ECA Marcellus Trust I Announces There Will Be No Quarterly Distribution
14 Agosto 2024 - 3:15PM
Business Wire
ECA MARCELLUS TRUST I (OTC Pink: ECTM) announced today that
there will be no distribution paid for the quarter ended June 30,
2024, for holders of record as of the close of business on August
23, 2024, as Trust expenses offset net revenues to the Trust for
the quarter.
Since the first quarter of 2019, the Trustee has been gradually
building a cash reserve for the payment of future known,
anticipated or contingent expenses or liabilities of the Trust by
withholding cash reserve amounts from each quarterly distribution.
In November 2021, the Trustee notified Greylock Energy LLC that the
Trustee had determined to increase the targeted cash reserve from
the initially stated amount of approximately $1.8 million, to
approximately $3.8 million. From the first quarter of 2019 through
the fourth quarter of 2022, the Trustee withheld an amount from
each distribution equal to the greater of $90,000 or 10% of the
funds otherwise available for distribution each quarter. Since
achieving the initial target of $1.8 million in the quarter ended
December 31, 2022, the Trustee has been withholding, and currently
plans to continue to withhold, $90,000 per quarter until a total of
approximately $3.8 million in cash reserves is withheld. The
Trustee may increase or decrease the targeted amount 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. 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 of the Trust
eventually will be distributed to unitholders, together with
interest earned on the funds. The Trustee has elected to not
withhold any cash reserves this quarter.
The Trust was formed to own royalty interests in natural gas
properties now held by Greylock Energy LLC and certain of its
wholly owned subsidiaries (“Greylock”) in the Marcellus Shale
formation in Greene County, Pennsylvania. The Trust is entitled to
receive certain amounts of the proceeds attributable to Greylock’s
interest in the sale of production from the properties. As
described in the Trust's filings, the amount of the quarterly
distributions is expected to fluctuate from quarter to quarter,
depending on the proceeds received by the Trust as a result of
production and natural gas prices and the amount of the Trust's
administrative expenses, among other factors. The amount of
proceeds received or expected to be received by the Trust (and its
ability to pay distributions) has been and will continue to be
directly affected by the volatility in commodity prices, which have
experienced significant fluctuation since the beginning of 2020 as
a result of a variety of factors that are beyond the control of the
Trust or Greylock. Low natural gas prices will reduce proceeds to
which the Trust is entitled, which will reduce the amount of cash
available for distribution to unitholders and in certain periods
could result in no distributions to unitholders.
Pursuant to Section 1446 of the Internal Revenue Code of 1986
(the “IRC”), withholding tax on income effectively connected to a
United States trade or business allocated to non-U.S. persons
(“ECI”) should be made at the highest marginal rate. Under IRC
Section 1441, withholding tax on fixed, determinable, annual,
periodic income from United States sources allocated to non-U.S.
persons should be made at a 30% rate unless the rate is reduced by
treaty. Nominees and brokers should withhold at the highest
marginal rate on the distribution made to non-U.S. persons. The Tax
Cuts and Jobs Act (the “TCJA”), enacted in December 2017, treats a
non-U.S. holder’s gain on the sale of Trust units as ECI to the
extent such holder would have had ECI if the Trust had sold all of
its assets at fair market value on the date of the exchange. The
TCJA also requires a transferee of units to withhold 10% of the
amount realized on the sale of exchange of units (generally, the
purchase price) unless the transferor certifies that it is not a
nonresident alien individual or foreign corporation, or other
exception is available. Pursuant to final Treasury Regulations
issued in 2020, this withholding obligation applies to transfers of
units in publicly traded partnerships such as the Trust (which is
classified as a partnership for federal and state income tax
purposes) occurring on or after January 1, 2022. This release is
intended to be a qualified notice to nominees and brokers as
provided for under Treasury Regulation Section 1.1446-4(b) by ECA
Marcellus Trust I, and while specific relief is not specified for
Section 1441 income, this disclosure is intended to suffice.
This press release contains statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements contained in this press
release, other than statements of historical facts, are
"forward-looking statements" for purposes of these provisions.
These forward-looking statements include the amount and date of any
anticipated distribution to unit holders. The anticipated
distribution is based, in part, on the amount of cash received or
expected to be received by the Trust from Greylock with respect to
the relevant quarterly period. Any differences in actual cash
receipts by the Trust could affect this distributable amount. Other
important factors that could cause actual results to differ
materially include expenses of the Trust and reserves for
anticipated future expenses and the effect, impact, potential
duration or other implications of the COVID-19 pandemic. Statements
made in this press release are qualified by the cautionary
statements made in this press release. Neither Greylock nor the
Trustee intends, and neither assumes any obligation, to update any
of the statements included in this press release. An investment in
Common Units issued by ECA Marcellus Trust I is subject to the
risks described in the Trust's Annual Report on Form 10-K for the
year ended December 31, 2023, and all of its other filings with the
Securities and Exchange Commission. The Trust's annual, quarterly
and other filed reports are or will be available over the Internet
at the SEC's web site at http://www.sec.gov.
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ECA Marcellus Trust I The Bank of New York Mellon
Trust Company, N.A., as Trustee Sarah Newell 1 (512)
236-6555 601 Travis Street, 16th Floor Houston, TX 77002