What changed in this filing

/stocks — the workspaceLOADING

Item 2. Properties

2023-03-31 compared with 2022-03-31 · 152 added, 136 removed, 152 unchanged (65% of the section changed)

13 unchanged sentences

production is attributable to coal seam reserves in the Fruitland Coal formation.

Coal seam natural gas constituted approximately 17% of

our proved natural gas reserves as of December 31, 2021.

Coal seam natural gas constituted approximately 23.1%

of our proved natural gas reserves as of December 31, 2022.

The process of removing coal seam natural gas is often referred to as degasification or desorption.

Millions of years ago, natural gas was generated in the process of coal formation and

absorbed into the coal.

Millions of years ago, natural gas was generated in the process of coal formation

and absorbed into the coal.

Water later filled the natural fracture system.

When the water is removed from the natural fracture system, reservoir pressure is lowered, and the natural gas desorbs from the coal.

The desorbed natural gas then flows through

the fracture system and is produced at the well bore.

The desorbed natural gas then flows

through the fracture system and is produced at the well bore.

The volume of formation water production typically declines with time and the natural gas production may increase for a period of time before starting to decline.

Typically, the volumes of

natural gas produced from a Coal Seam Well decline more rapidly than those of Conventional Wells.

Typically, the volumes

of natural gas produced from a Coal Seam Well decline more rapidly than those of Conventional Wells.

In order to dispose of the formation water, surface facilities including pumping units are required.

The price of coal seam natural gas is typically lower than the price of conventional natural

This is because the heating value of coal seam natural gas is much lower than that of conventional natural gas due to (a) ever increasing percentages of carbon dioxide in coal seam natural gas (carbon dioxide has no heating value), and

(b) the absence of heavier hydrocarbons such as ethanes, propanes, and butanes, which are present in conventional natural gas.

Furthermore, the production costs and processing fees for coal seam natural gas are typically higher than the

processing fees for conventional natural gas due to the cost of extracting the carbon dioxide.

The Royalty conveyed to the Trust is

limited to the base of the Dakota formation, which is currently the deepest significant producing formation under acreage affected by the Royalty.

The price of coal seam natural gas is typically

lower than the price of conventional natural gas.

This is because the heating value of coal seam natural gas is much lower than that of conventional natural gas due to (i) ever increasing percentages of carbon dioxide in coal seam natural gas

(carbon dioxide has no heating value), and (ii) the absence of heavier hydrocarbons such as ethanes, propanes, and butanes, which are present in conventional natural gas.

Furthermore, the production costs and processing fees for coal seam

natural gas are typically higher than the processing fees for conventional natural gas due to the cost of extracting the carbon dioxide.

The Royalty conveyed to the Trust is limited to the base of the Dakota formation, which is

currently the deepest significant producing formation under acreage affected by the Royalty.

Rights to production, if any, from deeper formations are retained by Hilcorp.

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(the 2023 Plan), and Hilcorp has estimated its 2023 capital expenditures for the Subject Interests to be $4.4 million.

Hilcorp informed the Trust that its 2022 Plan will allocate approximately $1.5 million of the 2022 Plans budget towards 24 well

Hilcorp informed the Trust that its 2023 Plan will allocate approximately $3.7 million of the 2023 Plans budget toward 25 well

recompletions and workovers scheduled to be completed in the Mesaverde, Pictured Cliffs and Fruitland Coal formations.

Approximately $300,000 of the 2022 Plans budget will be allocated to facilities projects related to natural gas compression,

and approximately $100,000 will be spent for permitting and surveying costs for future new drill projects that are being considered for 2023 and 2024.

Hilcorp further informed the Trust that its planned project status for 2022 is subject to revision

if Hilcorp revises its assumptions underlying the 2022 Plan, and that actual capital costs may vary from these estimates.

Oil and Natural Gas

The natural gas volumes reported to the Trust by Hilcorp are based on plant residue gas volumes plus equivalent volumes for

natural gas liquids.

Approximately $0.5 million of the 2023 Plans budget will be allocated to facilities projects related to natural gas

compression, and approximately $0.2 million will be spent for permitting costs for potential future new drill projects.

Hilcorp further informed the Trust that its planned project status for 2023 is subject to revision if Hilcorp revises its

assumptions underlying the 2023 Plan, and that actual capital costs may vary from these estimates.

