What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2024-03-22 compared with 2023-03-23 · 224 added, 179 removed, 265 unchanged (60% of the section changed)

Market for Registrant’s Common Equity, Related

Unitholder Matters and Issuer Purchases of Equity Securities.

Market for Registrant’s

Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.

Trust Units trade on the New York Stock Exchange under the symbol “PVL.”

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Trust Units outstanding.

On March 23, 2023, there were four unitholders of record.

On March 20, 2024, there were five unitholders of record.

This number does not include owners for

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monthly distributions payable on or before the tenth business day after the record date (or the next succeeding business day).

information on distributions to Trust unitholders, see Note 5 of the Notes to Financial Statements in Item 8 of this Form 10-K.

information on distributions to Trust unitholders, see Note 5 of the Notes to Financial Statements in Part II, Item 8 of this

Equity Compensation Plans

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Trust or any affiliated purchaser during the fourth quarter of 2023.

Trustee’s Discussion and Analysis of Financial

Condition and Results of Operations.

Trustee’s Discussion and

Analysis of Financial Condition and Results of Operations.

This discussion contains forward-looking statements.

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2023 Recap and 2024 Outlook

The average NYMEX oil price received for the production

months included in 2022 distributions increased 97%, while the gas price received for the production months included in 2022 distributions

increased 157%, from the prior year.

The geopolitical events of 2022 along with a rapidly evolving supply and demand picture for oil

and gas contributed to a material increase in the average NYMEX oil price and average NYMEX gas price for the relevant production months,

in addition to tighter differentials for the received oil and natural gas prices for the Underlying Properties.

The increase in commodity

prices compared to 2021 also drove a significant increase in the amount of third party operator drilling activity on the Underlying Properties,

which led to a 242% increase in development expenses for the production months of 2022 compared to 2021.

The development activity increases

were from both public and private operators in the Delaware and Midland basin areas of the Permian Basin as well as the Haynesville area

of Louisiana.

Crude oil prices increased materially throughout

the first half of 2022, to a high of $123.70/Bbl on March 8, 2022, before declining over the second half of the year, settling at

$80.26/Bbl on December 30, 2022, only 5% above the spot oil price to start the year.

Nevertheless, the longer-term outlook for the

oil and gas industry, together with the continued improvement in economic activity and mobility during 2022 despite the lingering effects

of the coronavirus pandemic, resulted in a material increase in industry activity.

This improvement continued to be aided by relatively

stable supply actions by members of OPEC, in contrast to prior years.

The effects of the global COVID-19 pandemic have not completely

subsided in parts of the world, particularly in China, and continue to create volatility for commodity prices.

Despite the recovery in

prices and activity, the oil and gas industry continues to face capital constraints from debt and equity capital providers focused on

free cash flow over reserve and production growth.

Natural gas prices saw a similar, and even more

volatile, recovery in 2022, rallying from $3.59/MMBtu at the beginning of 2022 to a high of $9.84/MMBtu on August 22, 2022, before

ending the year below where it started, at $3.52/MMBtu, as a warm winter and production growth offset the new LNG-directed US natural

Such volatility, if it persists for the near term or longer, could adversely affect the operators of the Underlying Properties,

production from the Underlying Properties and/or distributions to Trust unitholders.

The operators of the Underlying Properties continue

to evaluate planned capital expenditures during 2023, but based on currently available information, the Sponsor anticipates 2023 capital

expenditures on the Underlying Properties to range from $6.0 million to $9.0 million, or $4.8 million to $7.2 million net to

the Trust’s 80% Net Profits Interest.

This would represent a decrease compared to last year, due in part to lower projected natural

gas prices, which could reduce capital activity on the Haynesville area of the Underlying Properties, somewhat offset by continued activity

strength in the portion of the Underlying Properties located in the Permian region.

The Sponsor indicates that it continues to have access

to adequate capital and liquidity to fund such capital expenditures as the come due.

