tm211003-1_10k - none

10-K 1 tm211003-1_10k.htm 10-K tm211003-1_10k - none - 7.0312619s

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

	(Mark One)
	☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2020 Or
	☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number: 1-7884

Mesa Royalty Trust

(Exact name of registrant as specified in its charter)

	Texas (State or other jurisdiction of incorporation or organization)			76-6284806 (I.R.S. Employer Identification No.)
	The Bank of New York Mellon Trust Company, N.A., Trustee Global Corporate Trust 601 Travis Street, Floor 16 Houston, Texas (Address of principal executive offices)			77002 (Zip Code)

Registrant’s telephone number, including area code: 713-483-6020

Securities registered pursuant to Section 12(b) of the Act:

	Title of each class			Trading Symbol(s)			Name of each exchange on which registered
	Units of Beneficial Interest			MTR			New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐			Accelerated filer ☐			Non-accelerated filer ☒			Smaller reporting company ☒
										Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) if the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of 1,863,590 Units of Beneficial Interest in Mesa Royalty Trust held by non-affiliates of the registrant at the closing sales price on June 30, 2020 of $5.15 was approximately $9,597,489.

As of March 31, 2021, 1,863,590 Units of Beneficial Interest were outstanding in Mesa Royalty Trust.

DOCUMENTS INCORPORATED BY REFERENCE: None

	Page
PART I
Item 1. Business		1
Item 1A. Risk Factors		15
Item 1B. Unresolved Staff Comments		23
Item 2. Properties		23
Item 3. Legal Proceedings		23
Item 4. Mine Safety Disclosures		23
PART II
Item 5. Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities		24
Item 6. Selected Financial Data		24
Item 7. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations		24
Summary of Royalty Income, Production, Prices and Costs (Unaudited)		26
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		33
Item 8. Financial Statements and Supplementary Data		36
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		49
Item 9A. Controls and Procedures		49
PART III
Item 10. Directors, Executive Officers and Corporate Governance		51
Item 11. Executive Compensation		51
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters		51
Item 13. Certain Relationships and Related Transactions, and Director Independence		51
Item 14. Principal Accounting Fees and Services		51
PART IV
Item 15. Exhibits and Financial Statement Schedules		53
SIGNATURES		54

	IKAV		Hilcorp		Scout(1)		Total(2)
Proved Developed
Oil and Condensate		0		10		0		10
Natural Gas Liquids		0		306		0		306
Gas		1,341		4,032		0		5,373
Proved Undeveloped
Oil and Condensate		0		0		0		0
Natural Gas Liquids		0		0		0		0
Gas		0		0		0		0
Total, Proved
Oil and Condensate		0		10		0		10
Natural Gas Liquids		0		306		0		306
Gas		1,341		4,032		0		5,373

			IKAV						Hilcorp						Scout						Total
Future Royalty income(1)				$	1,044					$	12,120					$	0					$	13,164

	Hugoton									San Juan Basin — New Mexico(3)									San Juan Basin — Colorado									Total
	Natural Gas			Natural Gas Liquids			Oil and Condensate			Natural Gas			Natural Gas Liquids			Oil and Condensate			Natural Gas			Natural Gas Liquids			Oil and Condensate			Natural Gas			Natural Gas Liquids			Oil and Condensate
Year ended December 31, 2020:
Average Sales Price		$	2.73		$	10.01		$	—		$	1.53		$	12.68		$	41.42		$	0.75		$	—		$	—		$	1.28		$	11.93		$	41.42
Average Production Costs(1)		$	17.59		$	29.39		$	—		$	4.62		$	26.25		$	(225.13)		$	0.46		$	—		$	—		$	4.27		$	27.14		$	(225.13)
Net production volumes attributable to the			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)
Royalty paid(2)			68,957			6,011			—			144,318			15,271			(534)			254,346			—			—			467,621			21,282			(534)
Year ended December 31, 2019:
Average Sales Price		$	3.52		$	21.35		$	—		$	1.63		$	16.00		$	44.39		$	1.38		$	—		$	—		$	1.79		$	17.04		$	44.39
Average Production Costs(1)		$	8.40		$	55.33		$	—		$	1.65		$	20.32		$	51.88		$	0.39		$	—		$	—		$	2.04		$	27.14		$	51.88
Net production volumes attributable to the			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)
Royalty paid(2)			106,373			4,739			—			309,914			19,567			1,157			334,414			—			—			750,701			24,306			1,157

