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Item 1A. Risk Factors

2026-03-23 compared with 2025-03-19 · 382 added, 337 removed, 723 unchanged (50% of the section changed)

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Business and Operating Risks

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

· 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 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.

Prices of oil and natural gas fluctuate, and lower prices could reduce proceeds

to the Trust and cash distributions to Trust unitholders.

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 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.

Third-party operators operate all of the wells on the Underlying Properties;

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.

· 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.

· Shortages of equipment, services and qualified personnel could increase costs of developing and operating the Underlying Properties

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

· The amount of cash available for distribution by the Trust depends in part on access to and operation of gathering, transportation

and processing facilities.

· 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 distribution to Trust unitholders.

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.

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.

Shortages of equipment, services and qualified personnel could increase costs

of developing and operating the Underlying Properties and reduce the amount of cash available for distribution to Trust unitholders.

The amount of cash available for distribution by the Trust depends in part

on access to and operation of gathering, transportation and processing facilities.

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 distribution to Trust

Financial Risks

· The Trust Units may lose value as a result of title deficiencies with respect to the Underlying Properties.

· The oil and natural gas reserves attributable to the Underlying Properties are depleting assets and production

from those reserves will diminish over time.

· An increase in the differential between the price realized by the Sponsor for oil and natural gas produced

from the Underlying Properties and the NYMEX or other benchmark price of oil or natural gas could reduce the net profits payable to the

Trust and, therefore, the cash distributions by the Trust and the value of the Trust Units.

· Higher production and development costs and expenses related to the Underlying Properties and other costs

and expenses incurred by the Trust, without concurrent increases in revenue, will reduce the amount of cash available for distribution

to Trust unitholders.

· The Trust has established a cash reserve for contingent liabilities and to pay expenses in accordance

with the Trust Agreement, which would reduce net profits payable to the Trust and distributions to Trust unitholders.

· The amount of cash available for distribution by the Trust could be reduced by expenses caused by uninsured

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

its debt agreements.

· 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.

· 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 Trust Units may lose value as a result of

title deficiencies with respect to the Underlying Properties.

The oil and natural gas reserves attributable

to the Underlying Properties are depleting assets and production from those reserves will diminish over time.

An increase in the differential between the price

realized by the Sponsor for oil and natural gas produced from the Underlying Properties and the NYMEX or other benchmark price of oil

or natural gas could reduce the net profits payable to the Trust and, therefore, the cash distributions by the Trust and the value of

the Trust Units.

Higher production and development costs and expenses

related to the Underlying Properties and other costs and expenses incurred by the Trust, without concurrent increases in revenue, will

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

The Trust has established a cash reserve for

contingent liabilities and to pay expenses in accordance with the Trust Agreement, which would reduce net profits payable to the Trust

and distributions to Trust unitholders.

The amount of cash available for distribution

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

The Sponsor’s ability to perform its obligations

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

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.

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.

Risks Related to the Structure of the Trust

· The Trust is passive in nature and neither the Trustee nor the Trust unitholders have any ability to influence the Sponsor or control

the operations or development of the Underlying Properties.

· Subject to specified limitations, the Sponsor may transfer all or a portion of the Underlying Properties at any time without Trust

unitholder consent.

· Under certain circumstances, the Trustee must sell the Net Profits Interest and dissolve the Trust prior to the expected termination

of the Trust.

· Conflicts 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.

· The Trust is administered by a Trustee who cannot be replaced except by a majority vote of the Trust unitholders at a special meeting.

The Trust is passive in nature and neither the Trustee nor the Trust unitholders

have any ability to influence the Sponsor or control the operations or development of the Underlying Properties.

Subject to specified limitations, the Sponsor may transfer all or a portion

of the Underlying Properties at any time without Trust unitholder consent.

Under certain circumstances, the Trustee must sell the Net Profits Interest

and dissolve the Trust prior to the expected termination of the Trust.

Conflicts 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.

The Trust is administered by a Trustee who cannot be replaced except by a

majority vote of the Trust unitholders at a special meeting.

Trust unitholders have limited ability to enforce provisions of the Conveyance.

