Will wait for someone with accounting experience to wade through the filing, but some things stuck out to me:
Plunge NG prices offset a huge increase in production:
Oil and gas royalties. Oil and gas royalty revenue was $38.3 million for the three months ended September 30, 2019 compared to $31.3 million for the three months ended September 30, 2018. Oil royalty revenue was $33.1 million for the three months ended September 30, 2019, an increase of 37.2% over the three months ended September 30, 2018 when oil royalty revenue was $24.1 million. This increase in oil royalty revenue is principally due to a 50.4% increase in crude oil production subject to the Trust’s royalty interest, partially offset by a 8.8% decrease in the average price per royalty barrel of crude oil received during the three months ended September 30, 2019 compared to the same period in 2018. Gas royalty revenue was $5.2 million for the three months ended September 30, 2019, a decrease of 27.6% over the three months ended September 30, 2018 when gas royalty revenue was $7.1 million. While gas production increased 125.9% in the three months ended September 30, 2019 compared to September 30, 2018, the 64.6% decrease in prices received for gas production over the same time period had a more significant impact on gas royalty revenue.
Sounds like they sold some extremely valuable land - $60k/acre!?!
Land sales and other operating revenue. Land sales and other operating revenue includes revenue generated from land sales and grazing leases. For the three months ended September 30, 2019, we sold approximately 77 acres of land for total consideration of $4.6 million, or approximately $59,960 per acre.
Leased office space cost is going up enormously - no mention of why, as in did they double the amount of space leased, and for what reason? Water biz?
As of September 30, 2019, we have recorded right-of-use assets of $3.3 million and lease liabilities for $3.5 million primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. The office lease agreements require monthly rent payments and expire in December 2025 and August 2022, respectively. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost for the three and nine months ended September 30, 2019 was $0.2 million and $0.4 million, respectively.
Future minimum lease payments under these operating leases are as follows as of September 30, 2019 (in thousands):
| || || || || || || || || |
2019 (excluding the nine months ended September 30)
| || $ || 144 || |
| 2020 || || 696 || |
| 2021 || || 796 || |
| 2022 || || 697 || |
| 2023 || || 537 || |
| Thereafter || || 1,067 || |
| Total lease payments || || 3,937 || |
| Less: imputed interest || || (466) || |
| Total operating lease liabilities || || $ || 3,471 || |
Net income for the 9 months ended Sept 30, 2019 looks great on paper compared to same period of 2018, until you see that they recorded $113M in land sales in 2019 - subtract that from net income and first 3 quarters of 2019 net income actually went down from $147M to $132M (includes effect of $4M land sales as of 9/30/18). Oh, and legal fees were still very high in Q3 despite the detente that went into effect - $5.6M for the quarter - for what?
Really looking forward to a better review of the 10-Q, as I just pulled some things out in isolation, may not present a valid analysis of the overall results - will probably be several SA articles coming out in the following days, I'll post the links here if/when I get the alerts.