Oil and Natural Gas Production

The natural gas volumes reported to the Trust by Hilcorp are based on plant residue gas volumes plus equivalent volumes for natural gas

Hilcorp converts one barrel of natural gas liquids to six Mcf of natural gas using industry standards.

Production of oil and natural gas and related average sales prices attributable to each of the Subject Interests and the

Royalty for each of the two years ended December 31, 2021, were as follows:

Production of oil and natural gas and related average sales prices attributable to each of the Subject Interests and the Royalty for each

of the two years ended December 31, 2022, were as follows:

For the year ended December 31,

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Average Lifting Cost per unit of Production

Based on Hilcorps reporting methodology, the Trust recognizes production during the

month in which the related Royalty Income is paid to the Trust.

Royalty Income for a calendar year is based on the actual natural gas and oil production during the period beginning with November of the preceding calendar year through October of the

current calendar year.

Sales volumes attributable to the Royalty are determined by dividing the net profits by the Trust from the sale of oil and natural gas, respectively, by the prices received for sales of such volumes from the Subject Interests,

taking into consideration production taxes attributable to the Subject Interests.

Because the oil and natural gas sales attributable to the Royalty are based upon an allocation formula dependent on such factors as price and cost, including capital

expenditures, the aggregate sales amounts from the Subject Interests may not provide a meaningful comparison to sales attributable to the Royalty.

The fluctuations in annual natural gas production that have occurred during these two years generally resulted from large increases in

commodity prices, including natural gas, and slight decreases in production from new and existing wells.

Also, production from the Subject Interests is influenced by the line pressure of the natural gas gathering systems in the San Juan Basin.

noted above, oil and natural gas sales attributable to the Royalty are based on an allocation formula dependent on many factors, including oil and natural gas prices and capital expenditures.

Based on Hilcorps reporting methodology, the Trust recognizes production during the month in which the

related Royalty Income is paid to the Trust.

Royalty Income for a calendar year is based on the actual natural gas and oil production during the period beginning with November of the preceding calendar year through October of the current calendar

consideration production taxes attributable to the Subject Interests.

Because the oil and natural gas sales attributable to the Royalty are based upon an allocation formula dependent on such factors as price and cost, including capital expenditures,

the aggregate sales amounts from the Subject Interests may not provide a meaningful comparison to sales attributable to the Royalty.

Production from the Subject Interests is influenced by the line pressure of the natural gas gathering systems in the San Juan Basin.

above, oil and natural gas sales attributable to the Royalty are based on an allocation formula dependent on many factors, including oil and natural gas prices and capital expenditures.

Natural gas produced in the

6 unchanged sentences

Hilcorp sells natural gas produced from the Subject Interests under various contracts.

Hilcorps sales contracts with Chevron Natural Gas (Chevron) and EDF Trading North America LLC (EDF)

automatically renewed for an additional one-year term and now expire on March 31, 2023.

Each of Hilcorps sales contracts with EDF and Chevron provides for (i) the delivery of such natural gas

at various delivery points through their respective termination dates and (ii) the sale of such natural gas at prices that fluctuate in accordance with published indices for natural gas sold in the San Juan Basin.

Hilcorps natural gas

sales contract with New Mexico Gas Company, Inc.

Hilcorps sales contracts with Chevron Natural Gas (Chevron) and EDF

Trading North America LLC (EDF) automatically renewed for an additional one-year term and now expire on March 31, 2024.

Each of Hilcorps sales contracts with EDF and Chevron provides for

(i) the delivery of such natural gas at various delivery points through their respective termination dates and (ii) the sale of such natural gas at prices that fluctuate in accordance with published indices for natural gas sold in the San

Hilcorps natural gas sales contract with New Mexico Gas Company, Inc.

automatically renewed for an additional one-year term and now expires on March 31, 2024.

The contract provides for the sale of certain winter-only natural

gas supplies processed at the Kutz plant at prices that fluctuate in accordance with published indices for natural gas sold in the San Juan Basin.

The contract provides for

the sale of certain winter-only natural gas supplies processed at the Kutz plant at prices that fluctuate in accordance with published indices for natural gas sold in the San Juan Basin.

Hilcorp contracts with Enterprise Field Services, LLC (EFS) for the gathering and processing of certain natural gas produced from

13 unchanged sentences

As part of the 1996 settlement of litigation filed by the Trustee in 1992 against

Burlington and Southland, the Trustee and Burlington established a formal

protocol pursuant to which compliance auditors retained by the Trustee have access to Burlington and its successors books and records, which protocol has been adopted by Hilcorp.