Financial information of the Trust is not prepared in accordance with GAAP.

· The Trust is a smaller reporting company and benefits from certain reduced governance and disclosure requirements, which could make

the Trust Units less attractive to investors.

The Trust is a smaller reporting company and benefits from certain reduced

governance and disclosure requirements, which could make the Trust Units less attractive to investors.

Risks Related to Ownership of the Trust Units

· If the Trust cannot meet continued listing requirements, the NYSE may delist the Trust Units.

· The Sponsor may sell Trust Units in the public or private markets, and such sales may have an adverse impact on the trading price

of the Trust Units.

· The trading price for the Trust Units may not reflect the value of the Net Profits Interest held by the Trust.

· Courts outside of Delaware may not recognize the limited liability of Trust unitholders.

If the Trust cannot meet continued listing requirements, the NYSE may delist

the Trust Units.

The Sponsor may sell Trust Units in the public or private markets, and such

sales may have an adverse impact on the trading price of the Trust Units.

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

Profits Interest held by the Trust.

Courts outside of Delaware may not recognize the limited liability of Trust

Legal, Environmental and Regulatory Risks

· The operations on the Underlying Properties are subject to complex federal, state, local and other laws and regulations, including

environmental regulations, that could adversely affect the cost, manner or feasibility of conducting operations on them or expose the

operator to significant liabilities.

· Climate change laws and regulations restricting emissions of “greenhouse gases”

could 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.

· Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional

operating restrictions or delays.

The operations on the Underlying Properties are subject to complex federal,

state, local and other laws and regulations, including environmental regulations, that could adversely affect the cost, manner or feasibility

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

Climate change laws and regulations restricting emissions of “greenhouse

could 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.

Federal and state legislative and regulatory initiatives relating to hydraulic

fracturing could result in increased costs and additional operating restrictions or delays.

Cybersecurity Risks

· 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 or the Trustee’s operations.

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 or the Trustee’s operations.

Tax Risks Related to the Trust Units

· If 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.

· 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.

· A portion of any tax gain on the disposition of the Trust Units could be taxed as ordinary income.

· The IRS may challenge the Trust’s approach to allocating its items of income, gain, loss and deduction between transferors and

transferees of the Trust Units each month based upon the ownership of the Trust Units on the monthly record date, instead of on the basis

of the date a particular Trust Unit is transferred.

If 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.

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.

A portion of any tax gain on the disposition of the Trust Units could be

taxed as ordinary income.

The IRS may challenge the Trust’s approach to allocating its items

of income, gain, loss and deduction between transferors and transferees of the Trust Units each month based upon the ownership of the

Trust Units on the monthly record date, instead of on the basis of the date a particular Trust Unit is transferred.

BUSINESS AND OPERATING RISKS

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

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 Sponsor.

These factors include, among others:

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

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 Sponsor.

These factors include,

among others:

regional, domestic and foreign supply and perceptions of supply of oil and

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

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

· the armed conflicts between Russia and Ukraine and between Israel and Iran and its proxies and the potential destabilizing effects

such conflicts may pose for the global oil and gas markets;

· the actions of OPEC, its members and other oil-producing nations, such as Russia, relating to oil price and production levels, including

announcements of potential changes to such levels;

the wars in Ukraine and the Persian Gulf, and the potential destabilizing

effects such conflicts may pose for the global oil and gas markets;

the actions of OPEC, its members and other oil-producing nations, such as

Russia, relating to oil price and production controls, including announcements of potential changes to such levels;

the levels of production of oil and natural gas of non-OPEC countries;

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and worldwide economic conditions;

· trade barriers and tariffs;

· the occurrence or threat of epidemic or pandemic diseases or other public health event or any government response to such occurrence

· the price and availability of alternative fuels;

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

tax, trade and tariff policies of the United States and other countries involved

in global energy markets;

the development, exploitation and market acceptance of alternative energy

sources as part of a transition to a lower-carbon economy;

the occurrence or threat of epidemic or pandemic diseases or other public

health event or any government response to such occurrence or threat;

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

the volatility and uncertainty of regional pricing differentials;

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acts of force majeure.

factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with

any certainty.

