What changed in this filing

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Item 1A. Risk Factors

2021-03-23 compared with 2020-03-16 · 727 added, 484 removed, 373 unchanged (76% of the section changed)

Risk Factors.

Prices of oil and natural gas fluctuate,

and lower prices could reduce proceeds to the Trust and cash distributions to unitholders.

The Trust’s reserves and monthly cash

distributions are highly dependent upon the prices realized from the sale of oil and natural gas.

Oil and natural gas prices can

fluctuate widely on a month-to-month basis in response to a variety of factors that are beyond the control of the Trust and the

of Risk Factors

risk factors summarized and detailed below could materially harm production from the Underlying Properties, operating results

and/or the Trust’s financial condition, adversely affect proceeds to the Trust and cash distributions to Trust unitholders,

and/or cause the price of the Trust units to decline.

These are not all the risks the Trust faces, and other factors not presently

known to the Trust or that the Trust currently believes are immaterial may also affect the Trust if they occur.

risks and uncertainties include, but are not limited to, the following :

of oil and natural gas fluctuate, and lower prices could reduce proceeds to the Trust

and cash distributions to unitholders;

ongoing COVID-19 pandemic and related economic turmoil have affected and could continue

to adversely affect proceeds to the Trust and quarterly cash distributions to unitholders;

reserves and future production may be less than current estimates, which could reduce

cash distributions by the Trust and the value of the Trust Units;

ability or willingness of OPEC and other oil exporting nations to set and maintain production

levels has a significant impact on oil and natural gas commodity prices, which could

reduce the amount of cash available for distribution to Trust unitholders;

party operators are the operators of substantially all of the wells on the Underlying

Properties and, therefore, the Sponsor is not in a position to control the timing of

development efforts, the associated costs or the rate of production of the reserves on

such properties;

bankruptcy of operators could impede the operation of wells;

oil and natural gas wells and producing oil and natural gas are costly and high-risk

activities with many uncertainties that could adversely affect future production from

the Underlying Properties;

of equipment, services and qualified personnel could increase costs of developing and

operating the Underlying Properties and result in a reduction in the amount of cash available

for distribution to the Trust unitholders;

generation of profits for distribution by the Trust depends in part on access to and

operation of gathering, transportation and processing facilities.

Any limitation in the

availability of those facilities could interfere with sales of oil and natural gas production

from the Underlying Properties;

developments in Texas, Louisiana or New Mexico could adversely impact the results of

operations and cash flows of the Underlying Properties and reduce the amount of cash

available for distributions to Trust unitholders;

reserves attributable to the Underlying Properties are depleting assets and production

from those reserves will diminish over time.

Furthermore, the Trust is precluded from

acquiring other oil and natural gas properties or net profits interests to replace the

depleting assets and production;

amount of cash available for distribution by the Trust will be reduced by the amount

of any costs and expenses related to the Underlying Properties and other costs and expenses

incurred by the Trust;

Sponsor’s ability to perform its obligations to the Trust could be limited by restrictions

under its debt agreements;

bankruptcy of the Sponsor or any of the third-party operators could impede the operation

of the wells and the development of the proved undeveloped reserves;

the event of the bankruptcy of the Sponsor, if a court were to hold that the Net Profits

Interest was part of the bankruptcy estate, the Trust may be treated as an unsecured

creditor with respect to the Net Profits Interest attributable to properties in Louisiana

and New Mexico;

Trust is passive in nature and neither the Trust nor the Trust unitholders have any ability

to influence the Sponsor or control the operations or development of the Underlying Properties;

Sponsor may transfer all or a portion of the Underlying Properties at any time without

Trust unitholder consent, subject to specified limitations;

certain circumstances, the Trustee must sell the Net Profits Interest and dissolve the

Trust prior to the expected termination of the Trust.

As a result, Trust unitholders

may not recover their investment;

of interest could arise between the Sponsor and its affiliates, on the one hand, and

the Trust and the Trust unitholders, on the other hand;

Trust is administered by a Trustee who cannot be replaced except by a majority vote of

the Trust unitholders at a special meeting which may make it difficult for Trust unitholders

to remove or replace the Trustee;

the Trust cannot meet the New York Stock Exchange continued listing requirements, the

NYSE may delist the Trust units;

trading price for the Trust Units may not reflect the value of the Net Profits Interest

held by the Trust;

operations of the Underlying Properties are subject to environmental laws and regulations

that could adversely affect the cost, manner or feasibility of conducting operations

on them or result in significant costs and liabilities;

operations on the Underlying Properties are subject to complex federal, state, local

and other laws and regulations that could adversely affect the cost, manner or feasibility

of conducting operations on them or expose the operator to significant liabilities;

change laws and regulations restricting emissions of “greenhouse gases”

result in increased operating costs and reduced demand for the oil and natural gas that

the operators produce while the physical effects of climate change could disrupt their

production and cause them to incur significant costs in preparing for or responding to

those effects;

and state legislative and regulatory initiatives relating to hydraulic fracturing could

result in increased costs and additional operating restrictions or delays as well as

adversely affect the services of the operators of the Underlying Properties;

Cyber-attacks

or other failures in telecommunications or information technology systems could result

in information theft, data corruption and significant disruption of the Sponsor’s

business operations;

the IRS were to determine (and be sustained in that determination) that the Trust is

not a “grantor trust”

federal income tax purposes, the Trust could

be subject to more complex and costly tax reporting requirements that could reduce the

amount of cash available for distribution to Trust unitholders;

are required to pay taxes on their share of the Trust’s income even if they do

not receive any cash distributions from the Trust.

AND OPERATING RISKS

of oil and natural gas fluctuate, and lower prices could reduce proceeds to the Trust and cash distributions to unitholders.

Trust’s reserves and monthly cash distributions are highly dependent upon the prices realized from the sale of oil and natural

Oil and natural gas prices can fluctuate widely on a month-to-month basis in response to a variety of factors that are beyond

the control of the Trust and the Sponsor.

These factors include, among others:

regional, domestic and foreign supply and perceptions of supply of oil and natural gas;

the level of demand and perceptions of demand for oil and natural gas;

political conditions or hostilities in oil and natural gas producing regions;

anticipated future prices of oil and natural gas and other commodities;

weather conditions and seasonal trends;

technological advances affecting energy consumption and energy supply;

domestic and foreign supply and perceptions of supply of oil and natural gas;

level of demand and perceptions of demand for oil and natural gas;

conditions or hostilities in oil and natural gas producing regions;

future prices of oil and natural gas and other commodities;

conditions and seasonal trends;

technological

advances affecting energy consumption and energy supply;

and worldwide economic conditions;

the occurrence or threat of epidemic or pandemic diseases, such as the recent outbreak of coronavirus or any government

response to such occurrence or threat;

the price and availability of alternative fuels;

the proximity, capacity, cost and availability of gathering and transportation facilities;

the volatility and uncertainty of regional pricing differentials;

governmental regulations and taxation;

energy conservation and environmental measures;

acts of force majeure.

Crude oil prices have declined sharply

in the first quarter of 2020 in response to the economic effects of the coronavirus pandemic and the recent announcement of

planned production increases by Saudi Arabia.

Continued low oil and natural gas prices will reduce profits to which the

Trust is entitled, which will reduce the amount of each available for distribution to unitholders, and may ultimately reduce

the amount of oil and natural gas that is economically viable to produce from the Underlying Properties.

As a result, the

operators of the Underlying Properties could determine during periods of low commodity prices to shut-in or curtail

production from wells on the Underlying Properties, or even plug and abandon marginal wells that otherwise may have been

allowed to continue to produce for a longer period under conditions of higher prices.

Specifically, an operator may abandon

any well or property if it reasonably believes that the well or property can no longer produce oil or natural gas in

commercially paying quantities.

This could result in termination of the Net Profits Interest relating to the abandoned well

The Underlying Properties are

sensitive to decreasing commodity prices.

The commodity price sensitivity is due to a variety of factors that vary from well

to well, including the costs associated with water handling and disposal, chemicals, surface equipment maintenance, downhole

casing repairs and reservoir pressure maintenance activities that are necessary to maintain production.

decreasing commodity prices may cause the expenses of certain wells to exceed the well’s revenue, in which case the

operator may decide to shut-in the well or plug and abandon the well.

This scenario could reduce future cash distributions to

Trust unitholders.

The Sponsor has not entered into any hedge

contracts relating to oil and natural gas volumes expected to be produced on behalf of the Trust, and the terms of the Conveyance

of the Net Profits Interest prohibit the Sponsor from entering into new hedging arrangements burdening the Trust.

all production in which the Trust has an interest is unhedged, and the amount of the cash distributions is subject to the possibility

of greater fluctuations due to changes in oil and natural gas prices.

Actual reserves and future production

may be less than current estimates, which could reduce cash distributions by the Trust and the value of the Trust Units.

The value of the Trust Units and the amount

of future cash distributions to the Trust unitholders will depend upon, among other things, the accuracy of the reserves and future

production estimated to be attributable to the Trust’s interest in the Underlying Properties.

It is not possible to measure

underground accumulations of oil and natural gas in an exact way, and estimating reserves is inherently uncertain.

actual production and revenues for the Underlying Properties could vary both positively and negatively and in material amounts

from estimates.

Furthermore, direct operating expenses and development expenses relating to the Underlying Properties could be

substantially higher than current estimates.

Petroleum engineers are required to make subjective estimates of underground accumulations

of oil and natural gas based on factors and assumptions that include:

historical production from the area compared with production rates from other producing areas;

oil and natural gas prices, production levels, Btu content, production expenses, transportation costs, severance and excise

taxes and development expenses;

the assumed effect of expected governmental regulation and future tax rates.

Changes in these assumptions and amounts

of actual direct operating expenses and development expenses could materially decrease reserve estimates.

In addition, the quantities

of recovered reserves attributable to the Underlying Properties may decrease in the future as a result of future decreases in the

price of oil or natural gas.

The reserve report estimating the Trust’s

proved reserves, future production and income attributable to the Trust’s interests in the Underlying Properties as of December

31, 2019 was prepared, in accordance with applicable regulations, using an average of the NYMEX first-day-of-the-month commodity

price during the 12-month period ending on December 31, 2019 as required by the SEC.

The applicable prices for 2019 were $55.69

per Bbl of oil and $2.58 per Mcf of natural gas.

Third party operators are the operators

of substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is not in a position to control the

timing of development efforts, the associated costs or the rate of production of the reserves on such properties.

As of December 31, 2019, substantially

all of the wells on the Underlying Properties were operated by third party operators.

As a result, the Sponsor has limited ability

to exercise influence over, and control the risks or costs associated with, the operations of these properties.

The failure of

a third party operator to adequately or efficiently perform operations, a third party operator’s breach of the applicable

operating agreements or a third party operator’s failure to act in ways that are in the Sponsor’s or the Trust’s

best interests could reduce production and revenues.

Further, none of the third party operators of the Underlying Properties is

obligated to undertake any development activities, so any development and production activities will be subject to their reasonable

The success and timing of drilling and development activities on properties operated by the third party operators,

therefore, depends on a number of factors that will be largely outside of the Sponsor’s control, including:

the timing and amount of capital expenditures, which could be significantly more than anticipated;

the availability of suitable drilling equipment, production and transportation infrastructure and qualified operating personnel;

the third party operators’

occurrence or threat of epidemic or pandemic diseases, such as the recent outbreak of coronavirus or any government response to

such occurrence or threat;

price and availability of alternative fuels;

proximity, capacity, cost and availability of gathering and transportation facilities;

volatility and uncertainty of regional pricing differentials;

regulations and taxation;

conservation and environmental measures;

of force majeure.

oil prices declined sharply in the first quarter of 2020 in response to the economic effects of the COVID-19 pandemic and the

announcement of planned production increases by Saudi Arabia.

Low oil and natural gas prices will reduce profits to which the

Trust is entitled, which will reduce the amount of each available for distribution to unitholders, and may ultimately reduce the

amount of oil and natural gas that is economically viable to produce from the Underlying Properties.

As a result, the operators

of the Underlying Properties could determine during periods of low commodity prices to shut-in or curtail production from wells

on the Underlying Properties, or even plug and abandon marginal wells that otherwise may have been allowed to continue to produce

for a longer period under conditions of higher prices.

