversely affected… due to natural declines… expects production to continue to decline”	Deteriorating
Administrative expenses timing	Q1/Q2 included large cash advances (negative expenses) impacting quarter-to-quarter distributions	Q3 production-period calc shows only $14k admin in distribution computation; 10-Q shows $445k in quarter due to timing	Mixed/volatile
Taxes and refunds	Oklahoma production tax rate increased in Q3 2018; Q1/Q2 normal taxes	Q3 benefited from refunds offsetting current taxes; taxes/boe down	Improving (near-term)
Listing/compliance	N/A	NYSE notice of non-compliance; cure period active; “.BC” flag	New negative
Chesapeake credit risk	N/A	Going-concern doubt disclosed by Chesapeake if low prices persist	New negative

Management Commentary

“The Trust’s revenues and distributable income available to unitholders have been adversely affected to date in 2019 and throughout 2018 due to natural declines in production. The Trust expects production to continue to decline and expects distributable income to continue to be adversely affected.” .
“On November 5, 2019, the Trust declared a cash distribution of $0.0374 per common unit… consisting of proceeds attributable to production from June 1, 2019 to August 31, 2019.” .
Production taxes in the Q3 distribution calculation included $129,156 current taxes offset by ($157,062) prior-period tax refunds (2010–2017), reducing net taxes .
“The Trustee began withholding the greater of $70,000 or 3.5%… each quarter to gradually increase existing cash reserves by a total of approximately $850,000.” .
“The Trust was notified by the NYSE… not in compliance… average closing price less than $1.00… neither the Trust nor the trustee intends to attempt to cause a reverse split… at this time.” .
Chesapeake “disclosed… substantial doubt about its ability to continue as a going concern” if commodity prices persist; it is “actively pursuing… transactions and cost-cutting measures” .

Q&A Highlights

No analyst Q&A; the Trust did not host an earnings call this quarter. Key clarifications came via filings: NYSE non-compliance status and cure period, cash reserve policy, and Chesapeake’s going-concern disclosure .

Estimates Context

Wall Street consensus estimates (EPS, revenue, target price) via S&P Global/Capital IQ were unavailable for CHKR for Q3 2019; the Trust has limited analyst coverage and does not report EPS in the conventional sense. As a result, beat/miss analysis versus consensus cannot be provided this quarter.

Key Takeaways for Investors

Sequential improvement: Q3 distribution rose to $0.0374 per unit as admin costs in the distribution calculation were minimal and production taxes benefited from refunds, partially offsetting weak commodity prices .
Structural headwind: Ongoing natural production declines and lower average price per boe remain the primary drag on royalty income and future distributions; management expects declines to continue .
Liquidity discipline: The Trustee is consistently withholding $70k per quarter to build reserves toward ~$850k, supporting administrative liquidity amid volatile receipts .
Listing risk: The NYSE non-compliance notice introduces potential delisting risk if the unit price does not meet the $1.00 thresholds during the cure period; no reverse split is planned .
Counterparty risk: Chesapeake’s going-concern disclosure elevates risk to the Trust’s operations and payments if commodity weakness persists; monitor Chesapeake’s cost-cut and financing updates .
Trading implication: Near-term unit moves likely hinge on distribution cadence, NYSE compliance milestones, and Chesapeake credit headlines rather than fundamental “beats” given absence of consensus estimates .
Medium-term thesis: Expect continued decline in distributions due to production decline unless commodity prices materially improve or prior-period tax/expense timing provides temporary relief; the reserve build adds resilience but does not offset structural decline .

CHESAPEAKE GRANITE WASH TRUST (CHKR)·Q3 2019 Earnings Summary