A substantial or extended decline in oil or natural gas prices will reduce profits to which the Trust is entitled

and therefore the amount of cash available for distribution to Trust unitholders.

A prolonged period of low oil or 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.

This could result in termination

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

These factors and the volatility of the energy

markets make it extremely difficult to predict future oil and natural gas price movements with any certainty.

A substantial or extended

decline in oil or natural gas prices will reduce profits to which the Trust is entitled and therefore the amount of cash available

for distribution to Trust unitholders.

A prolonged period of low oil or 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

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.

The Underlying Properties are sensitive to decreasing

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the price of the Trust Units and the qualification of the Trust Units to remain listed on the New York Stock Exchange.

See “—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.”

The Sponsor has not entered into any hedge contracts

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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.

Ultimately, actual

production and revenues from the Underlying Properties could be materially lower than 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 Trust’s reserve

quantities and net profits income are based on estimates of reserve quantities and net profits income for the Underlying Properties.

“Reserves”

in Item 2 of this report for a discussion of the method of allocating proved reserves to the Underlying Properties

and the Net Profits Interest.

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 from the Underlying Properties could be materially lower

than 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 availability of enhanced recovery techniques;

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OPEC and certain other oil exporting nations, such as Russia, have previously agreed to take measures, including production cuts, to support

crude oil prices OPEC members and other oil exporting nations might not agree to future production cuts or other actions to support and

crude oil prices.

OPEC members and other oil exporting nations might not agree to future production cuts or other actions to support and

stabilize oil prices, and they may not reduce oil prices or increase production in the future.

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the Trust is entitled, which could materially reduce or completely eliminate the amount of cash available for distribution to Trust unitholders

for an unknown period of time.

Third-party operators operate all of the

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capital expenditures and amounts available for distribution to Trust unitholders.

addition, disagreements may arise between one or more of the operators, on the one hand, and the Sponsor, on the other hand, regarding

the associated costs of the Underlying Properties for which the Sponsor may be responsible, a portion of which may be attributable to

the Trust, to the extent of the Trust’s interest in the Underlying Properties.

Such disagreements could result in litigation or

other legal proceedings, which could reduce cash available for distribution to Trust unitholders.

In addition, disagreements may arise between one

or more of the operators, on the one hand, and the Sponsor, on the other hand, regarding the associated costs of the Underlying Properties

for which the Sponsor may be responsible, a portion of which may be attributable to the Trust, to the extent of the Trust’s interest

in the Underlying Properties.

Such disagreements could result in litigation or other legal proceedings, which could reduce cash available

for distribution to Trust unitholders.

Developing oil and natural gas wells and

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declines in oil or natural gas prices;

· delays imposed by or resulting from compliance with environmental and other governmental or regulatory requirements, including permitting;

· unusual or unexpected geological formations;

· shortages of or delays in obtaining equipment and qualified

· lack of available gathering, transportation and processing facilities, including availability on commercially reasonable terms, 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;

· blowouts, explosions, fires and natural disasters;

· environmental hazards, such as oil and natural gas leaks, pipeline ruptures and discharges of toxic gases or other pollutants into

the surface or subsurface environment;

· adverse weather conditions;

· oil or natural gas property title problems or legal disputes

regarding leasehold rights.

delays imposed by or resulting from compliance with environmental and other

governmental or regulatory requirements, including permitting;

or unexpected geological formations;

of or delays in obtaining equipment and qualified personnel;

lack of available gathering, transportation and processing facilities, including

availability on commercially reasonable terms, 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;

explosions, fires and natural disasters;

environmental hazards, such as oil and natural gas leaks, pipeline ruptures

and discharges of toxic gases or other pollutants into the surface or subsurface environment;

weather conditions;

or natural gas property title problems or legal disputes regarding leasehold rights.

If planned operations, including drilling of development

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of title deficiencies with respect to the Underlying Properties.

acquired the Underlying Properties through various acquisitions in late 2010 and early 2011.

