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Item 1. Financial Statements

2024-08-09 compared with 2024-05-08 · 216 added, 122 removed, 228 unchanged (60% of the section changed)

1 unchanged sentence

VOC ENERGY TRUST

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME

STATEMENTS OF DISTRIBUTABLE INCOME

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, 2024 and 2023)

(1) Includes $30,014 and $28,860 paid to VOC Brazos Energy Partners,

LP (“VOC Brazos”) during the three months ended March 31, 2024 and 2023, 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, 2024 and 2023.

CONDENSED STATEMENTS OF ASSETS AND TRUST CORPUS

Distributions per Trust unit (17,000,000 Trust units issued and outstanding at June 30, 2024 and 2023)

Includes $31,215 and $30,014 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended June 30, 2024 and 2023, respectively, and $61,229 and $58,874 during the six months ended June 30, 2024 and 2023, 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, 2024 and 2023 and $75,000 during each of the six-month periods ended June 30, 2024 and 2023.

STATEMENTS OF ASSETS AND TRUST CORPUS

Cash and cash equivalents

3 unchanged sentences

(128,648,342 )

Trust corpus, 17,000,000 Trust units issued and outstanding at March 31, 2024 and December 31, 2023

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS

Trust corpus, 17,000,000 Trust units issued and outstanding at June 30, 2024 and December 31, 2023

STATEMENTS OF CHANGES IN TRUST CORPUS

Three months ended

Six months ended

Trust corpus, beginning of period

5 unchanged sentences

The accompanying notes are an integral part of

these condensed financial statements.

these financial statements.

VOC ENERGY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS

Organization of the Trust

32 unchanged sentences

wind up its affairs and terminate.

As of March 31, 2024, cumulatively, since

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

interest from the sale of 8.8 MMBoe

of production from the underlying properties (which is the equivalent of 7.0 MMBoe (unaudited) in respect of the net profits interest).

As of June 30, 2024, cumulatively, since inception,

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

interest from the sale of 8.9 MMBoe of production

from the underlying properties (which is the equivalent of 7.1 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 Statement of Assets

and Trust Corpus as of December 31, 2023, which has been derived from audited financial statements, and the unaudited interim condensed

financial statements as of March 31, 2024 and for the three-month periods ended March 31, 2024 and 2023, 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

The accompanying Statement of Assets and Trust

Corpus as of December 31, 2023, which has been derived from audited financial statements, and the unaudited interim financial statements

as of June 30, 2024 and for the three- and six-month periods ended June 30, 2024 and 2023, 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 omitted pursuant to those rules and regulations.

The preparation of financial statements requires

39 unchanged sentences

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

during the quarters ended March 31, 2024 or 2023.

during the quarters ended June 30, 2024 or 2023.

No new accounting pronouncements were adopted or

issued during the quarter ended March 31, 2024 that would impact the financial statements of the Trust.

issued during the quarter ended June 30, 2024 that would impact the financial statements of the Trust.

Investment in Net Profits Interest

12 unchanged sentences

Three months ended

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

Six months ended

Excess 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)

Income from net profits interest before reserve

VOC Brazos reserve for future development,

maintenance or operating expenditures (2)

Income from net profits interest (3)

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

VOC Brazos during 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, 2024 and 2023, 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, 2024 and 2023.

During the three months ended June 30, 2024 and 2023, and the six months ended

June 30, 2024 and 2023, 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, 2024 and 2023.

(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, 2024 substantially represents production by VOC Brazos from September 2023 through November 2023.

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.

For the three months ended March 31, 2024

months ended June 30, 2024 substantially represents production by VOC Brazos from December 2023 through February 2024,

and the cash received by the Trust during the three months ended June 30, 2023 substantially represents production by VOC Brazos

from December 2022 through February 2023.

The cash received by the Trust during the six months ended June 30, 2024

substantially represents production by VOC Brazos from September 2023 through February 2024, and 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.

For the three and six months ended June 30,

2024 and 2023, MV Purchasing, LLC, an affiliate of VOC Brazos, purchased a significant portion of the production of the underlying properties.

12 unchanged sentences

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 $1.175 million for the payment of future known, anticipated or contingent expenses or liabilities of 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.

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

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

From the first quarter of 2022 to the second quarter of 2023, the Trustee withheld a portion of the proceeds otherwise available

for distribution each quarter to gradually 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 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.

This cash reserve is included in cash and cash equivalents on the accompanying Statements

of Assets and Trust Corpus.

