What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-13 · 105 added, 85 removed, 398 unchanged (32% of the section changed)

4 unchanged sentences

Reserve fund cash and short-term investments

Overriding royalty interests in subject interests, net

LIABILITIES AND TRUST CORPUS

Reserve fund liability

Trust corpus (230,172,696 royalty trust units authorized, issued and outstanding as of March 31, 2024 and December 31, 2023)

Reserve liability

Trust corpus (230,172,696 royalty trust units authorized, issued and outstanding as of June 30, 2024 and December 31, 2023)

Total liabilities and trust corpus

3 unchanged sentences

Three Months Ended

Six Months Ended

Royalty income

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Three Months Ended

Six Months Ended

Trust corpus, beginning of period

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of a normal recurring nature.

Operating results for the three-month period ended March 31, 2024, are not necessarily indicative of the

results that may be expected for the year ending December 31, 2024.

Royalty Trust was created to hold a 5% gross overriding royalty interest (collectively, the overriding royalty interests) in future production

from specified Inboard Lower Tertiary/Cretaceous exploration prospects, located in the shallow waters of the Gulf of Mexico and onshore

in South Louisiana that existed as of December 5, 2012 (collectively, the subject interests).

Operating results for the three and six-month periods ended June 30, 2024, are not necessarily indicative

of the results that may be expected for the year ending December 31, 2024.

Royalty Trust was created to hold a 5 percent gross overriding royalty interest (collectively, the overriding royalty interests) in future

production from specified Inboard Lower Tertiary/Cretaceous exploration prospects, located in the shallow waters of the Gulf of Mexico

and onshore in South Louisiana that existed as of December 5, 2012 (collectively, the subject interests).

are recorded in royalty income on the statements of distributable income when received under the modified cash basis of accounting.

27 unchanged sentences

charges related to production volumes associated with the onshore Highlander subject interest reduced the carrying value of the overriding

royalty interests by $0 and $21,780 during the three-month periods ended March 31, 2024 and 2023, respectively.

royalty interests by $0 and $21,780 during the three- and six-month periods ended June 30, 2024 and 2023, respectively.

Oil & Gas Assets LLC (HOGA) has a 72 percent working interest and an approximate 48 percent net revenue interest in the onshore Highlander

17 unchanged sentences

Unless another well is drilled on the onshore Highlander

subject interest, the Royalty Trust does not expect to receive any income attributable to its overriding royalty interests

and accordingly, does not expect to have any cash available to distribute to Royalty Trust unitholders in future periods.

informed the Trustee of any definitive plans to drill a new well on the Highlander subject interest.

Neither the Trustee nor the Royalty

Trust unitholders has any right to control or influence operations of the subject interest.

The Royalty Trust fully impaired the carrying value of the onshore Highlander

subject interest by $308,071 during the quarter ended March 31, 2023.

Unless a new well is drilled on the onshore Highlander subject interest,

the Royalty Trust does not expect to receive any income attributable to its overriding royalty interests.

Therefore, the Royalty Trust

recognized the remaining carrying value of the onshore Highlander subject interest as of March 31, 2023 as an impairment loss.

amortization was $6,756,701 at March 31, 2024 and December 31, 2023.

subject interest, the Royalty Trust does not expect to receive any income attributable to its overriding royalty interests and accordingly,

does not expect to have any cash available to distribute to Royalty Trust unitholders in future periods.

HOGA has not informed the Trustee

of any definitive plans to drill a new well on the Highlander subject interest.

Neither the Trustee nor the Royalty Trust unitholders

has any right to control or influence operations of the subject interest.

Royalty Trust fully impaired the carrying value of the onshore Highlander subject interest by $308,071 during the quarter ended March

Unless a new well is drilled on the onshore Highlander subject interest, the Royalty Trust does not expect to receive any income

attributable to its overriding royalty interests.

Therefore, the Royalty Trust recognized the remaining carrying value of the onshore

Highlander subject interest as of March 31, 2023 as an impairment loss.

Accumulated amortization was $6,756,701 at June 30, 2024 and

December 31, 2023.

