SBR Stock: Outlook for This 8%-Yielder Remains Robust
May 23, 2025
Get Paid Monthly by Sabine Royalty Trust
Today, I’m putting SBR stock in the income investing spotlight.
It can cost a great deal of money to operate an oil and gas well. It costs a lot just to get up and running. The cost of drilling the well can vary, from a few hundred thousand dollars into the millions. It all depends on location, how deep you’re drilling, and the geography.
On average, oil wells cost between $6.6 million and $8.1 million, with drilling accounting for 73% of total costs. On top of this, you have to factor in rig rentals, which can cost up to $10,000 per day, and skilled labor, which can account for 30% to 50% of the total project cost. (Source: “How Much Does It Cost to Drill an Oil Well? A Comprehensive Overview of Expenses Involved,” Energy Field Invest, October 8, 2025.)
There are a lot of additional costs to consider, too, if someone is thinking of drilling a crude oil well: well casing and construction materials; pumps and pressure systems; water treatment, storage, and electrical costs; and ongoing maintenance. These factors can add up to $150,000 in additional annual costs.
For those who don’t own land floating on crude oil and natural gas and who have less than $10.0 million in their bank account, investing in a midstream oil and gas company like Sabine Royalty Trust (NYSE:SBR) is worth considering.
Dallas-Texas-based Sabine Royalty Trust is an oil and gas trust that has royalty and mineral interests in producing and undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. (Source: “About Us,” Sabine Royalty Trust, last accessed May 9, 2025.)
That means that it has no real operations or capital expenses. The trust was formed in 1982 by Sabine Corporation. As a trust, Sabine Royalty is primarily used as a flow-through entity for royalties. Virtually all of the royalty income it receives gets passed on to unit holders. This means that it’s not exploring for or investing in new wells.
When the trust was formed in 1982, it had estimated reserves of approximately nine million barrels of oil and 62 billion cubic feet of gas. At that time, Sabine Royalty was expected to have a life span of nine to 10 years and be fully depleted by 1993.
That clearly didn’t happen.
Since then, Sabine Royalty has produced roughly 24.0 million barrels of oil and 307 billion cubic feet of gas. This has resulted in the trust paying out roughly $1.7 billion to unitholders.
Sabine’s current reserve estimates consist of total liquids of 8.8 million barrels in oil worth future gross revenue of $625.8 million. Sabine Royalty Trust believes its properties still have a life span of more than eight years. (Source: “Form-10K,” U.S. Securities and Exchange Commission, February 27, 2025.)
SBR Stock: Cash Distribution of $0.44/Unit in May
As expected, the trust’s revenues are directly dependent upon the price of oil and gas as well as the quantities produced.
In May, Sabine Royalty declared a monthly cash distribution of $0.44778 per SBR stock unit, or $5.19 per unit on an annual basis, for a forward yield of 8.2%. (Source: “SABINE ROYALTY TRUST ANNOUNCES MONTHLY CASH DISTRIBUTION FOR MAY 2025,” Sabine Royalty Trust, May 5, 2025.)
The distribution reflects the oil production for February 2025 and gas production for January 2025, so the current price of oil and gas is not reflected in its financial results for around three months.
During the production period, the company generated 53,621 barrels of oil at $71.45 per barrel and 1,100,895 thousand cubic feet (Mcf) of gas at $3.30 per Mcf of gas. In the prior month, Sabine Royalty announced oil production of 102,540 barrels of oil at $44.22 per barrel and 1,410,501 Mcf of gas at $2.62 per Mcf of gas, resulting in an April payout of $0.503880 per unit.
As expected, the distribution changes from year to year, too.
| Year | Distribution |
| 2024 | $5.45 |
| 2023 | $6.38 |
| 2022 | $8.61 |
| 2021 | $3.21 |
| 2020 | $2.39 |
Annual Cash Distributions with SBR Stock
So far this year, Sabine Royalty has distributed $2.14 per unit. (Source: “Cash Distributions,” Sabine Royalty Trust, last accessed May 9, 2025.)
SBR stock’s reliable ultra-high-yielding monthly dividend could help unitholders weather market uncertainty and volatility. And there is certainly a lot of both right now. However, all things considered, SBR stock has been performing better than other stocks. As of this writing (May 9), SBR is up five percent over the last six months and 8.8% over the last year.
For the sake of comparison, the S&P 500 is down six percent over the last six months and is up 8.1% year over year.
With SBR stock trading at $62.89 per unit, there is significant upside potential here, even after the units hit a record high of $91.10 on January 18, 2023.
Chart courtesy of StockCharts.com
The Lowdown on SBR Stock
Sabine Royalty Trust is an oil and gas midstream company with a reliable monthly dividend. How reliable? Well, SBR stock continued to reward unitholders throughout the 2020 health crisis.
Sabine Royalty units are also up significantly since before the health crisis. Since the start of 2020, SBR stock has rallied 155%. That’s total return and it includes reinvested dividends. Had an investor instead elected to take the monthly dividends and run, the return would slip to 56%. This goes to show how important reinvested dividends are to total returns.
Chances are good that the 129 institutions that have added Sabine Royalty to their portfolio are reinvesting their dividends, too. Some of the biggest holders are Morgan Stanley and Raymond James Financial, Inc. (Source: “Sabine Royalty Trust (SBR),” Yahoo! Finance, last accessed May 9, 2025.)
