What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 195 added, 111 removed, 239 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, 2023 and 2022)

Includes $28,860 and $27,750 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended March 31, 2023 and 2022, 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, 2023 and 2022.

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at June 30, 2023 and 2022)

(1) Includes $30,014 and $28,860 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended June 30,

2023 and 2022, respectively, and $58,874 and $56,610 during the six months ended June 30, 2023 and 2022, 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, 2023 and 2022

and $75,000 during each of the six-month periods ended June 30, 2023 and 2022.

CONDENSED STATEMENTS OF ASSETS AND TRUST CORPUS

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(126,792,167 )

Trust corpus, 17,000,000 Trust units issued and outstanding at March 31, 2023 and December 31, 2022

Trust corpus, 17,000,000 Trust units issued and outstanding at June 30, 2023 and December 31, 2022

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

39 unchanged sentences

wind up its affairs and terminate.

As of March 31, 2023, cumulatively, since

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

interest from the sale of 8.3 MMBoe

of production from the underlying properties (which is the equivalent of 6.6 MMBoe (unaudited) in respect of the net profits interest).

As of June 30, 2023, cumulatively, since inception,

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

interest from the sale of 8.4 MMBoe of production

from the underlying properties (which is the equivalent of 6.7 MMBoe (unaudited) in respect of the net profits interest).

The Trustee can authorize the Trust to borrow money

6 unchanged sentences

Basis of Presentation

The accompanying Condensed Statements of Assets

The accompanying Condensed Statement of Assets

and Trust Corpus as of December 31, 2022, which has been derived from audited financial statements, and the unaudited interim condensed

financial statements as of March 31, 2023 and for the three-month periods ended March 31, 2023 and 2022, have been prepared

financial statements as of June 30, 2023 and for the three- and six-month periods ended June 30, 2023 and 2022, have been prepared

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

42 unchanged sentences

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

during the quarters ended March 31, 2023 or 2022.

during the quarters ended June 30, 2023 or 2022.

No new accounting pronouncements were adopted or

issued during the quarter ended March 31, 2023 that would impact the financial statements of the Trust.

issued during the quarter ended June 30, 2023 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)

4 unchanged sentences

(1) 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.

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 March 31, 2023 and 2022, VOC Brazos did not withhold

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

The reserve balance was $1.0 million at March 31, 2023 and 2022.

During the three months ended June 30, 2023 and 2022, and the six months ended

June 30, 2023 and 2022, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the reserve.

balance was $1.0 million at June 30, 2023 and 2022.

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

1 unchanged sentence

thus, the cash received by the Trust during the three

months ended March 31, 2023 substantially represents production by VOC Brazos from September 2022 through November 2022.

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.

For the three months ended March 31, 2023

months ended June 30, 2023 substantially represents production by VOC Brazos from December 2022 through February 2023,

and 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.

The cash received by the Trust during the six months ended June 30, 2023

substantially represents production by VOC Brazos from September 2022 through February 2023, and 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.

For the three and six months ended June 30,

2023 and 2022, MV Purchasing, LLC, an affiliate of VOC Brazos, purchased a significant portion of the production of the underlying properties.

4 unchanged sentences

Distributions to Unitholders

VOC Brazos makes quarterly payments of the net

profits interest to the Trust.

The Trustee determines for each quarter the amount available for distribution to the Trust unitholders.

This distribution is expected to be made on or before the 45th day following the end of each quarter to the Trust unitholders of record

on the 30th day of the month following the end of each quarter (or the next succeeding business day).

Such amounts will be equal to the

excess, if any, of the cash received by the Trust relating to the preceding quarter, over the expenses of the Trust paid for such quarter,

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

Beginning in the first quarter of 2022, the Trustee withheld a portion of the proceeds otherwise available for distribution each

quarter to build a reserve of approximately $1.175 million for the payment of future known, anticipated or contingent expenses or liabilities

of the Trust.

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

The targeted $1.175 million cash reserve was fully funded by February 2023 and is included in cash and cash equivalents on the

accompanying Condensed Statements of Assets and Trust Corpus.

Brazos makes quarterly payments of the net profits interest to the Trust.

The Trustee determines for each quarter the amount available

for distribution to the Trust unitholders.

This distribution is expected to be made on or before the 45th day following the end of each

quarter to the Trust unitholders of record on the 30th day of the month following the end of each quarter (or the next succeeding business

Such amounts will be equal to the excess, if any, of the cash received by the Trust relating to the preceding quarter, over the

expenses of the Trust paid for such quarter, subject to adjustments for changes made by the Trustee during such quarter in any cash reserves

established for future expenses of the Trust.

Beginning in the first quarter of 2022, the Trustee withheld a portion of the proceeds

otherwise available for distribution each quarter to build a reserve of approximately $1.175 million for the payment of future known,

anticipated or contingent expenses or liabilities of the Trust.

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 targeted $1.175 million cash reserve was fully funded by February 2023

and is included in cash and cash equivalents on the accompanying Condensed Statements of Assets and Trust Corpus.

The first quarterly distribution during 2023 was

3 unchanged sentences

targeted reserve was fully funded.

The second quarterly distribution during 2023 was

$3,910,000, or $0.23 per Trust Unit, and was made on May 12, 2023 to Trust unitholders owning Trust Units as of May 1, 2023.

Such distribution included the net proceeds of production collected by VOC Brazos from January 1, 2023 through March 31, 2023.

The first quarterly distribution during 2022 was

2 unchanged sentences

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

The 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.

Advance for Trust Expenses

1 unchanged sentence

is allowed to borrow money to pay Trust expenses.

During the three months ended March 31, 2023 and 2022, there were no borrowings

During the three and six months ended June 30, 2023 and 2022, 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.

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

Subsequent Events

On April 20, 2023, the Trust announced a Trust

distribution of net profits for the first quarterly payment period ended March 31, 2023.

Unitholders of record on May 1, 2023

will receive a distribution amounting to $3,910,000, or $0.23 per Trust Unit, which will be paid on May 12, 2023.

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.

On July 20, 2023, the Trust announced a Trust

distribution of net profits for the second quarterly payment period ended June 30, 2023.

Unitholders of record on July 31, 2023

will receive a distribution amounting to $3,570,000, or $0.21 per Trust Unit, which will be paid on August 14, 2023.

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, 2023

Results of Operations for the Quarters Ended June 30,

2023 and 2022

The following is a summary of income from net profits

interest received by the Trust for the three months ended March 31, 2023 and 2022 consisting of the January distribution for

each respective year:

interest received by the Trust for the three months ended June 30, 2023 and 2022 consisting of the April distribution for each

respective year:

Three months ended

17 unchanged sentences

The cash received by the Trust from VOC Brazos

during the quarter ended March 31, 2023 substantially represents the production by VOC Brazos from September 2022 through November 2022.

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.

during the quarter ended June 30, 2023 substantially represents the production by VOC Brazos from December 2022 through February 2023.

The cash received by the Trust from VOC Brazos during the quarter ended June 30, 2022 substantially represents the production

by VOC Brazos from December 2021 through February 2022.

The revenues from oil production are typically received by VOC Brazos

one month after production.

Oil and natural gas sales were $9,357,015 for the three months ended June 30, 2023, a decrease of $1,017,544

or 9.8% from $10,374,559 for the three months ended June 30, 2022.

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

volumes sold.

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

gas sales volumes during the second quarter of 2023.

During the three months ended June 30, 2023, the average price for oil decreased

6.0% to $74.16 per Bbl and the average price for natural gas decreased 16.6% to $5.37 per Mcf.

Oil sales volumes were 120,771 Bbls for

the three months ended June 30, 2023, a decrease of 4,168 Bbls or 3.3% from 124,939 Bbls for the three months ended June 30,

2022, while natural gas sales volumes were 74,644 Mcf, a decrease of 5,779 Mcf or 7.2% from 80,423 Mcf for the same period in 2022.

Lease operating expenses were $3,637,884 for the three months ended June 30, 2023, an increase of $391,355 or 12.1% from $3,246,529

for the three months ended June 30, 2022.

Production and property taxes were $279,484 for the three months ended June 30, 2023,

a decrease of $38,935 or 12.2% from $318,419 for the same period in 2022.

Such decrease is the result of a $33,493 decrease in production

taxes, primarily due to lower sales prices, and a $5,442 decrease in property taxes.

Development expenses were $162,095 for the three

months ended June 30, 2023, a decrease of $168,540 or 51.0% from $330,635 for the same period in 2022.

Such decrease was primarily

due to decreased development expenses during the three months ended June 30, 2023, 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 $5,277,552 for the three months ended June 30,

2023, a decrease of $1,201,424 or 18.5% from $6,478,976 for the three months ended June 30, 2022.

The Trust’s 80% net profits

interest of these totals was $4,222,042 and $5,183,181, respectively.

During the three months ended June 30, 2023 and 2022, 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 $4,222,042 and $5,183,181 for such periods, respectively.

These amounts were reduced by a Trust holdback for current estimated Trust expenses of $312,042 and $240,264 for the three months ended

June 30, 2023 and 2022, respectively, and a Trust holdback for future estimated Trust expenses of $182,917 for the three months ended

June 30, 2022.

The Trustee paid general and administrative expenses of $235,865 for the three months ended June 30, 2023, a

decrease of $1,334 from $237,199 for the three months ended June 30, 2022.

These factors resulted in distributable income for the

three months ended June 30, 2023 of $3,910,000, a decrease of $850,000 from $4,760,000 for the three months ended June 30, 2022.

Results of Operations for the Six Months Ended June 30, 2023

The following is a summary of income from net profits

interest received by the Trust for the six months ended June 30, 2023 and 2022 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:

Oil and natural gas sales

were $11,195,578 for the three months ended March 31, 2023, an increase of $688,512 or 6.6% from $10,507,066 for the three months

ended March 31, 2022.

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 2023.

During the three months ended March 31, 2023, the average price for oil increased 12.1% to $82.73 per

Bbl and the average price for natural gas increased 32.4% to $7.65 per Mcf.

During the three months ended March 31, 2023, oil sales

volumes were 127,600 Bbls, a decrease of 8,162 Bbls or 6.0% from 135,762 Bbls for the three months ended March 31, 2022, while natural

gas sales volumes were 83,501 Mcf, a decrease of 1,131 Mcf or 1.3% from 84,632 Mcf for the same period in 2022.

Lease operating expenses were $4,022,303

for the three months ended March 31, 2023, an increase of $563,409 or 16.3% from $3,458,894 for the three months ended March 31,

Production and property taxes were $893,958 for the three months ended March 31, 2023, an increase of $228,167 or 34.3% from

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, 2023 substantially represents the production by VOC Brazos from September 2022 through

February 2023.

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 revenues from oil production are typically

received by VOC Brazos one month after production.

Oil and natural gas sales were $20,552,593 for the six months ended June 30, 2023, a decrease of $329,032

or 1.6% from $20,881,625 for the six months ended June 30, 2022.

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, partially offset by increases

in market prices for oil and natural gas during the six months ended June 30, 2023.

During the six months ended June 30, 2023,

the average price for oil increased 3.1% to $78.56 per Bbl and the average price for natural gas increased 7.9% to $6.58 per Mcf.

sales volumes were 248,371 Bbls for the six months ended June 30, 2023, a decrease of 12,330 Bbls or 4.7% from 260,701 Bbls for the

six months ended June 30, 2022, while natural gas sales volumes were 158,145 Mcf, a decrease of 6,910 Mcf or 4.2% from 165,055 Mcf

for the same period in 2022.

Such increase is primarily due to a $210,389 or 57.5% increase in property taxes along with a $17,778

or 5.9% increase in production taxes due to higher sales prices.

Development expenses were $868,377 for the three months ended March 31,

2023, an increase of $376,229 or 76.4% from $492,148 for the same period in 2022.

Of this increase, approximately $200,000 is associated

with the completion costs of two horizontal wells in Texas with the remainder being attributable to increased development expenses during

the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Excess 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 $5,410,940 for the three months ended March 31, 2023, a decrease of $479,293 or 8.1% from

$5,890,233 for the three months ended March 31, 2022.

The Trust’s 80% net profits interest of these totals were $4,328,752

and $4,712,186, respectively.

During the three months ended March 31, 2023 and 2022, 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 $4,328,752 and $4,712,186 for such periods, respectively.

These amounts were reduced

by a Trust holdback for current estimated expenses of $187,722 and $279,269 for the three months ended March 31, 2023 and 2022, respectively,

and a Trust holdback for future estimated expenses of $231,030 and $182,917 for the three months ended March 31, 2023 and 2022, respectively.

The Trustee paid general and administrative expenses of $375,563 for the three months ended March 31, 2023, an increase of $1,798

from $373,765 for the three months ended March 31, 2022.

These factors resulted in distributable income for the three months ended

March 31, 2023 of $3,910,000, a decrease of $340,000 from $4,250,000 for the three months ended March 31, 2022.

Lease operating expenses were $7,660,187 for the six months ended June 30, 2023, an increase of $954,764 or 14.2% from $6,705,423

for the six months ended June 30, 2022.

Production and property taxes were $1,173,442 for the six months ended June 30, 2023,

an increase of $189,232 or 19.2% from $984,210 for the six months ended June 30, 2022.

Such increase is the result of a $194,674

increase in production taxes, primarily due to higher sales prices, partially offset by a $5,442 decrease in property taxes.

expenses were $1,030,472 for the six months ended June 30, 2023, an increase of $207,689 or 25.2% from $822,783 for the same period

Of this increase, approximately $200,000 is associated with the completion costs of two horizontal wells in Texas with the remainder

being attributable to increased development expenses during the six months ended June 30, 2023, compared to the six months ended

June 30, 2022.

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 $10,688,492 for the six months ended June 30,

2023, a decrease of $1,680,717 or 13.6% from $12,369,209 for the six months ended June 30, 2022.

The Trust’s 80% net profits

interest of these totals was $8,550,794 and $9,895,367, respectively.

During the six months ended June 30, 2023 and 2022, 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 $8,550,794 and $9,895,367 for such periods, respectively.

These amounts were reduced by a Trust holdback for current estimated Trust expenses of $499,764 and $519,533 for the six months ended

June 30, 2023 and 2022, respectively, and a Trust holdback for future estimated Trust expenses of $231,030 and $365,834 for the six

months ended June 30, 2023 and 2022, respectively.

The Trustee paid general and administrative expenses of $611,428 for the six months

ended June 30, 2023, an increase of $464 from $610,964 for the six months ended June 30, 2022.

These factors resulted in

distributable income of $7,820,000 for the six months ended June 30, 2023 and $9,010,000 for the six months ended June 30, 2022.

Liquidity and Capital Resources

9 unchanged sentences

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

As of March 31, 2023, $1,292,066 was

As of June 30, 2023, $1,368,243 was

held by the Trustee as such a reserve.

The Trustee may cause the Trust to borrow funds

required to pay expenses if the Trustee determines that the cash on hand and the cash to be received are insufficient to cover the Trust’s

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, 2023 and 2022, 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

Trustee may cause the Trust to borrow funds required to pay expenses if the Trustee determines that the cash on hand and the cash to be

received are insufficient to cover the Trust’s expenses.

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, 2023 and 2022, 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 expenses.

Beginning in the first quarter of 2022, the Trustee

18 unchanged sentences

VOC Brazos may establish

a cash reserve of up to $1,000,000 in the aggregate at any given time from the dollar amount otherwise distributable to the Trust to reduce

the impact on distributions of uneven capital expenditure timing.

The cash reserve balance was $1,000,000 on March 31, 2023 and 2022,

respectively.

a cash reserve of up to $1.0 million in the aggregate at any given time from the dollar amount otherwise distributable to the Trust to

reduce the impact on distributions of uneven capital expenditure timing.

The cash reserve balance was $1.0 million at June 30, 2023

Note Regarding Forward-Looking Statements

5 unchanged sentences

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

2 unchanged sentences

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, 2022 (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, 2022

(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.

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.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements