What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-30 compared with 2021-03-31 · 63 added, 76 removed, 138 unchanged (50% of the section changed)

15 unchanged sentences

Year Ended December 31,

Gross Proceeds of Sales

From the Underlying Properties:

Other (adjustment)(1)

Gross Proceeds of

From the Underlying

Severance Tax

3 unchanged sentences

Total Royalty Income for Distribution

Due to the NPI deficit, the Waddell Ranch properties did not contribute Royalty income from June 1, 2020 through

Due to the NPI deficit, the Waddell Ranch properties did not contribute to Royalty income from June 1, 2021 through

December 31, 2021.

31 unchanged sentences

Average Price/Mcf

The average price of oil decreased to $39.51 per barrel in 2020, down from $51.74 per barrel in 2019.

The average price

of oil in 2018 was $58.11 per barrel.

In addition, the average price of gas decreased from $2.64 per Mcf in 2019 to $1.47 per Mcf in 2020.

The average price of oil increased to $63.34 per barrel in 2021, up from $39.51 per barrel in 2020.

The average price of

oil in 2019 was $51.74 per barrel.

In addition, the average price of gas increased from $1.47 per Mcf in 2020 to $3.43 per Mcf in 2021.

The average price of gas in 2019 was $2.64 per Mcf.

Oil prices have decreased primarily because of world

market conditions and the negative impact of the COVID-19 pandemic on economic activity.

Oil prices have increased primarily because of world market

Oil prices are expected to remain volatile.

Gas liquids values remain weaker and keep the prices of gas weaker in

addition to not receiving revenue from Blackbeard on the Waddell NPI due to excess costs of new drilling.

Gas liquids values remain stronger and keep the prices of gas stronger.

Blackbeard, after assuming the role of operation of the Waddell Ranch Properties, immediately instituted a workover of

specific wells, which cause the Trust not to receive any royalty income from the Waddell Properties in 2021.

Subsequent to December 31, 2021, the price of both oil and gas continued to fluctuate, giving

1 unchanged sentence

As of March 15, 2022, NYMEX posted oil prices were approximately $96.44 per barrel, which compared to the posted price of $66.56 per

barrel, used to calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a smaller standardized measure of discounted future net cash flows for oil.

As of March 10, 2021, NYMEX posted gas prices

were $2.69 per million British thermal units.

The use of such price, as compared to the posted price of $2.00 per million British thermal units, used to calculate the future net revenue of the Trusts proved developed reserves would result in a

smaller standardized measure of discounted future net cash flows for gas.

Since the oil and gas sales attributable to the Royalties are based on an

allocation formula that is dependent on such factors as price and cost (including capital expenditures), production amounts do not necessarily provide a meaningful comparison.

For the underlying properties total oil production decreased by

approximately 5% from 2019 to 2020 primarily due to the natural decline of production.

For the underlying properties total gas production increased approximately 5% from 2019 to 2020 primarily due to additional production on Waddell due to new

Total capital expenditures in 2020 used in the net overriding royalty calculation were approximately $10.3 million (gross) compared

to $3.3 million (gross) in 2019 and $730,000 (gross) in 2018.

The operator of the Waddell Ranch properties has informed the Trustee that, in order to halt the production decline curve and to exploit the remaining potential of the Trusts

assets more fully, a more aggressive, robust capital expenditure budget will be necessary in the future and is being pursued.

In 2019, there were 0

recompletion wells completed and 0 wells permanently plugged on the Waddell Ranch properties.

Actual costs for this program in 2019 approximated $3.3 million (gross).

barrel, used to calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a larger standardized measure of discounted future net cash flows for oil.

As of March 15 , 2022, NYMEX posted gas

prices were $4.46 per million British thermal units.

The use of such price, as compared to the posted price of $3.65 per million British thermal units, used to calculate the future net revenue of the Trusts proved developed reserves would

result in a larger standardized measure of discounted future net cash flows for gas.

Since the oil and gas sales attributable to the Royalties are

based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), production amounts do not necessarily provide a meaningful comparison.

For the underlying properties total oil production increased

by approximately 50% from 2020 to 2021 primarily due to additional production on Waddell due to new drilling.

For the underlying properties total gas production increased approximately 46% from 2020 to 2021 primarily due to the new drilling and

updated gas plant facility.

Total capital expenditures in 2021 used in the net overriding royalty calculation were approximately $66.6 million

(gross) compared to $10.3 million (gross) in 2020 and $3.3 million (gross) in 2019.

The operator of the Waddell Ranch properties has informed the Trustee that, in order to halt the production decline curve and to exploit the remaining

potential of the Trusts assets more fully, a more aggressive, robust capital expenditure budget will be necessary in the future and is being pursued.

In 2020, there were 3 recompletion wells completed and 21 wells permanently plugged on the Waddell Ranch properties.

Actual costs for this program in

2020 approximated $10.3 million (gross).

This cost is for the development program and base facilities.

In 2020, there

were 16 new drill wells and 3 recompletion.

Texas law requires all temporarily abandoned wells to be either worked over and recompleted to

functional status or permanently plugged and abandoned within a five year time frame.

In 2021, there were 28 new drill wells and 47 recompletion.

Texas law requires all temporarily abandoned wells to be either worked over and recompleted to functional status or permanently plugged and abandoned

within a five year time frame.

The Waddell Ranch properties contain over 700 such temporarily abandoned wells.

In 2020, there were 3 recompletion wells completed and 21 wells permanently

plugged on the Waddell Ranch properties.

In 2021, there were 47 recompletion wells completed and 20 wells permanently plugged on the Waddell Ranch properties.

There were 79 gross (20 net) drill wells completed on the Waddell Ranch properties during 2021.

December 31, 2019, there was 2 drill wells and 0 workover in progress on the Waddell Ranch properties.

Blackbeard has advised the

Trustee that the proposed budget for 2021 will be $86.7 million (gross) and $32.5 (net).

The 2021 budget will not include amounts to be spent on vertical wells, or wells to be worked over and completed, but will be spent on

additional facilities and infrastructure improvements and the completion of projects begun in 2020.

In 2020, lease operating expense and property

taxes on the Waddell Ranch properties amounted to approximately $19.6 million.

In 2019, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $23.4 million.

In 2018, lease operating expense

and property taxes on the Waddell Ranch properties amounted to approximately $23.1 million.

The Trustee has been advised by the operator that

since June 2006, the oil from the Waddell Ranch has been marketed by the operator by soliciting bids from third parties on an outright sale basis of production listed in bid packages.

At December 31, 2020, there were 4 drill

wells and 3 workover in progress on the Waddell Ranch properties.

Blackbeard has advised the Trustee that the proposed budget for 2022 will be

$245 million (gross) and $92 (net).

The 2022 budget will include amounts to be spent on 34 (net) vertical wells, targeting the WolfBone formations, 13 (net) horizontal wells targeting the Sandhills and McKnight

formations, along with various other recompleted wells prospects to be worked over and completed, and also amounts to be spent on additional facilities and infrastructure improvements and the completion of projects begun in 2021.

Because the wide

volatility of the pricing for both oil and gas in the current market, Blackbeard could not make any accurate projections as to the anticipated revenue streams or production levels of both the 2021 and projected 2022 budget projects.

In 2021, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $23 million, compared to

approximately $19.6 million in 2020 and approximately $23.4 million in 2019.

The Trustee has been advised by the operator that since June

2006, the oil from the Waddell Ranch has been marketed by the operator by soliciting bids from third parties on an outright sale basis of production listed in bid packages.

During 2021, the monthly royalty receipts were invested by the Trustee in cash and cash equivalents until the monthly distribution date, and earned

1 unchanged sentence

Interest income for 2020 and 2019 was $9,603 and $23,000, respectively.

General and administrative expenses in 2020 were

$1,041,303 compared to $1,089,302 in 2019 and $1,324,828 in 2018, decrease due primarily to audit of properties and other professional services in the prior years.

The reserve for

administrative expenses for any potentially extraordinary events and/or expenses was $1,100,000 as of December 31, 2020.

Total reserves for expenses for the years ended December 31,

2020, 2019 and 2018 was $50,000, $0 and $0, respectively.

Distributable income for 2020 was $10,958,618 or $0.24 per Unit.

General and administrative expenses in 2021 were $1,088,851 compared to $1,041,303 in 2020 and

$1,089,302 in 2019, primarily due to audit of properties and other professional services.

The reserve for administrative expenses for any potentially extraordinary events and/or expenses was $1,100,000 as of December 31, 2021 and 2020.

reserves for expenses for the years ended December 31, 2021, 2020 and 2019 was $0, $50,000 and $0, respectively.

Distributable income for 2021

was $10,721,775 or $0.23 per Unit.

Distributable income for 2020 was $10,958,618 or $0.24 per Unit.

5 unchanged sentences

2021 amounted to $1,253 compared to $1,539 for the fourth quarter of 2020.

The decrease in interest income can be attributed primarily to a decrease of funds available.

Total general and administrative expenses was $135,434 for the fourth quarter of

2020 compared to $213,203 for the fourth quarter of 2019.

The decrease in expenses primarily related to timing of payments of legal and auditor expenses.

The increase in interest income can be attributed primarily to an increase of funds available.

Total general and administrative expenses was $157,516 for the fourth quarter

of 2021 compared to $135,434 for the fourth quarter of 2020.

The increase in expenses primarily related to timing of payments of legal and auditor expenses.

Royalty income for the Trust for the fourth quarter is associated with actual oil and gas production during August through October from the Underlying

10 unchanged sentences

Average Price/Mcf

The posted price of oil decreased for the fourth quarter of 2020 compared to the fourth quarter of 2019, resulting in an

The posted price of oil increased for the fourth quarter of 2021 compared to the fourth quarter of 2020, resulting in an

average price per barrel of $72.44 compared to $37.91 in the same period of 2020.

The average price of gas decreased for the fourth quarter of 2020 compared to the same period in 2019, resulting in an average price per Mcf of $2.14 compared to $2.70

The average price of gas increased for the fourth quarter of 2021 compared to the same period in 2020, resulting in an average price per Mcf of $4.85 compared to $2.14

in the fourth quarter of 2020.

The Trustee has been advised that oil production decreased in the fourth quarter of 2020 compared to the same period

in 2019 primarily due to natural decline.

Gas production increased in the fourth quarter of 2020 compared to the same period in 2019 due to additional wells producing later in the year due to new drilling.

The Trust has been advised that 6 wells were drilled and completed during the three months ended December 31, 2020, and there were 7 wells in

The Trustee has been advised that oil and gas production increased in the fourth quarter of 2021 compared to the

same period in 2020 primarily due to additional drilling.

The Trust has been advised that 22.6 wells were drilled and completed during the

three months ended December 31, 2021, and there were 8.2 wells in progress.

Use of Estimates

33 unchanged sentences

Estimates of future net revenues from proved

reserves have been prepared using average 12-month oil and gas prices, determined

as an unweighted arithmetic average of the

reserves have been prepared using average 12-month oil and gas

prices, determined as an unweighted arithmetic average of the

first-day-of-the-month benchmark price for each month within the 12-month period preceding the end of the most recent fiscal year, unless prices are defined by contractual arrangements.

15 unchanged sentences

There are no new pronouncements that are expected to have a significant impact on the Trusts financial statements.

Off-Balance Sheet Arrangements.

As stipulated in the Trust Agreement, 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 Underlying Properties.

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.

Therefore, the

Trust has not engaged in any off-balance sheet arrangements.

Tabular Disclosure of Contractual Obligations.

Payments Due by Period

Contractual Obligations

Distribution payable to Unit holders

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-K

Item 5. Market for Registrant’s Common Equity