What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 199 added, 107 removed, 236 unchanged (56% of the section changed)

3 unchanged sentences

Three months ended

Six months ended

Income from net profits interest

2 unchanged sentences

Distributable income

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at March 31, 2022 and 2021)

Includes $27,750 and $26,685 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended March 31, 2022 and 2021, respectively, and $37,500 paid to The Bank of New York Mellon Trust Company, N.A.

during each of the three-month periods ended March 31, 2022 and 2021.

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at June 30, 2022 and 2021)

Includes $28,860 and $27,750 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended June 30, 2022 and 2021, respectively, and $56,610 and $54,435 during the six months ended June 30, 2022 and 2021, 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, 2022 and 2021 and $75,000 during each of the six-month periods ended June 30, 2022 and 2021.

CONDENSED STATEMENTS OF ASSETS AND TRUST CORPUS

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(124,873,620 )

Trust corpus, 17,000,000 Trust units issued and outstanding at March 31, 2022 and December 31, 2021

Trust corpus, 17,000,000 Trust units issued and outstanding at June 30, 2022 and December 31, 2021

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS

Three months ended

Six months ended

Trust corpus, beginning of period

Income from net profits interest

Cash distribution

Cash distributions

Trust expenses

5 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS

Organization of the Trust

VOC Energy Trust (the “Trust”) is a

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wind up its affairs and terminate.

As of March 31, 2022, cumulatively, since

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

interest from the sale of 7.7 MMBoe

of production from the underlying properties (which is the equivalent of 6.2 MMBoe (unaudited) in respect of the net profits interest).

As of June 30, 2022, cumulatively, since inception,

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

interest from the sale of 7.8 MMBoe of production

from the underlying properties (which is the equivalent of 6.3 MMBoe (unaudited) in respect of the net profits interest).

The Trustee can authorize the Trust to borrow money

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

of Presentation

Basis of Presentation

The accompanying Condensed Statements of Assets

and Trust Corpus as of December 31, 2021, which has been derived from audited financial statements, and the unaudited interim condensed

financial statements as of March 31, 2022 and for the three-month periods ended March 31, 2022 and 2021, 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

financial statements as of June 30, 2022 and for the three- and six-month periods ended June 30, 2022 and June 30, 2021,

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

rules and regulations.

The preparation of financial statements requires

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with the financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31,

Accounting Policies

Trust Accounting Policies

The Trust uses the modified cash basis of accounting

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The actual cash distributions of the

Trust will be made based on the terms of the conveyance creating the Trust’s net profits interest.

Trust will be made based on the terms of the conveyance that created the Trust’s net profits interest.

Expenses of the Trust, which

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There was no impairment of the investment in the net profits interest

during the quarters ended March 31, 2022 or 2021.

during the quarters ended June 30, 2022 or 2021.

No new accounting pronouncements were adopted or

issued during the quarter ended March 31, 2022 that would impact the financial statements of the Trust.

in Net Profits Interest

issued during the quarter ended June 30, 2022 that would impact the financial statements of the Trust.

Investment in Net Profits Interest

The net profits interest was recorded at the historical

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$ 140,591,606

Income from Net Profits

Income from Net Profits Interest

Three months ended

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

Six months ended

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

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

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 the September through November production period.

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 March 31, 2022 and 2021, 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 March 31, 2022 and 2021, respectively.

(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.

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.

(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, 2022 and 2021, and the six months ended

June 30, 2022 and 2021, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the reserve.

balance was $1,000,000 at June 30, 2022 and 2021.

(3) 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 March 31, 2022 substantially represents production by VOC Brazos from September 2021 through November 2021.

The cash received by the Trust during the three months ended March 31, 2021 substantially represents production by VOC Brazos from September 2020 through November 2020.

For the three months ended March 31, 2022

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, 2022 substantially represents production by VOC Brazos from December 2021 through February 2022,

and 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.

The cash received by the Trust during the six months ended June 30, 2022

substantially represents production by VOC Brazos from September 2021 through February 2022, and 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.

For the three and six months ended June 30,

2022 and 2021, MV Purchasing, LLC, an affiliate of VOC Brazos, purchased a significant portion of the production of the underlying properties.

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Accordingly, no provision for federal or state income taxes has been made.

Distributions

to Unitholders

Distributions to Unitholders

VOC Brazos makes quarterly payments of the net

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

The Trustee intends to build a reserve of approximately $1.175 million 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 unitholders.

As previously disclosed, the Trustee intends to build a reserve of approximately $1.175 million for the payment of future known,

anticipated or contingent expenses or liabilities.

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 unitholders.

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

Any cash reserved

in excess of the amount necessary to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities

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

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 2022 was

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2021 and was net of $182,917 withheld by the Trustee towards the building of the cash reserve described above.

second quarterly distribution during 2022 was $4,760,000, or $0.28 per Trust Unit, and was made on May 13, 2022 to Trust unitholders

owning Trust Units as of May 2, 2022.

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

2022 through March 31, 2022 and was net of $182,917 withheld by the Trustee towards the building of the cash reserve described above.

The first quarterly distribution during 2021 was

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

for Trust Expenses

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.

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

Advance for Trust Expenses

Under the terms of the Trust Agreement, the Trustee

is allowed to borrow money to pay Trust expenses.

During the three months ended March 31, 2022 and 2021, there were no borrowings

During the three and six months ended June 30, 2022 and 2021, there were no borrowings

or amounts owed for money borrowed in previous quarters.

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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.

On April 20, 2022, the Trust announced a Trust

distribution of net profits for the first quarterly payment period ended March 31, 2022.

Unitholders of record on May 2, 2022

will receive a distribution amounting to $4,760,000, or $0.28 per Trust Unit, which will be paid on May 13, 2022.

Subsequent Events

On July 20, 2022, the Trust announced a Trust

distribution of net profits for the second quarterly payment period ended June 30, 2022.

Unitholders of record on August 1, 2022

will receive a distribution amounting to $6,460,000, or $0.38 per Trust Unit, which will be paid on August 12, 2022.

Such distribution

is net of $221,666 withheld by the Trustee towards the building of the cash reserve described in Note 7.

Trustee’s

Discussion and Analysis of Financial Condition and Results of Operations.

Trustee’s Discussion and Analysis of Financial Condition

and Results of Operations.

The following discussion of the Trust’s financial

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Results of Operations

Results of Operations for the Quarters Ended March 31, 2022

Results of Operations for the Quarters Ended June 30,

2022 and 2021

The following is a summary of income from net profits

interest received by the Trust for the three months ended March 31, 2022 and 2021 consisting of the January distribution for

each respective year:

interest received by the Trust for the three months ended June 30, 2022 and 2021 consisting of the April distribution for each

respective year:

Three months ended

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The cash received by the Trust from VOC Brazos

during the quarter ended March 31, 2022 substantially represents the production by VOC Brazos from September 2021 through November 2021.

The cash received by the Trust from VOC Brazos during the quarter ended March 31, 2021 substantially represents the production by

VOC Brazos from September 2020 through November 2020.

The revenues from oil production are typically received by VOC Brazos

one month after production.

Oil and natural gas sales were $10,507,066 for the three months ended March 31, 2022, an increase of $5,355,245

or 103.9% from $5,151,821 for the three months ended March 31, 2021.

Revenues are a function of oil and natural gas sales prices

and volumes sold.

The increase in gross proceeds was due to increases in market prices for oil and natural gas, partially offset by decreases

in oil and natural gas sales volumes during the first quarter of 2022.

During the three months ended March 31, 2022, the average

price for oil increased 103.5% to $73.79 per Bbl and the average price for natural gas increased 179.2% to $5.78 per Mcf.

During the three

months ended March 31, 2022, oil sales volumes were 135,762 Bbls for the three months ended March 31, 2022, a decrease of 821

Bbls or 0.6% from 136,583 Bbls for the three months ended March 31, 2021, while natural gas sales volumes were 84,632 Mcf, a decrease

of 11,354 Mcf or 11.8% from 95,986 Mcf for the same period in 2021.

Lease operating expenses were $3,458,894 for the three months ended March 31, 2022, an increase of $767,407 or 28.5% from $2,691,487

for the three months ended March 31, 2021.

Production and property taxes were $665,791 for the three months ended March 31,

2022, a decrease of $85,766 or 11.4% from $751,557 for the same period in 2021.

Such decrease is primarily due to a $157,275 or 110.1%

increase in production taxes due to higher sales prices offset by a decrease in property taxes of $243,041 or 39.9%.

Development expenses

were $492,148 for the three months ended March 31, 2022, a decrease of $522,013 or 51.5% from $1,014,161 for the same period in 2021.

Such decrease was primarily due to decreased development expenses during the three months ended March 31, 2022, compared to the three

months ended March 31, 2021.

during the quarter ended June 30, 2022 substantially represents the production by VOC Brazos from December 2021 through February 2022.

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 revenues from oil production are typically received by VOC Brazos one

month after production.

Oil and natural gas sales were $10,374,559 for the three months ended June 30, 2022, an increase of $4,251,552

or 69.4% from $6,123,007 for the three months ended June 30, 2021.

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

volumes sold.

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

volumes, partially offset by a decrease in natural gas sales volumes during the second quarter of 2022.

During the three months ended

June 30, 2022, the average price for oil increased 62.6% to $78.89 per Bbl and the average price for natural gas increased 129.2%

to $6.44 per Mcf.

Oil sales volumes were 124,939 Bbls for the three months ended June 30, 2022, an increase of 3,920 Bbls or 3.2%

from 121,019 Bbls for the three months ended June 30, 2021, while natural gas sales volumes were 80,423 Mcf, a decrease of 8,728

Mcf or 9.8% from 89,151 Mcf for the same period in 2021.

Lease operating expenses were $3,246,529 for the three months ended June 30, 2022, an increase of $443,487 or 15.8% from $2,803,042

for the three months ended June 30, 2021.

Production and property taxes were $318,419 for the three months ended June 30, 2022,

an increase of $198,322 or 165.1% from $120,097 for the same period in 2021.

Such increase is the result of an increase of $185,579 in

production taxes primarily due to higher sales prices and a $12,743 increase in property taxes.

Development expenses were $330,635 for

the three months ended June 30, 2022, an increase of $46,992 or 16.6% from $283,643 for the same period in 2021.

Such increase was

primarily due to increased development expenses during the three months ended June 30, 2022, compared to the three months ended June 30,

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 $5,890,233 for the three months ended March 31,

2022, an increase of $5,195,617 or 748.0% from $694,616 for the three months ended March 31, 2021.

expenses and lease equipment and development costs from the underlying properties was $6,478,976 for the three months ended June 30,

2022, an increase of $3,562,751 or 122.2% from $2,916,225 for the three months ended June 30, 2021.

The Trust’s 80% net profits

interest of these totals were $4,712,186 and $555,693, respectively.

During the three months ended March 31, 2022 and 2021, VOC Brazos

interest of these totals was $5,183,181 and $2,332,980, respectively.

During the three months ended June 30, 2022 and 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, which resulted in income from the net profits interest of $5,183,181 and $2,332,980 for such periods, respectively.

These amounts were reduced by a Trust holdback for current estimated expenses of $279,269 and $45,693 for the three months ended March 31,

2022 and 2021, respectively, and a Trust holdback for future estimated expenses of $182,917 for the three months ended March 31,

The Trustee paid general and administrative expenses of $373,765 for the three months ended March 31, 2022, a decrease of $22,634

from $396,399 for the three months ended March 31, 2021.

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 for the three months ended

March 31, 2022 of $4,250,000, an increase of $3,740,000 from $510,000 for the three months ended March 31, 2021.

These amounts were reduced by a Trust holdback for current estimated expenses of $240,264 and $292,980 for the three months ended June

30, 2022 and 2021, respectively, and a Trust holdback for future estimated expenses of $182,917 for the three months ended June 30,

The Trustee paid general and administrative expenses of $237,199 for the three months ended June 30, 2022, an increase of $71,753

from $165,446 for the three months ended June 30, 2021.

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,

2022 of $4,760,000, an increase of $2,720,000 from $2,040,000 for the three months ended June 30, 2021.

Results of Operations for the Six Months Ended June 30, 2022

The following is a summary of income from net profits

interest received by the Trust for the six months ended June 30, 2022 and 2021 consisting of the January and April distributions

for each respective year:

Six months ended

Sales volumes:

Natural gas (Mcf)

Average sales prices:

Oil (per Bbl)

Natural gas (per Mcf)

Gross proceeds:

Natural gas sales

Total gross proceeds

Production and development costs:

Lease operating expenses

Production and property taxes

Development expenses

Excess 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

VOC Brazos reserve for future development, maintenance or operating expenditures

Income from net profits interest

The cash received by the Trust from VOC Brazos

during the six months ended June 30, 2022 substantially represents the production by VOC Brazos from September 2021 through

February 2022.

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 revenues from oil production are typically

received by VOC Brazos one month after production.

Oil and natural gas sales were $20,881,625 for the six months ended June 30, 2022, an increase of $9,606,797

or 85.2% from $11,274,828 for the six months ended June 30, 2021.

Revenues are a function of oil and natural gas sales prices

and volumes sold.

The increase in gross proceeds was due to increases in market prices for oil and natural gas and an increase in oil

sales volumes, partially offset by a decrease in natural gas sales volumes during the six months ended June 30, 2022.

During the six months

ended June 30, 2022, the average price for oil increased 81.4% to $76.23 per Bbl and the average price for natural gas increased

151.0% to $6.10 per Mcf.

Oil sales volumes were 260,701 Bbls for the six months ended June 30, 2022, an increase of 3,099 Bbls or

1.2% from 257,602 Bbls for the six months ended June 30, 2021, while natural gas sales volumes were 165,055 Mcf, a decrease of 20,082

Mcf or 10.8% from 185,137 Mcf for the same period in 2021.

Lease operating expenses were $6,705,423 for the six months ended June 30, 2022, an increase of $1,210,894 or 22.0% from $5,494,529

for the six months ended June 30, 2021.

Production and property taxes were $984,210 for the six months ended June 30, 2022,

an increase of $112,556 or 12.9% from $871,654 for the six months ended June 30, 2021.

Such increase is the result of an increase

of $342,854 in production taxes primarily due to higher sales prices offset by a $230,298 decrease in property taxes.

Development expenses

were $822,783 for the six months ended June 30, 2022, a decrease of $475,021 or 11.1% from $1,297,804 for the same period in 2021.

Such decrease was primarily due to decreased development expenses during the six months ended June 30, 2022, compared to the six months

ended June 30, 2021.

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 $12,369,209 for the six months ended June 30,

2022, an increase of $8,758,368 or 242.6% from $3,610,841 for the six months ended June 30, 2021.

The Trust’s 80% net

profits interest of these totals was $9,895,367 and $2,888,673, respectively.

During the six months ended June 30, 2022 and 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, which resulted in income from the net profits interest of $9,895,367 and $2,888,673 for such periods,

respectively.

These amounts were reduced by a Trust holdback for current estimated expenses of $519,533 and $338,673 for the six

months ended June 30, 2022 and 2021, respectively, and a Trust holdback for future estimated expenses of $365,834 for the six months

ended June 30, 2022.

The Trustee paid general and administrative expenses of $610,964 for the six months ended June 30, 2022,

an increase of $49,119 from $561,845 for the six months ended June 30, 2021.

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 $9,010,000

for the six months ended June 30, 2022 and $2,550,000 for the six months ended June 30, 2021.

Liquidity and Capital Resources

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

As of March 31, 2022, $375,625 was

As of June 30, 2022, $561,607 was

held by the Trustee as such a reserve.

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

During the three months ended March 31, 2022 and 2021, there were no such borrowings.

VOC Brazos has provided a letter of credit

in the amount of $1.7 million to the Trustee to protect the Trust against the risk that it does not have sufficient cash to pay future

During the three and six months ended June 30, 2022 and 2021, 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

In November 2021, the Trustee notified VOC

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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,

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 elected to withhold $365,834 from the proceeds otherwise available for distribution

through March 31, 2022 towards the building of the cash reserve described above.

through June 30, 2022 towards the building of the cash reserve described above.

Income to the Trust from the net profits interest

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reduce the impact on distributions of uneven capital expenditure timing.

The cash reserve balance was $1,000,000 at March 31, 2022

and 2021, respectively.

The cash reserve balance was $1,000,000 at June 30, 2022

Note Regarding Forward-Looking Statements

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this Form 10-Q, including without limitation the statements under “Trustee’s Discussion and Analysis of Financial Condition

and Results of Operations”

are forward-looking statements.

and Results of Operations”, are forward-looking statements.

Although VOC Brazos advised the Trust that it believes that the expectations

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Important factors that could cause actual results to differ materially from expectations (“Cautionary Statements”)

are disclosed in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”),

including under the section “Item 1A.

are disclosed in this Form 10-Q and in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2021

(the “Form 10-K”), including under the section “Item 1A.

Risk Factors”.

All subsequent written and oral forward-looking statements attributable

to the Trust or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements.

and Qualitative Disclosures About Market Risk.

All subsequent written and oral

forward-looking statements attributable to the Trust or persons acting on its behalf are expressly qualified in their entirety by the

Cautionary Statements.

Quantitative and Qualitative Disclosures About Market Risk.

The Trust is a smaller reporting company as defined

1 unchanged sentence

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