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San Juan Basin Royalty Trust 2021 Second Quarter TO OUR UNIT HOLDERS We are pleased to present the 2021 2nd Quarter Report ( this " Report " ) of the San Juan Basin Royalty Trust ( the “ Trust ” ) to the holders ( the " Unit Holders " ) of units of beneficial interest in the Trust ( the “ Units ” ) . The principal asset of the Trust is a 75 % net overriding royalty interest ( the " Royalty " ) that is carved out of certain oil and gas leasehold and royalty interests in properties located in the San Juan Basin of New Mexico ( the “ Subject Interests " ) . The Subject Interests are owned by Hilcorp San Juan L.P. ( " Hilcorp " ) . Royalty income distributed by Hilcorp to the Trust , which consists of monthly net proceeds attributable to the Royalty , was approximately $ 7.6 million for the three months ended June 30 , 2021 , compared to $ 1.0 million during the same period in 2020. The increase in Royalty income is attributable primarily to higher natural gas prices due to the spike in natural gas prices during the February 2021 winter storms ( February production month corresponds to the Trust's April distribution month ) . Distributable income , which is the amount that the Trust distributes to the Unit Holders from the Royalty income less the amount of expenses paid by the Trust and any changes in cash reserves , increased from $ 0.6 million ( $ 0.012557 per Unit ) for the three months ended June 30 , 2020 to $ 7.2 million ( $ 0.153748 per Unit ) for the three months ended June 30 , 2021. The increase in distributable income was primarily attributable to higher natural gas prices . Based on 46,608,796 Units outstanding , the per - Unit distributions during the second quarter of 2021 were as follows : General and administrative expenses decreased approximately 19 % for the three months ended June 30 , 2021 , as compared to the three months ended June 30 , 2020. The decrease was primarily a result of differences in timing in the receipt and payment of certain expenses by the Trust . Total cash reserves were $ 1.0 million as of June 30 , 2021. The Trustee does not anticipate any increase or decrease to the cash reserves in 2021 , although it cannot guarantee that the Trustee will not increase such cash reserves in the future . Hilcorp's capital expenditures increased approximately $ 157,000 for the three months ended June 30 , 2021 , compared to the three months ended June 30 , 2020. The increase was primarily due to differences in timing in the payment of these expenditures along with capital expenditures attributable to the prior year's budget . Hilcorp's 2021 capital project plan for the Subject Interests calls for total capital spending of $ 0.3 million for fiscal 2021 . Royalty Income for the three months ended June 30 , 2021 is associated with oil and natural gas production during February through April 2021 from the Subject Interests . Production of oil and natural gas and related average sales prices attributable to each of the Subject Interests and the Royalty for the three months ended June 30 , 2021 and 2020 were as follows : For the Three Months Ended June 30 , 2021 2020 Natural Gas ( Mcf ) Oil and Condensate ( Bbls ) Natural Gas ( Mcf ) Oil and Condensate ( Bbls ) April May June Quarter Total $ 0.095794 0.040339 0.017615 $ 0.153748 Production Subject Interests Royalty Average Price ( per Mcf / Bbl ) 7,517,056 10,596 6,871,522 2,765,560 11,896 $ 2.77 6,509 ( 1,373,556 ) ¹ $ 50.59 $ 0.92 $ 21.74 5,721 Interest income was lower for the three months ended June 30 , 2021 , as compared to the same period in 2020 , due primarily to lower yields on short - term investments held by the Trust . 1 The oil and natural gas sales attributable to the Royalty are based upon an allocation formula dependent on such factors as price and cost . The allocation formula for natural gas produced a negative volume due to excess production costs for natural gas in June 2020 . Gross excess production costs applicable to the Subject Interests were $ 1.6 million as of June 30 , 2020 , with 75 % , or $ 1.2 million ( net ) allocated to the Trust .