CHESAPEAKE GRANITE WASH TRUST Trustee’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Introduction

The following discussion and analysis is intended to help the reader understand
the Trust's financial condition and results of operations. This discussion and
analysis should be read in conjunction with the Trust's unaudited interim
financial statements and the accompanying notes relating to the Trust and the
Underlying Properties included in Item 1 of Part I of this Quarterly Report as
well as the Trust's 2021 Form 10-K.

RECENT DEVELOPMENTS

COVID-19 pandemic and impact on global demand for Oil and natural gas

The global spread of COVID-19 has created significant volatility, uncertainty,
and economic disruption. The pandemic has resulted in widespread adverse impacts
on the global economy and on Diversified and Diversified's customers and other
parties with whom it has business relations. To date, Diversified has
experienced limited operational impacts as a result of COVID-19 or the related
governmental restrictions.

We cannot predict the full impact that COVID-19 or the current significant
disruption and volatility in the oil and natural gas markets will have on
Diversified's business, cash flows, liquidity, financial condition and results
of operations. For additional discussion regarding risks associated with the
COVID-19 pandemic, see Part II, Item 7. Trustee's Discussion and Analysis of
Financial Condition and Results of Operations in our 2021 Form 10-K and Item 1A
"Risk Factors" in our 2021 Form 10-K.

Military conflict in Ukraine

We are actively monitoring the military conflict in Ukraine and assessing its
impact on the Trust's business. To date, we have not experienced any material
interruptions to our business given our properties are exclusively located
within the United States. The extent and duration of the military action,
sanctions and resulting market disruptions could be significant, including
significant volatility in commodity prices, supply of energy resources,
instability in financial markets, supply chain interruptions, political and
social instability, changes in consumer or purchaser preferences as well as
increases in cyberattacks and espionage, each of which could have a substantial
impact on the global economy and consequently our business for an unknown period
of time. We currently do not expect any material impact on the Trust's business,
cash flows, liquidity or financial condition; however, we have no way to predict
the progress or outcome of the military conflict in Ukraine as the conflict, and
any resulting government reactions, are rapidly developing and beyond our
control.

Insight

The Trust is a statutory trust formed in June 2011 under the Delaware Statutory
Trust Act. The business and affairs of the Trust are managed by the Trustee and,
as necessary, the Delaware Trustee. The Trust does not conduct any operations or
activities other than owning the Royalty Interests and activities related to
such ownership. The Trust's purpose is generally to own the Royalty Interests,
to distribute to the Trust unitholders cash that the Trust receives in respect
of the Royalty Interests and to perform certain administrative functions in
respect of the Royalty Interests and the Trust units. The Trust derives all or
substantially all of its income and cash flow from the Royalty Interests. The
Trust is treated as a partnership for U.S. federal income tax purposes.

Concurrent with the Trust's initial public offering in November 2011, Chesapeake
conveyed the Royalty Interests to the Trust effective July 1, 2011, which
included interests in (a) 69 Producing Wells in the Colony Granite Wash play and
(b) 118 Development Wells that Chesapeake was obligated to drill, cause to be
drilled or participate as a non-operator in the drilling of, from drill sites in
the AMI, on or prior to June 30, 2016. As of June 30, 2016, Chesapeake fulfilled
its drilling obligation under the development agreement. Chesapeake retained an
interest in each of the Producing Wells and Development Wells, which were
acquired by Diversified pursuant to the Assignment Agreement, and Diversified
currently operates 96% of the Producing Wells and the completed Development
Wells.

The Trust was not responsible for any costs related to the drilling of the development wells and is not responsible for any other operating or capital costs of the Underlying propertiesand Chesapeake was not allowed to drill and

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complete any well in the Colony Granite Wash Formation on any area included in the AMI for its own account until it has satisfied its drilling obligation to the Trust.