The Sponsor acquired Enduro’s

interests in the Underlying Properties 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 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, net profits available for distribution to Trust unitholders, and the value of the Trust Units,

may be reduced.

Enduro acquired the Underlying Properties through

various acquisitions in late 2010 and early 2011.

The Sponsor acquired Enduro’s interests in the Underlying Properties 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 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, net profits available for distribution to Trust unitholders, and the value of the Trust Units, may be reduced.

The oil and natural gas reserves attributable

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oil and natural gas produced from the Underlying Properties will decline over time.

maintenance projects on the Underlying Properties may affect the quantity of proved reserves that can be economically produced from wells

on the Underlying Properties.

The timing and size of these projects will depend on, among other factors, the market prices of oil and

Neither the Sponsor nor, to the Sponsor’s knowledge, the third-party operators have a contractual obligation

to develop or otherwise pay development expenses on the Underlying Properties in the future.

Furthermore, with respect to properties for

which the Sponsor is not designated as the operator, the Sponsor has limited control over the timing or amount of those development expenses.

The Sponsor also has the right to non-consent and not participate in the development expenses on properties for which it is not the operator,

in which case the Sponsor and the Trust will not receive the production resulting from such development expenses.

If the operators of

the Underlying Properties do not implement maintenance projects when warranted, the future rate of production decline of proved reserves

may be higher than the rate currently expected by the Sponsor or estimated in the reserve report.

Future maintenance projects on the Underlying Properties

may affect the quantity of proved reserves that can be economically produced from wells on the Underlying Properties.

The timing and size

of these projects will depend on, among other factors, the market prices of oil and natural gas.

Neither the Sponsor nor, to the Sponsor’s

knowledge, the third-party operators have a contractual obligation to develop or otherwise pay development expenses on the Underlying

Properties in the future.

Furthermore, with respect to properties for which the Sponsor is not designated as the operator, the Sponsor

has limited control over the timing or amount of those development expenses.

The Sponsor also has the right to non-consent and not participate

in the development expenses on properties for which it is not the operator, in which case the Sponsor and the Trust will not receive the

production resulting from such development expenses.

If the operators of the Underlying Properties do not implement maintenance projects

when warranted, the future rate of production decline of proved reserves may be higher than the rate currently expected by the Sponsor

or estimated in the reserve report.

The Trust Agreement provides that the Trust’s

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of the Trust Units.

prices received for the Sponsor’s oil and natural gas production usually fall below the relevant benchmark prices, such as NYMEX,

that are used for calculating hedge positions.

The prices received for the Sponsor’s oil

and natural gas production usually fall below the relevant benchmark prices, such as NYMEX, that are used for calculating hedge positions.

The difference between the price received and the benchmark price is called a basis differential.

The differential may vary significantly due to market conditions, the quality and location of production and other factors.

Sponsor cannot accurately predict oil or natural gas differentials.

Increases in the differential between the realized price of oil and

natural gas and the benchmark price for oil and natural gas could reduce the profits to the Trust, the cash distributions by the Trust

and the value of the Trust Units.

The differential may vary significantly

due to market conditions, the quality and location of production and other factors.

The Sponsor cannot accurately predict oil or natural

gas differentials.

Increases in the differential between the realized price of oil and natural gas and the benchmark price for oil and

natural gas could reduce the profits to the Trust, the cash distributions by the Trust and the value of the Trust Units.

Higher production and development costs and

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

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 reached.

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

Sponsor does not currently have any insurance policies in effect that are intended to provide coverage for losses solely related

to hydraulic fracturing operations, other than its general liability and excess liability insurance policies that may 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 the insurance coverage may not be adequate to cover claims that may arise;

moreover, the Sponsor may

not 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

Sponsor’s ability to perform its obligations to the Trust could be limited by restrictions under its debt agreements .

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 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.

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 reached.

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.

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, other than its

general liability and excess liability insurance policies that may 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 the insurance

coverage may not be adequate to cover claims that may arise;

moreover, the Sponsor may not 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.

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 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.

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.

Reduced demand for crude oil in the global market could have a negative impact on the financial condition and economic

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

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.

