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SR

SABINE ROYALTY TRUST (SBR)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 royalty income was $19.78M, up 38% year over year (+$5.42M) and down 12% quarter over quarter (−$2.82M), driven by higher oil and gas production YoY and lower gas prices QoQ .
  • Distributable income was $19.07M and $1.31 per unit; quarterly distributions totaled $1.25 per unit (Jul $0.379040, Aug $0.450890, Sep $0.421310) .
  • Operational drivers: Q3 oil volumes 206,892 bbls and gas volumes 3,822,044 Mcf; realized prices averaged $77.55/bbl oil and $1.52/Mcf gas .
  • Near-term catalyst: subsequent October and November distributions increased sequentially ($0.435840 and $0.514350), supported by stronger August oil volumes and July gas volumes, with trustee noting ad valorem tax deductions were lower YoY in November ($167K vs $851K) .
  • No earnings call transcript and no formal guidance; Wall Street consensus via S&P Global was unavailable at the time of retrieval.

What Went Well and What Went Wrong

What Went Well

  • Higher YoY production and oil pricing: “Royalty income… increased approximately $5,419,000, or 38%,… primarily the result of an increase in both oil and natural gas production ($6.3 million) and in oil prices ($0.8 million)” .
  • Strong quarterly volumes: Oil 206,892 bbls and gas 3,822,044 Mcf in Q3, indicating sustained operational activity across properties .
  • Sequentially higher October and November distributions, reflecting improved August oil and July gas volumes; trustee highlighted lower ad valorem deductions in November vs prior year ($167K vs $851K) .

What Went Wrong

  • QoQ decline in royalty income: “Compared to the preceding quarter… decreased approximately $2,823,000, or 12%, due mainly to decreased oil and natural gas production ($1.1 million), and lower oil and natural gas prices ($2.1 million)” .
  • Gas price weakness: Realized gas price fell to $1.52/Mcf in Q3 (vs $1.99/Mcf in Q2), pressuring royalty income mix .
  • Higher G&A vs prior periods due to timing: Q3 G&A rose ~$93,700 YoY and ~$156,400 QoQ, tied to timing of unitholder services and professional fees .

Financial Results

Core Financials vs Prior Periods

MetricQ3 2023Q2 2024Q3 2024
Royalty Income ($USD Millions)$14.365 $22.607 $19.784
Distributable Income ($USD Millions)$13.727 $22.079 $19.070
Distributable Income per Unit ($)$0.94 $1.51 $1.31

Changes vs Prior Year and Prior Quarter

Change Metricvs Q3 2023vs Q2 2024
Royalty Income Change ($USD Millions)+$5.419 −$2.823
Royalty Income Change (%)+38% −12%
G&A Expense Change ($USD)+$93,700 +$156,400

KPIs (Volumes and Prices)

KPIQ3 2023Q2 2024Q3 2024
Oil Production (bbls)140,084 220,438 206,892
Gas Production (Mcf)3,061,615 3,869,375 3,822,044
Avg Realized Oil Price ($/bbl)$71.83 $78.89 $77.55
Avg Realized Gas Price ($/Mcf)$1.96 $1.99 $1.52

Distributions (Q3 months)

MonthDistribution per Unit
July 2024$0.379040
August 2024$0.450890
September 2024$0.421310
Q3 Total$1.25

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Financial GuidanceN/AN/ATrust does not issue formal guidance; monthly distributions declared Maintained (no guidance)
Monthly Distribution per UnitOctober 2024N/A$0.435840 N/A
Monthly Distribution per UnitNovember 2024N/A$0.514350 N/A
Ad Valorem Tax DeductionNovember 2024$851,000 same time last year $167,000 Lower YoY

Note: The trust operates on modified cash basis and provides monthly distribution declarations rather than formal forward guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024)Previous Mentions (Q2 2024)Current Period (Q3 2024)Trend
Commodity PricesPrices fluctuated; macro/geopolitics/weather; gas royalty timing 3 months lag; oil 2 months lag Continued volatility; detailed drivers (weather, geopolitical) Ongoing fluctuations; NYMEX oil avg May–Jul $80.57; Henry Hub Apr–Jun $1.86; as of Oct 28: oil $67.65, gas $1.83 Persistent volatility; gas weak; oil eased late Oct
Production VolumesQ1 oil 174,002 bbl; gas 3,934,950 Mcf Q2 oil 220,438 bbl; gas 3,869,375 Mcf Q3 oil 206,892 bbl; gas 3,822,044 Mcf YoY up; QoQ slightly down from Q2 peak
Distributions and ReserveMonthly distributions; expense reserve maintained Monthly distributions; reserve maintained Monthly distributions; reserve maintained Stable practice
State Tax Withholding (NM/OK)Trust processes refunds; unit holder considerations Withholding and refund process; OK exemptions pursued Withholding/refunds; unit holder filing considerations remain Ongoing administrative item
Ad Valorem TaxesTiming/seasonality referenced in distribution notes (general practice) N/ALower deduction in Nov vs prior year; timing variability noted Seasonally variable; lower YoY in Nov

Management Commentary

  • “Distributable income for the three months ended September 30, 2024, was $19,070,466, or $1.31 per unit.”
  • “Royalty income… increased approximately $5,419,000, or 38%, compared with the third quarter of 2023… primarily the result of an increase in both oil and natural gas production ($6.3 million) and in oil prices ($0.8 million), partially offset by a decrease in natural gas prices ($1.3 million) and increased production taxes, operating expenses, and ad valorem taxes ($0.4 million).”
  • “Compared to the preceding quarter… royalty income decreased approximately $2,823,000, or 12%, due mainly to decreased oil and natural gas production ($1.1 million), and lower oil and natural gas prices ($2.1 million).”
  • Trustee’s macro view: commodity prices influenced by geopolitics, weather, and demand; pricing volatility reduces predictability of future cash distributions .

Q&A Highlights

  • No earnings call or transcript was filed; analysis relies on the Form 10-Q and monthly distribution press releases .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable at the time of retrieval; therefore no vs-estimates comparison is provided.

Key Takeaways for Investors

  • Distribution sensitivity: SBR’s monthly distributions remain directly tied to realized commodity prices and volumes; Q3 distributions totaled $1.25 per unit, with sequential increases announced for October and November .
  • Mix matters: Q3 YoY was strong on production and oil price, but QoQ declined on lower production and weaker oil/gas pricing—gas price weakness remains a headwind .
  • Operational cadence: Volumes remain robust vs 2023; monitor near-term realized prices (NYMEX/Henry Hub) and ad valorem/tax timing for distribution variability .
  • Expense timing: G&A timing can cause quarterly noise; Q3 showed increases due to unitholder services and professional fees—expect periodic timing effects .
  • Trust structure: Modified cash basis and no formal guidance imply traders should focus on monthly press releases and macro price tapes for near-term positioning .
  • Near-term catalyst: November distribution was notably higher ($0.514350), supported by stronger August oil and July gas volumes; watch subsequent monthly declarations for momentum .
  • Risk monitor: Geopolitical and weather-driven price volatility, plus sustained low gas prices, are key variables for distribution trajectory .