What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-20 compared with 2024-03-20 · 32 added, 26 removed, 352 unchanged (14% of the section changed)

42 unchanged sentences

Income from net profits interest

Cash on hand used (withheld) for Trust expenses

Cash on hand withheld for Trust expenses

General and administrative expenses (1)

Distributable income

Distributions per Trust Unit (17,000,000 Trust Units issued and

outstanding at December 31, 2021, 2022 and 2023,

respectively)

Distributions per Trust Unit (17,000,000 Trust Units issued and outstanding at December 31, 2022, 2023 and 2024, respectively)

Includes $114,330, $118,902 and $123,659 paid to VOC Brazos and $150,000, $150,000 and $150,000 paid to The Bank of New York Mellon Trust Company, N.A.

7 unchanged sentences

(15,215,000 )

(12,410,000 )

Trust expenses

1 unchanged sentence

Trust corpus, end of year

The accompanying notes are an integral part of these financial statements.

TABLE OF CONTENTS

20 unchanged sentences

there is a judicial dissolution of the Trust.

Upon dissolution, the Trustee would sell all of the Trust’s assets, either by private sale or public auction, and distribute the net proceeds of the sale to the Trust unitholders.

Upon dissolution prior to the liquidation date, the Trustee would sell all of the Trust’s assets, which are limited to the net profits interest, and do not include the Underlying Properties, either by private sale or public auction, and distribute the net proceeds of the sale to the Trust unitholders.

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.

22 unchanged sentences

Securities and Exchange Commission (the “SEC”) as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

No new accounting pronouncements have been adopted or issued during the year ended December 31, 2023 that would impact the financial statements of the Trust.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

The Trust adopted ASU 2023-07 during the year ended December 31, 2024.

Cash equivalents

1 unchanged sentence

Use of estimates

financial statements and the reported amounts of income and expenses during the reporting period.

The preparation of financial statements requires estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.

Actual results could differ from those estimates.

Significant estimates affecting these financial statements include estimates of proved oil and gas reserves, which are used to compute the Trust’s amortization of net profits interest.

Segment reporting

The Trust has one business activity as the owner of an investment in net profits interest, as reported in accompanying the Statements of Assets and Trust Corpus, and operates in a single operating and reportable segment.

Operating segments are defined as components of an entity for which separate financial information is evaluated regularly by the chief operating decision maker, which is the Trustee.

The segment participates in activities and derives its income from net profits interest (net sales proceeds from oil and gas production) as reported in the accompanying Statements of Distributable Income, and the Trustee uses this in making decisions about the allocation of cash reserves for current and future Trust general and administrative expenses and the ultimate distribution to the Trust unitholders.

NOTE C — NET PROFITS INTEREST

52 unchanged sentences

Pursuant to the terms of the Conveyance, VOC Brazos can reserve up to $1,000,000 for future development, maintenance or operating expenditures at any time.

The reserve balance was $1,000,000 at December 31, 2021, 2022 and 2023, respectively.

The reserve balance was $1,000,000 at each of December 31, 2022, 2023 and 2024.

The income from the net profits interest for the year ended December 31, 2022 (consisting of VOC Brazos’ February, May, August and November 2022 net profits interest distributions to the Trust) generally represents the production by VOC Brazos from September 2021 through August 2022.

12 unchanged sentences

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 gradually build an approximately $1.175 million cash reserve for the payment of future known, anticipated or contingent expenses or liabilities of the Trust.

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 build an approximately

$1.175 million cash reserve 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 withholds funds to build the cash reserve at any time, without advance notice to the Trust 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 Trust unitholders, together with interest earned on the funds.

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

The interest earned on this cash reserve is used to reduce the reported general and administrative expense each quarter on the statements of distributable income.

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

Period covered

62 unchanged sentences

Trustee Administrative Fee.

Under the terms of the Trust Agreement, the Trust pays an annual administrative fee of $150,000 to the Trustee and paid $2,500, $2,510 and $2,510 to the Delaware Trustee for 2021, 2022 and 2023, respectively.

Under the terms of the Trust Agreement, the Trust pays an annual administrative fee of $150,000 to the Trustee and paid $2,510 to the Delaware Trustee for 2022, 2023 and 2024, respectively.

Agreement with VOC Brazos.

In May 2011, the Trustee, not in its individual capacity but solely as Trustee of the Trust, entered into an administrative services agreement with VOC Brazos whereby, in connection with the conveyance of the net profits interest to the Trust, VOC Brazos agreed to provide the Trust with accounting, bookkeeping and informational services relating to the net profits interest in exchange for an administrative services fee of $18,750 that will be paid to VOC Brazos on a quarterly basis, The administrative services agreement will terminate on the earliest to occur of:

administrative services agreement will terminate on the earliest to occur of:

(i) the date the Trust shall have dissolved and commenced winding up in accordance with the Trust Agreement, (ii) the date that all of the net profits interest has been terminated or is no longer held by the Trust and (iii) a date mutually agreed to by VOC Brazos and the Trustee.

The quarterly fee increases by 4% each year.

For 2021, 2022 and 2023, $136,620 (representing five quarters), $114,330 (representing four quarters) and $118,902 (representing four quarters) respectively, was paid to VOC Brazos as administrative fees.

For 2022, 2023 and 2024, $114,330, $118,902 and $123,659 respectively, was paid to VOC Brazos as administrative fees.

Joint Venture Agreement.

In 2018, VOC Brazos entered into a joint venture agreement with Hawkwood Energy East Texas, LLC (“Hawkwood”).

Under the terms of the joint venture agreement, Hawkwood carried VOC Brazos for its share of drilling and completion costs for four wells in the Lower Woodbine Organic

Shale (the “Hawkwood Earning Wells”).

Under the terms of the joint venture agreement, Hawkwood carried VOC Brazos for its share of drilling and completion costs for four wells in the Lower Woodbine Organic Shale (the “Hawkwood Earning Wells”).

In exchange, Hawkwood earned a working interest representing 50% of VOC Brazos’ interest in each Hawkwood Earning Well and up to a 50% interest in VOC Brazos’ acreage in the south half of the Kurten Woodbine Unit.

12 unchanged sentences

Under the terms of the Trust Agreement, 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 build an approximately $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 letter of credit in the amount of $1.7 million discussed above.

1 unchanged sentence

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

The interest earned on this cash reserve is used to reduce the reported general and administrative expense each quarter on the statements of distributable income.

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

6 unchanged sentences

This same 12-month average price is also used in calculating the aggregate amount of (and changes in) future cash inflows related to the standardized measure of discounted future net cash flows.

The rules also allow for the use of reliable technology to estimate proved oil and gas reserves if those technologies have been demonstrated to result in

reliable conclusions about reserve volumes.

The rules also allow for the use of reliable technology to estimate proved oil and gas reserves if those technologies have been demonstrated to result in reliable conclusions about reserve volumes.

The unaudited supplemental information on oil and gas exploration and production activities for 2022, 2023 and 2024 has been presented in accordance with these rules.

30 unchanged sentences

December 31, 2021

Proved undeveloped reserves converted to proved developed by drilling

Additional proved undeveloped reserves added

1 unchanged sentence

December 31, 2022

Proved undeveloped reserves converted to proved developed by drilling

Additional proved undeveloped reserves added

4 unchanged sentences

December 31, 2024

The Trust recognized net increases in reserves for its share of VOC Brazos’ total during 2021.

This increase was primarily the result of net positive revisions due to increases in realized prices during 2021, including additional net proved undeveloped reserve locations of 127,130 Boe due to changes in a previously adopted development plan, offset by production of properties of 467,718 Boe.

The Trust recognized net decreases in reserves for its share of VOC Brazos’ total during 2022 associated with the production of properties of 451,225 Boe.

2 unchanged sentences

This decrease was also compounded by a negative revision due to increases in development costs and a net negative decrease of reserves of 93,677 Boe due to the removal of proved undeveloped locations in a previously adopted development plan.

The Trust recognized net decreases in reserves for its share of VOC Brazos’ total during 2024 associated with the production of properties of 390,446 Boe.

This decrease was also compounded by a negative revision due to increases in development costs and a net negative decrease of reserves of 77,751 Boe due to the removal of proved undeveloped locations in a previously adopted development plan.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS

20 unchanged sentences

(16,459,918 )

(13,622,718 )

Net changes in price and production costs

1 unchanged sentence

Changes in estimated future development costs

(10,644,520 )

Development costs incurred during the year

9 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-K

Item 8. Financial Statements and Supplementary Data