What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 203 added, 195 removed, 304 unchanged (57% of the section changed)

3 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Income from net profits interest

2 unchanged sentences

Distributable income

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at June 30, 2020 and 2019)

(1) Includes $0 and $0 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended June 30,

2020 and 2019, respectively, and $51,320 and $24,675 during the six months ended June 30, 2020 and 2019, respectively.

includes $37,500 paid to The Bank of New York Mellon Trust Company, N.A.

during each of the three-month periods ended June 30,

2020 and 2019 and $75,000 during each of the six-month periods ended June 30, 2020 and 2019, respectively.

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at September 30, 2020 and 2019)

Includes $26,685 and $51,320 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended September 30, 2020 and 2019, respectively, and $78,005 and $75,995 during the nine months ended September 30, 2020 and 2019, respectively.

Also includes $37,500 paid to The Bank of New York Mellon Trust Company, N.A.

during each of the three-month periods ended September 30, 2020 and 2019 and $112,500 during each of the nine-month periods ended September 30, 2020 and 2019, respectively.

CONDENSED STATEMENTS OF ASSETS AND TRUST

September 30,

Cash and cash equivalents

3 unchanged sentences

(77,571,838 )

Trust corpus, 17,000,000 Trust units issued and outstanding at June 30, 2020 and December 31, 2019

Trust corpus, 17,000,000 Trust units issued and outstanding at September 30, 2020 and December 31, 2019

CONDENSED STATEMENTS OF CHANGES IN TRUST

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Trust corpus, beginning of period

2 unchanged sentences

Trust expenses

Amortization of net profits interest (includes impairment expense of $41,261,354 during the six months ended June 30, 2020)

Amortization of net profits interest (includes impairment expense of $41,261,354 during the nine months ended September 30, 2020)

(43,899,467 )

52 unchanged sentences

Assets and Trust Corpus as of December 31, 2019, which has been derived from audited financial statements, and the unaudited

interim condensed financial statements as of June 30, 2020 and for the three- and six-month periods ended June 30, 2020

and June 30, 2019, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission

(the “SEC”).

Accordingly, certain information and note disclosures normally included in annual financial statements

have been condensed or omitted pursuant to those rules and regulations.

interim condensed financial statements as of September 30, 2020 and for the three- and nine-month periods ended September 30,

2020 and September 30, 2019, have been prepared pursuant to the rules and regulations of the Securities and Exchange

Commission (the “SEC”).

Accordingly, certain information and note disclosures normally included in annual financial

statements have been condensed or omitted pursuant to those rules and regulations.

The preparation of financial statements

47 unchanged sentences

The Trust has determined that no additional impairment

has been incurred during the quarter ended June 30, 2020.

has been incurred during the quarter ended September 30, 2020.

No new accounting pronouncements have been

adopted or issued during the quarter ended June 30, 2020 that would impact the financial statements of the Trust.

adopted or issued during the quarter ended September 30, 2020 that would impact the financial statements of the Trust.

Investment in Net Profits Interest

13 unchanged sentences

Three months ended

Six months ended

Excess of revenues over direct operating expenses and lease equipment and development costs(1)

September 30,

Nine months ended

September 30,

Excess (deficit) of revenues over direct operating expenses and lease equipment and development costs(1)

Times 80% net profits interest to Trust

Income from net profits interest before reserve adjustments

Income (loss) from net profits interest before reserve adjustments

VOC Brazos reserve for future development, maintenance or operating expenditures(2)

Income from net profits interest(3)

(1) Excess of revenues over direct operating expenses and lease equipment and development costs reflect expenses and costs incurred

by VOC Brazos during each of the December through February production periods for the three months ended June 30

and during each of the September through February production periods for the six months ended June 30.

to the terms of the conveyance of the net profits interest, lease equipment and development costs are to be deducted when calculating

the distributable income to the Trust.

(2) Pursuant to the terms of the conveyance of the net profits interest, VOC Brazos can reserve up to $1.0 million for future development,

maintenance or operating expenditures at any time.

During the three months ended June 30, 2020 and 2019, and the six months

ended June 30, 2020 and 2019, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the reserve.

The reserve balance was $1,000,000 at June 30, 2020 and 2019, respectively.

Excess of revenues over direct operating expenses and lease equipment and development costs reflect expenses and costs incurred by VOC Brazos during each of the March through May production periods for the three months ended September 30 and during each of the September through May production periods for the nine months ended September 30.

