Mesa Royalty Trust (NYSE: MTR) is an oil and natural gas royalty trust that holds overriding royalty interests in producing properties located in the Hugoton gas area and the San Juan Basin. It makes money by collecting net proceeds royalties from working interest owners who operate the underlying properties, then distributing substantially all of that income to unitholders. The trust was established under a trust indenture dated November 1, 1979, originally between Mesa Petroleum Co. and Texas Commerce Bank National Association as Trustee. The Bank of New York Mellon Trust Company, N.A. serves as Trustee, headquartered at 601 Travis Street, Houston, Texas. Royalty income was $2,076,841 in FY2015, down from $6,692,021 in FY2014, with distributable income per unit of $1.0279 in FY2015 versus $3.5059 in FY2014. The trust has no employees, no board of directors, and no principal executive officer. Working interest owners operating the properties include BP, ConocoPhillips, Pioneer, Red Willow, and XTO.

Revenue model

Overriding royalty interest model. The trust receives a share of net proceeds, defined as gross proceeds from oil, natural gas, and natural gas liquids production minus production and capital costs, from working interest owners operating the Hugoton and San Juan Basin properties. All royalty income collected, less trust expenses, is distributed to unitholders.

Products and services

Units of Beneficial Interest listed on the New York Stock Exchange. The trust holds overriding royalty interests covering natural gas, natural gas liquids, and oil and condensate production from the Hugoton gas area and the San Juan Basin properties.

Customers and end markets

The trust's royalty payments originate from working interest owners: BP, ConocoPhillips, Pioneer, Red Willow, and XTO. End markets are oil and natural gas commodity markets. The standardized measure of future net royalty income discounted at 10% was $10,724 total across all operators as of FY2015, per the 10-K filed 2016-03-30.

Value-chain role

Passive royalty interest holder. The trust does not operate wells, employ field personnel, or bear production costs directly. Working interest owners handle all exploration, development, and operations. The trust receives a contractual share of net proceeds and passes income through to unitholders.

Geographic exposure

United States. Properties are located in the Hugoton gas area and the San Juan Basin, per the 10-K filed 2016-03-30.

Source: SEC 10-K, filed 2016-03-30

Industry: Oil Royalty Traders Peers: Barnwell Industries Inc ConocoPhillips Abundia Global Impact Group, Inc VIKING ENERGY GROUP, INC. Mexco Energy Corp Reserve Petroleum Co Spindletop Oil and Gas Co