The average NYMEX oil and natural gas prices experienced

significant volatility in 2023, with the average NYMEX oil price declining from $94.57 per Bbl in calendar year 2022 to $77.65 per Bbl

in calendar year 2023, a decline of 18%.

Meanwhile, the price range varied from a low of $66.74 per Bbl in March 2023 to a high

of $93.68 per Bbl in September 2023, before declining during the fourth quarter in response to increasing conflict in the Middle

Natural gas prices faced even greater challenges in 2023 after seeing some of the highest prices in prior years in 2022.

NYMEX natural gas price declined from $6.41 per MMBtu in calendar year 2022 to $2.54 per MMBtu in calendar year 2023, a decline of 60%.

Prices for natural gas experienced similar volatility, ranging from a low of $1.77 per MMBtu in June 2023 to a high of $3.77 per

MMBtu in January 2023.

The year-over-year decline in commodity prices also drove a significant reduction in third-party operator

drilling activity on the Underlying Properties, which led to a 45% decrease in development expenses for the production months of 2023

compared to 2022.

The Sponsor believes that the outlook for the

oil and gas industry remains mixed, with oil prices having ended 2023 within a range consistent with prior years, but with natural gas

prices currently facing levels generally below operator-targeted forward prices for capital deployment.

In addition, mergers and acquisitions

have continued to change the makeup of the companies deploying capital in the sector.

As larger public companies continue to acquire

smaller public companies and private operators, these larger companies are likely to react differently to commodity price volatility

than smaller operators have in historical cycles.

This merger and acquisition activity has also affected the operators of the Underlying

Properties, with several of the largest and/or most active operators for the Underlying Properties announcing merger events in 2023.

Nevertheless, the capital spending activity or operating performance for the Underlying Properties under new third-party operatorship

in the future may not be consistent with such activity or performance experienced under previous third-party operators in prior years.

discussed further under “—Sale of 2023 Divestiture Properties”

below, the Sponsor leveraged the volatility in commodity

prices to negotiate and subsequently close the sale of certain acreage and associated production in the Permian Basin that constituted

part of the Underlying Properties , generating $0.146920 per Trust Unit of distributable proceeds from properties that in the prior

three years had generated cumulative net profits of $0.00831 per Trust Unit.

Given the commodity price volatility as well as

the recent merger activity in the industry, the operators of the Underlying Properties continue to evaluate planned capital expenditures

Based on currently available information, the Sponsor anticipates 2024 capital expenditures on the Underlying Properties

to range from $5.0 million to $9.0 million, or $4.0 million to $7.2 million net to the Trust’s 80% Net Profits Interest.

This would represent a decrease from 2023 levels, partly due to lower projected natural gas prices, which could reduce capital activity

on the Haynesville area of the Underlying Properties, but somewhat offset by continued activity strength in the portion of the Underlying

Properties located in the Permian region.

The expected range is also wider compared to 2023 given the volatility and recent third-party

operator merger activity.

The Sponsor indicates that it continues to have access to adequate capital and liquidity to fund such capital

expenditures as they come due.

In addition to continued capital expenditure participation,

the Sponsor believes there could be further opportunity in 2024 for prospective divestitures, as operators of some of the Underlying

Properties look to acquire assets at compelling valuations against the backdrop of favorable oil prices compared to prior years.

Properties look to consolidate non-operated interests and acreage given recent merger and acquisition activity in the industry.

Capex Drilling Activity Update

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(in thousands)

Large Cap Major

D&C New Drills

1 Drilled, Awaiting First Revenues;

Large Cap E&P 1

D&C New Drills

5 Producing, Awaiting First

3 Drilling In-Process

2 Producing, Awaiting First Revenues;

Large Cap E&P 2

Conventional Permian

New Drills / Workovers

Continual Program

In-process/ Continual Program

Large Private E&P

Producing, Awaiting First

PE-Backed Private 1

D&C New Drills

4 Drilling In-Process

PE-Backed Private 1

D&C New Drills

3 Producing, Awaiting First

Producing Awaiting Revenues

PE-Backed Private 2

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Drilling In-Process

Private E&P 1

Large Cap E&P 3

D&C New Drills

Drilling In-Process

Large Cap E&P 4

New Drills / Workovers

Private E&P 2

The Sponsor expects a majority of these projects

to be completed and to begin producing during 2023 for those that are still in process or awaiting first revenues.