Specifically, an operator may abandon any well or property if it reasonably

believes that the well or property can no longer produce oil or natural gas in commercially paying quantities.

This could result

in termination of the Net Profits Interest relating to the abandoned well or property.

Underlying Properties are sensitive to decreasing commodity prices.

The commodity price sensitivity is due to a variety of factors

that vary from well to well, including the costs associated with water handling and disposal, chemicals, surface equipment maintenance,

downhole casing repairs and reservoir pressure maintenance activities that are necessary to maintain production.

decreasing commodity prices may cause the expenses of certain wells to exceed the well’s revenue, in which case the operator

may decide to shut-in the well or plug and abandon the well.

This scenario could reduce future cash distributions to Trust unitholders.

Sponsor has not entered into any hedge contracts relating to oil and natural gas volumes expected to be produced on behalf of

the Trust, and the terms of the Conveyance of the Net Profits Interest prohibit the Sponsor from entering into new hedging arrangements

burdening the Trust.

As a result, all production in which the Trust has an interest is unhedged, and the amount of the cash distributions

is subject to the possibility of greater fluctuations due to changes in oil and natural gas prices.

ongoing COVID-19 pandemic and related economic turmoil have affected and could continue to adversely affect proceeds to the Trust

and quarterly cash distributions to unitholders.

global spread of COVID-19 created significant volatility, uncertainty, and economic disruption during 2020 and continuing through

the beginning of 2021.

The ongoing COVID-19 pandemic has reached more than 200 countries and has continued to be a rapidly evolving

economic and public health situation.

The pandemic has resulted in widespread adverse impacts on the global economy, and there

is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental

and other measures implemented to try to slow the spread of the virus, such as quarantines, shelter-in-place orders and business

and government shutdowns.

State and local authorities have also implemented multi-step policies with the goal of re-opening.

certain jurisdictions began re-opening only to return to restrictions in the face of increases in new COVID-19 cases .

the impact of the pandemic has led to significant global economic contraction generally, and in the oil and gas industry in particular,

which experienced a significant downturn during 2020 and into 2021.

Since the beginning of 2020, the West Texas Intermediate spot

price of crude oil has ranged widely in response to the economic effects of the COVID-19 pandemic and the dispute over production

levels between Russia and the members of OPEC.

Oil and natural gas prices are expected to continue to be volatile as a result

of the near-term production increases and the COVID-19 pandemic and as changes in oil and natural gas inventories, industry demand

and national and economic performance are reported, and the Trust cannot predict when prices will improve and stabilize.

cannot predict the full impact that COVID-19 or the significant disruption and volatility currently being experienced in the oil

and natural gas markets will have on the Sponsor’s business, financial condition and results of operations or on proceeds

to the Trust and the Trust’s reserves and quarterly cash distributions to unitholders due to numerous uncertainties.

extent to which the COVID-19 pandemic negatively affects the operators of and production from the Underlying Properties will depend

on the severity, location and duration of the effects and spread of COVID-19, the actions undertaken by federal, state and local

governments and health officials to contain the virus or treat its effects, and how quickly and to what extent economic conditions

improve and normal business and operating conditions resume.

prolonged period of low crude oil and natural gas prices will adversely affect the operators of the Underlying Properties.

commodity prices for crude oil and natural gas remain volatile and below historical levels, monthly cash distributions to unitholders

will be substantially lower than historical distributions, and in certain periods there may be no distribution to unitholders.

Continued low oil and natural gas prices may ultimately reduce the amount of oil and natural

gas that is economically viable to produce from the Underlying Properties.

As a result, the operators of the Underlying Properties

could determine during periods of low commodity prices to shut-in or curtail production from wells on the Underlying Properties,

or even plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under

conditions of higher prices.

Specifically, an operator may abandon any well or property if it reasonably believes that the well

or property can no longer produce oil or natural gas in commercially paying quantities, which could result in termination of the

Net Profits Interest relating to the abandoned well or property.

Future downward revisions in actual production volumes

relative to current forecasts, higher than expected operating costs, or lower than anticipated commodity prices could result in

recognition of impairment in future periods.

ultimate impact of COVID-19 will depend on future developments, which are highly uncertain, difficult to predict and largely outside

of the Trust’s control, including, among others, the continued spread, duration and severity of the pandemic outbreak;

occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks;

the consequences of governmental and other

measures designed to prevent the spread of the virus;

the development of effective treatments;

actions taken by governmental authorities,

the Sponsor’s customers and other third parties;

workforce availability;

and the timing and extent to which normal economic

and operating conditions resume.

the extent COVID-19 adversely affects production from the Underlying Properties or the business, results of operations and financial

condition of the operators of the Underlying Properties, it may also have the effect of heightening many of the other risks described

in this Form 10-K.

reserves and future production may be less than current estimates, which could reduce cash distributions by the Trust and the

value of the Trust Units.

value of the Trust Units and the amount of future cash distributions to the Trust unitholders will depend upon, among other things,

the accuracy of the reserves and future production estimated to be attributable to the Trust’s interest in the Underlying

It is not possible to measure underground accumulations of oil and natural gas in an exact way, and estimating reserves

is inherently uncertain.

Ultimately, actual production and revenues for the Underlying Properties could vary both positively and

negatively and in material amounts from estimates.

Furthermore, direct operating expenses and development expenses relating to

the Underlying Properties could be substantially higher than current estimates.

Petroleum engineers are required to make subjective

estimates of underground accumulations of oil and natural gas based on factors and assumptions that include:

production from the area compared with production rates from other producing areas;

and natural gas prices, production levels, Btu content, production expenses, transportation costs, severance and excise taxes

and development expenses;

assumed effect of expected governmental regulation and future tax rates.

in these assumptions and amounts of actual direct operating expenses and development expenses could materially decrease reserve

In addition, the quantities of recovered reserves attributable to the Underlying Properties may decrease in the future

as a result of future decreases in the price of oil or natural gas.

reserve report estimating the Trust’s proved reserves, future production and income attributable to the Trust’s interests

in the Underlying Properties as of December 31, 2020 was prepared, in accordance with applicable regulations, using an average

of the NYMEX first-day-of-the-month commodity price during the 12-month period ending on December 31, 2020 as required by the

The applicable prices for 2020 were $39.57 per Bbl of oil and $1.985 per Mcf of natural gas.

ability or willingness of OPEC and other oil exporting nations to set and maintain production levels has a significant impact

on oil and natural gas commodity prices, which could reduce the amount of cash available for distribution to Trust unitholders.

is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market.