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 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.

Reduced demand for crude oil in the

global market could have a negative impact on the financial condition and economic performance of one or more of the operators of the

Underlying Properties.

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 any future bankruptcy of any operator

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with respect to the Net Profits Interest attributable to properties in Louisiana and New Mexico.

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, if the bankruptcy court were to hold

otherwise, or if 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.

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, if the bankruptcy court were to hold otherwise, or if 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

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

Third 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.

Neither the Trustee nor the Trust unitholders have any contractual ability to influence or control

the field operations of, sale of oil or natural gas from, or any future development of, the Underlying Properties.

The current operators

developing the Underlying Properties are under no obligations to continue operations on the Underlying Properties.

Neither the Trustee

nor the Trust unitholders have the right to replace an operator.

As of December 31, 2025, all of the

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

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.

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.

Neither the Trustee nor the Trust unitholders have any contractual

ability to influence or control the field operations of, sale of oil or natural gas from, or any future development of, the Underlying

The current operators developing the Underlying Properties are under no obligations to continue operations on the Underlying

Neither the Trustee nor the Trust unitholders have the right to replace an operator.

Subject to specified limitations, the Sponsor

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to the Net Profits Interest on the portion of the Underlying Properties transferred.

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 no more than 0.25% of the total production from the Underlying Properties in the prior 12 months ,

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 may 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.

For example, in May 2023, the Sponsor sold approximately $0.3 million in non-producing,

non-cash flowing acreage to a private oil company, free and clear of the Net Profits Interest, as permitted under the Trust Agreement.

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 no more

than 0.25% of the total production from the Underlying Properties in the prior 12 months, 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 may

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.

example, in September 2025, the Sponsor sold approximately $0.4 million in non-producing, non-cash flowing acreage to a private oil

company, free and clear of the Net Profits Interest, as permitted under the Trust Agreement.

The third-party operators and the Sponsor may enter

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

of March 18, 2025, the Sponsor holds an aggregate of 7,363,961 Trust Units.

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.

On June 22, 2022, pursuant to the

Registration Rights Agreement between the Trust and the Sponsor, the Trust filed a registration statement on Form S-3 registering

the offering by the Sponsor of 8,600,000 Trust Units.

The registration statement was declared effective on July 7, 2022.

then, the Sponsor has sold approximately 1.2 million Trust Units under the Registration Statement pursuant to a Rule 10b5-1 trading

plan adopted in accordance with Rule 10b5-1 of the Exchange Act.

As of March 23, 2026, the Sponsor holds an

aggregate of 7,363,961 Trust Units.

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.

On June 22, 2022, pursuant to the Registration Rights Agreement between the Trust

and the Sponsor, the Trust filed a registration statement on Form S-3 registering the offering by the Sponsor of 8,600,000 Trust

Since the registration statement was declared effective on July 7, 2022, the Sponsor has sold approximately 1.2 million

Trust Units under the Registration Statement pursuant to a Rule 10b5-1 trading plan adopted in accordance with Rule 10b5-1 of

the Exchange Act.

The trading price for the Trust Units may

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and the imposition of substantial liabilities for pollution resulting from

example, the EPA has published regulations that impose more stringent emissions control requirements for oil and gas development and production

operations, which may require the Sponsor, its operators, or third-party contractors to incur additional expenses to control air emissions

from current operations and during new well developments by installing emissions control technologies and adhering to a variety of work

practice and other requirements.

In addition, in 2012 and 2016, the EPA adopted federal New Source Performance Standards (“NSPS”) that

require the reduction of volatile organic compound and sulfur dioxide emissions from certain fractured and refractured natural gas wells

for which well completion operations are conducted and further require that most wells use reduced emission completions, also known as

“green completions.”

These regulations also establish specific requirements limiting emissions from production-related wet

seal and reciprocating compressors, pumps, and from pneumatic controllers and storage vessels, and for equipment leaks.

These NSPS apply

to sources that are newly constructed or modified after the rules’

For example, the EPA has published regulations

that impose more stringent emissions control requirements for oil and gas development and production operations, which may require the

Sponsor, its operators, or third-party contractors to incur additional expenses to control air emissions from current operations and during

new well developments by installing emissions control technologies and adhering to a variety of work practice and other requirements.