Drilling In-Process

Sponsor expects that a majority of the projects above that are still in process or awaiting first revenues will be completed and

will begin producing during 2024.

Sale of 2023 Divestiture Properties

On May 3, 2023, the Sponsor notified the

Trustee that the Sponsor had entered into an agreement to divest certain acreage and associated production in the Permian Basin (the

“2023 Divestiture Properties”) that constituted part of the Underlying Properties and were therefore burdened by the Trust’s

Net Profits Interest, for a total purchase price of approximately $6.7 million.

On July 19, 2023, at a special meeting of Trust

unitholders, the unitholders approved the foregoing transaction and the release of the Trust’s Net Profits Interest in the 2023

Divestiture Properties.

On August 9, 2023, the Sponsor completed the sale of the 2023 Divestiture Properties, and the Trustee, on

behalf of the Trust, reconveyed, terminated and released to the Sponsor the Net Profits Interest with respect to the 2023 Divestiture

The total proceeds received by the Sponsor from the sale of the 2023 Divestiture Properties, after preliminary closing adjustments,

were approximately $6.5 million, inclusive of the escrow funded by the buyer and partial expense reimbursement associated with the

proxy solicitation.

The Sponsor deducted the final transaction expenses from the sales proceeds, along with an escrow amount of $250,000

to cover possible indemnification obligations under the purchase and sale agreement (the “Indemnification Escrow Amount”),

to arrive at final net proceeds, based upon the Trust’s Net Profits Interest.

On September 20, 2023, the Trust announced

a special cash distribution to Trust unitholders of $0.069670 per Trust Unit, payable on October 13, 2023 to Trust unitholders of

record on October 2, 2023, reflecting 50% of the Trust’s share of the net proceeds, after accounting for the Indemnification

Escrow Amount.

The remaining 50% of the Trust’s share of the net proceeds was temporarily retained by the Sponsor as a source of

payment of the Trust’s proportionate share of any post-closing purchase price adjustments, with any amount remaining (less any

amounts in dispute) after such adjustments to be paid to the Trust within five business days after finalization of the settlement statement

and included in a distribution to Trust unitholders.

On November 6, 2023, the Trust announced a special cash distribution to Trust

unitholders of $0.077250 per Trust Unit, payable on November 22, 2023 to Trust unitholders of record on November 16, 2023,

reflecting the remaining 50% of the Trust’s share of the net proceeds (net of the Indemnification Escrow Amount).

Within 12 months

after the closing of the sale, any remaining amount from the Indemnification Escrow Amount (less any amounts in dispute) will be released

to the Trust and included in a distribution to Trust unitholders.

Results of Operations

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the distributions paid during the years ended December 31, 2023 and 2022.

Underlying Properties Sales Volumes

Average Price

Underlying Properties

Sales Volumes

Month of Distribution

Total—2023 (1)

Underlying Properties

Sales Volumes

Total—2022

table for the year ended December 31, 2021 does not separately display sales volumes

for January through August because the Trust did not pay a distribution with respect

to those months, as the net profits interest calculation for each such period was negative.

(1) The year ended December 31, 2023 does not include sales volumes

for December as the Trust did not make a distribution in that month, as the Net Profits

Interest calculation for the corresponding production period was negative.

