Overview.

Kiewit Royalty Trust (the "Trust") is a royalty trust with royalty and overriding royalty interests in certain coal leases. The Trust was formed for the purposes of administering the income received from such coal leases and distributing such income (together with interest earned thereon, if any, less payment of or provision for obligations) to the holders of the units of beneficial interest.

During the three month period ended March 31, 2020, the Trust received a total of $600,737 of royalty and overriding royalty payments from the Decker Mines. The following table reflects the royalty and overriding royalty payments, net of production expenses, received by the Trust at the following mines:





                          Three Months Ended March 31,
                            2020                 2019
Decker Mine            $      600,737       $      658,972
Spring Creek Mine                   -                    -
Total Royalty Income   $      600,737       $      658,972

Decker Mine. Royalty and overriding royalty amounts received by the Trust from the Decker Mine during the first three months of 2020, decreased by $58,235 or 8.9% to $600,737 as compared to $658,972 received during the same period in 2019. A portion of the royalty amount received for the quarter ended March 31, 2019 included a one-time credit for state withholding taxes in the amount of $28,041, and without this credit, the royalty and overriding amounts received by the Trust during the first three months of 2002 decreased by approximately 5% as compared to the prior period. The Decker Mine includes West Decker and East Decker Mine leases. Of the Decker Mines, the primary producer currently is an East Decker Mine. The changes during the quarter were the net result of changes in the relative amounts of coal mined, which was a normal result of the execution of a mining plan encompassing several coal leases. The Mine operator indicated that the Decker Mine is ahead of schedule for Spring 2020 and expects to ship its budgeted tons of coal of 3.8 million for 2020.

Spring Creek Mine. No royalties were received from the Spring Creek Mine during the first three months of 2020 and 2019 because historically, royalties with respect to this mine typically were paid by the mine operators on an annual basis during the second half of the calendar year. However, it is unknown whether the Trust will receive additional royalties from this mine in the future due to various factors, including the financial struggles of the coal operator, the lack of mining activities in the applicable mines, and the general depletion of coal. In 2019, the Spring Creek Mine was sold to Navajo Transitional Energy Company ("NTEC"), which is wholly owned by the Navajo Nation, and is currently operating the mine as a contract operator. The mine shut down briefly in October after the Navajo Nation declined to waive sovereign immunity for the benefit of Montana's Department of Environmental Quality ("MDEQ"). While the MDEQ and NTEC have resolved certain issues, the Spring Creek Mine currently is operating although NTEC has yet to secure mining permits and needs to obtain substantial financial assistance for reclamation. The Navajo Nation announced that it will not issue reclamation bonds for the benefit of this project. The long-term status of the mine operations is unknown, and the Trust intends to continue monitoring the new ownership by NTEC and related matters. At this time, the Trust does not expect that such restructuring will materially impact the results of operations or financial condition of the Trust.





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Interest Income. During the three months ended March 31, 2020 and March 31, 2019, the Trust earned a nominal amount of interest.

Trust Expenses. Trust expenses remained consistent and were $25,000 in the first three months of 2020 as compared to $25,947 for the same period in 2019. Trust expenses generally include fees of the Trustee, accountants, attorneys, and other professionals that the Trustee employs in the administration of the Trust.

Liquidity and Capital Resources. The Trust's primary source of liquidity is the royalty payments. In accordance with the provisions of the Trust Indenture, generally all income received by the Trust, net of Trust expenses and any amounts placed in reserves, is distributed to the Unit Holders on a biannual basis. At this time, the Trust does not expect that the COVID-19 pandemic will materially impact the liquidity or capital resources of the Trust.

Trust Reserves. During the first quarter of 2020, the Trust's distributable income was $576,223, which amount was reserved to be paid within 10 days of June 30, which is the Trust's next distribution payment date. During the first quarter of 2019, the Trust's distributable income was $634,327 and was paid to Unit Holders in July 2019. The Trust currently pays biannual distributions within 10 days after June 30 and December 31 of each year to the extent funds are available.

Change in Trust Corpus. During the first three months of 2020, the trust corpus remained unchanged.

Off-Balance Sheet Arrangements. As required by the Trust Indenture, the Trust is intended to be passive in nature and the Trustee does not have any control over or any responsibility relating to the operation of the mines under which the Trust has any royalty interests and overriding royalty interests. The Trustee has powers to collect and distribute proceeds received by the Trust and pay Trust liabilities and expenses and its actions have been limited to those activities. As a result, the Trust has not engaged in any off-balance sheet arrangements.

Critical Accounting Policies and Estimates. The Trust's condensed financial statements are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, and as such there are no critical accounting policies or estimates.

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