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San Juan Basin Royalty Trust Announces Hilcorp's 2025 Capital Plan

On February 13, 2025, Argent Trust Company, acting as the trustee of the San Juan Basin Royalty Trust (NYSE: SJT), unveiled the capital expenditure plan for the year prepared by Hilcorp Energy Company, the operator of the trust's interests. This initiative, known as the 2025 Plan, outlines a strategic vision for investment in various projects that focus on enhancing output and operational efficiency within the trust's designated areas.

The anticipated capital funds for 2025 are set at approximately $9.0 million, directed towards 29 distinct projects. A significant portion of about $4.0 million is earmarked for seven new vertical drilling endeavors in the Dakota/Mesaverde formations, signaling a robust approach to bolster resource recovery through new drilling technologies and methods.

Additionally, around $4.5 million from the budget will be allocated to upgrading and revitalizing existing sites through 22 projects focusing on recompletions and workovers within the Fruitland Coal formation. This indicates Hilcorp’s strategy to enhance the operational lifespan and productivity of existing wells, ensuring maximized returns on past investments.

The remaining $0.5 million is set aside for facility upgrades primarily aimed at natural gas compression and other enhancements critical to sustaining operational reliability and efficiency.

It's essential to note that Hilcorp emphasized that the 2025 Plan is subject to changes. Should there be any shifts in the assumptions underlying the plan—such as price fluctuations or operational challenges—actual capital expenditures may vary from the outlined estimates.

Looking back at 2024, Hilcorp had initially projected $34.0 million in capital outlays. By year-end, actual expenditures tallied around $33.6 million, demonstrating a disciplined fiscal management approach in a volatile market. The breakdown of these expenditures reveals that approximately $24.6 million was spent on two new horizontal drilling projects in the Mancos formation, indicating a strong commitment to driving production in high-yield areas. Furthermore, around $8.0 million was directed toward recompletion and workover activities, with an additional $1.0 million allocated for facility enhancements.

In providing these updates, both the trust and Hilcorp have reaffirmed the importance of diligent resource management in the dynamic landscape of energy production. They also highlighted the inherent uncertainties in their forecasts, adhering to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements illustrate expectations while acknowledging the risks that can affect future outcomes, including price volatility in oil and gas markets, regulatory changes, and unforeseen geological factors.

As the San Juan Basin Royalty Trust navigates this complex landscape, stakeholders will be keenly observing how Hilcorp’s planned initiatives unfold amidst an ever-evolving energy sector, deciphering the implications for long-term strategic investments in the San Juan Basin.