Pursuant to the terms of the conveyance of the net profits interest, lease equipment and development costs are to be deducted when calculating the distributable income to the Trust.

Pursuant to the terms of the conveyance of the net profits interest, VOC Brazos can reserve up to $1.0 million for future development, maintenance or operating expenditures at any time.

During the three and nine months ended September 30, 2020, VOC Brazos released $7,045 previously held for future development, maintenance or operating expenditures to to cover the Trust deficit for the three months ended September 30, 2020.

During the three and nine months ended September 30, 2019, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the reserve.

The reserve balance was $992,955 at September 30, 2020 and $1,000,000 at September 30, 2019.

The income from net profits interest is based upon the cash receipts from VOC Brazos for the oil and gas production.

from oil production are typically received by VOC Brazos one month after production;

thus, the cash received by the Trust during

the three months ended June 30, 2020 substantially represents production by VOC Brazos from December 2019 through February 2020

and the cash received by the Trust during the three months ended June 30, 2019 substantially represents production by VOC

Brazos from December 2018 through February 2019.

The cash received by the Trust during the six months ended June 30,

2020 substantially represents production by VOC Brazos from September 2019 through February 2020 and the cash received

by the Trust during the six months ended June 30, 2019 substantially represents production by VOC Brazos from September 2018

through February 2019.

For the three and six months ended June 30,

The revenues from oil production are typically received by VOC Brazos one month after production;

thus, the cash received by the Trust during the three months ended September 30, 2020 substantially represents production by VOC Brazos from March 2020 through May 2020 and the cash received by the Trust during the three months ended September 30, 2019 substantially represents production by VOC Brazos from March 2019 through May 2019.

The cash received by the Trust during the nine months ended September 30, 2020 substantially represents production by VOC Brazos from September 2019 through May 2020 and the cash received by the Trust during the nine months ended September 30, 2019 substantially represents production by VOC Brazos from September 2018 through May 2019.

For the three and nine months ended September 30,

2020 and 2019, MV Purchasing, LLC, an affiliate of VOC Brazos, purchased a significant portion of the production of the underlying

12 unchanged sentences

established for future expenses of the Trust.

The West Texas Intermediate spot price

of crude oil has declined since the beginning of 2020, from $63.27 per barrel on January 6, 2020 to $ 41.95 per barrel on August 6 , 2020.

During this time frame, the monthly

average price, which is the base price that crude oil sales are based on, reached a low of $16.70 for April 2020.

in oil prices is primarily attributable to the economic effects of the COVID-19 pandemic and the dispute over production levels

between Russia and the members of the Organization of Petroleum Exporting Countries, which resulted in an oversupply of crude oil

and exacerbated the decline in crude oil prices.

If commodity prices for crude oil remain at reduced levels, subsequent distributions

in 2020 will be substantially lower than historical distributions, and in certain periods there may be no distribution to unitholders.

In light of the current uncertain economic environment, the Trustee withheld an amount from the second quarterly distribution in

The West Texas Intermediate spot

price of crude oil has declined since the beginning of 2020, from $63.27 per barrel on January 6, 2020 to $38.79 per

barrel on November 5, 2020.

During this time frame, the monthly average price, which is the base price that crude oil

sales are based on, reached a low of $16.70 for April 2020.

The decline in oil prices is primarily attributable to the

economic effects of the COVID-19 pandemic and the dispute over production levels between Russia and the members of the

Organization of Petroleum Exporting Countries, which resulted in an oversupply of crude oil and exacerbated the decline in

crude oil prices.

If commodity prices for crude oil remain at reduced levels, subsequent distributions in 2020 will be

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

light of the current uncertain economic environment, the Trustee withheld an amount from the second quarterly distribution in

2020 that is estimated to be sufficient to pay Trust expenses through approximately April 2021.

7 unchanged sentences

Such distribution included the net proceeds of production collected by VOC Brazos from January 1, 2020 through March 31,

There was no third quarterly distribution

during 2020 to Trust unitholders owning Trust units as of July 30, 2020.

The revenue collected by VOC Brazos from April 1, 2020

through June 30, 2020 was not sufficient to cover the costs paid during the period.

VOC Brazos applied $7,045 from the reserve

for future expenditures to cover the deficit.