Computation of Income from Net Profits Interest Received by

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income for the years ended December 31, 2023 and 2022 were determined as shown in the following table:

Year Ended December 31,

Gross profits:

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Development expenses

Gross proceeds from sale/lease of undeveloped acreage

Net profits attributable to underlying properties

Gross proceeds

from sale/lease of undeveloped acreage

Net profits attributable to Underlying

Percentage allocable to Net Profits Interest

Income from Net Profits Interest

COERT Loan Repayment

Capex Reserve –

Holdback/release for Increasing 2022/2023 Capex Outlook

Trust general and administrative expenses and cash withheld for expenses

Release (Holdback) for anticipated 2022-2023

capital expenditures

Trust general and administrative

expenses and cash withheld for expenses

Distributable income generated by properties

prior to divestiture

Income from sale of Net Profits Interest

Distributable income

In 2020, there were five months in which direct

operating and development expenses exceeded revenues, thereby causing net profits attributable to the Underlying Properties to be negative.

This resulted in an aggregate Net Profits Interest shortfall of $2.7 million, prior to repayment of Sponsor advances, as of August 31,

2020, which was carried forward to be deducted from net profits to be generated by the Underlying Properties in future months.

there were no distributions to Trust unitholders from August 2020 through August 2021.

In September 2021, net profits

from the Underlying Properties were positive, which eliminated the cumulative Net Profits Interest shortfall of $2.7 million and the

cumulative outstanding Sponsor advances to the Trust of $0.8 million.

Since the Net Profits Interest shortfall was eliminated in

2021, revenues and the associated direct operating and development expenses for the final five months of 2020 are included in the calculation

of distributable income detailed in the table above for the year ended December 31, 2021 as well as the related sales volumes detailed

As reflected in the Net Profits Interest calculation

for November 2023, direct operating and development expenses exceeded revenues, thereby causing net profits attributable to the

Underlying Properties to be negative and resulting in a Net Profits Interest shortfall of approximately $1.2 million.

there was no distribution to Trust unitholders in the month of December 2023.

The shortfall of $1.2 million was carried forward

to be deducted from future net profits to be generated by the Underlying Properties, and the corresponding revenues and associated direct

operating and development expenses are excluded from the calculation of distributable income for the year ended December 31, 2023

detailed in the table above as well as the related sales volumes detailed below.

As a result, only eleven months of results are included

in the results for the year ended December 31, 2023.

The following table displays oil and natural gas

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distributions paid during the years ended December 31, 2023 and 2022:

Year Ended December 31,

Underlying Properties Sales Volumes:

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Average Prices:

NYMEX (applicable NPI period) ($/Bbl)

Oil prices realized ($/Bbl)

NYMEX (applicable NPI period)

Oil prices realized

Natural gas –

NYMEX (applicable NPI period) ($/Mcf)

Natural gas prices realized ($/Mcf)

NYMEX (applicable

NPI period) ($/Mcf)

prices realized ($/Mcf)

Years Ended December 31, 2023 and 2022

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sales related to oil produced from the Underlying Properties primarily from September 2022

through August 2022;

gas sales related to natural gas produced from the Underlying Properties primarily from August 2021

through July 2023;

gas sales related to natural gas produced from the Underlying Properties primarily from August 2022

through June 2023;

operating and development expenses related to expenses and capital incurred primarily from

October 2021 to September 2022.

profits attributable to the Underlying Properties for the year ended December 31, 2022 were $20.2 million compared to $5.4

million for the year ended December 31, 2021.

As a result of direct operating expenses and development expenses exceeding

oil and natural gas sales for the last five months of 2020, the Trust did not pay a distribution to Trust unitholders from August 2020

through September 2021.

Accordingly, under the modified cash basis of accounting, the oil and natural gas sales, direct operating

expenses and development expenses for such periods were not included in the final five months of 2020 and instead are included in the

results for the year ended December 31, 2021, as the Net Profits Interest shortfall was finally eliminated in September 2021.

Therefore, several variances between the periods are due to the inclusion of 17 months of results in the year ended December 31,

2021 compared to 12 months included in the year ended December 31, 2022.

The $14.8 million increase in net profits attributable

to the Underlying Properties from the 2021 period to the 2022 period was primarily due to the following items:

sales increased $11.2 million, primarily due to higher realized sales prices, which increased

oil sales by $22.0 million.

The average oil price received increased 97% as a result of the

corresponding increase in the average NYMEX oil price for the relevant production months.

The offsetting $10.8 million decrease in oil sales was due to lower oil sales volumes.

32% decrease in oil sales volumes was primarily because the year ended December 31,

2022 only included 12 months of oil sales volumes while the year ended December 31,

2021 included 17 months of oil sales volumes.

gas sales increased $7.5 million due to higher realized sales prices, which increased natural

October 2022 to August 2023.

Net profits attributable to the Underlying Properties

for the year ended December 31, 2023 were $12.0 million compared to $20.2 million for the year ended December 31, 2022.

As discussed in “—Computation of Income from Net Profits Interest Received by the Trust”

above, no distribution was

made to Trust unitholders in December 2023 due to the Net Profits Interest shortfall.

Accordingly, under the modified cash basis

of accounting, the oil and natural gas sales, direct operating expenses and development expenses attributable to that period was not

included and instead will be included in the Trust’s results once the shortfall is recouped.

Therefore, several variances between

the periods are due to the inclusion of only eleven months of results in the year ended December 31, 2023 compared to twelve months

in the year ended December 31, 2022.

The $8.2 million decrease in net profits attributable to the Underlying Properties from

the 2022 period to the 2023 period was primarily due to the following items:

sales decreased $10.0 million, primarily due to lower sales volumes, which decreased oil

sales by $5.1 million.

Oil sales volumes decreased 11% primarily due to the inclusion of

only eleven months of oil sales volumes in the year ended December 31, 2023.

The remaining

$4.9 million decrease in oil sales was due to lower realized sales prices.

The average oil

price received decreased 12% as a result of the corresponding decrease in the average NYMEX

oil price for the relevant production months.

gas sales decreased $6.9 million due to lower realized sales prices, which decreased natural

gas sales by $3.9 million.

The average natural gas price received increased 157% as a result

of the corresponding increases in the average NYMEX gas price for the relevant production

The offsetting $3.2 million decrease in natural gas sales was due to lower sales

Natural gas volumes decreased 32% primarily because the year ended December 31,

2022 only included 12 months of gas sales volumes while the year ended December 31,

2021 included 17 months of gas sales volumes.

operating expenses decreased $4.7 million in 2022 compared to 2021, primarily attributable

to the difference in the number of months included in the respective periods.

The average natural gas price received decreased 27% as a result

of the corresponding decreases in the average NYMEX gas price for the relevant production

The remaining $3.0 million decrease in natural gas sales was due to lower sales volumes.

Natural gas sales volumes decreased 17% primarily due to the inclusion of only eleven months

of natural gas sales volumes in the year ended December 31, 2023.

operating expenses during the year ended December 31, 2023 were $22.1 million compared

to $21.9 million for the year ended December 31, 2022.

Approximately $1.4 million of

the 2023 expenses were attributable to a settlement between COERT and one of the operators

of the Underlying Properties relating to a dispute with respect to certain lease operating

expenses from 2018 and 2019 that the operator had mistakenly coded for Enduro instead of

In May 2023, the Sponsor and the operator agreed to settle the dispute

at a discounted amount, resulting in an incremental lease operating expense adjustment of

approximately $0.4 million per month from June 2023 through December 2023, after

which no additional amounts relating to the disputed expenses will be owed to the operator.

● Compression,

gathering and transportation expenses decreased from $3.3 million in 2022 to $1.7 million

ad valorem and other taxes increased $0.1 million in 2022 compared to 2021, primarily due

to the increase in realized sales prices, but was offset by the lower sales volumes.

expenses increased $8.6 million due to drilling and completion costs for drilling multiple

new wells in the Permian and Haynesville areas.

in 2023 due to lower sales volumes and the inclusion of only eleven months of expenses in

the year ended December 31, 2023.

● Production,

ad valorem and other taxes decreased $1.8 million in 2023 compared to 2022, primarily due

to the decrease in realized sales prices, and lower sales volumes.

● Development

expenses decreased $5.4 million due to drilling and completion costs for drilling multiple

new wells in the Permian and Haynesville areas during 2022.

During the year ended December 31, 2022,

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reserve for approved, future development expenses.

This reserve is intended to fund an expected increase in development expenses;

if those expenses are ultimately delayed or are less than expected, or if the outlook changes, amounts reserved but unspent will be released

as an incremental cash distribution in a future period.

This reserve was intended to fund an expected increase in development expenses;

if those expenses are ultimately delayed or are less than expected, or if the outlook changes, amounts reserved but unspent would be

released as an incremental cash distribution in a future period.

This cash reserve for future development was fully released to the Trust

during the year ended 2023.

The Trust withheld $1.3 million and paid $0.9

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In November 2021, the Trustee notified the

Sponsor of the Trustee’s intent to build a cash reserve of approximately $2.3 million for the payment of future known, anticipated

or contingent expenses or liabilities of the Trust.

Since February 2022, the Trustee has been withholding $37,833, and in the future,

commencing with the distribution to Trust unitholders payable in April 2023, intends to withhold $50,000, from the funds otherwise

available for distribution each month to gradually build the reserve.

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 Trust unitholders.

Cash held in reserve will be invested as required by the 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 Trust unitholders, together with interest earned on the funds.

As of December 31, 2022, the Trustee

has withheld $390,497 toward this cash reserve.

If the Trustee determines that the cash on hand

and the cash to be received are, or will be, insufficient to cover the Trust’s liabilities, the Trustee may authorize the Trust

to borrow money to pay administrative or incidental expenses of the Trust that exceed cash held by the Trust.

The Trustee may authorize

the Trust to borrow from any person, including the Trustee or the Delaware Trustee or an affiliate thereof, although none of the Trustee,

the Delaware Trustee or any affiliate thereof intends to lend funds to the Trust.

The Trustee may also cause the Trust to mortgage its

assets to secure payment of the indebtedness.

The terms of such indebtedness and security interest, if funds were to be loaned by the

entity serving as Trustee or Delaware Trustee or an affiliate thereof, would be similar to the terms which such entity would grant to

a similarly situated commercial customer with whom it did not have a fiduciary relationship.

In addition, the Sponsor has provided the

Trust with a $1.2 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is insufficient

to pay ordinary course administrative expenses.

Further, if the Trust requires more than the $1.2 million under the letter of credit

to pay administrative expenses, the Sponsor has agreed to loan funds to the Trust necessary to pay such expenses.

Any loan made by the

Sponsor to the Trust would be evidenced by a written promissory note, be on an unsecured basis, and have terms that are no less favorable

to the Sponsor than those that would be obtained in an arm’s length transaction between the Sponsor and an unaffiliated third party.

If the Trust borrows funds or draws on the letter of credit, no further distributions will be made to Trust unitholders until such amounts

borrowed or drawn are repaid.

Except for the foregoing, the Trust has no source of liquidity or capital resources.

The Trustee has no

current plans to authorize the Trust to borrow money other than Sponsor advances to pay the Trust’s monthly operating expenses.

At December 31, 2022 and 2021, the Trust held cash reserves of $922,913 and $67,116, respectively, for future Trust expenses.

its formation, the Trust has not borrowed any funds other than Sponsor advances to pay the Trust’s monthly operating expenses and

no amounts have been drawn on the letter of credit.

From time to time, if the Trust’s cash on

hand (including available cash reserves, if any) is not sufficient to pay the Trust’s ordinary course administrative expenses that

are due prior to the monthly payment to the Trust of proceeds from the Net Profits Interest, the Sponsor may advance funds to the Trust

to pay such expenses.

Such advances are recorded as a liability on the Statements of Assets, Liabilities and Trust Corpus until repaid.

Sponsor of the Trustee’s intent to build a cash reserve for the payment of future known, anticipated or contingent expenses or

liabilities of the Trust.

From February 2022 through March 2023, the Trustee withheld $37,833, and commencing with the distribution

to Trust unitholders paid in April 2023 has been withholding and, in the future, intends to withhold $50,000, from the funds otherwise

available for distribution each month to gradually build a cash reserve of approximately $2.3 million.

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 Trust unitholders.

Cash held in reserve will be invested as required by the

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 Trust unitholders, together with interest earned on the funds.

of December 31, 2023, this cash reserve totaled $941,386.

the Trustee determines that the cash on hand and the cash to be received are, or will be, insufficient to cover the Trust’s liabilities,

the Trustee may authorize the Trust to borrow money to pay administrative or incidental expenses of the Trust that exceed cash held by

The Trustee may authorize the Trust to borrow from any person, including the Trustee or the Delaware Trustee or an affiliate

thereof, although none of the Trustee, the Delaware Trustee or any affiliate thereof intends to lend funds to the Trust.

may also cause the Trust to mortgage its assets to secure payment of the indebtedness.

The terms of such indebtedness and security interest,

if funds were to be loaned by the entity serving as Trustee or Delaware Trustee or an affiliate thereof, would be similar to the terms

which such entity would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship.

the Sponsor has provided the Trust with a $1.2 million letter of credit to be used by the Trust if its cash on hand (including available

cash reserves) is insufficient to pay ordinary course administrative expenses.

Further, if the Trust requires more than the $1.2 million

under the letter of credit to pay administrative expenses, the Sponsor has agreed to loan funds to the Trust necessary to pay such expenses.

Any loan made by the Sponsor to the Trust would be evidenced by a written promissory note, be on an unsecured basis, and have terms that

are no less favorable to the Sponsor than those that would be obtained in an arm’s length transaction between the Sponsor and an

unaffiliated third party.

If the Trust borrows funds or draws on the letter of credit, no further distributions will be made to Trust

unitholders until such amounts borrowed or drawn are repaid.

Except for the foregoing, the Trust has no source of liquidity or capital

The Trustee has no current plans to authorize the Trust to borrow money other than Sponsor advances to pay the Trust’s

monthly operating expenses.

At December 31, 2023 and 2022, the Trust held cash reserves of $1,394,697 and $922,913, respectively,

for future Trust expenses.

Since its formation, the Trust has not borrowed any funds other than Sponsor advances to pay the Trust’s

monthly operating expenses and no amounts have been drawn on the letter of credit.

time to time, if the Trust’s cash on hand (including available cash reserves, if any) is not sufficient to pay the Trust’s

ordinary course administrative expenses that are due prior to the monthly payment to the Trust of proceeds from the Net Profits Interest,

the Sponsor may advance funds to the Trust to pay such expenses.

Such advances are recorded as a liability on the Statements of

Assets, Liabilities and Trust Corpus until repaid.

Cash held by the Trustee as a reserve against

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certificates of deposit.

Enduro nor the Sponsor has entered into any hedge contracts relating to oil and natural gas volumes produced from the Underlying

Properties, attributable to the Net Profits Interest for the years ended December 31, 2022 or 2021, and the terms of the Conveyance

prohibit COERT from entering into new hedging arrangements burdening the Trust.

Sponsor has not entered into any hedge contracts relating to oil and natural gas volumes produced from the Underlying Properties,

attributable to the Net Profits Interest for the years ended December 31, 2023 or 2022, and the terms of the Conveyance prohibit

the Sponsor from entering into new hedging arrangements burdening the Trust.

The Trust pays the Trustee an administrative fee

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for the amount by which the carrying amount of the asset exceeds its estimated fair value determined using discounted cash flows.

impairment is a direct charge to the trust corpus.

The financial statements of the Trust differ from

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administrative expenses are recorded when paid instead of when incurred;

and any impairment;

Any impairment;

and amortization of the net profits interest

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Net Profits Interest in Oil and Gas Properties”

of the Notes to Financial Statements in Item 8 of this Form 10-K.

Quantitative and Qualitative Disclosures About

of the Notes to Financial Statements in Part II, Item 8 of this

Quantitative and Qualitative

Disclosures About Market Risk.

As a “smaller reporting company”

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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