The Royalty Interests entitle the Trust to receive 90% of the proceeds (after
deducting certain post-production expenses and any applicable taxes) from the
sales of production of oil, natural gas and NGL attributable to Diversified's
net revenue interest in the Producing Wells and 50% of the proceeds (after
deducting certain post-production expenses and any applicable taxes) from the
sales of oil, natural gas and NGL production attributable to Diversified's net
revenue interest in the Development Wells. Post-production expenses generally
consist of costs incurred to gather, store, compress, transport, process, treat,
dehydrate and market the oil, natural gas and NGL produced. However, the Trust
is not responsible for costs of marketing services provided by Diversified or
Diversified affiliates.

The Trust is required to make quarterly cash distributions of substantially all
of its cash receipts, after deducting the Trust's administrative expenses, on or
about 60 days following the completion of each calendar quarter through (and
including) the quarter ending June 30, 2031. During the three months ended
March 31, 2022, a distribution was paid on March 3, 2022. See Liquidity and
Capital Resources below and   Note 5   to the financial statements contained in
Item 1 of Part I of this Quarterly Report for more information regarding these
distributions.

The amount of Trust income and cash distributions to Trust Unitholders fluctuates from quarter to quarter depending on several factors, including but not limited to:

• Timing and amount of production and sales from development and production wells;

• Price of oil, natural gas and NGLs received;

•Volumes of oil, natural gas and NGLs produced and sold;

•Certain post-production expenses and all applicable taxes; and

•Trust expenses.

Results of fiduciary operations

The quarterly payments to the Trust with respect to the Royalty Interests are
based on the amount of proceeds actually received by Diversified during the
preceding calendar quarter. Proceeds from production are typically received by
Diversified in the month following the month of production. Due to the timing of
the payment of production proceeds, quarterly distributions made by Diversified
to the Trust generally include royalties attributable to sales of oil, natural
gas and NGL for three months, comprised of the first two months of the quarter
just ended and the last month of the quarter prior to that one. Diversified is
required to make the Royalty Interest payments to the Trust within 35 days after
the end of each calendar quarter. During the three months ended March 31, 2022,
the Trust received payments on the Royalty Interests representing royalties
attributable to proceeds from sales of oil, natural gas and NGL for September 1,
2021 to November 30, 2021.

The Trust's revenues and distributable income available to unitholders were
affected throughout 2021 and to date in 2022 by natural declines in production
and commodity price volatility. The Trust expects production to decline further
and expects distributable income to continue to be adversely affected.

The Trust's Investment in Royalty Interests is subject to a quarterly full cost
ceiling test. The Trust recognized no impairment of the Royalty Interests in the
Current Quarter. The Trust recognized a $0.84 million impairment of the Royalty
Interests in the Prior Quarter. See Investment in Royalty Interests in   Note
2   to the financial statements contained in Item 1 of Part I of this Quarterly
Report for further discussion.
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Distributable Income

                                                                   Three Months Ended March 31,
                                                        2022                   2021                  Change
                                                              ($ in thousands, except per unit data)
Distributable income available to unitholders     $        3,120          $       294                      961  %

Distributable income per common unit              $       0.0667          $    0.0063                      959  %




The $2.83 million increase in distributable income during the Current Quarter
was primarily due to an increase in the average realized price per boe in the
production period from September 1, 2021 to November 30, 2021 (the "Current
Production Quarter") as compared to the production period from September 1, 2020
to November 30, 2020 (the "Prior Production Quarter"), combined with an increase
in total sales volumes in the Current Production Quarter.

Royalty Income

                                                                  Three Months Ended March 31,
                                                       2022                   2021                  Change
                                                             ($ in thousands, except per unit data)
Royalty income(a)                                $        3,693          $       954                      287  %

Estimated production from trust properties:
Oil sales volumes (MBbl)                                     15                   10                       50  %
Natural gas sales volumes (MMcf)                            336                  340                       (1) %
Natural gas liquids sales volumes (MBbl)                     40                   31                       29  %
Total sales volumes (Mboe)                                  111                   98                       13  %

Average prices received for production(b):
Oil ($/Bbl)                                      $        73.92          $     33.37                      122  %
Natural gas ($/Mcf)(c)                           $         3.43          $      0.68                      404  %
Natural gas liquids ($/Bbl)                      $        35.17          $     12.47                      182  %
Total average price received ($/boe)             $        33.15          $      9.75                      240  %


(a) Net of certain post-production costs.