RELATED PARTY TRANSACTIONS

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The Royalty Trust received royalties of $0 and $14,331 during

the three-month periods ended March 31, 2024 and 2023, respectively.

the three-month periods ended June 30, 2024 and 2023, respectively.

Royalties received by the Royalty Trust must first be used to (i)

1 unchanged sentence

The Royalty Trust had no indebtedness outstanding

as of March 31, 2024 and December 31, 2023.

as of June 30, 2024 and December 31, 2023.

quarter, the Trustee will determine the amount of funds available for distribution to the Royalty Trust unitholders.

3 unchanged sentences

Available funds will be reduced by any cash the Trustee reserves against future liabilities.

As of March 31, 2024, the Trustee has established a minimum cash reserve of $302,500.

As of June 30, 2024, the Trustee has established a minimum cash reserve of $302,500.

The minimum cash reserve is not reflective of the

Royalty Trust’s operating cash balance as of March 31, 2024 and December 31, 2023.

Royalty Trust’s operating cash balance as of June 30, 2024 and December 31, 2023.

with the distribution to unitholders in the first quarter of 2022, the Royalty Trust withheld $8,750 from the funds otherwise available

for distribution each quarter through the first quarter of 2023, with the intent of gradually building a cash reserve of approximately

As no proceeds were available for distribution in the first quarter of 2024, the Royalty Trust did not withhold any funds for

the cash reserve.

Unless a new well is drilled on the onshore Highlander subject interest as discussed in Note 2 above, the Royalty

Trust does not intend to withhold funds for the cash reserve in the future, as the Royalty Trust does not expect to have any cash available

to distribute to unitholders in future periods.

This cash is reserved for the payment of future known, anticipated or contingent expenses

or liabilities of the Royalty Trust.

The Trustee may increase or decrease the targeted cash reserve amount at any time, and may increase

or decrease the rate at which it withholds funds to build the cash reserve at any time, without advance notice to the unitholders.

held in reserve will be invested as required by the amended and restated royalty trust agreement governing the Royalty Trust (the royalty

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.

additional information regarding distributions to Royalty Trust unitholders, see Note 4.

As no proceeds were available for distribution in the three- and six-month periods ended June 30, 2024, the Royalty Trust did

not withhold any funds for the cash reserve.

Unless a new well is drilled on the onshore Highlander subject interest as discussed in

Note 2 above, the Royalty Trust does not intend to withhold funds for the cash reserve in the future, as the Royalty Trust does not expect

to have any cash available to distribute to unitholders in future periods.

This cash is reserved for the payment of future known, anticipated

or contingent expenses or liabilities of the Royalty Trust.

The Trustee may increase or decrease the targeted cash reserve amount at

any time, and may increase or decrease the rate at which it withholds 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 amended and restated royalty trust agreement governing the

Royalty Trust (the royalty 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.

For additional information regarding distributions to Royalty Trust unitholders, see Note 4.

of Administrative Expenses.

12 unchanged sentences

No loans or repayments were made during the quarters

ending March 31, 2024 or December 31, 2023.

ended June 30, 2024 or December 31, 2023, and no loans were outstanding as of June 30, 2024 or December 31, 2023.

to the royalty trust agreement, FCX agreed to provide and maintain a $1.0 million stand-by reserve account or an equivalent letter of

8 unchanged sentences

of Assets, Liabilities and Trust Corpus.

On February 1, 2024, the Royalty Trust used $14,280 from the reserve account to pay administrative

expenses to the Trustee, which is included in the administrative expenses in the accompanying Statements of Distributable

As of March 31, 2024, FCX had not requested a reduction of the reserve account.

The Royalty Trust used $14,280 and $1,820 on February 1 and April 1, 2024, respectively, from

the reserve account to pay administrative expenses to the Trustee, which is included in the administrative expenses in the accompanying

Statements of Distributable Income.

As of June 30, 2024, FCX had not requested a reduction of the reserve account.

Administration.

11 unchanged sentences

gas sales volumes (measured in thousands of cubic feet, or Mcf), average sales price and net cash proceeds available for distribution

for the three-month periods ended March 31, 2024 and 2023, are set forth in the table below.

for the three and six-month periods ended June 30, 2024 and 2023, are set forth in the table below.