Actions taken

by OPEC members, including those taken alongside other oil exporting nations, have a significant impact on global oil supply and

For example, OPEC and certain other oil exporting nations have previously agreed to take measures, including production

cuts, to support crude oil prices.

In March 2020, members of OPEC and Russia considered extending and potentially increasing these

oil production cuts.

However, those negotiations were unsuccessful.

As a result, Saudi Arabia announced an immediate reduction

in export prices and Russia announced that all previously agreed upon oil production cuts would expire on April 1, 2020.

actions led to an immediate and steep decrease in oil prices, which briefly reached a closing NYMEX price low of negative $37.63

per Bbl of crude oil in April 2020.

Although OPEC has since agreed to certain production cuts, prices in the oil and gas market

have remained depressed, as the oversupply and lack of demand in the market persist.

There can be no assurance that OPEC members

and other oil exporting nations will agree to future production cuts or other actions to support and stabilize oil prices, nor

can there be any assurance that they will not further reduce oil prices or increase production.

Uncertainty regarding future actions

to be taken by OPEC members or other oil exporting countries could lead to increased volatility in the price of oil, which could

adversely affect the financial condition and economic performance of the operators of the underlying properties and may reduce

the net proceeds to which the Trust is entitled, which could materially reduce or completely eliminate the amount of cash available

for distribution to Trust unitholders.

party operators are the operators of substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is

not in a position to control the timing of development efforts, the associated costs or the rate of production of the reserves

on such properties.

of December 31, 2020, substantially all of the wells on the Underlying Properties were operated by third party operators.

result, the Sponsor has limited ability to exercise influence over, and control the risks or costs associated with, the operations

of these properties.

The failure of a third party operator to adequately or efficiently perform operations, a third party operator’s

breach of the applicable operating agreements or a third party operator’s failure to act in ways that are in the Sponsor’s

or the Trust’s best interests could reduce production and revenues.

Further, none of the third-party operators of the Underlying

Properties is obligated to undertake any development activities, so any development and production activities will be subject

to their reasonable discretion.

The success and timing of drilling and development activities on properties operated by the third-party

operators, therefore, depends on a number of factors that will be largely outside of the Sponsor’s control, including:

timing and amount of capital expenditures, which could be significantly more than anticipated;

availability of suitable drilling equipment, production and transportation infrastructure and qualified operating personnel;

third-party operators’

expertise, operating efficiency and financial resources;

approval of other participants in drilling wells;

the selection of technology;

the selection of counterparties for the sale of production;

the rate of production of the reserves.

The third party operators may elect not

to undertake development activities, or may undertake such activities in an unanticipated fashion, which may result in significant

fluctuations in capital expenditures and amounts available for distribution to Trust unitholders.

The bankruptcy of

operators could impede the operation of wells.

The value of the Net Profits

Interest and the Trust’s ultimate cash available for distribution is highly dependent on the financial condition of the operators

of the wells.

of other participants in drilling wells;

selection of technology;

selection of counterparties for the sale of production;

rate of production of the reserves.

third-party operators may elect not to undertake development activities, or may undertake such activities in an unanticipated

fashion, which may result in significant fluctuations in capital expenditures and amounts available for distribution to Trust

bankruptcy of operators could impede the operation of wells.

value of the Net Profits Interest and the Trust’s ultimate cash available for distribution is highly dependent on the financial

condition of the operators of the wells.

The ability to operate the Underlying Properties depends on all operators’

future financial condition and economic

performance and access to capital, which in turn will depend upon the supply and demand for oil and natural gas, prevailing economic

conditions and financial, business and other factors, many of which are beyond the control of such operators.

If the reduced demand

for crude oil in the global market as a result of the economic effects of the outbreak of coronavirus, and the recent reduction

in the benchmark price of crude oil, persist for the near future or longer, such factors could have a negative impact on the financial

condition and economic performance of one or more of the operators of the Underlying Properties.

In the event of any future

bankruptcy of any operator of the Underlying Properties, the value of the Net Profits Interest could be adversely affected by,

among other things, delay or cessation of payments under the Net Profits Interest, business disruptions or cessation of operations

by the operator, replacements of operators, inability to find a replacement operator if necessary, reduced production of reserves,

or decreased distributions to Trust unitholders.

Developing oil and natural gas wells

and producing oil and natural gas are costly and high-risk activities with many uncertainties that could adversely affect future

production from the Underlying Properties.

Any delays, reductions or cancellations in development and producing activities could

decrease revenues that are available for distribution to Trust unitholders.

The process of developing oil and natural

gas wells and producing oil and natural gas on the Underlying Properties is subject to numerous risks beyond the Trust’s,

the Sponsor’s and the third party operators’

control, including risks that could delay the operators’

drilling or production schedule and the risk that drilling will not result in commercially viable oil or natural gas production.

The ability of the operators to carry out operations or to finance planned development expenses could be materially and adversely

affected by any factor that may curtail, delay, reduce or cancel development and production, including:

reductions in oil or natural gas prices;

delays imposed by or resulting from compliance with regulatory requirements, including permitting;

unusual or unexpected geological formations;

shortages of or delays in obtaining equipment and qualified personnel;

lack of available gathering facilities or delays in construction of gathering facilities;

lack of available capacity on interconnecting transmission pipelines;

equipment malfunctions, failures or accidents;

unexpected operational events and drilling conditions;

market limitations for oil or natural gas;

pipe or cement failures;

casing collapses;

lost or damaged drilling and service tools;

loss of drilling fluid circulation;

uncontrollable flows of oil and natural gas, inert gas, water or drilling fluids;

fires and natural disasters;

environmental hazards, such as oil and natural gas leaks, pipeline ruptures and discharges of toxic gases;

adverse weather conditions;

oil or natural gas property title problems.

financial condition and economic performance and access to capital, which in turn will depend upon the supply and demand for oil

and natural gas, prevailing economic conditions and financial, business and other factors, many of which are beyond the control

of such operators.

