Gas royalty income received for the three months ended September 30, 2021, related
primarily to production for April through June 2021. The average price of gas reported by the Henry Hub for the same time period was $2.66 per Mcf. The average price of gas for the Henry Hub was $3.25 per Mcf for January through September 2021. Oil
royalty income for the three months ended September 30, 2021 related primarily to production for May through July 2021. The average price of oil as reported by NYMEX for that time period was $69.78 per barrel. The average price of oil was
$65.05 per barrel for January through September 2021. As of November 1, 2021, the average price of gas for the Henry Hub was $4.70 per Mcf and the average price of oil reported by NYMEX was $84.08 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
September 30, 2021 was relatively unchanged compared with the third quarter of 2020. Compared to the preceding quarter ended June 30, 2021, interest income was relatively unchanged as well. Interest income for the nine months ended
September 30, 2021 decreased approximately $25,000 over the same time period in 2020. 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 September 30, 2021 decreased by approximately $84,200 compared to the same
quarter of 2020 primarily due to a decrease in the Escrow Agent/Trustee fees of approxmately $63,900 and due to the timing of payment of legal and professional services of approximately $84,600. These decreases were offset somewhat by an increase in
printing and unitholder services of approximately $64,400.
Compared to the previous quarter ended June 30, 2021, general and
administrative expenses decreased approximately $80,900 primarily due to decreases in the Trustee/Escrow Agent fees of approximately $88,400 and the timing of payment of legal and professional services of approximately $54,300. These decreases were
offset somewhat by an increase due due to the timing of payment of printing and unitholder services of approximately $61,800.
Administrative expenses decreased approxmately $52,900 for the nine months ended September 30, 2021 compared to the same time period in
2020 due primarily to decreases in legal and professional services of approximately $100,600 and a decrease in printing and unitholder services of approximately $1,200. These decreases were tempered somewhat by an increase in the Escrow
Agent/Trustee fees of approximately $48,900.
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 following:
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Royalty income is recognized in the month received, pending verification of ownership and title, rather than in
the month of production.
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Expenses other than those expected to be paid on the following monthly record date are not accrued.
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Amortization of the Royalties is shown as a reduction to Trust corpus and not as a charge to operating results.
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Reserves may be established for contingencies that would not be recorded under accounting principles generally
accepted in the United States of America.
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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 Trusts.
Critical Accounting Policies and Estimates
A disclosure of critical accounting policies and the more significant judgments and estimates used in the preparation of the Trusts
financial statements is included in Item 7 of the Trusts 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
September 30, 2021.
Distributable Income per Unit
Basic distributable income per Unit is computed by dividing distributable income by the weighted average number of 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 Trusts financial statements.
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