Burlington and Southland, the Trustee and Burlington established a formal protocol pursuant to which compliance auditors retained by the Trustee have access to Burlington and its successors books and records, which protocol has been adopted by

Oil and Natural Gas Reserves

6 unchanged sentences

Crude Oil and

Proved reserves were calculated using prices equal to the twelve-month unweighted arithmetic average of the first-day-of-the-month commodity prices for each of the preceding twelve months, which were $

3.598 per MMBtu (Henry Hub) of natural gas and $66.56 per Bbl (West Texas Intermediate) of oil.

The adjusted volume-weighted average prices over the life of the properties were $3.05 per Mcf of gas and $55.73 per Bbl of oil.

Proved reserves were calculated using prices equal to the 12-month

unweighted arithmetic average of the first-day-of-the-month commodity prices for each of

the preceding 12 months, which were $6.36 per MMBtu (Henry Hub) of natural gas and $93.67 per Bbl (West Texas Intermediate) of oil.

The adjusted volume-weighted average prices over the life of the properties were $6.09 per Mcf of gas and $83.28 per

The Trust does not own a specific percentage of the oil and gas reserves because the Conveyance has defined the

17 unchanged sentences

available information, and provides the results to the Trust.

The Trust maintains internal controls and procedures applicable to reserve estimation which

are reviewed annually and updated as required and reviews the reserve reports prepared by CG&A for reasonableness.

The Trusts internal controls and procedures regarding reserve estimates require proved reserves to be determined and

disclosed in compliance with the SEC definitions and guidance.

The Trust maintains internal controls and procedures applicable to reserve

estimation, which are reviewed annually and updated as required, and the Trust reviews the reserve reports prepared by CG&A for reasonableness.

The Trusts internal controls and procedures regarding reserve estimates require proved reserves

to be determined and disclosed in compliance with SEC definitions and guidance.

Third-Party Reserves

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production, transportation, and sales.

In addition, FERC continues to promulgate revisions to various aspects of the rules and regulations affecting those segments of the natural gas industry, most notably interstate natural gas

transmission companies that remain subject to FERCs jurisdiction.

In addition, FERC continues to promulgate revisions to various aspects of the rules and regulations affecting those segments of the natural gas industry, most notably interstate natural gas transmission

companies, that remain subject to FERCs jurisdiction.

These initiatives may also affect the intrastate transportation of gas under certain circumstances.

The stated purpose of

many of these regulatory changes is to promote competition among the various sectors of the natural gas industry.

Additional proposals

and proceedings that might affect the natural gas industry are considered from time to time by Congress, FERC, state regulatory bodies and the courts.

The Trust cannot predict when or if any such proposals might become effective, or their effect, if

any, on the Trust.

The natural gas industry historically has been very heavily regulated;

The stated purpose of many of these regulatory changes is to promote competition among

the various sectors of the natural gas industry.

Additional proposals and proceedings that might affect the natural gas industry are

considered from time to time by Congress, FERC, state regulatory bodies and the courts.

The Trust cannot predict when or if any such proposals might become effective, or their effect, if any, on the Trust.

The natural gas industry historically has

been very heavily regulated;

therefore, there is no assurance that the less stringent regulatory approach to natural gas sales pursued since 1993 by FERC and Congress will continue.

17 unchanged sentences

laws (including case law) and regulations governing health, safety, environmental quality and pollution control.

Failure to comply with these laws, rules and regulations, however, may result in the assessment of administrative, civil or criminal

Those requirements have frequently changed, and new programs may be even more stringent.

Failure to comply with applicable health,

safety and environmental laws, rules and regulations may result in the assessment of administrative, civil or criminal penalties;

the imposition of investigatory or remedial obligations;

and the issuance of injunctions limiting or preventing some or all of the operations on the Subject Interests.

Under certain environmental laws and regulations, the operators of the Subject Interests could be subject to strict,

joint and several liability for the removal or remediation of property contamination, whether at a drill site or a waste disposal facility, even when the operators did not cause the contamination, or their activities were in compliance with all

applicable laws at the time the actions were taken.

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as the superfund law, for example, imposes liability, regardless of fault or

the legality of the original conduct, on certain classes of persons for releases into the environment of a hazardous substance. Liable persons may include the current or previous owner and operator of a site where a hazardous substance

has been disposed and persons who arranged for the disposal of a hazardous substance at a site.

Under CERCLA and similar statutes, government authorities or private parties may take actions in response to threats to the public health or the

environment or sue responsible persons for the associated costs.

In the course of operations, the working interest owner and/or the operator of Subject Interests may have generated and may generate materials that could trigger cleanup liabilities.

In addition, the Subject Interests have produced oil and/or natural gas for many years, and previous operators may have disposed or released hydrocarbons, wastes or hazardous substances at the Subject Interests.

The operator of

the Subject Interests or the working interest owners may be responsible for all or part of the costs to clean up any such contamination.

Although the Trust is not the operator of any Subject

Interests, or the owner of any working interest, its ownership of the Royalty could cause it to be responsible for all or part of such costs to the extent CERCLA or any similar statute imposes responsibility on such parties as owners.

and the issuance of injunctions limiting or preventing some or

all of the operations on the Subject Interests.

Under certain environmental laws and regulations, the operators of

the Subject Interests could be subject to strict, joint and several liability for the removal or remediation of property contamination, whether at a drill site or a waste disposal facility, even when the operators did not cause the contamination, or

their activities were in compliance with all applicable laws at the time the actions were taken.

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as the superfund law, for example,

imposes liability, regardless of fault or the legality of the original conduct, on certain classes of persons for releases into the environment of a hazardous substance. Liable persons may include the current or previous owner and

operator of a site where a hazardous substance has been disposed and persons who arranged for the disposal of a hazardous substance at a site.

Under CERCLA and similar statutes, government authorities or private parties may take actions in response

to threats to the public health or the environment and sue responsible persons for the associated costs;

government authorities also may direct responsible persons to implement cleanup measures.

In the course of operations, the working interest

owner and/or the operator of Subject Interests may have generated and may generate materials that could trigger cleanup liabilities.

In addition, the Subject Interests have produced oil and/or natural gas for many years, and previous operators may

have disposed or released hydrocarbons, wastes or hazardous substances at the Subject Interests.

The operator of the Subject Interests or the working interest owners may be responsible for all or part of the costs to clean up any such contamination.

Although the Trust is not the operator of any Subject Interests, or the owner of any working interest, its ownership of the Royalty could cause it to be responsible for all or part of such costs to the extent CERCLA, or any similar statute, imposes

responsibility on such parties as owners.

Climate Change .

Mitigating climate change has become the subject of an important public policy debate and the basis for new

legislation proposed by the United States Congress and certain states.

Some states have adopted climate change statutes and regulations, and in one of the first acts of his presidency, President Biden signed an executive order to rejoin the Paris

Climate Accord, a voluntary international agreement with the goal of limiting global climate change to not more than 2 degrees Celsius (or less);

preparing, maintaining and publishing national greenhouse gas (GHG) reduction targets;

creating a carbon-neutral world by 2050.

The Biden administration has also set ambitious domestic targets for curbing climate change, such as making the US power sector climate neutral by 2035.

Due to factors such as environmental

concerns and increased competition from renewables, the International Energy Agency (IEA) estimates that natural gas demand in established markets such as the U.S.

and the European Union will begin to deteriorate by the mid-2020s, and oil demand will plateau after 2030.

Notwithstanding potential risks related to climate change, the IEA estimates that global energy demand will continue to rise and will not peak until after 2040 and

that oil and natural gas will continue to represent a substantial percentage of global energy use over that time.

The EPA has issued

greenhouse gas monitoring and reporting regulations.

Under those rules, since 2012, annual reporting of greenhouse gases has been required for persons operating certain types of industrial operations, including oil and natural gas production,

transmission and storage operations that emit 25,000 metric tons or more of carbon dioxide equivalent per year.

Beyond measuring and

reporting, EPA issued an Endangerment Finding under Section 202(a) of the Clean Air Act, concluding GHG pollution threatens the public health and welfare of future generations.

EPA indicated that it will use data collected through

the reporting rules to decide whether to promulgate future greenhouse gas emission limits.

On August 16, 2012, EPA issued a final rule that established new source performance standards for volatile organic compounds (VOCs) and

sulfur dioxide, an air toxics standard for sources of oil and natural gas production, and an air toxics standard for sources of natural gas transmission and storage.

The rule required that, since January 1, 2015, all hydraulically fractured or

refractured natural gas wells must have been completed using so-called green completion technology, which significantly reduces VOC emissions.

Limiting emissions of VOCs will have the co-benefit of also limiting methane, a greenhouse gas.