If the reduced demand for crude oil in the global market as a result of the economic effects of the COVID-19

pandemic persists for the near future or longer, such factors could have a negative impact on the financial condition and economic

performance of one or more of the operators of the Underlying Properties.

the event of any future bankruptcy of any operator of the Underlying Properties, the value of the Net Profits Interest could be

adversely affected by, among other things, delay or cessation of payments under the Net Profits Interest, business disruptions

or cessation of operations by the operator, replacements of operators, inability to find a replacement operator if necessary,

reduced production of reserves, or decreased distributions to Trust unitholders.

oil and natural gas wells and producing oil and natural gas are costly and high-risk activities with many uncertainties that could

adversely affect future production from the Underlying Properties.

Any delays, reductions or cancellations in development and

producing activities could decrease revenues that are available for distribution to Trust unitholders.

process of developing oil and natural gas wells and producing oil and natural gas on the Underlying Properties is subject to numerous

risks beyond the Trust’s, the Sponsor’s and the third party operators’

control, including risks that could delay

the operators’

current drilling or production schedule and the risk that drilling will not result in commercially viable

oil or natural gas production.

The ability of the operators to carry out operations or to finance planned development expenses

could be materially and adversely affected by any factor that may curtail, delay, reduce or cancel development and production,

in oil or natural gas prices;

imposed by or resulting from compliance with regulatory requirements, including permitting;

or unexpected geological formations;

of or delays in obtaining equipment and qualified personnel;

of available gathering facilities or delays in construction of gathering facilities;

of available capacity on interconnecting transmission pipelines;

malfunctions, failures or accidents;

operational events and drilling conditions;

limitations for oil or natural gas;

or cement failures;

or damaged drilling and service tools;

of drilling fluid circulation;

uncontrollable

flows of oil and natural gas, inert gas, water or drilling fluids;

and natural disasters;

environmental

hazards, such as oil and natural gas leaks, pipeline ruptures and discharges of toxic gases;

weather conditions;

or natural gas property title problems.

If planned operations, including drilling

4 unchanged sentences

unable to recover such costs from insurance, estimated future distributions to Trust unitholders may be reduced.

The Trust is passive in nature and

neither the Trust nor the Trust unitholders have any ability to influence the Sponsor or control the operations or development

of the Underlying Properties.

The Trust Units are a passive investment

that entitles the Trust unitholder to only receive cash distributions from the Net Profits Interest.

Trust unitholders have no

voting rights with respect to the Sponsor and, therefore, have no managerial, contractual or other ability to influence the Sponsor’s

or the third party operators’

activities or the operations of the Underlying Properties.

Oil and natural gas properties are

typically managed pursuant to an operating agreement among the working interest owners of oil and natural gas properties.

party operators operate substantially all of the wells on the Underlying Properties.

The typical operating agreement contains procedures

whereby the owners of the working interests in the property designate one of the interest owners to be the operator of the property.

Under these arrangements, the operator is typically responsible for making all decisions relating to drilling activities, sale

of production, compliance with regulatory requirements and other matters that affect the property.

Shortages of equipment, services and

13 unchanged sentences

reduce the amount of cash received by the Trust and available for distribution to the Trust unitholders.

The generation of profits for distribution

by the Trust depends in part on access to and operation of gathering, transportation and processing facilities.

Any limitation

in the availability of those facilities could interfere with sales of oil and natural gas production from the Underlying Properties.

The amount of oil and natural gas that may

be produced and sold from a well is subject to curtailment in certain circumstances, such as by reason of weather conditions, pipeline

interruptions due to scheduled and unscheduled maintenance, failure of tendered oil and natural gas to meet quality specifications

of gathering lines or downstream transporters, excessive line pressure which prevents delivery, physical damage to the gathering

system or transportation system or lack of contracted capacity on such systems.

The curtailments may vary from a few days to several

In many cases, the operators of the Underlying Properties receive only limited notice, if any, as to when production will

be curtailed and the duration of such curtailments.

If the operators of the Underlying Properties are forced to reduce production

due to such a curtailment, the revenues of the Trust and the amount of cash distributions to the Trust unitholders similarly would

be reduced due to the reduction of profits from the sale of production.

Adverse developments in Texas, Louisiana

or New Mexico could adversely impact the results of operations and cash flows of the Underlying Properties and reduce the amount

of cash available for distributions to Trust unitholders.

The operations of the Underlying Properties

are focused on the production and development of oil and natural gas within the states of Texas, Louisiana and New Mexico.

result, the results of operations and cash flows of the Underlying Properties depend upon continuing operations in these areas.

This concentration could disproportionately expose the Trust’s interests to operational and regulatory risk in these areas.

Due to the lack of diversification in geographic location, adverse developments in exploration and production of oil and natural

gas in any of these areas of operation could have a significantly greater impact on the results of operations and cash flows of

the Underlying Properties than if the operations were more diversified.

FINANCIAL RISKS

The Trust Units may lose value as

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pursuant to the Sale Transaction that closed in August 2018.

The existence of a material title deficiency with respect to the Underlying

Properties could reduce the value of a property or render it worthless, thus adversely affecting the Net Profits Interest and the

distributions to Trust unitholders.

The existence of a material title deficiency with respect to the

Underlying Properties could reduce the value of a property or render it worthless, thus adversely affecting the Net Profits Interest

and the distributions to Trust unitholders.

The Sponsor does not obtain title insurance covering mineral leaseholds, and the Sponsor’s

failure to cure any title defects may cause the Sponsor to lose its rights to production from the Underlying Properties.

If a material

title problem were to arise, profits available for distribution to Trust unitholders, and the value of the Trust Units, may be

The Sponsor may transfer all or a

portion of the Underlying Properties at any time without Trust unitholder consent, subject to specified limitations.

The Sponsor at any time may transfer all

or part of the Underlying Properties, subject to and burdened by the Net Profits Interest, and may, along with the third party

operators, abandon individual wells or properties reasonably believed to be not economically viable.

