Legal Proceedings
−Removed: On May 27, 2025, the Trustee announced that it had filed a Second Amended Petition in the District Court of Tarrant County, Texas in connection with its lawsuit against Blackbeard, the operator of properties in Waddell Ranch, in Crane County, Texas, in which the Trust holds a 75% net overriding royalty.
−Removed: On May 8, 2024, the Trustee announced that it had initiated the lawsuit by filing a petition in the District Court of Tarrant County, Texas, and on June 10, 2024, Blackbeard filed its original answer and counterclaim to the lawsuit.
−Removed: The trial date in the District Court of Tarrant County is scheduled for November 17, 2025, 8:30 a.m., Central Time.
−Removed: Discovery is ongoing.
−Removed: Under the Second Amended Petition, the Trustee seeks to recover more than $9 million in damages to the Trust it alleges result from Blackbeard’s failure to properly calculate and pay royalties due and owing to the Trust.
−Removed: Specifically, the Trustee alleges that Blackbeard impermissibly calculated and deducted overhead costs, labor expenses, and saltwater disposal fees.
−Removed: The Trustee also claims Blackbeard failed to pay on all volumes of oil, gas, and other minerals produced by Blackbeard from the relevant lands and failed to provide annual reports required by the Conveyance.
−Removed: The claims relate to the April 2020 through December 2023 production months.
−Removed: A joint venture audit of the 2024 production months is underway, and the Trustee reserved the right in the petition to bring any additional claims revealed by such audit.
−Removed: Certain additional claims raised in the Trustee’s original and first amended petitions have been resolved through prior joint venture audits.
−Removed: Except as described above, there are no material pending legal proceedings to which the Trust is a party or of which any of its property is the subject.
+Added: On August 19, 2025, the Trustee on behalf of the Trust, entered into a settlement agreement and release (the “Settlement Agreement”) in connection with its lawsuit against Blackbeard.
+Added: Pursuant to the lawsuit, the Trustee had sought to recover more than $9 million in damages it alleged resulted from Blackbeard’s failure to properly calculate and pay royalties due and owing to the Trust.
+Added: Pursuant to the Settlement Agreement, Blackbeard has agreed to pay the Trust $9,000,000, of which $4,500,000 was paid in September, and the remainder of which will be paid in four equal installments of $1,125,000 quarterly during the 2026 calendar year.
+Added: Additionally, the Settlement Agreement established the overhead rate that may be charged to the Trust and permits Blackbeard to pass through third-party charges for saltwater disposal and gathering and transportation, and charge technical labor on reservoir engineers using an agreed allocation methodology against the net overriding royalty.
+Added: The parties also agreed that the Trust would not make future claims for lost volumes in the case of ordinary line loss (as defined by third party purchase agreements with purchasers).
+Added: The Trust will have the option to conduct annual site audits, at its expense.
+Added: The Settlement Agreement also set forth agreed reporting that Blackbeard will provide the Trustee going forward.
+Added: There are no material pending legal proceedings to which the Trust is a party or, to its knowledge, of which any of its property is the subject.
Risk factors relating to the Trust are contained in Item 1A of the Trust's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
−Removed: Except as set forth in such filing, no material change to such risk factors has occurred during the six months ended June 30, 2025.
+Added: Except as set forth in such filing, no material change to such risk factors has occurred during the nine months ended September 30, 2025.
Items 2 through 4
1 unchanged sentence
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.