(b) Includes the impact of certain post-production expenses but excludes production taxes.

(c) The Trust was affected by lower commodity prices in early 2021 due to the impact of COVID-19

The increase in the average price received per barrel of oil equivalent (boe) in
the Current Production Quarter compared to the Prior Production Quarter resulted
in an increase of approximately $2.61 million in royalty income. The increase in
royalty income is primarily attributable to an increase in commodity pricing.
Additionally, higher sales volumes in the Current Production Quarter increased
royalty income by approximately $0.13 million, for a total increase in royalty
income of approximately $2.74 million in the Current Production Quarter compared
to the Prior Production Quarter. The 13 mboe increase in total sales
attributable to the Royalty Interests for the Current Production Quarter
compared to the Prior Production Quarter is primarily the result of improved
operational performance, offset by natural declines in production from the
Producing Wells and Development Wells.


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Production Taxes

                                               Three Months Ended March 31,
                                               2022                    2021       Change
                                          ($ in thousands, except per unit data)
       Production tax expenses    $          263                     $   56       (370) %

       Production taxes per boe   $         2.37                     $ 0.57       (316) %


Production taxes are calculated as a percentage of oil, natural gas and NGL
revenues, net of any applicable tax credits. The increase in production taxes in
the Current Quarter compared to the Prior Quarter relates primarily to an
increase in royalty income.

Trust Administrative Expenses

                                                    Three Months Ended March 31,
                                                    2022                    2021       Change
                                                          ($ in thousands)
  Trust administrative expenses(a)    $          211                       

$534 (60)%

(a) Includes a change in cash advances resulting in a $0.10 million decrease in administrative expenses for the three months ended March 31, 2022.

Trust administrative expenses primarily consist of the administrative fees paid
to the Trustees and Diversified, as well as costs for accounting and legal
services. The decrease in expenses in the Current Quarter is primarily related
to accounting, tax preparation, and regulatory compliance expenses.
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Cash and capital resources

The Trust's principal sources of liquidity and capital are cash flows generated
from the Royalty Interests and the loan commitment as described below. The
Trust's primary uses of cash are distributions to Trust unitholders, payments of
production taxes, payments of Trust administrative expenses, including any
reserves established by the Trustee for future liabilities and repayment of
loans and payments of expense reimbursements to Diversified for out-of-pocket
expenses incurred on behalf of the Trust. Administrative expenses include
payments to the Trustees, as well as a quarterly fee of $50,000 to Diversified
pursuant to an administrative services agreement. Each quarter, the Trustee
determines the amount of funds available for distribution. Available funds are
the excess cash, if any, received by the Trust from the sales of oil, natural
gas and NGL production attributable to the Royalty Interests during the quarter,
over the Trust's expenses for the quarter and any cash reserve for the payment
of liabilities of the Trust. The Trust does not undertake or control any capital
projects or capital expenditures. These capital expenditures, if any, are
controlled and paid by Diversified.

The Trust's revenue and distributions are substantially dependent upon the
prevailing and future prices for oil, natural gas and NGL, each of which depends
on numerous factors beyond the Trust's control such as economic conditions,
regulatory developments and competition from other energy sources. Oil, natural
gas and NGL prices historically have been volatile and may be subject to
significant fluctuations in the future; however, the volatility in the prices
for these commodities has substantially increased as a result of COVID-19. We
expect to see continued volatility in oil and natural gas prices for the
foreseeable future, and such volatility has impacted and is expected to continue
to impact Diversified's business, financial condition and results of operations
and proceeds to the Trust and the Trust's reserves and quarterly cash
distributions to unitholders. The Trust does not have the ability to enter into
derivative contracts to mitigate the effect of this price volatility.