Trust unitholders will not

be entitled to vote on any transfer or abandonment of the Underlying Properties, and the Trust will not receive any profits from

any such transfer, except in the limited circumstances when the Net Profits Interest is released in connection with such transfer,

in which case the Trust will receive an amount equal to the fair market value (net of sales costs) of the Net Profits Interest

Following any sale or transfer of any of the Underlying Properties, if the Net Profits Interest is not released in connection

with such sale or transfer, the Net Profits Interest will continue to burden the transferred property and net profits attributable

to such property will be calculated as part of the computation of net profits.

The Sponsor may delegate to the transferee responsibility

for all of the Sponsor’s obligations relating to the Net Profits Interest on the portion of the Underlying Properties transferred.

In addition, the Sponsor may, without the

consent of the Trust unitholders, require the Trustee to release the Net Profits Interest associated with any lease that accounts

for 0.25% or less of the total production from the Underlying Properties in the prior 12 months and provided that the Net Profits

Interest covered by such releases cannot exceed, during any 12-month period, an aggregate fair market value to the Trust of $500,000.

These releases will be made only in connection with a sale by the Sponsor to a non-affiliate of the relevant Underlying Properties

and are conditioned upon an amount equal to the fair market value of such Net Profits Interest being treated as an offset amount

against costs and expenses.

In January 2019, the Sponsor sold two producing wells and associated acreage of the Underlying

Properties under this provision for a sale price of approximately $62,000, and the Trustee released such properties from the Net

Profits Interest.

The third party operators and the Sponsor

may enter into farm-out, operating, participation and other similar agreements to develop the property without the consent or approval

of the Trustee or any Trust unitholder.

material title problem were to arise, profits available for distribution to Trust unitholders, and the value of the Trust Units,

may be reduced.

The reserves attributable to the Underlying

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The Trust will indirectly bear an 80% share

of all costs and expenses related to the Underlying Properties, such as direct operating and development expenses, which will reduce

the amount of cash received by the Trust and thereafter distributable to Trust unitholders.

Accordingly, higher costs and expenses

related to the Underlying Properties will directly decrease the amount of cash received by the Trust in respect of its Net Profits

of all costs and expenses related to the Underlying Properties, such as direct operating and development expenses, which will

reduce the amount of cash received by the Trust and thereafter distributable to Trust unitholders.

Accordingly, higher costs and

expenses related to the Underlying Properties will directly decrease the amount of cash received by the Trust in respect of its

Net Profits Interest.

Historical costs may not be indicative of future costs.

For example, the third party operators may in the future propose

additional drilling projects that significantly increase the capital expenditures associated with the Underlying Properties, which

could reduce cash available for distribution by the Trust.

In addition, cash available for distribution by the Trust will be further

reduced by the Trust’s general and administrative expenses.

For example, the third-party operators may in the

future propose additional drilling projects that significantly increase the capital expenditures associated with the Underlying

Properties, which could reduce cash available for distribution by the Trust.

In addition, cash available for distribution by the

Trust will be further reduced by the Trust’s general and administrative expenses.

If direct operating and development expenses

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Development activities may not generate sufficient additional revenue to repay the costs.

The generation of profits for distribution

by the Trust depends in part on access to and operation of gathering, transportation and processing facilities.

Any limitation

in the availability of those facilities could interfere with sales of oil and natural gas production from the Underlying Properties.

The amount of oil and natural gas that may

be produced and sold from a well is subject to curtailment in certain circumstances, such as by reason of weather conditions, pipeline

interruptions due to scheduled and unscheduled maintenance, failure of tendered oil and natural gas to meet quality specifications

of gathering lines or downstream transporters, excessive line pressure which prevents delivery, physical damage to the gathering

system or transportation system or lack of contracted capacity on such systems.

The curtailments may vary from a few days to several

In many cases, the operators of the Underlying Properties receive only limited notice, if any, as to when production will

be curtailed and the duration of such curtailments.

If the operators of the Underlying Properties are forced to reduce production

due to such a curtailment, the revenues of the Trust and the amount of cash distributions to the Trust unitholders similarly would

be reduced due to the reduction of profits from the sale of production.

The amount of cash available for distribution

by the Trust could be reduced by expenses caused by uninsured claims.

The Sponsor maintains insurance coverage

against potential losses that it believes is customary in its industry.

The Sponsor currently maintains general liability insurance

and excess liability coverage.

The Sponsor’s excess liability coverage and general liability insurance do not have deductibles.

The general liability insurance covers the Sponsor and its subsidiaries for legal and contractual liabilities arising out of bodily

injury or property damage, including any resulting loss of use to third parties, and for sudden and accidental pollution or environmental

liability, while the excess liability coverage is in addition to and triggered if the general liability per occurrence limit is

In addition, the Sponsor maintains control of well insurance with per occurrence limits depending on the status of the

well and deductibles consistent with industry standards.

The Sponsor’s general liability insurance and excess liability policies

do not provide coverage with respect to legal and contractual liabilities of the Trust, and the Trust does not maintain such coverage

since it is passive in nature and does not have any ability to influence the Sponsor or control the operations or development of

the Underlying Properties.

However, the Trust unitholders may indirectly benefit from the Sponsor’s insurance coverage to

the extent that insurance proceeds offset or reduce any costs or expenses that are deducted when calculating the net profits attributable

to the Trust.

The Sponsor does not currently have any

insurance policies in effect that are intended to provide coverage for losses solely related to hydraulic fracturing operations;

however, the Sponsor believes its general liability and excess liability insurance policies would cover third-party claims related

to hydraulic fracturing operations in accordance with, and subject to, the terms of such policies.

These policies may not cover

fines, penalties or costs and expenses related to government-mandated cleanup of pollution.

In addition, these policies do not

provide coverage for all liabilities, and there can be no assurance that the insurance coverage will be adequate to cover claims

that may arise or that the Sponsor will be able to maintain adequate insurance at rates it considers reasonable.

The occurrence

of an event not fully covered by insurance could result in a significant decrease in the amount of cash available for distribution

by the Trust.

The Trust does not maintain any type of insurance against any of the risks of conducting oil and gas exploration

and production, hydraulic fracturing operations, or related activities.

The Sponsor’s ability to perform

its obligations to the Trust could be limited by restrictions under its debt agreements .

The Sponsor has various contractual obligations

to the Trust under the Trust Agreement and Conveyance.

