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EM

ECA Marcellus Trust I (ECTM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 distributable income was $0.3457M ($0.020 per unit), supported by royalty income of $0.6616M, with $0.090M withheld for cash reserves; G&A expenses were ~$0.229M .
  • Pricing was the key driver: average realized price rose to $1.58/Mcf (from $0.88/Mcf YoY), while volumes fell 11.2% to 418 MMcf and post‑production costs increased to $0.71/Mcf; net income margin expanded to 52.3% .
  • Firm transportation cost headwinds moderated after FERC approved a settlement rate of $0.4376/MMBtu (vs initial $0.725/MMBtu proposal), with refunds expected for April–May 2025; impact to the Trust is “not expected to be material” .
  • Trailing four‑quarter gross proceeds were ~$3.6M, comfortably above the $1.5M early‑termination threshold—an important support for the unit narrative near‑term .

What Went Well and What Went Wrong

What Went Well

  • Realized pricing recovery: average realized price increased to $1.58/Mcf in Q3 2025 vs $0.88/Mcf YoY, driven by higher NYMEX ($3.06/MMBtu vs $2.15/MMBtu) despite a wider negative basis; “average sales price… increased… to $2.29/Mcf” before post‑production costs .
  • Distribution maintained: the Trust declared $0.020 per unit for Q3 2025, consistent with Q2, while continuing to build the cash reserve ($90,000 withheld) .
  • Early‑termination buffer: “gross proceeds… totaled approximately $3.6 million for the four consecutive quarters ended September 30, 2025,” above the $1.5M termination trigger .

What Went Wrong

  • Volume decline: production decreased 11.2% YoY to 418 MMcf due to normal declines, pressuring royalty volumes .
  • Cost headwinds: average post‑production costs increased to $0.71/Mcf from $0.65/Mcf YoY, primarily from higher firm transportation tariffs .
  • Basis widened: average negative basis moved to −$0.84/MMBtu from −$0.67/MMBtu YoY, offsetting some NYMEX price benefit .

Financial Results

Core financials vs prior quarters

MetricQ1 2025Q2 2025Q3 2025
Revenue / Royalty Income ($USD)$1,278,647*$878,516*$661,621
Net Income / Distributable Income ($USD)$911,520 $345,074 $345,734
EPS (Diluted; $/unit)$0.0518 $0.0196 $0.0200
Net Income Margin (%)71.29*39.28*52.26 [GetFinancials]

Values marked with * retrieved from S&P Global.

Year-over-year

MetricQ3 2024Q3 2025
Revenue / Royalty Income ($USD)$412,587 $661,621
Net Income / Distributable Income ($USD)$85,484 $345,734
EPS (Diluted; $/unit)$0.0049 $0.0200
Net Income Margin (%)20.72 [GetFinancials]52.26 [GetFinancials]

Values without citations retrieved from S&P Global.

KPIs and operating metrics

KPIQ3 2024Q3 2025
Production (MMcf)471 418
Avg Realized Price ($/Mcf)$0.88 $1.58
Avg Sales Price pre PPC ($/Mcf)$1.53 $2.29
NYMEX Weighted Avg ($/MMBtu)$2.15 $3.06
Basis ($/MMBtu)−$0.67 −$0.84
Avg Post‑Production Costs ($/Mcf)$0.65 $0.71
G&A Expense ($USD)$239,921 $229,274
Cash Reserves Withheld ($USD)$90,000 $90,000
Distribution per Unit ($)$0.005 $0.020

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Distribution per UnitQ2 → Q3 2025$0.020 per unit (Q2 actual) $0.020 per unit (Q3 declared) Maintained
Cash Reserve PolicyOngoingContinue withholding $90,000/quarter until ~$3.8M target reached (policy in place since 2022/2021 update) Withheld $90,000 in Q3; cumulative ~$2.6M + $0.3M interest reserved by 9/30/25 Maintained; progress update
Firm Transportation Tariff (Columbia)Apr 1, 2025–Mar 31, 2026Initial rate charged ~$0.725/MMBtu (subject to refund) Settlement rate $0.4376/MMBtu; small refunds expected for Apr–May 2025, “not expected to be material” Lowered vs initial increase; refunds pending
Early Termination Threshold (4Q gross proceeds)Trailing 4Q to 9/30/25Threshold $1.5M Actual ~$3.6M; above threshold Status: Above threshold

Earnings Call Themes & Trends

No earnings call transcript was filed for Q3 2025; the Trust typically communicates via 8‑K and 10‑Q filings rather than calls [ListDocuments result: no earnings-call-transcript].