The first quarterly distribution during

6 unchanged sentences

Such distribution included the net proceeds of production collected by VOC Brazos from January 1, 2019 through March 31,

The third quarterly distribution during

2019 was $3,485,000, or $0.205 per Trust Unit, and was made on August 14, 2019 to Trust unitholders owning Trust Units as of July

Such distribution included the net proceeds of production collected by VOC Brazos from April 1, 2019 through June 30,

Advance for Trust Expenses

1 unchanged sentence

the Trustee is allowed to borrow money to pay Trust expenses.

During the three and six months ended June 30, 2020 and 2019,

During the three and nine months ended September 30, 2020 and

2019, there were no borrowings or amounts owed for money borrowed in previous quarters.

Under the terms of the Trust Agreement, VOC Brazos

has provided a letter of credit in the amount of $1,700,000 to the Trustee to protect the Trust against the risk that it does not

have sufficient cash to pay future expenses.

Under the terms of the Trust Agreement,

VOC Brazos has provided a letter of credit in the amount of $1,700,000 to the Trustee to protect the Trust against the risk that

it does not have sufficient cash to pay future expenses.

Subsequent Events

On July 20, 2020, the Trust announced

that there would be no Trust quarterly distribution of net profits for the second quarterly payment period ended June 30,

2020 as the revenue received from the underlying properties was not sufficient to cover the costs attributable to the underlying

properties during the period.

VOC Brazos applied $7,045 from the reserve for future development, maintenance or operating expenditures

to cover the deficit.

On October 20, 2020, the Trust announced

a Trust distribution of net profits for the fourth quarterly distribution during 2020.

Unitholders of record on October 30,

2020 will receive a distribution amounting to $1,445,000, or $0.085 per Trust Unit, which will be paid on November 13, 2020.

Trustee’s Discussion and Analysis of Financial

8 unchanged sentences

regarding operations has been provided to the Trustee by VOC Brazos.

The recent outbreak of the novel form of coronavirus known as COVID-19 and its development into a

global pandemic is negatively impacting worldwide economic and commercial activity and financial markets, as well as global

demand for crude oil and natural gas.

The West Texas Intermediate spot price of crude oil has declined since the beginning

of 2020, from $63.27 per barrel on January 6, 2020 to $41.95 per barrel on

August 6, 2020.

During this time frame, the monthly average price, which

is the base price that crude oil sales are based on, reached a low of $16.70 for April 2020.

The decline in oil prices is

primarily attributable to the economic effects of the COVID-19 pandemic and the dispute over production levels between Russia and

the members of the Organization of Petroleum Exporting Countries, which resulted in an oversupply of crude oil and exacerbated

the decline in crude oil prices.

COVID-19 and the responses by federal, state and local governmental authorities to the pandemic

have also resulted in significant business and operational disruptions, including business closures, supply chain disruptions,

The recent outbreak of the novel form of coronavirus known as COVID-19 and its development into

a global pandemic is negatively impacting has had, and continues to have, a negative impact on worldwide economic and

commercial activity and financial markets, as well as global demand for crude oil and natural gas.

The West Texas

Intermediate spot price of crude oil has declined since the beginning of 2020, from $63.27 per barrel on January 6, 2020 to

$38.79 per barrel on November 5, 2020.

During this time frame, the monthly average price, which is the base price that crude

oil sales are based on, reached a low of $16.70 for April 2020.

The decline in oil prices is primarily attributable to

the economic effects of the COVID-19 pandemic and the dispute over production levels between Russia and the members of the

Organization of Petroleum Exporting Countries, which resulted in an oversupply of crude oil and exacerbated the decline in

crude oil prices.

COVID-19 and the responses by federal, state and local governmental authorities to the pandemic have

also resulted in significant business and operational disruptions, including business closures, supply chain disruptions,

travel restrictions, stay-at-home orders and limitations on the availability of workforces.

The full impact of COVID-19 is

unknown and is rapidly evolving.

The extent to which COVID-19 negatively impacts the operators of and production from

the underlying properties will depend on the severity, location and duration of the effects and spread of COVID-19, the

actions undertaken by federal, state and local governments and health officials to contain the virus or treat its effects, and

how quickly and to what extent economic conditions improve and normal business and operating conditions resume.

A prolonged period

of low crude oil prices would adversely affect the operators of the underlying properties.

As a result of the decreased price

of crude oil during the second quarter of 2020, there was no distribution made to unitholders in the third quarter of 2020.

commodity prices for crude oil remain at reduced levels, quarterly cash distributions to unitholders will be substantially lower

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

The full impact

of COVID-19 is unknown and is rapidly evolving.

The extent to which COVID-19 negatively impacts the

operators of and production from the underlying properties will depend on the severity, location and duration of the effects

and spread of COVID-19, the actions undertaken by federal, state and local governments and health officials to

contain the virus or treat its effects, and how quickly and to what extent economic conditions improve and normal business

and operating conditions resume.

A prolonged period of low crude oil prices would adversely affect the operators of the

underlying properties.

As a result of the decreased price of crude oil during the second quarter of 2020, there was no

distribution made to unitholders in the third quarter of 2020.

If commodity prices for crude oil remain at reduced levels,

quarterly cash distributions to unitholders will be substantially lower than historical distributions, and in certain periods

there may be no distribution to unitholders.

of Net Profits Interest .

3 unchanged sentences

The impairment was charged directly to Trust corpus and did not affect distributable

The Trust has determined that no additional impairment has been incurred during the quarter ended June 30, 2020.

The Trust has determined that no additional impairment has been incurred during the quarters ended June 30 or September

Results of Operations

of Operations for the Quarters Ended June 30, 2020 and 2019

The following is a summary of income from

net profits interest received by the Trust for the three months ended June 30, 2020 and 2019 consisting of the April distribution

Results of Operations for the Quarters Ended September 30,

2020 and 2019

The following is a summary of income (loss)

from net profits interest received by the Trust for the three months ended September 30, 2020 and 2019 consisting of the July distribution

for each respective year:

Three months ended

September 30,

Sales volumes:

10 unchanged sentences

Development expenses

Excess of revenues over direct operating expenses and lease equipment and development costs

Excess (deficit) of revenues over direct operating expenses and lease equipment and development costs

Times net profits interest over the term of the Trust

Income from net profits interest before reserve adjustments

Income (loss) from net profits interest before reserve adjustments

VOC Brazos reserve for future development, maintenance or operating expenditures

1 unchanged sentence

The cash received by the Trust from VOC

Brazos during the quarter ended June 30, 2020 substantially represents the production by VOC Brazos from December 2019

through February 2020.

The cash received by the Trust from VOC Brazos during the quarter ended June 30, 2019 substantially

represents the production by VOC Brazos from December 2018 through February 2019.

The revenues from oil production are

typically received by VOC Brazos one month after production.

Oil and natural gas sales were $9,474,836 for the three months ended June 30, 2020, an increase of $2,197,340

or 30.2% from $7,277,496 for the three months ended June 30, 2019.

Revenues are a function of oil and natural gas sales volumes

and prices received.

The increase in gross proceeds was due to increases in oil and natural gas sales volumes and an increase in

market prices for oil sales partially offset by a decrease in market prices for natural gas sales during the second quarter of

During the three months ended June 30, 2020, the average price for oil increased 9.2% to $53.94 per Bbl and the average

price for natural gas decreased 31.4% to $2.36 per Mcf.

Oil sales volumes were 171,188 Bbls for the three months ended June 30,

2020, an increase of 29,164 Bbls or 20.5% from 142,024 Bbls for the three months ended June 30, 2019, while natural gas sales

volumes were 102,303 Mcf, an increase of 26,322 Mcf or 34.6% from 75,981 Mcf for the same period in 2019.

Lease operating expenses were $3,029,692 for the three months ended June 30, 2020, an increase of $54,436 or 1.8% from $2,975,256

for the three months ended June 30, 2019.

Production and property taxes were $481,878 for the three months ended June 30,

2020, an increase of $269,875 or 127.3% from $212,003 for the same period in 2019.

Such increase is the result of an increase of

$202,326 in property taxes resulting primarily from a timing difference as to when payments are normally made and an increase of

$67,549 or 32.1% in production taxes due to higher sales volumes for oil and natural gas.

Development expenses were $4,166,222

for the three months ended June 30, 2020, an increase of $3,775,250 or 965.6% from $390,972 for the same period in 2019.

increase was primarily due to payments totaling $4,046,455 made to the operator from net revenue received from the Hawkwood Development

wells during the three months ended June 30, 2020.

Brazos during the quarter ended September 30, 2020 substantially represents the production by VOC Brazos from March 2020

through May 2020.

The cash received by the Trust from VOC Brazos during the quarter ended September 30, 2019 substantially

represents the production by VOC Brazos from March 2019 through May 2019.

The revenues from oil production are typically

received by VOC Brazos one month after production.

Oil and natural gas sales were $2,889,592 for the three months ended September 30, 2020, a decrease of

$6,039,600 or 67.6% from $8,929,192 for the three months ended September 30, 2019.

Revenues are a function of oil and natural

gas sales volumes and prices received.

The decrease in gross proceeds was due to a decrease in oil sales volumes, partially offset

by an increase in natural gas sales volumes, and decreases in market prices for oil and natural gas sales during the third quarter

During the three months ended September 30, 2020, the average price for oil decreased 61.6% to $22.53 per Bbl and

the average price for natural gas decreased 56.2% to $1.24 per Mcf.

Oil sales volumes were 122,672 Bbls for the three months ended

September 30, 2020, a decrease of 25,824 Bbls or 17.4% from 148,496 Bbls for the three months ended September 30, 2019,

while natural gas sales volumes were 100,804 Mcf, an increase of 22,018 Mcf or 27.9% from 78,786 Mcf for the same period in 2019.

Lease operating expenses were $2,251,208 for the three months ended September 30, 2020, a decrease of $918,949 or 29.0% from

$3,170,157 for the three months ended September 30, 2019.

Production and property taxes were $262,775 for the three months

ended September 30, 2020, a decrease of $288,195 or 52.3% from $550,970 for the same period in 2019.

Such decrease is the

result of an decrease of $104,242 in property taxes resulting primarily from a timing difference as to when payments are normally

made and a decrease of $183,953 or 67.8% in production taxes due primarly to lower sales volumes for oil.

Development expenses

were $384,415 for the three months ended September 30, 2020, a decrease of $134,208 or 25.9% from $518,623 for the same period

Such decrease was primarily due to a decrease in drilling activity and development expenses.

Included in the $384,415

is $290,204 in payments made to the operator from net revenue received from the Hawkwood Development wells during the three months

ended September 30, 2020.

of revenues over direct operating expenses and lease equipment and development costs .

The excess of revenues over direct

operating expenses and lease equipment and development costs from the underlying properties was $1,797,044 for the three months

ended June 30, 2020, a decrease of $1,902,221 or 51.4% from $3,699,265 for the three months ended June 30, 2019.

Trust’s 80% net profits interest of these totals was $1,437,635 and $2,959,412, respectively.

The deficit of revenues over direct

operating expenses and lease equipment and development costs from the underlying properties was $(8,806) for the three months ended

September 30, 2020, a decrease of $4,698,248 or 100.2% from $4,689,442 for the three months ended September 30, 2019.

The Trust’s 80% net profits interest of these totals was $(7,045) and $3,751,554, respectively.

During the three months ended

June 30, 2020 and 2019, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the previously established

cash reserve for future development, maintenance or operating expenditures, which resulted in income from the net profits interest

of $1,437,635 and $2,959,412 for such periods, respectively.

These amounts were reduced by a Trust holdback for future expenses

of $927,635 and $239,412 for the three months ended June 30, 2020 and 2019, respectively.

This increase of $688,223 includes

an amount estimated to be sufficient to pay estimated Trust expenses through approximately April 2021.

The Trustee paid general

and administrative expenses of $231,891 for the three months ended June 30, 2020, an increase of $73,917 from $157,974 for

the three months ended June 30, 2019.

This increase was primarily due to the differences in timing of receipt and payment

of recurring general and administrative expenses.

These factors resulted in distributable income for the three months ended June 30,

2020 of $510,000, a decrease of $2,210,000 from $2,720,000 for the three months ended June 30, 2019.

Results of Operations for the Six Months Ended June 30,

September 30, 2020, VOC Brazos released $7,045 from the previously established cash reserve for future development, maintenance

or operating expenditures to cover the deficit.

This resulted in income from the net profits interest of $0 and $3,751,554 for

such periods, respectively.

These amounts were reduced by a Trust holdback for future expenses of $0 and $266,554 for the three

months ended September 30, 2020 and 2019, respectively.

The Trustee paid general and administrative expenses of $139,230 for

the three months ended September 30, 2020, a decrease of $61,692 from $200,922 for the three months ended September 30,

This decrease was primarily due to the differences in timing of receipt and payment of recurring general and administrative

These factors resulted in distributable income for the three months ended September 30, 2020 of $0, a decrease of

$3,485,000 from $3,485,000 for the three months ended September 30, 2019.

Results of Operations for the Nine Months Ended September 30,

2020 and 2019

The following is a summary of income from

net profits interest received by the Trust for the six months ended June 30, 2020 and 2019 consisting of the January and

April distributions for each respective year:

Six months ended

net profits interest received by the Trust for the nine months ended September 30, 2020 and 2019 consisting of the January,

April and July distributions for each respective year:

Nine months ended

September 30,

Sales volumes:

16 unchanged sentences

The cash received by the Trust from VOC

Brazos during the six months ended June 30, 2020 substantially represents the production by VOC Brazos from September 2019

through February 2020.

The cash received by the Trust from VOC Brazos during the six months ended June 30, 2019

substantially represents the production by VOC Brazos from September 2018 through February 2019.

The revenues from

oil production are typically received by VOC Brazos one month after production.

Oil and natural gas sales were $17,845,093 for the six months ended June 30, 2020, an increase

of $2,277,043 or 14.6% from $15,568,050 for the six months ended June 30, 2019.

Revenues are a function of oil and natural

gas sales prices and volumes sold.

The increase in gross proceeds was due to increases in oil and natural gas sales volumes

during the first six months of 2020.

These increases were partially offset by decreases in market prices for oil and natural

gas during the first six months of 2020.

During the six months ended June 30, 2020, the average price for oil decreased

4.1% to $53.60 per Bbl and the average price for natural gas decreased 34.9% to $2.22 per Mcf.

Oil sales volumes were 324,963 Bbls

for the six months ended June 30, 2020, an increase of 55,858 Bbls or 20.8% from 269,105 Bbls for the six months ended June 30,

2019, while natural gas sales volumes were 192,788 Mcf, an increase of 39,076 Mcf or 25.4% from 153,712 Mcf for the same period

Lease operating expenses were $6,527,218 for the six months ended June 30, 2020, an increase of $306,161 or 4.9% from $6,221,057

for the six months ended June 30, 2019.

Production and property taxes were $1,376,329 for the six months ended June 30,

2020, an increase of $409,475 or 42.4% from $966,854 for the six months ended June 30, 2019.

Such increase is primarily due

to an increase of $309,255 or 56.4% in property taxes of which approximately $200,000 is the result of a timing difference as to

when payments are normally made and an increase of $100,220 or 24.0% in production taxes due to higher sales volumes for oil and

Development expenses were $5,552,927 for the six months ended June 30, 2020, an increase of $4,134,716 or 291.5%

from $1,418,211 for the same period in 2019.

Such increase was primarily due to payments totaling $4,650,763 made to the operator

from net revenue received from the Hawkwood Development wells during the six months ended June 30, 2020.

Brazos during the nine months ended September 30, 2020 substantially represents the production by VOC Brazos from September 2019

through May 2020.

The cash received by the Trust from VOC Brazos during the nine months ended September 30, 2019

substantially represents the production by VOC Brazos from September 2018 through May 2019.

The revenues from oil

production are typically received by VOC Brazos one month after production.

Oil and natural gas sales were $20,734,685 for the nine months ended September 30, 2020, a decrease

of $3,762,557 or 15.4% from $24,497,242 for the nine months ended September 30, 2019.

Revenues are a function of oil

and natural gas sales prices and volumes sold.

The decrease in gross proceeds was due to increases in oil and natural gas

sales volumes during the first nine months of 2020 that were offset by decreases in market prices for oil and natural gas.

During the nine months ended September 30, 2020, the average price for oil decreased 20.7% to $45.08 per Bbl and the average

price for natural gas decreased 41.1% to $1.89 per Mcf.

Oil sales volumes were 447,635 Bbls for the nine months ended September 30,

2020, an increase of 30,034 Bbls or 7.2% from 417,601 Bbls for the nine months ended September 30, 2019, while natural gas

sales volumes were 293,592 Mcf, an increase of 61,094 Mcf or 26.3% from 232,498 Mcf for the same period in 2019.

Lease operating expenses were $8,778,426 for the nine months ended September 30, 2020, a decrease of $612,788 or 6.5% from

$9,391,214 for the nine months ended September 30, 2019.

Production and property taxes were $1,639,104 for the nine months

ended September 30, 2020, an increase of $121,280 or 8.0% from $1,517,824 for the nine months ended September 30, 2019.

Such increase is primarily due to an increase of $205,013 or 24.8% in property taxes partially offset by a decrease of $83,733

or 12.1% in production taxes due to lower prices for oil and natural gas.