These regulations, referred to as New Source Performance Standards (NSPS) Subpart OOOO, also apply to storage tanks, natural gas wells, and other

equipment in the affected oil and natural gas industry segments.

In May 2016, EPA issued a suite of new final regulations, referred to as NSPS Subpart OOOOa, designed to limit methane, VOCs and other emissions from new and existing sources in the

oil and natural gas sector.

Among other things, these new rules apply green completion requirements to newly fractured and re-fractured oil wells.

And rulemaking concerning regulation of greenhouse gas and

other emissions from the oil and natural gas industry continues:

in October 2018, the EPA released proposed revisions to some of the NSPS Subpart OOOOa requirements, including reducing the required frequency of fugitive emissions monitoring at well

site and compressor stations.

Most recently, EPA published two new rules on September 14 and 15, 2020 that remove the transmission and storage sectors of the oil and natural gas industry from regulation under the NSPS and rescind

methane-specific standards for the production and processing segments of the industry.

However, states and environmental groups brought suit challenging the new rules almost immediately.

Although the bulk of the 2012 and 2016 standards are currently

in effect, future implementation and the ultimate scope of the 2012 and 2016 standards are uncertain at this time as a result of these challenges and current uncertainty regarding how the standards may be altered under the administration of recently

President Biden.

Accordingly, the ultimate scope of these regulations remains uncertain.

In addition, on January 19,

2021, the D.C.

Circuit vacated former President Trumps administrations Affordable Clean Energy rule, which had interpreted the Clean Air Act as limiting the scope of the federal

governments authority to establishing only source-specific (or inside the fence line) emissions reduction requirements for coal-fired power plants.

The decision remanded the

rule back to the agency, and leaves the door open for the EPA under President Bidens administration to adopt more stringent rules on fossil fuel-fired power plants, as well as other measures to reduce GHG emissions associated with power

generation and incentivize low-carbon emitting power generation sources.

Adoption of such rules that either place additional limits on GHG emissions from fossil fuel-fired power plants or otherwise incentivize

non-fossil fuel generated sources of energy could reduce demand for oil and gas generally, including oil and natural gas produced from the Subject Interests and could increase the cost of operations of the

Subject Interests, which could result in a loss of reserves or revenues to the Trust.

The impact such regulation may have on the amount of Royalty and Royalty Income paid to the Trust by Hilcorp or subsequent operators of the Subject Interests is

difficult to predict.

Mitigating climate change has become the subject of an important

public policy debate and the basis for new legislation proposed by the United States Congress and certain states.

Some states have adopted climate change statutes and regulations, and in one of the first acts of his administration, President Biden

signed an executive order to rejoin the Paris Climate Agreement, which sets out an international framework to limit the increase in global average temperature to well below two degrees Celsius (or less).

Participating countries prepare,

maintain and publish national greenhouse gas (GHG) reduction targets.

Accordingly, the Biden administration has set ambitious domestic targets for curbing climate change, such as making the U.S.

power sector climate neutral by 2035 and

achieving a net-zero emissions economy by 2050.

The Inflation Reduction Act (IRA) was

signed into law in August 2022 and contains many provisions that address climate change by creating incentives to use alternative fuels and sources of energy.

The Biden administration expects the IRA to reduce U.S.

GHG emissions by approximately 40%

by 2030 compared with 2005 levels and put the United States on course for a net-zero economy by 2050.

The Methane Emissions Reduction Program in the IRA (Sec.

60113) gives the Environmental Protection Agency

(EPA) the ability to impose charges on methane emitted by certain oil and gas companies.

The charges will start in 2024 and apply to facilities that emit over 25,000 metric tons of carbon dioxide equivalent unless exemptions are

The impact such regulation may have on the amount of Royalty and Royalty Income paid to the Trust by Hilcorp or subsequent operators of the Subject Interests is difficult to predict.

In addition, federal agencies are building upon their existing programs to impose new climate controls.

In 2009, EPA issued an

Endangerment Finding under Section 202(a) of the Clean Air Act, concluding GHG pollution threatens the public health and welfare of future generations.

And EPA has required annual reporting of greenhouse gases for persons operating

certain types of industrial facilities, including oil and natural gas production, transmission and storage operations that emit 25,000 metric tons or more of carbon dioxide equivalent per year.

The data collected through the reporting rules has

helped to provide a basis for promulgating greenhouse gas emission limits.