The first quarterly distribution during 2024 was

1 unchanged sentence

Such distribution included the net proceeds of production collected by VOC Brazos from October 1, 2023 through December 31,

The second quarterly distribution during 2024 was

$3,060,000, or $0.18 per Trust Unit, and was made on May 15, 2024 to Trust unitholders owning Trust Units as of April 30, 2024.

Such distribution included the net proceeds of production collected by VOC Brazos from January 1, 2024 through March 31, 2024.

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.

Advance for Trust Expenses

1 unchanged sentence

is allowed to borrow money to pay Trust expenses.

During the three months ended March 31, 2024 and 2023, there were no borrowings

During the three and six months ended June 30, 2024 and 2023, 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 18, 2024, the Trust announced a Trust

distribution of net profits for the first quarterly payment period ended March 31, 2024.

Unitholders of record on April 30,

2024 will receive a distribution amounting to $3,060,000, or $0.18 per Trust Unit, which will be paid on May 15, 2024.

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

On July 18, 2024, the Trust announced a Trust

distribution of net profits for the quarterly payment period ended June 30, 2024.

Unitholders of record on July 30, 2024 will

receive a distribution amounting to $3,060,000, or $0.18 per Trust Unit, which will be paid on August 14, 2024.

Trustee’s Discussion and Analysis of Financial Condition

and Results of Operations.

The following discussion of the Trust’s financial

7 unchanged sentences

Results of Operations

Results of Operations for the Quarters Ended March 31, 2024

Results of Operations for the Quarters Ended June 30,

2024 and 2023

The following is a summary of income from net profits

interest received by the Trust for the three months ended March 31, 2024 and 2023 consisting of the January distribution for

each respective year:

interest received by the Trust for the three months ended June 30, 2024 and 2023 consisting of the April distribution for each

respective year:

Three months ended

5 unchanged sentences

Gross proceeds:

Three months ended

Natural gas sales

10 unchanged sentences

The cash received by the Trust from VOC Brazos

during the quarter ended March 31, 2024 substantially represents the production by VOC Brazos from September 2023 through November 2023.

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.

during the quarter ended June 30, 2024 substantially represents the production by VOC Brazos from December 2023 through February 2024.

The cash received by the Trust from VOC Brazos during the quarter ended June 30, 2023 substantially represents the production

by VOC Brazos from December 2022 through February 2023.

The revenues from oil production are typically received by VOC Brazos

one month after production.

Oil and natural gas sales were $9,694,535 for the three months ended March 31, 2024, a decrease of $1,501,043

or 13.4% from $11,195,578 for the three months ended March 31, 2023.

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 by decreases in oil

and natural gas sales volumes during the first quarter of 2024.

During the three months ended March 31, 2024, the average price for

oil decreased 1.6% to $81.39 per Bbl and the average price for natural gas decreased 57.6% to $3.24 per Mcf.

During the three months ended

March 31, 2024, oil sales volumes were 116,405 Bbls, a decrease of 11,195 Bbls or 8.8% from 127,600 Bbls for the three months ended

March 31, 2023, while natural gas sales volumes were 67,921 Mcf, a decrease of 15,580 Mcf or 18.7 % from 83,501 Mcf for the same

period in 2023.

Lease operating expenses were $3,907,650 for the three months ended March 31, 2024, a decrease of $114,653 or 2.9% from $4,022,303

for the three months ended March 31, 2023.

Production and property taxes were $834,484 for the three months ended March 31,

Oil and natural gas sales were $8,076,227 for the three months ended June 30, 2024, a decrease of

$1,280,788 or 13.7% from $9,357,015 for the three months ended June 30, 2023.

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, as further discussed below, during the second quarter of 2024.

During the three

months ended June 30, 2024, the average price for oil decreased 3.9% to $71.25 per Bbl and the average price for natural gas

decreased 42.3% to $3.10 per Mcf.

Oil sales volumes were 110,534 Bbls for the three months ended June 30, 2024, a decrease of

10,237 Bbls or 8.5% from 120,771 Bbls for the three months ended June 30, 2023, while natural gas sales volumes were

64,808 Mcf, a decrease of 9,836 Mcf or 13.2% from 74,644 Mcf for the same period in 2023.

These oil and natural gas sales volume decreases are partially the result of severe winter storms in January 2024 that affected Kansas

and Texas and resulted in a curtailment of production on certain of the underlying properties, as discussed in the Trust’s Current

Report on Form 8-K filed on January 19, 2024.

The snow and ice associated with those storms disabled electrical power to the affected

underlying properties for an extended period, rendering some properties inaccessible, and generally created difficult working conditions.

Lease operating expenses were $3,312,352 for the three months ended June 30, 2024, a decrease of $325,532 or 8.9% from $3,637,884

for the three months ended June 30, 2023.

Production and property taxes were $183,728 for the three months ended June 30, 2024,

a decrease of $95,756 or 34.3% from $279,484 for the same period in 2023.

Such decrease is primarily due to a $65,743 or 20.7% decrease

in production taxes due primarily to lower sales volumes and sales prices for oil and natural gas, partially offset by an increase of

$6,269 or 1.1% in property taxes.

Development expenses were $447,259 for the three months ended March 31, 2024, a decrease of $421,118

or 48.5% from $868,377 for the same period in 2023.

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

expenses, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, a period that included

approximately $200,000 in costs associated with the completion costs of two horizontal wells in Texas.

Such decrease is the result of a $63,281 decrease in production

taxes, primarily due to lower sales prices, and a $32,475 decrease in property taxes.

Development expenses were $358,318 for the three

months ended June 30, 2024, an increase of $196,223 or 121.1% from $162,095 for the same period in 2023.

Such increase was primarily

due to increased development activity during the three months ended June 30, 2024, 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 $4,505,142 for the three months ended March 31,

2024, a decrease of $905,798 or 16.7% from $5,410,940 for the three months ended March 31, 2023.

expenses and lease equipment and development costs from the underlying properties was $4,221,829 for the three months ended June 30,

2024, a decrease of $1,055,723 or 20.0% from $5,277,552 for the three months ended June 30, 2023.

The Trust’s 80% net profits

interest of these totals were $3,604,114 and $4,328,752, respectively.

During the three months ended March 31, 2024 and 2023, VOC

Brazos did not withhold or release any dollar amounts due to the Trust from the previously established cash reserve for future development,

maintenance or operating expenditures, which resulted in income from the net profits interest of $3,604,114 and $4,328,752 for such periods,

respectively.

These amounts were reduced by a Trustee holdback for current estimated Trust expenses of $374,114 and $187,722 for the three

months ended March 31, 2024 and 2023, respectively, and a Trustee holdback for future estimated Trust expenses of $231,030 for the

three months ended March 31, 2023.

The Trustee paid general and administrative expenses of $356,459 for the three months ended March 31,

2024, a decrease of $19,104 from $375,563 for the three months ended March 31, 2023.

These factors resulted in distributable income

for the three months ended March 31, 2024 of $3,230,000, a decrease of $680,000 from $3,910,000 for the three months ended March 31,

interest of these totals was $3,377,463 and $4,222,042, respectively.

During the three months ended June 30, 2024 and 2023, VOC Brazos

did not withhold or release any dollar amounts due to the Trust from the previously established cash reserve for future development, maintenance

or operating expenditures, which resulted in income from the net profits interest of $3,377,463 and $4,222,042 for such periods, respectively.

These amounts were reduced by a Trustee holdback for current estimated Trust expenses of $317,463 and $312,042 for the three months ended

June 30, 2024 and 2023, respectively.

The Trustee paid general and administrative expenses of $120,837 for the three months ended

June 30, 2024, a decrease of $115,028 from $235,865 for the three months ended June 30, 2023.

These factors resulted in distributable

income for the three months ended June 30, 2024 of $3,060,000, a decrease of $850,000 from $3,910,000 for the three months ended

June 30, 2023.

Results of Operations for the Six Months Ended June 30, 2024

The following is a summary of income from net profits

interest received by the Trust for the six months ended June 30, 2024 and 2023 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

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, 2024 substantially represents the production by VOC Brazos from September 2023 through

February 2024.

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 revenues from oil production are typically

received by VOC Brazos one month after production.

Oil and natural gas sales were $17,770,762 for the six months ended June 30, 2024, a decrease of $2,781,831

or 13.5% from $20,552,593 for the six months ended June 30, 2023.

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, as further discussed below, during the six months ended June 30, 2024.

During the six months ended June 30, 2024, the average

price for oil decreased 2.7 % to $76.45 per Bbl and the average price for natural gas decreased 51.8% to $3.17 per Mcf.

Oil sales volumes

were 226,939 Bbls for the six months ended June 30, 2024, a decrease of 21,432 Bbls or 8.6% from 248,371 Bbls for the six months

ended June 30, 2023, while natural gas sales volumes were 132,729 Mcf, a decrease of 25,416 Mcf or 16.1% from 158,145 Mcf for the

same period in 2023.

These oil and natural gas sales volume decreases are partially the result of severe winter storms in January 2024 that affected Kansas

and Texas and resulted in a curtailment of production on certain of the underlying properties, as discussed in the Trust’s Current

Report on Form 8-K filed on January 19, 2024.

The snow and ice associated with those storms disabled electrical power to the affected

underlying properties for an extended period, rendering some properties inaccessible, and generally created difficult working conditions.

Lease operating expenses were $7,220,002 for the six months ended June 30, 2024, a decrease of $440,185 or 5.7% from $7,660,187 for

the six months ended June 30, 2023.

Production and property taxes were $1,018,212 for the six months ended June 30, 2024, a

decrease of $155,230 or 13.2% from $1,173,442 for the six months ended June 30, 2023.

Such decrease is the result of a $129,024 decrease

in production taxes, primarily due to lower sales volumes and sales prices for oil and natural gas, and a $26,206 decrease in property

Development expenses were $805,577 for the six months ended June 30, 2024, a decrease of $224,895 or 21.8% from $1,030,472

for the same period in 2023.

Such decrease was primarily due to a decrease in development activity and drilling expenses during the six

months ended June 30, 2024, compared to the six months ended June 30, 2023, a period that included approximately $200,000 in

costs associated with the completion costs of two horizontal wells in Texas.

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 $8,726,971 for the six months ended June 30,

2024, a decrease of $1,961,521 or 18.4% from $10,688,492 for the six months ended June 30, 2023.

The Trust’s 80% net profits

interest of these totals was $6,981,577 and $8,550,794, respectively.

During the six months ended June 30, 2024 and 2023, 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 $6,981,577 and $$8,550,794 for such periods, respectively.

These amounts were reduced by a Trustee holdback for current estimated Trust expenses of $691,577 and $499,764 for the six months ended

June 30, 2024 and 2023, respectively, and a Trustee holdback for future estimated Trust expenses of $231,030 for the six months ended

June 30, 2023.

The Trustee paid general and administrative expenses of $477,296 for the six months ended June 30, 2024, a decrease

of $134,132 from $611,428 for the six months ended June 30, 2023.

These factors resulted in distributable income of $6,290,000

for the six months ended June 30, 2024 and $7,820,000 for the six months ended June 30, 2023.

Liquidity and Capital Resources

Other than Trust administrative expenses,

including any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to

Trust unitholders.

Administrative expenses include payments to the Trustee as well as a quarterly administrative fee to VOC Brazos

pursuant to an administrative services agreement.

Each quarter, the Trustee determines the amount of funds available for

distribution.

Available funds are the excess cash, if any, received by the Trust from the net profits interest and other sources

(such as interest earned on any amounts reserved by the Trustee) in that quarter, over the Trust’s expenses paid for that

Available funds are reduced by any cash that the Trustee decides to reserve for future development, maintenance or

operating expenses.

As of March 31, 2024, the Trustee held $1,446,956 as cash and cash equivalents on the accompanying Condensed Statements of Assets and Trust Corpus, which includes the $1.175 million cash

Other than Trust administrative expenses, including

any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to Trust unitholders.

Administrative expenses include payments to the Trustee as well as a quarterly administrative fee to VOC Brazos pursuant to an administrative

services agreement.

Each quarter, the Trustee determines the amount of funds available for distribution.

Available funds are the

excess cash, if any, received by the Trust from the net profits interest and other sources (such as interest earned on any amounts reserved

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, 2024, the Trustee held

$1,643,582 as cash and cash equivalents on the accompanying Statements of Assets and Trust Corpus, which includes the $1.175 million cash

reserve described below, as such a reserve.

2 unchanged sentences

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, 2024 and 2023, 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

Beginning in the first quarter of 2022, the Trustee

withheld a portion of the proceeds otherwise available for distribution each quarter to gradually build a $1.175 million cash reserve

for the payment of future known, anticipated, or contingent expenses or liabilities of the Trust.

This amount is in addition to the $1.7

million letter of credit described above.

The targeted $1.175 million cash reserve was fully funded as of January 30, 2023.

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

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

During the three and six months ended June 30, 2024 and 2023, 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.

From the first quarter of 2022 to the second quarter

of 2023, the Trustee withheld a portion of the proceeds otherwise available for distribution each quarter to gradually build a $1.175

million cash reserve for the payment of future known, anticipated, or contingent expenses or liabilities of the Trust.

This amount is

in addition to the $1.7 million letter of credit described above.

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

and may increase or decrease the rate at which it withholds 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.

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.

Income to the Trust from the net profits interest

8 unchanged sentences

the impact on distributions of uneven capital expenditure timing.

The cash reserve balance was $1,000,000 on March 31, 2024 and 2023,

respectively.

The cash reserve balance was $1,000,000 at June 30, 2024 and 2023.

Note Regarding Forward-Looking Statements

20 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