Gas royalty income received for the three months ended March 31,
2021, related primarily to production for October through December
2020. The average price of gas reported by the Henry Hub for the
same time period was $2.27 per Mcf. The average price of gas for
the Henry Hub was $3.15 per Mcf for January through March 2021. Oil
royalty income for the three months ended March 31, 2021 related
primarily to production for November 2020 through January 2021. The
average price of oil as reported by NYMEX for that time period was
$46.68 per barrel. The average price of oil was $58.09 per barrel
for January through March 2021. As of May 3, 2021, the average
price of gas for the Henry Hub was $2.66 per Mcf and the average
price of oil reported by NYMEX was $64.46 per barrel. It is
difficult to estimate future prices of oil and gas, and any
assumptions concerning future prices may prove to be incorrect.
Interest income for the quarter ended March 31, 2021 decreased
approximately $22,300 compared with the first quarter of 2020.
Compared to the preceding quarter ended December 31, 2020, interest
income was relatively unchanged, increasing only $15. Changes in
interest income are the result of changes in interest rates and
funds available for investment.
General and administrative expenses for the quarter ended March 31,
2021 decreased by approximately $121,400 compared to the same
quarter of 2020 primarily due to decreases in legal and
professional fees of approximately $140,500 and the timing of
payment of revenue processing fees of approximately $34,300. These
decreases were offset somewhat by increases in services for
digitizing certain trust files of approximately $30,400, printing
and unitholder information services of approximately $18,100 and an
increase in Escrow Agent/Trustee fees of approximately $6,800.
Compared to the previous quarter ended December 31, 2020, general
and administrative expenses increased approximately $70,100
primarily due to increases in printing and unitholder information
services of approximately $76,800 and the timing of payment of the
New York Stock Exchange listing fee of $71,000. These increases
were offset somewhat by decreases due to the timing of payment of
revenue processing fees of approximately $31,000, a decrease in the
Escrow Agent/Trustee fees of approximately $24,900 and a decrease
due to the timing of the payment of legal and professional fees of
The financial statements of the Trust differ from financial
statements prepared in conformity with accounting principles
generally accepted in the United States of America because of the
Royalty income is recognized in the month received, pending
verification of ownership and title, rather than in the month of
Expenses other than those expected to be paid on the following
monthly record date are not accrued.
Amortization of the Royalties is shown as a reduction to Trust
corpus and not as a charge to operating results.
Reserves may be established for contingencies that would not be
recorded under accounting principles generally accepted in the
United States of America.
This comprehensive basis of accounting other than GAAP corresponds
to the accounting permitted for royalty trusts by the U.S.
Securities and Exchange Commission, as specified by Staff
Accounting Bulletin Topic 12:E, Financial Statements of Royalty
Critical Accounting Policies and Estimates
A disclosure of critical accounting policies and the more
significant judgments and estimates used in the preparation of the
Trust’s financial statements is included in Item 7 of the Trust’s
Annual Report on Form 10-K for the year ended
December 31, 2020. There have been no significant changes to
the critical accounting policies during the three months ended
March 31, 2021.
Distributable Income per Unit
Basic distributable income per Unit is computed by dividing
distributable income by the weighted average Units outstanding.
Distributable income per Unit assuming dilution is computed by
dividing distributable income by the weighted average number of
Units and equivalent Units outstanding. The Trust had no equivalent
Units outstanding for any period presented. Therefore, basic
distributable income per Unit and distributable income per Unit
assuming dilution are the same.
New Accounting Pronouncements
There are no new pronouncements that are expected to have a
significant impact on the Trust’s financial statements.