Three Months Ended

Six Months Ended

Natural gas sales volumes (Mcf)

9 unchanged sentences

Net cash proceeds available for distribution

summary of quarterly per unit distributions for the three-month periods ended March 31, 2024 and 2023, is set forth in the table below.

summary of quarterly per unit distributions for the three- and six-month periods ended June 30, 2024 and 2023, is set forth in the table

Per Unit Amount

distributions are not necessarily indicative of future distributions.

2 unchanged sentences

SUBSEQUENT EVENTS

Royalty Trust evaluated all other events subsequent to March 31, 2024, and through the date the Royalty Trust’s financial statements

Royalty Trust evaluated all other events subsequent to June 30, 2024, and through the date the Royalty Trust’s financial statements

were issued, and determined that all events or transactions occurring during this period requiring recognition or disclosure were appropriately

75 unchanged sentences

subject interest to HOGA.

At March 31, 2024, HOGA owned interests in gas leases onshore in South Louisiana, covering approximately 9,000

At June 30, 2024, HOGA owned interests in gas leases onshore in South Louisiana, covering approximately 9,000

gross acres associated with the onshore Highlander subject interest.

2 unchanged sentences

Trust has no control.

As of March 31, 2024, the onshore Highlander subject interest had no production, as HOGA had commenced operations

As of June 30, 2024, the onshore Highlander subject interest had no production, as HOGA had commenced operations

to permanently plug and abandon the well in early March 2024.

13 unchanged sentences

to its overriding royalty interests.

Unless a new well is drilled on the onshore Highlander subject interest,

the Royalty Trust does not expect to receive any income attributable to its overriding royalty interests and accordingly, does not expect

to have any cash available to distribute to Royalty Trust unitholders in future periods.

HOGA has not informed the Trustee of any definitive

plans to drill a new well on the Highlander subject interest.

Neither the Trustee nor the Royalty Trust unitholders has any right to control

or influence operations of the subject interest.

Unless a new well is drilled on the onshore Highlander subject interest, the Royalty Trust does

not expect to receive any income attributable to its overriding royalty interests and accordingly, does not expect to have any cash available

to distribute to Royalty Trust unitholders in future periods.

HOGA has not informed the Trustee of any definitive plans to drill a new

well on the Highlander subject interest.

Neither the Trustee nor the Royalty Trust unitholders has any right to control or influence

operations of the subject interest.

AND CAPITAL RESOURCES

9 unchanged sentences

receive any distributions.

No loans or repayments were made during the quarters ending March 31, 2024 or December 31, 2023.

No loans or repayments were made during the quarters ended June 30, 2024 or December 31, 2023, and no loans

were outstanding as of June 30, 2024 or December 31, 2023.

to the royalty trust agreement, FCX agreed to provide and maintain a $1.0 million stand-by reserve account or an equivalent letter of

8 unchanged sentences

of Assets, Liabilities and Trust Corpus.

On February 1, 2024, the Royalty Trust used $14,280 from the reserve account to pay administrative

expenses to the Trustee, which is included in the administrative expenses in the accompanying Statements of Distributable

As of March 31, 2024, FCX had not requested a reduction of the reserve account.

The Royalty Trust used $14,280 and $1,820 on February 1 and April 1, 2024, respectively, from

the reserve account to pay administrative expenses to the Trustee, which is included in the administrative expenses in the accompanying

Statements of Distributable Income.

As of June 30, 2024, FCX had not requested a reduction of the reserve account.

connection with the completion of the Highlander Sale, HOGA assumed all administrative and reporting responsibilities with respect to

3 unchanged sentences

The Royalty Trust received royalties of $0 and $14,331 during the three-month

periods ended March 31, 2024 and 2023, respectively.

periods ended June 30, 2024 and 2023, respectively.

received by the Royalty Trust must first be used to (i) satisfy Royalty Trust administrative expenses and (ii) reduce Royalty Trust indebtedness.

The Royalty Trust had no indebtedness outstanding as of March 31, 2024 and December 31, 2023.

The Royalty Trust had no indebtedness outstanding as of June 30, 2024 and December 31, 2023.

quarter, the Trustee will determine the amount of funds available for distribution to the Royalty Trust unitholders.

4 unchanged sentences

future liabilities.

As of March 31, 2024, the Trustee has established a minimum cash reserve of $302,500.

As of June 30, 2024, the Trustee has established a minimum cash reserve of $302,500.

The minimum cash reserve is

not reflective of the Royalty Trust’s operating cash balance as of March 31, 2024 and December 31, 2023.

not reflective of the Royalty Trust’s operating cash balance as of June 30, 2024 and December 31, 2023.

with the distribution to unitholders in the first quarter of 2022, the Royalty Trust withheld $8,750 from the funds otherwise available

for distribution each quarter through the first quarter of 2023, with the intent of gradually building a cash reserve of approximately

As no proceeds were available for distribution in the first quarter of 2024, the Royalty Trust did not withhold any funds for

the cash reserve.

As no proceeds were available for distribution in the second quarter of 2024, the Royalty Trust did not withhold any funds

for the cash reserve.

Unless another well is drilled on the onshore Highlander subject interest as discussion “Overview –

of the Onshore Highlander Subject Interest”

above, the Royalty Trust does not intend to withhold funds for the cash reserve as

the Royalty Trust does not expect to have any cash available to distribute to unitholders in future periods.

This cash is reserved for

the payment of future known, anticipated or contingent expenses or liabilities of the Royalty Trust.

The Trustee may increase or decrease

the targeted cash reserve 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 royalty trust

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.

Distributable

income totaled $0 and $197,331 during the three-month periods ended March 31, 2024 and 2023, respectively.

These distributions are not

Status of the Onshore Highlander Subject Interest”

above, the Royalty Trust does not intend to withhold funds for the cash reserve

as the Royalty Trust does not expect to have any cash available to distribute to unitholders in future periods.

This cash is reserved

for the payment of future known, anticipated or contingent expenses or liabilities of the Royalty Trust.

The Trustee may increase or

decrease the targeted cash reserve 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 royalty

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.

was no distributable income during the three-month periods ended June 30, 2024 and 2023.

Any distribution in a particular period is not

necessarily indicative of future distributions.

30 unchanged sentences

OF OPERATIONS

In accordance with the terms of the master conveyance, during the three-month period ended March 31, 2024, the Royalty Trust

In accordance with the terms of the master conveyance, during the three-month period ended June 30, 2024, the Royalty Trust

did not receive royalty income.

During the three-month period ended March 31, 2023, the Royalty Trust received royalties of $386,947

During the three-month period ended June 30, 2023, the Royalty Trust received royalties of $14,331 related

to 14,231 Mcf of natural gas production attributable to the onshore Highlander subject interest with average post-production costs of

$1.43 per Mcf and an average sales price of $2.43 per Mcf.

During the six-month period ended June 30, 2024, the

Royalty Trust did not receive royalty income.

During the six-month period ended June 30, 2023, the Royalty Trust received royalties of

$401,278 related to 101,352 Mcf of natural gas production attributable to the onshore Highlander subject interest with average post-production

costs of $0.67 per Mcf and an average sales price of $4.63 per Mcf.

Royalty income was lower during the three- and six-month periods ended

June 30, 2024, as compared to the corresponding 2023 periods, primarily due to lower production resulting from the operational issues

relating to the sole well producing from the Highlander subject interest and ultimately the shutting in of the well.

Administrative

1 unchanged sentence

of the Royalty Trust.

During the three-month periods ended March 31, 2024 and 2023, the Royalty Trust paid administrative expenses of

During the three-month periods ended June 30, 2024 and 2023, the Royalty Trust paid administrative expenses of

$156,042 and $171,714, respectively.

Administrative expenses were higher for the three-month period ended March 31, 2024, as compared

to the corresponding period in 2023, primarily due to the Trust’s payment of fourth quarter 2023 administrative expenses in the

first quarter of 2024.

During the six-month periods ended June 30, 2024 and 2023, the Royalty Trust paid administrative expenses of

$577,765 and $361,390, respectively.

Administrative expenses were lower for the six-month period ended June 30, 2024, as compared

to the corresponding 2023 period, primarily due to the Trust’s payment of fourth quarter 2023 administrative expenses in the first

quarter of 2024.

ACCOUNTING STANDARDS

59 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements