What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 208 added, 168 removed, 279 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, 2021 and 2020)

Includes $27,750 and $0 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended June 30, 2021 and 2020, respectively, and $54,435 and $51,320 during the six months ended June 30, 2021 and 2020, respectively.

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at September 30, 2021 and 2020)

Includes $54,435 and $26,685 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended September 30, 2021 and 2020, respectively, and $108,870 and $78,005 during the nine months ended September 30, 2021 and 2020, 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 June 30, 2021 and 2020 and $75,000 during each of the six-month periods ended June 30, 2021 and 2020, respectively.

during each of the three-month periods ended September 30, 2021 and 2020 and $112,500 during each of the nine-month periods ended September 30, 2021 and 2020, respectively.

CONDENSED STATEMENTS OF ASSETS AND TRUST CORPUS

September 30,

Cash and cash equivalents

3 unchanged sentences

(122,182,408 )

Trust corpus, 17,000,000 Trust units issued and outstanding at June 30, 2021 and December 31, 2020

Trust corpus, 17,000,000 Trust units issued and outstanding at September 30, 2021 and December 31, 2020

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS

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 )

3 unchanged sentences

VOC ENERGY TRUST

NOTES TO CONDENSED FINANCIAL

NOTES TO CONDENSED FINANCIAL STATEMENTS

Organization of the Trust

VOC Energy Trust (the “Trust”) is a

statutory trust formed on November 3, 2010 (capitalized on December 17, 2010), under the Delaware Statutory Trust Act pursuant

VOC Energy Trust (the “Trust”) is

a statutory trust formed on November 3, 2010 (capitalized on December 17, 2010), under the Delaware Statutory Trust Act pursuant

to a Trust Agreement dated November 3, 2010 (as amended and restated on May 10, 2011, the “Trust Agreement”) among

28 unchanged sentences

and the Trust will soon thereafter wind up its affairs and terminate.

As of June 30, 2021, cumulatively, since inception,

As of September 30, 2021, cumulatively, since inception,

the Trust has received payment for 80% of the net proceeds attributable to VOC Brazos’

1 unchanged sentence

from the underlying properties (which is the equivalent of 5.9 MMBoe in respect of the net profits interest).

The Trustee can authorize the Trust to borrow money

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

The Trustee may authorize the Trust to borrow

from the Trustee or the Delaware Trustee as a lender provided the terms of the loan are similar to the terms it would grant to a similarly

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

The Trustee may also deposit funds awaiting distribution

in an account with itself and make other short-term investments with the funds distributed to the Trust.

The Trustee can authorize the Trust to borrow

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

The Trustee may authorize the Trust

to borrow from the Trustee or the Delaware Trustee as a lender provided the terms of the loan are similar to the terms it would grant

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

The Trustee may also deposit funds awaiting

distribution in an account with itself and make other short-term investments with the funds distributed to the Trust.

Basis of Presentation

1 unchanged sentence

and Trust Corpus as of December 31, 2020, which has been derived from audited financial statements, and the unaudited interim condensed

financial statements as of June 30, 2021 and for the three- and six-month periods ended June 30, 2021 and June 30, 2020,

have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

financial statements as of September 30, 2021 and for the three- and nine-month periods ended September 30, 2021 and 2020, have

been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to those

44 unchanged sentences

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

No new accounting pronouncements have been adopted

or issued during the quarter ended June 30, 2021 that would impact the financial statements of the Trust.

No new accounting pronouncements were adopted

or issued during the quarter ended September 30, 2021 that would impact the financial statements of the Trust.

Investment in Net Profits Interest

12 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)

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.

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 months ended June 30, 2021 and 2020, and the six months ended June 30, 2021 and 2020, 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, 2021 and 2020, respectively.

During the three and nine months ended September 30, 2021, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the reserve.

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 cover the Trust deficit for the three months ended September 30, 2020.

The reserve balance was $1,000,000 at September 30, 2021 and $992,955 at September 30, 2020.

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

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 June 30, 2021 substantially represents production by VOC Brazos from December 2020 through February 2021, and 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.

The cash received by the Trust during the six months ended June 30, 2021 substantially represents production by VOC Brazos from September 2020 through February 2021, and 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.

For the three and six months ended June 30,

2021 and 2020, MV Purchasing, LLC, an affiliate of VOC Brazos, purchased a significant portion of the production of the underlying properties.

Sales to MV Purchasing, LLC are under short-term arrangements, ranging from one to six months, using market sensitive pricing.

thus, the cash received by the Trust during the three months ended September 30, 2021 substantially represents production by VOC Brazos from March 2021 through May 2021, and 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.

The cash received by the Trust during the nine months ended September 30, 2021 substantially represents production by VOC Brazos from September 2020 through May 2021 and 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.

the three and nine months ended September 30 , 2021 and 2020, MV Purchasing, LLC, an affiliate of VOC Brazos, purchased a significant

portion of the production of the underlying properties.

Sales to MV Purchasing, LLC are under short-term arrangements, ranging from one

to six months, using market sensitive pricing.

The Trust is a Delaware statutory trust and is

10 unchanged sentences

subject to adjustments for changes made by the Trustee during such quarter in any cash reserves established for future expenses of the

In November 2021, the Trustee notified VOC Brazos that the Trustee intends to build a reserve for the payment of future known,

anticipated or contingent expenses or liabilities, commencing with the distribution payable in the first quarter of 2022.

may increase or decrease the targeted amount at any time, and may increase or decrease the rate at which it is withholding funds to build

the cash reserve at any time, without advance notice to the unitholders.

Cash held in reserve will be invested as required by the Trust

Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known, anticipated or contingent

expenses or liabilities eventually will be distributed to unitholders, together with interest earned on the funds.

The first quarterly distribution during 2021 was

1 unchanged sentence

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

The second quarterly distribution during 2021 was

$2,040,000, or $0.12 per Trust Unit, and was made on May 14, 2021 to Trust unitholders owning Trust Units as of April 30, 2021.

The second quarterly distribution during 2021

was $2,040,000, or $0.12 per Trust Unit, and was made on May 14, 2021 to Trust unitholders owning Trust Units as of April 30,

Such distribution included the net proceeds of production collected by VOC Brazos from January 1, 2021 through March 31,

The third quarterly distribution during 2021 was

$2,720,000, or $0.16 per Trust Unit, and was made on August 13, 2021 to Trust unitholders owning Trust Units as of July 30, 2021.

distribution included the net proceeds of production collected by VOC Brazos from April 1, 2021 through June 30, 2021.

The first quarterly distribution during 2020 was

1 unchanged sentence

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

The second quarterly distribution during 2020 was

$510,000, or $0.03 per Trust Unit, and was made on May 15, 2020 to Trust unitholders owning Trust Units as of April 30, 2020.

The second quarterly distribution during 2020

was $510,000, or $0.03 per Trust Unit, and was made on May 15, 2020 to Trust unitholders owning Trust Units as of April 30,

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.

Advance for Trust Expenses

1 unchanged sentence

is allowed to borrow money to pay Trust expenses.

During the three and six months ended June 30, 2021 and 2020, 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.

During the three and nine months ended September 30, 2021 and 2020, 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.

Subsequent Events

On July 20, 2021, the Trust announced a Trust

distribution of net profits for the second quarterly payment period ended June 30, 2021.

Unitholders of record on July 30, 2021

will receive a distribution amounting to $2,720,000, or $0.16 per Trust Unit, which will be paid on August 13, 2021.

On October 20, 2021, the Trust announced a Trust

distribution of net profits for the fourth quarterly distribution during 2021.

Unitholders of record on November 1, 2021 will receive

a distribution amounting to $3,400,000, or $0.20 per Trust Unit, which will be paid on November 12, 2021.

Trustee’s Discussion and Analysis of Financial Condition

and Results of Operations.

The following discussion of the Trust’s financial

condition and results of operations should be read in conjunction with the financial statements and notes thereto.

The Trust’s purpose

is, in general, to hold the net profits interest, to distribute to the Trust unitholders cash that the Trust receives in respect of the

net profits interest and to perform certain administrative functions in respect of the net profits interest and the Trust Units.

derives substantially all of its income and cash flows from the net profits interest.

All information regarding operations has been provided

to the Trustee by VOC Brazos.

The following discussion of the Trust’s

financial condition and results of operations should be read in conjunction with the financial statements and notes thereto.

The Trust’s

purpose is, in general, to hold the net profits interest, to distribute to the Trust unitholders cash that the Trust receives in respect

of the net profits interest and to perform certain administrative functions in respect of the net profits interest and the Trust Units.

The Trust derives substantially all of its income and cash flows from the net profits interest.

All information regarding operations has

been provided to the Trustee by VOC Brazos.

The 2020 outbreak of the novel form of coronavirus known as COVID-19 and its development into a global pandemic

10 unchanged sentences

Nevertheless, prices could

decline again, and the Trust’s quarterly cash distibutions could similarly decline, depending on future actions by OPEC or the future

course of the ongoing COVID-19 pandemic.

decline again, and the Trust’s quarterly cash distributions could similarly decline, depending on future actions by OPEC or the

future course of the ongoing COVID-19 pandemic.

of Net Profits Interest .

Based on the substantial decline of the oil future markets at March 31, 2020, the Trust determined

that its aggregate value of the underlying properties was impaired, which resulted in an impairment expense of $41,261,354 during the

quarter ended March 31, 2020.

that its aggregate value of the underlying properties was impaired, which has resulted in an impairment expense of $41,261,354 during

the quarter ended March 31, 2020.

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

Results of Operations

Results of Operations for the Quarters Ended June 30,

Results of Operations for the Quarters Ended September 30,

2021 and 2020

The following is a summary of income from net profits

interest received by the Trust for the three months ended June 30, 2021 and 2020 consisting of the April distribution for each

respective year:

The following is a summary of income (loss) from

net profits interest received by the Trust for the three months ended September 30, 2021 and 2020 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, 2021 substantially represents the production by VOC Brazos from December 2020 through February 2021.

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 revenues from oil production are typically received by VOC Brazos one

month after production.

Oil and natural gas sales were $6,123,007 for the three months ended June 30, 2021, a decrease of $3,351,829

or 35.4% from $9,474,836 for the three months ended June 30, 2020.

Revenues are a function of oil and natural gas sales volumes and

prices received.

The decrease in gross proceeds was due to decreases in oil and natural gas sales volumes and a decrease in market prices

for oil sales partially offset by an increase in market prices for natural gas sales during the second quarter of 2021.

during the quarter ended September 30, 2021 substantially represents the production by VOC Brazos from March 2021 through May 2021.

The cash received by the Trust from VOC Brazos during the quarter ended September 30, 2020 substantially represents the production

by VOC Brazos from March 2020 through May 2020.

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

after production.

Oil and natural gas sales were $7,938,356 for the three months ended September 30, 2021, an increase of $5,048,764

or 174.7% from $2,889,592 for the three months ended September 30, 2020.

Revenues are a function of oil and natural gas sales volumes

and prices received.

The increase in gross proceeds was due to an increase in oil sales volumes and increases in market prices for oil

and natural gas sales, partially offset by a decrease in natural gas sales volumes during the third quarter of 2021.

During the three

months ended June 30, 2021, the average price for oil decreased 10.0% to $48.53 per Bbl and the average price for natural gas increased

19.1% to $2.81 per Mcf.

Oil sales volumes were 121,019 Bbls for the three months ended June 30, 2021, a decrease of 50,169 Bbls or

29.3% from 171,188 Bbls for the three months ended June 30, 2020, while natural gas sales volumes were 89,151 Mcf, a decrease of

13,152 Mcf or 12.9% from 102,303 Mcf for the same period in 2020.

Lease operating expenses were $2,803,042 for the three months ended June 30, 2021, a decrease of $226,650 or 7.5% from $3,029,692

for the three months ended June 30, 2020.

Production and property taxes were $120,097 for the three months ended June 30, 2021,

a decrease of $361,781 or 75.1% from $481,878 for the same period in 2020.

Such decrease is the result of a decrease of $202,611 in property

taxes resulting primarily from a timing difference as to when payments are normally made and a decrease of $159,170 or 57.3% in production

taxes due to lower sales volumes for oil and natural gas.

Development expenses were $283,643 for the three months ended June 30,

2021, a decrease of $3,882,579 or 93.2% from $4,166,222 for the same period in 2020.

Such decrease was primarily due to payments totaling

$4,046,455 made to the operator for previously unpaid costs associated with the Hawkwood Development Wells from net revenue received from

the Hawkwood Development wells during the three months ended June 30, 2020.

months ended September 30, 2021, the average price for oil increased 164.6% to $59.62 per Bbl and the average price for natural gas

increased 165.3% to $3.29 per Mcf.

Oil sales volumes were 128,814 Bbls for the three months ended September 30, 2021, an increase

of 6,142 Bbls or 5.0% from 122,672 Bbls for the three months ended September 30, 2020, while natural gas sales volumes were 78,734

Mcf, a decrease of 22,070 Mcf or 21.9% from 100,804 Mcf for the same period in 2020.

Lease operating expenses were $3,069,270 for the three months ended September 30, 2021, an increase of $818,062 or 36.3% from $2,251,208

for the three months ended September 30, 2020.

Production and property taxes were $608,076 for the three months ended September 30,

2021, an increase of $345,301 or 131.4% from $262,775 for the same period in 2020.

Such increase is the result of an increase of $239,526

or 136.6% in property taxes resulting primarily from a timing difference as to when payments are normally made and an increase of $105,775

or 121.1% in production taxes due primarily to higher sales volumes for oil and higher sales prices for oil and natural gas.

expenses were $706,669 for the three months ended September 30, 2021, an increase of $322,254 or 83.8% from $384,415 for the same

period in 2020.

Such increase was primarily due to an increase 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.

See “Liquidity and Capital Resources”

for further discussion.

below for further discussion.

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 $2,916,225 for the three months ended June 30,

2021, an increase of $1,119,181 or 62.3% from $1,797,044 for the three months ended June 30, 2020.

The Trust’s 80% net profits

interest of these totals was $2.332,980 and $1,437,635, respectively.

During the three months ended June 30, 2021 and 2020, 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 $2,332,980 and $1,437,635 for such periods, respectively.

These amounts were reduced by a Trust holdback for future expenses of $292,980 and $927,635 for the three months ended June 30, 2021

expenses and lease equipment and development costs from the underlying properties was $3,554,341 for the three months ended September 30,

2021, an increase of $3,563,147 from the deficit of revenues over direct operating expenses and lease equipment and development costs

from the underlying properties of $(8,806) for the three months ended September 30, 2020.

The Trust’s 80% net profits interest

of these totals was $2,843,473 and $(7,045), respectively.

During the three months ended September 30, 2021, VOC Brazos did not withhold

or release any dollar amounts due to the Trust from the reserve;

however, during the three months ended September 30, 2020, VOC Brazos

released $7,045 previously held for future development, maintenance, or operating expenditures to cover the Trust deficit for the three

months ended September 30, 2020.

This resulted in income from the net profits interest of $2,843,473 and $0 for such periods, respectively.

These amounts were reduced by a Trust holdback for future expenses of $123,473 and $0 for the three months ended September 30, 2021

and 2020, respectively.

This decrease of $634,655 is primarily the result of the inclusion in 2020 of an amount estimated to be sufficient

to pay estimated Trust expenses through approximately April 2021.

The Trustee paid general and administrative expenses of $165,446

for the three months ended June 30, 2021, a decrease of $66,445 from $231,891 for the three months ended June 30, 2020.

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

factors resulted in distributable income for the three months ended June 30, 2021 of $2,040,000, an increase of $1,530,000 from $510,000

for the three months ended June 30, 2020.

Results of Operations for the Six Months Ended June 30, 2021

The following is a summary of income from net profits

interest received by the Trust for the six months ended June 30, 2021 and 2020 consisting of the January and April distributions

for each respective year:

Six months ended

The Trustee paid general and administrative expenses of $174,503 for the three months ended September 30,

2021, an increase of $35,273 from $139,230 for the three months ended September 30, 2020.

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 September 30, 2021 of $2,720,000 as compared to $0 for the three months ended September 30,

Results of Operations for the Nine Months Ended September 30,

2021 and 2020

The following is a summary of income from net

profits interest received by the Trust for the nine months ended September 30, 2021 and 2020 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, 2021 substantially represents the production by VOC Brazos from September 2020 through

February 2021.

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.

during the nine months ended September 30, 2021 substantially represents the production by VOC Brazos from September 2020 through

The cash received by the Trust from VOC Brazos during the nine months ended September 30, 2021 substantially

represents the production by VOC Brazos from September 2019 through May 2020.

The revenues from oil production are typically

received by VOC Brazos one month after production.

Oil and natural gas sales were $11,274,828 for the six months ended June 30, 2021, a decrease of $6,570,265

or 36.8% from $17,845,093 for the six months ended June 30, 2020.

Revenues are a function of oil and natural gas sales prices

and volumes sold.

The decrease in gross proceeds was due to decreases in oil and natural gas sales volumes and a decrease in market

prices for oil sales partially offset by an increase in market prices for natural gas sales during the first six months of 2021.

the six months ended June 30, 2021, the average price for oil decreased 21.6% to $42.02 per Bbl and the average price for natural

gas increased 9.5% to $2.43 per Mcf.

Oil sales volumes were 257,602 Bbls for the six months ended June 30, 2021, a decrease of 67,361

Bbls or 20.7% from 324,963 Bbls for the six months ended June 30, 2020, while natural gas sales volumes were 185,137 Mcf, a decrease

of 7,651 Mcf or 4.0% from 192,788 Mcf for the same period in 2020.

Lease operating expenses were $5,494,529 for the six months ended June 30, 2021, a decrease of $1,032,689 or 15.8% from $6,527,218

for the six months ended June 30, 2020.

Production and property taxes were $871,654 for the six months ended June 30, 2021,

a decrease of $504,675 or 36.7% from $1,376,329 for the six months ended June 30, 2020.

Such decrease is primarily due to a decrease

of $247,498 or 28.9% in property taxes resulting primarily from a timing difference as to when payments are normally made and a decrease

of $257,177 or 49.6% in production taxes due to lower sales volumes for oil and natural gas.

Development expenses were $1,297,804 for

the six months ended June 30, 2021, a decrease of $4,255,123 or 76.6% from $5,552,927 for the same period in 2020.

Such decrease

was primarily due to payments totaling $4,650,763 made to the operator for previously unpaid costs associated with the Hawkwood Development

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

See “Liquidity

and Capital Resources”

Oil and natural gas sales were $19,213,184 for the nine months ended September 30, 2021, a decrease of

$1,521,501 or 7.3% from $20,734,685 for the nine months ended September 30, 2020.

Revenues are a function of oil and natural

gas sales prices and volumes sold.

The decrease in gross proceeds was due to increases in market prices for oil and natural gas during

the first nine months of 2021 that were offset by decreases in oil and natural gas sales volumes.

During the nine months ended September 30,

2021, the average price for oil increased 6.2% to $47.89 per Bbl and the average price for natural gas increased 41.8% to $2.68 per Mcf.

Oil sales volumes were 386,416 Bbls for the nine months ended September 30, 2021, a decrease of 61,219 Bbls or 13.7% from 447,635

Bbls for the nine months ended September 30, 2020, while natural gas sales volumes were 263,871 Mcf, a decrease of 29,721 Mcf or

10.1% from 293,592 Mcf for the same period in 2020.

Lease operating expenses were $8,563,799 for the nine months ended September 30, 2021, a decrease of $214,627 or 2.4% from $8,778,426

for the nine months ended September 30, 2020.

Production and property taxes were $1,479,730 for the nine months ended September 30,

2021, a decrease of $159,374 or 9.7% from $1,639,104 for the nine months ended September 30, 2020.

Such decrease is primarily due

to a decrease of $151,402 or 25.0% in production taxes due to lower production volumes for oil and natural gas along with a decrease of

$7,972 or 0.8% in property taxes.

Development expenses were $2,004,473 for the nine months ended September 30, 2021, a decrease of

$3,932,869 or 66.2% from $5,937,342 for the same period in 2020.

Such decrease was primarily the result of the inclusion in 2020 of 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, partially offset by an increase in drilling activity and development expenses in 2021.

See “Liquidity and Capital Resources”

below for further discussion.

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 $3,610,841 for the six months ended June 30,

2021, a decrease of $777,778 or 17.7% from $4,388,619 for the six months ended June 30, 2020.

The Trust’s 80% net profits

interest of these totals was $2,888,673 and $3,510,895, respectively.

During the six months ended June 30, 2021 and 2020, 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 $2,888,673 and $3,510,895 for such periods, respectively.

These amounts were further reduced by a Trust holdback for future expenses of $338,673 and $1,130,895 for the six months ended June 30,

2021 and 2020, respectively.

This decrease of $792,222 is primarily the result of the inclusion in 2020 of an amount estimated to be sufficient

to pay estimated Trust expenses through approximately April 2021.

The Trustee paid general and administrative expenses of $561,845

for the six months ended June 30, 2021, an increase of $39,496 from $522,349 for the six months ended June 30, 2020.

increase was primarily due to the differences in timing of receipt and payment of recurring general and administrative expenses.

factors resulted in distributable income of $2,550,000 for the six months ended June 30, 2021 and $2,380,000 for the six months ended

June 30, 2020.

excess of revenues over direct operating expenses and lease equipment and development costs from the underlying properties was $7,165,182

for the nine months ended September 30, 2021, an increase of $2,785,369 or 63.6% from $4,379,813 for the nine months ended September 30,

The Trust’s 80% net profits interest of these totals were $5,732,146 and $3,503,850, respectively.

During the nine months

ended September 30, 2021, 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, but did release $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 which

resulted in income from the net profits interest of $5,732,146 and $3,510,895 for such periods, respectively.

These amounts were further

reduced by a Trust holdback for future expenses of $462,146 and $1,130,895 for the nine months ended September 30, 2021 and 2020, respectively.

This decrease of $668,749 is primarily the result of the inclusion in 2020 of an amount estimated to be sufficient to pay estimated Trust

expenses through approximately April 2021.

The Trustee paid general and administrative expenses of $736,348 for the nine months ended

September 30, 2021, an increase of $74,769 from $661,579 for the nine months ended September 30, 2020.

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 of $5,270,000 for the nine months ended September 30, 2021 and $2,380,000 for the nine months ended September 30,

Liquidity and Capital Resources

7 unchanged sentences

by the Trustee) in that quarter, over the Trust’s expenses paid for that quarter.

Available funds are reduced by any cash

that the Trustee decides to reserve for future development, maintenance or operating expenses.

As of June 30, 2021, $379,832 was

Available funds are reduced by any cash that

the Trustee decides to reserve for future development, maintenance or operating expenses.

As of September 30, 2021, $328,802 was

held by the Trustee as such a reserve.

In November 2021, the Trustee notified VOC Brazos

that the Trustee intends to build a reserve for the payment of future known, anticipated or contingent expenses or liabilities, commencing

with the distribution payable in the first quarter of 2022.

The Trustee may increase or decrease the targeted amount at any time, and

may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance notice to the

Cash held in reserve will be invested as required by the Trust Agreement.

Any cash reserved in excess of the amount necessary

to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities eventually will be distributed to

unitholders, together with interest earned on the funds.

The Trustee may cause the Trust to borrow funds

1 unchanged sentence

If the Trust borrows funds, the Trust unitholders will not receive distributions until the borrowed funds are repaid.

During the three and six months ended June 30, 2021 and 2020, 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

the three and nine months ended September 30, 2021 and 2020, 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.

Income to the Trust from the net profits interest

8 unchanged sentences

reduce the impact on distributions of uneven capital expenditure timing.

The cash reserve balance was $1,000,000 at June 30, 2021

The cash reserve balance was $1,000,000 and $992,955 at September 30,

2021 and 2020, respectively.

15 unchanged sentences

revenue from each of the wells was received, thereby having no current effect on Trust distributions.

The remaining balance was paid in

full on December 31, 2020.

The balance owed to Vess Oil was

paid in full on December 31, 2020.

No new Hawkwood Development Wells were drilled in 2020, or through the date of this Form 10-Q.

21 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-Q

Item 1. Financial Statements