Chesapeake Granite Wash Trust

What they do

The Trust owns royalty interests in certain oil and natural gas properties in the Colony Granite Wash play in Washita County, Oklahoma, conveyed by Chesapeake Energy Corporation in 2011. The Trust receives proceeds from the sale of oil, natural gas liquids (NGLs), and natural gas produced from those interests. The Trust does not operate the wells and has no employees; it is administered by The Bank of New York Mellon Trust Company, N.A. as Trustee.

Revenue drivers

• Oil royalties — The Trust receives a share of proceeds from oil sales from the Colony Granite Wash wells. For the production period September 1, 2019 through November 30, 2019, oil sales volumes were 20 mbbl, with an average price of $51.06 per barrel.
• Natural gas royalties — The Trust receives proceeds from natural gas sales. In the same production period, natural gas volumes were 511 mmcf at an average price of $0.81 per mcf.
• Natural gas liquids royalties — The Trust receives proceeds from NGL sales. For the production period September 1, 2019 through November 30, 2019, NGL volumes were 42 mbbl at an average price of $14.17 per barrel.

Recent performance

The most recent earnings release provided by the Trust is from February 5, 2020, announcing a distribution of $0.0371 per common unit for the quarter ended December 31, 2019, which primarily relates to production from September 1, 2019 through November 30, 2019. For that production period, the Trust reported total sales volumes of 147 mboe, revenue less production taxes of $2.180 million, trust administrative expenses of $0.377 million, and distributable income of $1.733 million. More recent financial results are not included in the provided excerpts from the 10-K/A or 10-Q.

Strategy

The Trust has ceased voluntarily filing periodic reports with the SEC after its Form 10-Q for the quarter ended September 30, 2024. It intends to make financial and other information available on its corporate website and through the OTC Disclosure News Services operated by OTC Markets Group Inc. The Trust's common units have been quoted on the OTC Pink Open Market under the symbol "CHKR" since March 2, 2020. The Trust expects to reduce general and administrative expenses by ceasing SEC reporting.

Risks

• Reduced disclosure and reporting — The Trust has ceased filing periodic reports with the SEC, which may reduce the availability of timely and audited financial information for unitholders and potential investors.
• Volatile commodity prices — Distributions are directly affected by fluctuations in oil, natural gas, and NGL prices, as illustrated by the low average natural gas price of $0.81 per mcf in the September-November 2019 period.
• Declining production and reserves — The Trust's royalty interests are depleting assets; production volumes will decline over time as reserves are depleted, reducing future distributable income.
• Operational dependence on Chesapeake — The Trust relies on Chesapeake Energy Corporation to operate the underlying properties and provide production and sales data; operational or financial difficulties at Chesapeake could adversely affect the Trust.

Outlook

The Trust has not provided forward-looking guidance in the provided excerpts. Management expects to continue making financial information available via its website and OTC Disclosure News Services, and to reduce general and administrative expenses as a result of ceasing SEC reporting. Future distributions will continue to depend on production volumes, commodity prices, and Trust expenses.