Executive Summary

Q3 2025 royalty income totaled $0.129M, and distributions per unit summed to $0.0386, a sharp sequential decline versus Q2 2025’s $0.0946 per unit. All Q3 proceeds were from Hilcorp’s San Juan Basin (New Mexico) properties, with no income from Hugoton or Colorado due to excess production costs and operator true-ups .
Distributions are expected to be materially reduced until the Trustee increases cash reserves to $2.0M (Contingent Reserve was $1.91M at 6/30/25) .
October distribution improved to $0.018350966 per unit (payable Jan 30, 2026), signaling some recovery after September’s trough but remains subject to reserve funding and operator adjustments .
No earnings call was held in Q3, and Wall Street consensus coverage (EPS, EBITDA, target price, recommendation) was unavailable, limiting beat/miss analysis [GetEstimates].

What Went Well and What Went Wrong

What Went Well

October distribution per unit increased to $0.018350966 (payable Jan 30, 2026), up from September’s $0.001723157, indicating sequential improvement after Q3’s weak end .
The Trust continued to receive payments from Hilcorp’s New Mexico properties (San Juan Basin), which provided 100% of Q3 receipts, underscoring the importance of this operator and region .
Trustee reiterated actions to bolster liquidity via reserve build (“distributions to unitholders are expected to be materially reduced, until the Trust increases its cash reserves to a total of $2.0 million”), providing clarity on near-term cash priorities .

What Went Wrong

Q3 distributions per unit fell sharply q/q to $0.0386 versus $0.0946 in Q2 due to lower receipts and ongoing reserve funding and operator cost recovery dynamics, including true-ups and excess production costs .
No income was received from Hugoton (Scout) or San Juan Basin–Colorado (Simcoe/Red Willow) in Q3; accumulated excess production costs and joint interest billing true-ups continue to suppress non-New Mexico contributions .
Volatility in commodity prices and operator adjustments (true-ups, cost recoveries) remain direct headwinds to proceeds and distributions, as repeatedly cautioned by the Trustee in press releases and the 10-Q .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Royalty Income (“Revenues”) ($USD)	$110,963	$220,855	$128,992 (sum of $80,962 July + $28,001 Aug + $20,029 Sept)
Net Income - (IS) ($USD)	$80,999	$195,817	$88,894*
Distributable Income per Unit (paid) ($USD)	$0.0331	$0.0946	$0.0386 (0.027480528 + 0.009431485 + 0.001723157)
Net Income Margin %	61.977%*	81.1505%*	59.2038%*

Values marked with * retrieved from S&P Global.

Segment breakdown (Q3 2025 monthly detail):

Source / Month	July 2025	August 2025	September 2025	Q3 Total
Hilcorp – San Juan Basin (New Mexico): Trust Received ($USD)	$80,962	$28,001	$20,029	$128,992
Hugoton (Scout): Trust Received ($USD)	$0	$0	$0	$0
San Juan Basin – Colorado (Simcoe/Red Willow): Trust Received ($USD)	$0	$0	$0	$0

KPIs (distributions and net profits):

KPI	July 2025	August 2025	September 2025	October 2025 (post-Q3)
Distribution per Unit ($)	$0.027480528	$0.009431485	$0.001723157	$0.018350966
Income from Distributable Net Profits ($USD)	$51,212	$17,576	$3,211	$34,199
Record Date	Jul 31, 2025	Aug 29, 2025	Sep 30, 2025	Oct 31, 2025
Payable Date	Oct 31, 2025	Oct 31, 2025	Oct 31, 2025	Jan 30, 2026

Liquidity and reserves (for context):

Metric	Q1 2025	Q2 2025
Contingent Reserve Balance ($USD)	$1,891,418	$1,910,899
Trustee’s stated target	Increase reserve to $2.0M	Increase reserve to $2.0M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Contingent Reserve target	2025	Trustee intends to increase reserve to $2.0M	Distributions expected to be materially reduced until the reserve reaches $2.0M; Trustee continues to increase reserve	Maintained (emphasis repeated)
Distribution cadence	Ongoing	Cash distributions made quarterly in Jan/Apr/Jul/Oct; include interest earned to distribution date	Same; dates confirmed for Q3 distributions payable Oct 31 and October distribution payable Jan 30, 2026	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Tariffs/macro/commodity volatility	Trustee highlighted tariff uncertainty, OPEC+ actions, geopolitical risks, inflation, and high rates; expected adverse impact on royalty income and distributions	Press releases reiterate proceeds/distributions directly affected by industry volatility	Unchanged; persistent macro headwinds
Operator true-ups and excess production costs	Simcoe true-ups keep CO in deficit; no income from Scout/CO; Hilcorp reconciliations may reduce future Net Proceeds	Q3 receipts solely from Hilcorp NM; no income from Hugoton/CO	Ongoing constraint outside NM
Reserve policy/liquidity	Plan to increase reserve to $2.0M; reserve balances rising	Reiterated “materially reduced” distributions until reserve reaches $2.0M	Continued reserve build suppresses payouts
Regional contribution (NM vs KS/CO)	Q1/Q2: income solely from NM; none from KS/CO -	Q3: 100% from NM; none from KS/CO	Stable pattern: NM-only

Note: No Q3 earnings call or transcript was filed; Trust typically does not host calls [ListDocuments].

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.” (Press releases, reiterated monthly) .
“The amount of the proceeds, if any, received or expected to be received by the Trust (and its ability to pay distributions to unitholders) has been and will continue to be directly affected, among other things, by volatility in the industry and revenues and expenses reported to the Trust by working interest owners.” .
“The Trustee intends to increase the Contingent Reserve to a total of $2.0 million.” (10-Q) .
“The Trust is engaged with [operators] in reviewing the amount of Net Proceeds in past and current periods.” (Scout/Hugoton; Simcoe/CO; Hilcorp/NM) .

Q&A Highlights

No Q3 earnings call or Q&A session was filed; no live guidance clarifications available [ListDocuments].

Estimates Context

S&P Global consensus coverage for Q3 2025 was unavailable for EPS, EBITDA, target price, and recommendation; revenue “consensus” detail did not provide a usable estimate baseline for beat/miss analysis. Values retrieved from S&P Global.

Key Takeaways for Investors

Q3 proceeds were concentrated entirely in Hilcorp’s San Juan Basin (NM); non-NM sources remain constrained by excess production costs and operator true-ups, limiting diversification of distributions .
Distributions are structurally suppressed until the reserve reaches $2.0M; expect continued payout pressure despite intermittent month-to-month improvements (e.g., October) .
Sequential declines in Q3 distributions per unit versus Q2 reflect lower receipts and continued reserve funding; traders should watch monthly releases for changes in operator payments and reserve actions .
Any resolution of Simcoe’s joint interest billing true-ups or reduction of excess production costs at Hugoton could unlock incremental proceeds; monitor Trustee updates and 10-Q disclosures .
Macro volatility in natural gas/oil pricing and the Trustee’s reliance on operator-reported data remain key narrative drivers; allocation decisions should incorporate commodity sensitivity and potential operator adjustments .
Near-term trading: consider monthly distribution momentum and signs of stabilization or recovery (October uptick) versus ongoing reserve build; medium-term thesis hinges on normalization of operator reconciliations and commodity price support .
Absence of consensus coverage and earnings calls reduces visibility; rely on SEC filings and monthly press releases for updates to proceeds and distribution trajectory [ListDocuments].

S&P Global disclaimer: Where noted with *, values were retrieved from S&P Global.

MESA ROYALTY TRUST/TX (MTR)·Q3 2025 Earnings Summary