In addition, in 2012 and 2016, the EPA adopted federal New Source Performance Standards (“NSPS”) that require the reduction

of volatile organic compound and sulfur dioxide emissions from certain fractured and refractured natural gas wells for which well completion

operations are conducted and further require that most wells use reduced emission completions, also known as “green completions.”

These regulations also establish specific requirements limiting emissions from production-related wet seal and reciprocating compressors,

pumps, and from pneumatic controllers and storage vessels, and for equipment leaks.

These NSPS apply to sources that are newly constructed

or modified after the rules’

applicability dates.

More recently, in December 2023 the

EPA adopted a final rule that will directly regulate volatile organic compound and methane emissions from new oil and gas sources

and will require further reductions in emissions through its regulation of flaring, compressors, pumps, storage vessels, process controllers,

well completions and liquids unloading, and equipment leaks.

At the same time, the EPA adopted emissions guidelines that will apply to

existing oil and gas sources and that require reductions in volatile organic compound and methane emissions that are largely equivalent

to the requirements for new sources.

The existing source emissions guidelines are to be implemented through state plans, with expected

compliance dates for existing sources arriving in 2029.

More recently, in December 2023 the EPA adopted a final rule that will

directly regulate volatile organic compound and methane emissions from new oil and gas sources and will require further reductions in

emissions through its regulation of flaring, compressors, pumps, storage vessels, process controllers, well completions and liquids unloading,

and equipment leaks.

At the same time, the EPA adopted emissions guidelines that will apply to existing oil and gas sources and that require

reductions in volatile organic compound and methane emissions that are largely equivalent to the requirements for new sources.

source emissions guidelines are to be implemented through state plans, with expected compliance dates for existing sources arriving in

Numerous governmental authorities, such as the

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costs in preparing for or responding to those effects.

In response to its 2009 finding that emissions

of carbon dioxide, methane and other greenhouse gases (“GHGs”) may present an endangerment to public health and the environment,

the EPA has issued regulations to restrict emissions of greenhouse gases under existing provisions of the CAA.

These regulations include

limits on tailpipe emissions from motor vehicles, preconstruction and operating permit requirements for certain large stationary sources,

and methane emissions standards for certain new, modified and reconstructed oil and gas sources –

as well as the EPA’s methane

emissions guidelines for existing oil and gas sources that were adopted in 2024.

The EPA also has adopted rules requiring the reporting

of GHG emissions from specified large greenhouse gas emission sources in the United States, as well as certain onshore oil and natural

gas production facilities, on an annual basis.

On January 20, 2025, President Trump announced

the withdrawal of the United States from the Paris Climate Agreement.

President Trump also issued an executive order directing the EPA

to review the legality and continuing applicability of its 2009 GHG endangerment finding.

The outcome of that review is not currently

however, it has the potential to eliminate the basis for the EPA’s regulation of GHGs under the CAA.

The EPA has established GHG standards for oil and

gas sources based on its endangerment finding.

In 2024, the EPA adopted a final rule that will directly regulate volatile organic

compound and methane emissions from new oil and gas sources and will require further emissions reductions through its regulation of flaring,

compressors, pumps, storage vessels, process controllers, well completions and liquids unloading, and equipment leaks.

At the same time,

the EPA adopted emissions guidelines that will apply to existing oil and gas sources and that require reductions in volatile organic compound

and methane emissions that are largely equivalent to the requirements for new sources.

The existing source emissions guidelines are to

be implemented through state plans, with expected compliance dates for existing sources arriving in 2029.

The Inflation Reduction

Act of 2022 (“IRA”) included new CAA section 136(c) directing EPA to collect the Waste Emissions Charge (“WEC”)

from facilities in the oil and gas sector that report more than 25,000 tons of carbon dioxide equivalent emissions in a calendar year.

The charge will first apply to methane emissions from calendar year 2024.

The charge is determined by comparing actual reported methane

emissions to statutorily established “methane intensity figures”

that are based on gas production or throughput, with a charge

assessed for every ton of methane emissions that exceeds the facility’s allowable emissions based on the applicable methane intensity

The charge will be $900 per ton for 2024 emissions and will increase to $1,200 and then $1,500 per ton in subsequent years.

program includes key exemptions, most notably a regulatory compliance exemption that applies to and exempts the emissions from facilities

that are subject to and in complete compliance with the EPA’s new or existing source methane requirements.

The EPA adopted new rules to

implement the WEC program in November 2024;

The Trump Administration’s efforts to roll

back federal regulation of greenhouse gases (“GHGs”) represent a significant shift in federal climate policy, though the ultimate

impact of those efforts on the Sponsor is unclear.

In 2009, the EPA found that emissions of carbon dioxide, methane and other GHGs may

present an endangerment to public health and the environment and subsequently issued regulations to restrict emissions of greenhouse gases

under existing provisions of the CAA.

These regulations include limits on tailpipe emissions from motor vehicles, preconstruction and

operating permit requirements for certain large stationary sources, and methane emissions standards for certain new, modified and reconstructed

oil and gas sources –

as well as the EPA’s methane emissions guidelines for existing oil and gas sources that were adopted

The EPA also has adopted rules requiring the reporting of GHG emissions from specified large greenhouse gas emission sources

in the United States, as well as certain onshore oil and natural gas production facilities, on an annual basis.

Shortly after President

Trump took office in January 2025, the federal government embarked on a series of changes relating to climate policy and regulation.

On January 20, 2025, President Trump announced the withdrawal of the United States from the Paris Climate Agreement.

In July 2025,

the EPA issued a proposed rule to rescind the 2009 GHG endangerment finding that provided a basis for GHG regulation under the CAA.

In September 2025, the EPA proposed to rescind the GHG reporting program for sectors other than the oil and gas sector, while proposing

to suspend GHG reporting requirements for the oil and gas sector until 2034.

In February 2026, the EPA adopted a final rule repealing

its prior endangerment finding, which opens the door for the EPA to repeal its GHG rules for the oil and gas sector.

The EPA has established methane standards for oil

and gas sources under the CAA based on the now-repealed GHG endangerment finding.

In 2024, the EPA adopted a final rule that will

directly regulate volatile organic compound and methane emissions from new oil and gas sources and will require further emissions reductions

through its regulation of flaring, compressors, pumps, storage vessels, process controllers, well completions and liquids unloading, and

equipment leaks.

At the same time, the EPA adopted emissions guidelines that will apply to existing oil and gas sources and that require

reductions in volatile organic compound and methane emissions that are largely equivalent to the requirements for new sources.

source emissions guidelines are to be implemented through state plans, with expected compliance dates for existing sources arriving in

In 2025, however, the EPA extended certain compliance deadlines for both new and existing sources, and the 2026 endangerment finding

repeal provides a basis for undoing the oil and gas methane standards, though the fact that the oil and gas standards address both methane

and volatile organic compounds, which are regulated independently of the EPA’s authority to regulate GHGs, may limit the impact

of future changes to the methane standards that currently apply to oil and gas sources.

The Inflation Reduction Act of 2022 (“IRA”)

included new CAA section 136(c) directing the EPA to collect the Waste Emissions Charge (“WEC”) from facilities in the

oil and gas sector that report more than 25,000 tons of carbon dioxide equivalent emissions in a calendar year.

The charge will first

apply to methane emissions from calendar year 2024.

The charge is determined by comparing actual reported methane emissions to statutorily

established “methane intensity figures”

that are based on gas production or throughput, with a charge assessed for every ton

of methane emissions that exceeds the facility’s allowable emissions based on the applicable methane intensity figure.

will be $900 per ton for 2024 emissions and will increase to $1,200 and then $1,500 per ton in subsequent years.

The program includes

key exemptions, most notably a regulatory compliance exemption that applies to and exempts the emissions from facilities that are subject

to and in complete compliance with the EPA’s new or existing source methane requirements.