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3 2025)Trend
Distribution Policy & Cash ReservesOngoing withholding of $90k/quarter; Q1 distribution $0.052; Q2 distribution $0.020 Q3 distribution $0.020; $90k withheld; cumulative reserve ~$2.6M + $0.3M interest Policy maintained; reserves building steadily
Natural Gas PricingCaution on volatility and its effect on proceeds in press releases Realized price up to $1.58/Mcf; NYMEX $3.06/MMBtu Pricing recovery YoY
Volumes/DeclineNormal declines highlighted historically Production down 11.2% YoY to 418 MMcf Continued decline
Post‑Production & Transportation CostsStanding fees and tariffs referenced Post‑production costs rose to $0.71/Mcf; FERC settlement moderates tariff vs initial increase Mixed: elevated costs but tariff settled lower
Early Termination ThresholdStructural risk flagged in filings Trailing gross proceeds ~$3.6M vs $1.5M threshold Buffer improved

Management Commentary

  • “Gross proceeds… totaled approximately $3.6 million for the four consecutive quarters ended September 30, 2025… Future volumes or realized pricing or both may not be sufficient to maintain… in excess of $1.5 million” .
  • “The average price realized… increased $0.70 per Mcf to $1.58 per Mcf… average sales price… increased… to $2.29 per Mcf… partially offset by an increase in… post‑production costs” .
  • “Production decreased 11.2%… primarily due to normal production declines” .
  • “The Trustee… plans to continue to withhold $90,000 per quarter until a total of approximately $3.8 million in cash reserves is withheld” .
  • “FERC… settlement… $0.4376 per MMBtu… refunds… for April and May 2025… not expected to be material” .

Q&A Highlights

No analyst Q&A was held for Q3 2025; the Trust did not file an earnings call transcript [ListDocuments result: no earnings-call-transcript].

Estimates Context

  • S&P Global consensus estimates were unavailable for EPS and revenue; no active coverage was returned for Q1–Q3 2025. Actuals are shown in the financial tables above. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q3 distribution maintained at $0.020/unit, underpinned by pricing recovery; unit support further aided by trailing four‑quarter proceeds above the early‑termination threshold .
  • Operating leverage to gas prices remains high: NYMEX uplift drove realized price gains, but negative basis widening and higher post‑production costs muted some benefits .
  • Transportation tariff risk has eased vs initial 2025 hike due to FERC settlement ($0.4376/MMBtu) with refunds expected; cost headwinds persist but are more manageable .
  • Volumes continue to decline as expected for mature wells (−11.2% YoY), reinforcing that distributions will remain sensitive to price rather than growth .
  • Cash reserve build continues ($90k/quarter; ~$2.6M + ~$0.3M interest accumulated by 9/30/25), supporting administrative liquidity even through weak price periods .
  • Near‑term trading implication: watch Henry Hub and regional basis volatility—pricing momentum is the primary driver for distributable income; tariff refunds could offer a modest tailwind .
  • Medium‑term thesis: structural decline in volumes and cost inflation argue for cautious distribution expectations; key risk remains sustained low prices that could pressure proceeds toward the early‑termination threshold .

Sources

  • Q3 2025 8‑K and press release: $0.020 distribution; $90k reserve withholding; policy details .
  • Q3 2025 10‑Q: financial statements; pricing/volume/cost drivers; FERC settlement; termination threshold; distributions; reserves .
  • Prior quarters press releases: Q2 ($0.020); Q1 ($0.052) distributions and reserve policy .

Values marked with * retrieved from S&P Global.