Development expenses were $5,937,342 for the nine months

ended September 30, 2020, an increase of $4,000,508 or 206.5% from $1,936,834 for the same period in 2019.

Included in the

$5,937,342 are payments totaling $4,940,967 made to the operator from net revenue received from the Hawkwood Development wells

during the nine months ended September 30, 2020.

of revenues over direct operating expenses and lease equipment and development costs .

The excess of revenues over

direct operating expenses and lease equipment and development costs from the underlying properties was $4,388,619 for the six months

ended June 30, 2020, a decrease of $2,573,309 or 37.0% from $6,961,928 for the six months ended June 30, 2019.

direct operating expenses and lease equipment and development costs from the underlying properties was $4,379,813 for the nine

months ended September 30, 2020, a decrease of $7,271,557 or 62.4% from $11,651,370 for the nine months ended September 30,

The Trust’s 80% net profits interest of these totals were $3,503,850 and $9,321,096, respectively.

During the six months

ended June 30, 2020 and 2019, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the previously

established cash reserve for future development, maintenance or operating expenditures, which resulted in income from the net profits

interest of $3,510,895 and $5,569,542 for such periods, respectively.

These amounts were further reduced by a Trust holdback

for future expenses of $1,130,895 and $384,542 for the six months ended June 30, 2020 and 2019, respectively.

This increase

of $746,353 includes an amount estimated to be sufficient to pay estimated Trust expenses through approximately April 2021.

The Trustee paid general and administrative expenses of $522,349 for the six months ended June 30, 2020, a decrease of $15,394

from $537,743 for the six months ended June 30, 2019.

This decrease was primarily due to the differences in timing of

receipt and payment of recurring general and administrative expenses.

nine months ended September 30, 2020, VOC Brazos released $7,045 from the previously established cash reserve for future development,

maintenance or operating expenditures to cover the deficit for the three months ended September 30, 2020 but did not withhold or

release any dollar amounts due to the Trust from the previously established cash reserve for future development, maintenance or

operating expenditures for the nine months ended September 30, 2019, which resulted in income from the net profits interest of

$3,510,895 and $9,321,096 for such periods, respectively.

These amounts were further reduced by a Trust holdback for future

expenses of $1,130,895 and $651,096 for the nine months ended September 30, 2020 and 2019, respectively.

This increase of

$479,799 includes an amount estimated to be sufficient to pay estimated Trust expenses through approximately April 2021.

Trustee paid general and administrative expenses of $661,579 for the nine months ended September 30, 2020, a decrease of $77,086

from $738,665 for the nine months ended September 30, 2019.

This decrease was primarily due to the differences in timing

of receipt and payment of recurring general and administrative expenses.

These factors resulted in distributable income of $2,380,000

for the six months ended June 30, 2020 and $5,185,000 for the six months ended June 30, 2019.

for the nine months ended September 30, 2020 and $8,670,000 for the nine months ended September 30, 2019.

Liquidity and Capital Resources

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or operating expenses.

As of June 30, 2020, $934,678 was held by the Trustee as such a reserve.

As of September 30, 2020, $795,448 was held by the Trustee as such a reserve.

The Trustee may cause the Trust to borrow

3 unchanged sentences

the borrowed funds are repaid.

During the three and six months ended June 30, 2020 and 2019, there were no such borrowings.

VOC Brazos has provided a letter of credit in the amount of $1,700,000 to the Trustee to protect the Trust against the risk that

it does not have sufficient cash to pay future expenses.

During the three and nine months ended September 30, 2020 and 2019, there were no such

VOC Brazos has provided a letter of credit in the amount of $1,700,000 to the Trustee to protect the Trust against

the risk that it does not have sufficient cash to pay future expenses.

Income to the Trust from the net profits

8 unchanged sentences

The cash reserve balance was $992,955

at June 30, 2020 and 2019, respectively.

and $1,000,000 at September 30, 2020 and 2019, respectively.

In 2018, VOC Brazos entered into a joint

14 unchanged sentences

on Trust distributions.

The unpaid balance thru June 30, 2020 was $1,011,654.

The unpaid balance thru September 30, 2020 was $595,873.

Note Regarding Forward-Looking Statements

19 unchanged sentences

Quantitative and Qualitative Disclosures About Market

Trust is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and

is not required to provide the information under this Item.

The Trust is a smaller reporting company

as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and is not required to provide the information

under this Item.

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-Q

Item 1. Financial Statements