A number of those rules have addressed emissions from the oil

and gas industry.

On August 16, 2012, for example, EPA issued a final rule that established new source performance standards for volatile organic compounds (VOCs) and sulfur dioxide, an air toxics standard for sources of oil and

natural gas production, and an air toxics standard for sources of natural gas transmission and storage.

That rule generally required all hydraulically fractured or refractured natural gas wells to be completed using

so-called green completion technology, which significantly reduces VOC emissions.

Limiting those emissions of VOCs has the co-benefit of also limiting

methane, a greenhouse gas.

These regulations, referred to as New Source Performance Standards (NSPS) Subpart OOOO, also apply to storage tanks and other equipment in the affected oil and natural gas industry segments.

In May 2016, EPA

issued a suite of new final regulations, referred to as NSPS Subpart OOOOa, designed to limit methane, VOCs and other emissions from new and existing sources in the oil and natural gas sector.

Among other things, these rules applied green completion

requirements to newly fractured and re-fractured oil wells.

Rulemaking concerning regulation of greenhouse gas and other emissions from the oil and natural gas industry continues.

In 2022, EPA proposed new

rules for oil and gas sources that would (i) ensure all wells are routinely monitored for leaks, (ii) encourage use of innovative and advanced monitoring, (iii) impose strengthened emission standards for certain equipment, and

(iv) require states to reduce methane emissions from existing sources.

The ultimate scope of these regulations remains uncertain;

however, any resulting increase in production costs may affect the amount of Royalty and Royalty Income that is

paid to the Trust by Hilcorp or subsequent operators of the Subject Interests.

The oil and gas industry also is likely to be indirectly

affected by EPA rulemakings covering other industry sectors.

For example, in 2015 EPA promulgated its Clean Power Plan, which imposed greenhouse gas emissions limits on U.S.

power plants.

In the Trump Administration, EPA replaced the Clean Power

Plan with the Affordable Clean Energy rule, which interpreted the Clean Air Act as limiting the scope of the federal governments authority to establishing only source-specific (or inside the fence line) emissions reduction

requirements for coal-fired power plants.

Circuit vacated the Affordable Clean Energy rule, but the Supreme Court reversed the vacatur and ruled the Clean Power Plan was invalid.

EPA has indicated that it has started work to replace the

Affordable Clean Energy rule with new standards governing emissions from fossil-fuel-fired power plants.

EPA under President Bidens administration therefore will have a further opportunity to adopt more stringent limits on GHG emissions and

incentivize alternative energy sources.

Adoption of any such requirements could reduce demand for oil and gas generally, including oil and natural gas produced from the Subject Interests, and could increase the cost of operations of the Subject

Interests, which could result in a loss of reserves or revenues to the Trust.

The impact such regulation may have on the amount of Royalty and Royalty Income paid to the Trust by Hilcorp or subsequent operators of the Subject Interests is difficult

The cumulative effect of the various climate change measures is likewise uncertain.

Due to factors such as environmental concerns and

increased competition from renewables, the International Energy Agency (IEA) estimates that natural gas demand in established markets such as the U.S.

and the European Union will begin to deteriorate by the

mid-2020s, and oil demand will plateau after 2030.

Notwithstanding potential risks related to climate change, the IEA estimates that global energy demand will continue to rise and will not peak until after

2040 and that oil and natural gas will continue to represent a substantial percentage of global energy use over that time.

Certain Tax Considerations

5 unchanged sentences

The Trustee, on advice of New Mexico counsel,

has observed that net profits interests, such as the Royalty, and other types of interests, the extent of which cannot be determined with respect to a specific share of the oil and natural gas production, as well as amounts deducted from

payments that are for expenses related to oil and natural gas production, are excluded from the withholding requirements of the Withholding Tax Act.

Unit Holders should consult with their individual tax advisors regarding the applicability of the

Withholding Tax Act and other tax matters to distributions received from the Trust by a Unit Holder.

has observed that net profits interests (such as the Royalty) and other types of interests (the extent of which cannot be determined with respect to a specific share of the oil and natural gas production), as well as amounts deducted

from payments that are for expenses related to oil and natural gas production, are excluded from the withholding requirements of the Withholding Tax Act.

Unit Holders should consult with their individual tax advisors regarding the applicability of

the Withholding Tax Act and other tax matters to distributions received from the Trust by a Unit Holder.

LEGAL PROCEEDINGS

2 unchanged sentences

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 2. Properties