The Trustee may increase or decrease the targeted amount of the cash reserve at
any time, and may increase or decrease the rate at which it is withholding funds
to build the cash reserve at any time, without advance notice to the
unitholders. Without limiting the foregoing, the Trustee has reviewed the
adequacy and sufficiency of the existing cash reserve and determined that,
commencing with the distribution to unitholders for the fourth quarter 2021, the
Trustee began withholding the funds otherwise available for distribution to the
unitholders each quarter to increase existing cash reserves by a total of
approximately $3,200,000 over a period of several quarters. Cash held in reserve
will be invested as required by the Trust Agreement. Any cash reserved in excess
of the amount necessary to pay or provide for the payment of future known,
anticipated or contingent expenses or liabilities eventually will be distributed
to unitholders, together with interest earned on the funds. As of March 31,
2022, $893,328 has been withheld to increase cash reserves.

The Trust is required to make quarterly cash distributions of substantially all
of its cash receipts, after deducting the Trust's administrative expenses, on or
about 60 days following the completion of each calendar quarter through (and
including) the quarter ending June 30, 2031. The 2022 first quarter distribution
of $0.0667 per common unit, consisting of proceeds attributable to production
from September 1, 2021 through November 30, 2021, (net of administrative
expenses) was made on March 3, 2022 to record unitholders as of February 21,
2022.





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On May 4, 2022, the Trust declared the May 2022 Distribution. The Trust's
quarterly income available for distribution was $0.0540 per common unit
consisting of proceeds attributable to production from December 1, 2021 to
February 28, 2022 (net of administrative expenses). The distribution will be
paid on May 31, 2022 to common unitholders of record as of May 20, 2022. All
Trust unitholders share on a pro rata basis in the Trust's distributable income.
Distributable income attributable to production from December 1, 2021 to
February 28, 2022 was calculated as follows (in thousands, except for unit and
per unit amounts):

         REVENUES:
         Royalty income(a)                                        $  3,233

         EXPENSES:
         Production taxes                                             (228)
         Trust administrative expenses(b)                             (382)
         Total expenses                                               (610)
         Cash withheld to increase cash reserves                       (99)
         Distributable income available to common unitholders     $  2,524

         Distributable income per common unit(c)                  $ 0.0540

(a) Net of certain post-production costs.

(b) Includes the quarterly change in the cash advance leading to an increase in administrative expenses totaling $0.1 million.

(c) The calculation of distributable income per Ordinary Unit is based on 46,750,000 Ordinary Units issued and outstanding at May 12, 2022

The Trustee can authorize the Trust to borrow money to pay Trust expenses that
exceed cash held by the Trust. The Trustee may authorize the Trust to borrow
from the Trustee as a lender provided the terms of the loan are fair to the
Trust unitholders. The Trustee may also deposit funds awaiting distribution in
an account with itself, if the interest paid to the Trust at least equals
amounts paid by the Trustee on similar deposits, and make other short-term
investments with the funds distributed to the Trust. The Trustee may also hold
funds awaiting distribution in a non-interest-bearing account.

Pursuant to the Trust Agreement, if at any time the Trust's cash on hand
(including cash reserves, if any) is not sufficient to pay the Trust's ordinary
course expenses as they become due, Diversified will loan funds to the Trust
necessary to pay such expenses. Any funds loaned by Diversified pursuant to this
commitment will be limited to the payment of current accounts payable or other
obligations to trade creditors in connection with obtaining goods or services or
the payment of other current liabilities arising in the ordinary course of the
Trust's business and may not be used to satisfy Trust indebtedness for borrowed
money of the Trust. If Diversified loans funds pursuant to this commitment,
unless Diversified agrees otherwise in writing, no further distributions may be
made to unitholders (except in respect of any previously determined quarterly
cash distribution amount) until such loan is repaid. There were no loans
outstanding as of March 31, 2022 and December 31, 2021.

Significant Accounting Policies and Estimates

Refer to   Note 2   to the financial statements contained in Item 1 of Part I of
this Quarterly Report for a discussion of significant accounting policies and
estimates that impact the Trust's financial statements. Critical accounting
policies and estimates relating to the Trust are contained in Item 7 of Part II
of the 2021 Form 10-K.
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