Restrictions under the Sponsor’s debt agreements, including

certain covenants, financial ratios and tests, could impair its ability to fulfill its obligations to the Trust.

The requirement

that the Sponsor comply with these restrictive covenants and financial ratios and tests may materially adversely affect its ability

to react to changes in market conditions, take advantage of business opportunities it believes to be desirable, obtain future

financing, fund needed capital expenditures or withstand a continuing or future downturn in its business which may, in turn, impair

the Sponsor’s operations and its ability to perform its obligations to the Trust under the Trust Agreement and Conveyance.

If the Sponsor is unable to perform its obligations to the Trust under the Trust Agreement or Conveyance, it could have a material

adverse effect on the Trust.

The bankruptcy of the Sponsor or any

of the third-party operators could impede the operation of the wells and the development of the proved undeveloped reserves.

The value of the Net Profits Interest and

the Trust’s ultimate cash available for distribution will be highly dependent on the financial condition of the operators

of the Underlying Properties.

None of the operators of the Underlying Properties, including the Sponsor, has agreed with the Trust

to maintain a certain net worth or to be restricted by other similar covenants.

The ability to develop and operate the Underlying

Properties depends on the future financial condition and economic performance and access to capital of the operators of those properties,

which in turn will depend upon the supply and demand for oil and natural gas, prevailing economic conditions and financial, business

and other factors, many of which are beyond the control of the Sponsor and the third party operators.

The Sponsor is not a reporting

company and is not required to file periodic reports with the SEC pursuant to the Exchange Act.

Therefore, Trust unitholders do

not have access to financial information about the Sponsor.

In the event of the bankruptcy of an operator

of the Underlying Properties, the working interest owners in the affected properties will have to seek a new party to perform the

development and the operations of the affected wells.

The working interest owners may not be able to find a replacement driller

or operator, and they may not be able to enter into a new agreement with such replacement party on favorable terms within a reasonable

As a result, such a bankruptcy may result in reduced production from the reserves and decreased distributions to Trust

In the event of the bankruptcy of

the Sponsor, if a court were to hold that the Net Profits Interest was part of the bankruptcy estate, the Trust may be treated

as an unsecured creditor with respect to the Net Profits Interest attributable to properties in Louisiana and New Mexico.

The Sponsor and the Trust believe that,

in a bankruptcy of the Sponsor, the Net Profits Interest would be viewed as a separate property interest under Texas law and, as

such, outside of the Sponsor’s bankruptcy estate.

However, to the extent that were not the case, or to the extent Louisiana

or New Mexico law were held to be applicable, the Net Profits Interest might be considered an asset of the bankruptcy estate and

used to satisfy obligations to creditors of the Sponsor, in which case the Trust would be an unsecured creditor of the Sponsor

at risk of losing the entire value of the Net Profits Interest to senior creditors.

RISKS RELATED TO THE STRUCTURE OF THE TRUST

The Trust is passive in nature and

neither the Trust nor the Trust unitholders have any ability to influence the Sponsor or control the operations or development

of the Underlying Properties.

The Trust Units are a passive investment

that entitles the Trust unitholder to only receive cash distributions from the Net Profits Interest.

Trust unitholders have no

voting rights with respect to the Sponsor and, therefore, have no managerial, contractual or other ability to influence the Sponsor’s

or the third-party operators’

activities or the operations of the Underlying Properties.

Oil and natural gas properties are

typically managed pursuant to an operating agreement among the working interest owners of oil and natural gas properties.

party operators operate substantially all of the wells on the Underlying Properties.

The typical operating agreement contains procedures

whereby the owners of the working interests in the property designate one of the interest owners to be the operator of the property.

Under these arrangements, the operator is typically responsible for making all decisions relating to drilling activities, sale

of production, compliance with regulatory requirements and other matters that affect the property.

The Sponsor may transfer all or a

portion of the Underlying Properties at any time without Trust unitholder consent, subject to specified limitations.

The Sponsor at any time may transfer all

or part of the Underlying Properties, subject to and burdened by the Net Profits Interest, and may, along with the third-party

operators, abandon individual wells or properties reasonably believed to be not economically viable.

Trust unitholders will not

be entitled to vote on any transfer or abandonment of the Underlying Properties, and the Trust will not receive any profits from

any such transfer, except in the limited circumstances when the Net Profits Interest is released in connection with such transfer,

in which case the Trust will receive an amount equal to the fair market value (net of sales costs) of the Net Profits Interest

Following any sale or transfer of any of the Underlying Properties, if the Net Profits Interest is not released in connection

with such sale or transfer, the Net Profits Interest will continue to burden the transferred property and net profits attributable

to such property will be calculated as part of the computation of net profits.

The Sponsor may delegate to the transferee responsibility

for all of the Sponsor’s obligations relating to the Net Profits Interest on the portion of the Underlying Properties transferred.

In addition, the Sponsor may, without the

consent of the Trust unitholders, require the Trustee to release the Net Profits Interest associated with any lease that accounts

for 0.25% or less of the total production from the Underlying Properties in the prior 12 months and provided that the Net Profits

Interest covered by such releases cannot exceed, during any 12-month period, an aggregate fair market value to the Trust of $500,000.

These releases will be made only in connection with a sale by the Sponsor to a non-affiliate of the relevant Underlying Properties

and are conditioned upon an amount equal to the fair market value of such Net Profits Interest being treated as an offset amount

against costs and expenses.

In January 2019, the Sponsor sold two producing wells and associated acreage of the Underlying

Properties under this provision for a sale price of approximately $62,000, and the Trustee released such properties from the Net

Profits Interest.

The third-party operators and the Sponsor

may enter into farm-out, operating, participation and other similar agreements to develop the property without the consent or approval

of the Trustee or any Trust unitholder.

Under certain circumstances, the Trustee

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be distributed to the Trust unitholders.

The Sponsor may sell Trust Units in

the public or private markets, and such sales could have an adverse impact on the trading price of the Trust Units.

The Sponsor holds an aggregate of 8,600,000

The Sponsor may sell Trust Units in the public or private markets, and any such sales could have an adverse impact

on the price of the Trust Units.

The Trust has granted registration rights to the Sponsor, which, if exercised, would facilitate

sales of Trust Units by the Sponsor.

The trading price for the Trust Units

may not reflect the value of the Net Profits Interest held by the Trust.

The trading price for publicly traded securities

similar to the Trust Units tends to be tied to recent and expected levels of cash distributions.

The amounts available for distribution

by the Trust vary in response to numerous factors outside the control of the Trust, including prevailing prices for sales of oil

and natural gas production from the Underlying Properties and the timing and amount of direct operating expenses and development

Consequently, the market price for the Trust Units may not necessarily be indicative of the value that the Trust would

realize if it sold the Net Profits Interest to a third-party buyer.

In addition, the market price may not necessarily reflect the

fact that since the assets of the Trust are depleting assets, a portion of each cash distribution paid with respect to the Trust

Units should be considered by investors as a return of capital, with the remainder being considered as a return on investment.

As a result, distributions made to a Trust unitholder over the life of these depleting assets may not equal or exceed the purchase

price paid by the Trust unitholder.

Conflicts of interest could arise

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of the Trust and the Trust unitholders.

The Sponsor’s interests may conflict with those of the Trust and the Trust unitholders in situations involving the development,

maintenance, operation or abandonment of certain wells on the Underlying Properties for which the Sponsor acts as the operator.

The Sponsor also may make decisions with respect to development expenses that adversely affect the Underlying Properties.

decisions include reducing development expenses on properties for which the Sponsor acts as the operator, which could cause oil

and natural gas production to decline at a faster rate and thereby result in lower cash distributions by the Trust in the future.

The Sponsor may sell some or all of the Underlying Properties without taking into consideration the interests of the Trust

Such sales may not be in the best interests of the Trust unitholders.

These purchasers may lack the Sponsor’s

experience or its creditworthiness.

The Sponsor also has the right, under certain circumstances, to cause the Trustee to release

all or a portion of the Net Profits Interest in connection with a sale of a portion of the Underlying Properties to which such

Net Profits Interest relates.

In such an event, the Trust is entitled to receive the fair value (net of sales costs) of the Net

Profits Interest released.

The Sponsor may sell its Trust Units without considering the effects such sale may have on Trust Unit prices or on the Trust

Additionally, the Sponsor can vote its Trust Units in its sole discretion without considering the interests of the other

Trust unitholders.

The Sponsor is not a fiduciary with respect to the Trust unitholders or the Trust and does not owe any fiduciary

duties or liabilities to the Trust unitholders or the Trust.

The Trust is administered by

a Trustee who cannot be replaced except by a majority vote of the Trust unitholders at a special meeting which may make it difficult

for Trust unitholders to remove or replace the Trustee.

The Sponsor’s interests may conflict with those

of the Trust and the Trust unitholders in situations involving the development, maintenance, operation or abandonment of certain

wells on the Underlying Properties for which the Sponsor acts as the operator.

The Sponsor also may make decisions with respect

to development expenses that adversely affect the Underlying Properties.

These decisions include reducing development expenses

on properties for which the Sponsor acts as the operator, which could cause oil and natural gas production to decline at a faster

rate and thereby result in lower cash distributions by the Trust in the future.

The Sponsor may sell some or all the Underlying Properties

without taking into consideration the interests of the Trust unitholders.

Such sales may not be in the best interests of the Trust

These purchasers may lack the Sponsor’s experience or its creditworthiness.

The Sponsor also has the right,

under certain circumstances, to cause the Trustee to release all or a portion of the Net Profits Interest in connection with a

sale of a portion of the Underlying Properties to which such Net Profits Interest relates.

In such an event, the Trust is entitled

to receive the fair value (net of sales costs) of the Net Profits Interest released.

The Sponsor may sell its Trust Units without considering

the effects such sale may have on Trust Unit prices or on the Trust itself.

Additionally, the Sponsor can vote its Trust Units

in its sole discretion without considering the interests of the other Trust unitholders.

The Sponsor is not a fiduciary with respect

to the Trust unitholders or the Trust and does not owe any fiduciary duties or liabilities to the Trust unitholders or the Trust.

The Trust is administered by a Trustee

who cannot be replaced except by a majority vote of the Trust unitholders at a special meeting which may make it difficult for

Trust unitholders to remove or replace the Trustee.

The affairs of the Trust are administered

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gross negligence or willful misconduct.

RISKS RELATED TO OWNERSHIP OF THE TRUST UNITS

If the Trust cannot meet the New York

Stock Exchange continued listing requirements, the NYSE may delist the Trust units.

Under the continued listing requirements

of the NYSE, a company will be considered to be out of compliance with the exchange’s minimum price requirement if the company’s

average closing price over a consecutive 30 trading day period (“Average Closing Price”) is less than $1.00 (the “Minimum

Price Requirement”).

Under NYSE rules, a company that is out of compliance with the Minimum Price Requirement has a

cure period of six months to regain compliance if it notifies the NYSE within 10 business days of receiving a deficiency notice

of its intention to cure the deficiency.

A company may regain compliance if on the last trading day of any calendar month during

the cure period the company has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over

the 30-trading-day period ending on the last trading day of that month.

If at the expiration of the cure period, both a $1.00 closing

share price on the last trading day of the cure period and a $1.00 average closing share price over the 30-trading-day period ending

on the last trading day of the cure period are not attained, the NYSE will commence suspension and delisting procedures.

by the NYSE, a company’s shares may be transferred to the over-the-counter (“OTC”) market, a significantly more

limited market than the NYSE, which could affect the market price, trading volume, liquidity and resale price of such shares.

that trade on the OTC markets also typically experience more volatility compared to securities that trade on a national securities

During the cure period, the company’s shares would continue to trade on the NYSE, subject to compliance with other

continued listing requirements.

On September 25, 2020, the Trust received

written notification from the NYSE that the Trust was not in compliance with the Minimum Price Requirement.

Neither the Trust

nor the Trustee has any control over the trading price of the Trust units, nor does the Trust have the authority to cause a reverse

split of the units or to take similar action designed to affect the trading price of the units without a vote from the Trust unitholders.

Although the NYSE has notified the Trust that the Trust had regained compliance with the Minimum Price Requirement as of February

26, 2021, it might be unable to maintain compliance, and would again become subject to the NYSE delisting procedures.