The San Juan Basin Royalty Trust is an express royalty trust formed under Texas law in November 1980 by an indenture between Southland Royalty and The Fort Worth National Bank. Its main asset is a 75% net overriding royalty interest (i.e. net profits interest) carved out of Southland’s oil and gas leasehold and royalty rights in the San Juan Basin of northwestern New Mexico.
SJT does not operate wells. Instead, it collects royalty income (net proceeds) from the production and sale of oil and gas from the underlying properties, after deductions for production costs, taxes, and administrative expenses. The Trust’s operator is Hilcorp (via its San Juan LP affiliate), which owns and operates most of the underlying “Subject Interests” after acquiring them from ConocoPhillips/Burlington in 2017. Monthly distributions are made to unit holders from the Trust’s net proceeds, subject to reserves and administrative costs.
The Trust’s asset footprint spans many producing acres: it holds interests in over 119,000 net producing acres in counties such as San Juan, Rio Arriba, and Sandoval in New Mexico. Nearly all of its royalty income is derived from natural gas (with a small oil component). Because it is a grantor trust, the Trustee is forbidden from acquiring new properties or engaging in operating ventures — the Trust’s role is purely to administer the royalty interests and distribute cash.