The EPA adopted new rules to implement

the WEC program in November 2024;

however, the fate of the WEC and the EPA rules implementing the WEC is unclear.

In February 2025, the United States House of Representatives and Senate both passed resolutions to repeal the EPA’s 2024 WEC

rules under the Congressional Review Act (“CRA”), and on March 14, 2025 President Trump signed the resolution repealing those rules under the CRA.

In addition, the United States House of Representatives and Senate may be considering amendment or repeal of certain portions of

the IRA, including the statutory provisions establishing the WEC.

Additionally, more than one-third of the states

have begun taking actions to control and/or reduce emissions of GHGs, primarily through the planned development of GHG emission inventories

In March 2025,

President Trump signed legislation repealing the EPA’s 2024 WEC rules under the Congressional Review Act.

The repeal of the

EPA’s WEC rules did not eliminate the statutory requirement to pay the WEC, but it eliminated the rules established by

the EPA to determine the WEC due, the payment mechanism, and any payment deadlines.

Congress may be considering amendment or

repeal of certain portions of the IRA, including the statutory provisions establishing the WEC.

Meanwhile, more than one-third of the states have

begun taking actions to control and/or reduce emissions of GHGs, primarily through the planned development of GHG emission inventories

and/or regional GHG cap and trade programs.

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The Sponsor cannot predict with any certainty at this time how these possibilities may affect its operations.

In addition, new and emerging regulatory initiatives

related to climate change could adversely affect the Trust.

In March 2024, the SEC issued a final rule regarding

In addition, future regulatory initiatives in the

related to climate change disclosure or reporting could adversely affect the Trust.

In 2024, the SEC issued a final rule regarding

the enhancement and standardization of mandatory climate-related disclosures for investors.

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strategy and greenhouse gas emissions, for certain public companies.

Compliance with the final rule may result in increased legal,

accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on the personnel,

systems and resources of the Sponsor or the Trust or both.

The SEC’s climate disclosure requirements may change under the Trump

Administration.

In February 2025, the acting SEC Chair issued a statement that the SEC would not defend the 2024 disclosure rule in

court and that the SEC would revisit the 2024 rule.

The outcome of the SEC’s review may result in changes to SEC climate-related

disclosure requirements, but the outcome of that review is uncertain.

Even in the absence of federal requirements, however, some states

have adopted climate disclosure laws or rules that are not affected by the SEC’s review.

The SEC’s climate disclosure rule was challenged in court,

and in March 2025 the SEC announced that it had voted to end its defense of the 2024 rule.

The outcome of that litigation or separate

rule changes made by the SEC may result in changes to climate-related disclosure requirements.

Even in the absence of federal requirements,

however, some states have adopted climate disclosure laws or rules that are not affected by the SEC’s review.

Compliance with

the federal or state disclosure rules may result in increased legal, accounting and financial compliance costs, make some activities

more difficult, time-consuming and costly, and place strain on the personnel, systems and resources of the Sponsor or the Trust or both.

Finally, some scientists have theorized that increasing

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systems and networks, the confidentiality, availability and integrity of its data and the physical security of its employees and assets.

Any cyber-attack could have a material adverse effect on the Sponsor’s reputation, competitive position, business, financial condition

and results of operations, and could have a material adverse effect on the Trust.

Cyber-attacks or security breaches also could result

in litigation or regulatory action, as well as significant additional expense to the Sponsor to implement further data protection measures.

This risk is exacerbated with the advancement of technologies like artificial intelligence, which malicious third parties are using to

create new, sophisticated and more frequent attacks.

Furthermore, geopolitical tensions or conflicts, such as the ongoing wars in Ukraine

and in the Persian Gulf, may further heighten the risk of cybersecurity attacks.

Any cyber-attack could have a material adverse effect

on the Sponsor’s reputation, competitive position, business, financial condition and results of operations, and could have a material

adverse effect on the Trust.

Cyber-attacks or security breaches also could result in litigation or regulatory action, as well as significant

additional expense to the Sponsor to implement further data protection measures.

In addition to the risks presented to the Sponsor’s

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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 1A. Risk Factors