Executive Summary

Q1 2025 royalty income was $110,963, with distributable income available for distribution of $61,606 ($0.0331 per unit); monthly distributions were $0.0005 (Jan), $0.0024 (Feb), and $0.0302 (Mar) . The Trust’s Q1 2025 per‑unit payout is down versus Q1 2024 ($0.0617 per unit) alongside lower royalty income ($183,657 in Q1 2024) .
Hilcorp (San Juan Basin – New Mexico) was the sole contributor to Q1 royalty income; Hugoton and San Juan Basin – Colorado contributed zero due to expenses exceeding revenues and continued deficit/true‑up recovery by Simcoe .
The Trustee reiterated plans to raise the Contingent Reserve to $2.0 million, cautioning that distributions are expected to be materially reduced until that target is reached .
Excess production costs rose to $896,946 at March 31, 2025, a headwind to future distributions that must be recovered before royalty payments resume from impacted properties .

What Went Well and What Went Wrong

What Went Well

Operating costs at Hugoton decreased ~11% YoY in Q1 (to $487,403 from $550,033), driven primarily by lower compressor repair costs .
San Juan Basin – New Mexico operating costs fell ~3% YoY (to $249,267 from $258,275) and capital expenditures fell ~61% YoY (to $25,258 from $65,046), reflecting reduced project activity .
The Trustee affirmed it will continue allocating a portion of its fees to meet the minimum interest rate payable under the Trust Indenture when market rates are insufficient (“the Trustee intends to allocate certain of its fees due to the Trust to meet the minimum interest rate payable under the Trust Indenture”) .

What Went Wrong

YoY royalty income declined (Q1 2025 $110,963 vs Q1 2024 $183,657), primarily due to lower pricing and net production for gas, NGLs, and oil/condensate; operating expenses rose in certain categories, partially offset by lower gas operating and capex .
Hugoton and San Juan Basin – Colorado generated no royalty income in Q1, with Hugoton’s expenses exceeding revenues and Simcoe withholding Net Proceeds to recover prior joint interest billing adjustments, keeping the Trust in deficit on Colorado properties .
Excess production costs increased to $896,946 (Mar 31, 2025) from $793,838 (Dec 31, 2024), reinforcing the need for recovery before distributions can resume from affected properties .

Financial Results

Quarterly comparables (oldest → newest)

Metric	Q2 2024	Q3 2024	Q1 2025
Royalty income ($)	$305,372	$63,966	$110,963
Interest income ($)	$24,417	$25,887	$20,161
General & administrative ($)	$(59,138)	$(52,258)	$(49,693)
Distributable income available for distribution ($)	$209,742	$10,314	$61,606
Distributable income per unit ($)	$0.1125	$0.0055	$0.0331
Units outstanding	1,863,590	1,863,590	1,863,590

Year-over-year (Q1)

Metric	Q1 2024	Q1 2025
Royalty income ($)	$183,657	$110,963
Interest income ($)	$24,228	$20,161
General & administrative ($)	$(46,192)	$(49,693)
Distributable income available for distribution ($)	$114,987	$61,606
Distributable income per unit ($)	$0.0617	$0.0331

Segment breakdown (Q1 2025)

Segment	Royalty Income ($)	Operating Costs ($)	Capital Expenditures ($)
Hugoton (KS)	$0	$487,403	$(432)
San Juan – Colorado	$0	$29,225	$0
San Juan – New Mexico	$110,963	$249,267	$25,258

KPIs

KPI	Prior	Current
Excess production costs ($)	$793,838 (Dec 31, 2024)	$896,946 (Mar 31, 2025)
Contingent Reserve balance ($)	$1,762,256 (Mar 31, 2024)	$1,891,418 (Mar 31, 2025)
Monthly per‑unit distributions (Q1 2025)	Jan: $0.000453223 ; Feb: $0.002429966 ; Mar: $0.030174584	Total: $0.0331

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Contingent Reserve target ($)	2025	Intent to raise to $2.0M (communicated in prior periods)	Intent to raise to $2.0M reaffirmed	Maintained
Contingent Reserve balance ($)	Mar 31, 2025	$1,872,026 (Dec 31, 2024 context)	$1,891,418	Increased
Distributions	Ongoing	N/A	“Distributions… expected to be materially reduced, until the Trust increases its cash reserves to a total of $2.0 million.”	New/maintained caution

Earnings Call Themes & Trends

Mesa Royalty Trust does not publish earnings call transcripts; themes below are drawn from Q2–Q3 2024 and Q1 2025 filings.

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q1 2025)	Trend
Tariffs/macro volatility	OPEC+, rates, inflation, supply disruptions cited as cost drivers and demand risks	Continued volatility; U.S. tariffs and retaliations referenced; macro uncertainty expected to pressure expenses and royalty income	Persistent macro headwinds
Operator true‑ups/deficits	Simcoe true‑ups (2020–22) and joint interest billing adjustments keeping CO in deficit; Hilcorp estimate true‑ups	CO remained in deficit; no royalty income from Simcoe; Trust engaged with operators on Net Proceeds reviews	Ongoing reconciliation, timing risk
Distribution policy/reserves	Plan to build Contingent Reserve to $2.0M; cash withholding affects payouts	Reserve build reaffirmed; distributions cautioned to be materially reduced until target reached	Continued reserve accumulation
Property performance	Hugoton: expenses > revenues, no royalty income	Same pattern in Q1 2025; lower Hugoton costs YoY but still negative	Hugoton remains non‑contributing
Interest rate mechanics	Trustee to allocate fees to meet minimum interest rate when unavailable	Same mechanism applied in Q1	Structural, continuing practice

Management Commentary

“Distributions to unitholders are expected to be materially reduced, until the Trust increases its cash reserves to a total of $2.0 million in order to provide added liquidity.” (Jan/Feb/Mar releases) .
“The Trustee intends to increase the Contingent Reserve to a total of $2.0 million,” with monthly additions determined at the Trustee’s discretion .
The Trustee will “allocate certain of its fees due to the Trust to meet the minimum interest rate payable under the Trust Indenture” when the market rate is unavailable .

Q&A Highlights

No earnings call or transcript was available for Q1 2025; the Trust communicates via SEC filings and monthly press releases .

Estimates Context

S&P Global/Capital IQ consensus coverage for MTR appears unavailable: no EPS, target price, or recommendation data returned, and no revenue consensus series to compare; consequently, no estimate beat/miss analysis is possible for Q1 2025. Values retrieved from S&P Global.*

Key Takeaways for Investors

Q1 2025 distributions totaled $0.0331 per unit (Jan–Mar), down from $0.0617 in Q1 2024, reflecting lower royalty income and ongoing reserve build . Monthly payouts were $0.00045 (Jan), $0.00243 (Feb), and $0.03017 (Mar) .
Hilcorp (San Juan NM) remains the sole source of royalty income; Hugoton and San Juan CO produced no royalty income due to expenses exceeding revenues and continued deficit/true‑up recovery by Simcoe .
The Trustee is prioritizing liquidity, targeting a $2.0M Contingent Reserve (balance $1.891M at Mar 31); expect “materially reduced” near‑term distributions until that level is achieved .
Excess production costs increased to $896,946 at Mar 31, 2025 (from $793,838 at Dec 31, 2024), implying future Net Proceeds from affected properties will first be applied to recover these balances .
Macro factors (tariffs, OPEC+ actions, rates, supply chain) are cited as elevating operating costs and contributing to natural gas price volatility that can suppress Net Proceeds and distributions .
Structural risks persist: termination could occur if annual royalty income is below $250,000 for two successive years; continued non‑contribution from Hugoton/Colorado increases that sensitivity .
Operator adjustments (true‑ups and joint interest billing) and fixed-price contracts (Colorado) create variability and can delay or dampen Net Proceeds to the Trust, affecting payout timing .

Notes:
* Values retrieved from S&P Global.

MESA ROYALTY TRUST/TX (MTR)·Q1 2025 Earnings Summary