	Hugoton									San Juan Basin — New Mexico(5)									San Juan Basin — Colorado									Total
	Natural Gas			Natural Gas Liquids			Oil and Condensate			Natural Gas			Natural Gas Liquids			Oil and Condensate			Natural Gas			Natural Gas Liquids			Oil and Condensate			Natural Gas			Natural Gas Liquids			Oil and Condensate
Year ended December 31, 2020:
The Trust’s proportionate share of – Gross Proceeds(1)		$	1,010,852		$	196,435		$	—		$	881,596		$	586,723		$	97,964		$	301,723		$	—		$	—		$	2,194,171		$	783,158		$	97,964
Less the Trust’s proportionate share of – Capital costs			(1,123)			(207)			—			(50,124)			(13,117)			(32,354)			—			—			—			(51,247)			(13,324)			(32,354)
Operating costs			(1,211,937)			(176,462)			—			(616,280)			(387,758)			(87,948)			(117,130)			—			—			(1,945,347)			(564,220)			(87,948)
Net Proceeds(2)		$	(202,208)		$	19,766		$	—		$	215,192		$	185,848		$	(22,338)		$	184,593		$	—		$	—		$	197,577		$	205,614		$	(22,338)
Royalty Income(2)		$	188,274		$	60,172		$	—		$	220,687		$	193,704		$	(22,136)		$	191,448		$	—		$	—		$	600,409		$	253,876		$	(22,136)
Average Sales Price		$	2.73		$	10.01		$	—		$	1.53		$	12.68		$	41.42		$	0.75		$	—		$	—		$	1.28		$	11.93		$	41.42
Average Production Costs(3)		$	17.59		$	29.39		$	—		$	4.62		$	26.25		$	(225.13)		$	0.46		$	—		$	—		$	4.27		$	27.14		$	(225.13)
Net production volumes attributable to the			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)
Royalty paid(4)			68,957			6,011			—			144,318			15,271			(534)			254,346			—			—			467,621			21,282			(534)
Year ended December 31, 2019:
The Trust’s proportionate share of – Gross Proceeds(1)		$	1,267,360		$	363,402		$	—		$	1,017,563		$	710,207		$	111,188		$	564,795		$	—		$	—		$	2,849,718		$	1,073,609		$	111,188
Less the Trust’s proportionate share of – Capital costs			(1)			—			—			(32,047)			(28,884)			(5,719)			—			—			—			(32,048)			(28,884)			(5,719)
Operating costs			(893,033)			(262,217)			—			(478,648)			(368,629)			(54,307)			(129,665)			—			—			(1,501,346)			(630,846)			(54,307)
Net Proceeds(2)		$	374,326		$	101,185		$	—		$	506,868		$	312,694		$	51,162		$	435,130		$	—		$	—		$	1,316,324		$	413,879		$	51,162
Royalty Income(2)		$	374,326		$	101,185		$	—		$	506,692		$	313,039		$	51,365		$	461,771		$	—		$	—		$	1,342,789		$	414,224		$	51,365
Average Sales Price		$	3.52		$	21.35		$	—		$	1.63		$	16.00		$	44.39		$	1.38		$	—		$	—		$	1.79		$	17.04		$	44.39
Average Production Costs(3)		$	8.40		$	55.33		$	—		$	1.65		$	20.32		$	51.88		$	0.39		$	—		$	—		$	2.04		$	27.14		$	51.88
Net production volumes attributable to the			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)			(Mcf)			(Bbls)			(Bbls)
Royalty paid(4)			106,373			4,739			—			309,914			19,567			1,157			334,414			—			—			750,701			24,307			1,157

	2020			2019
Royalty income		$	832,149		$	1,808,378
Interest income			5,756			29,415
General and administrative expenses			(193,947)			(202,747)
Cash reserves withheld for current Trust expenses			(78,208)			—
Distributable income		$	565,750		$	1,635,046
Distributable income per unit		$	0.3036		$	0.8774

SEC Form 10-K filed by Mesa Royalty Trust