Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 24

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 24
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 Distributions paid                                                                                   -                        (819,225  
  Trust corpus, end of period                                            $                             (336,061      $            43,741  

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

  40  

GULF
COAST ULTRA DEEP ROYALTY TRUST

NOTES
TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The
financial statements of Gulf Coast Ultra Deep Royalty Trust (the Royalty Trust) are prepared on the modified cash basis of accounting
and are not intended to present the Royalty Trust’s financial position and results of operations in conformity with United States
(U. S.) generally accepted accounting principles (GAAP). This other comprehensive basis of accounting corresponds to the accounting permitted
for royalty trusts by the U. S. Securities and Exchange Commission (SEC), as specified by Staff Accounting Bulletin Topic 12:E, Financial
Statements of Royalty Trusts

The
Royalty Trust’s operating cash and reserve fund cash amounts represent deposits in highly liquid short-term U. S. Treasury money
market funds. The Royalty Trust’s reserve fund short-term investments include U. S. treasury securities with maturities of three
months to one year and are recorded at cost in accordance with the modified cash basis of accounting.

The
carrying value of the Royalty Trust’s overriding royalty interests in the subject interests (each defined in Note 2) is amortized
using the units of production method based on estimated proved reserves, on an individual subject interest basis, once production has
been achieved for the respective subject interests. Such non-cash amortization is charged directly to the Trust Corpus as royalties are
received, and will not affect distributable cash or the determination of distributable cash per Royalty Trust unit, see Note 3.

The
Royalty Trust evaluates the carrying values of the overriding royalty interests in the subject interests for impairment if conditions
indicate that potential uncertainty exists regarding the Royalty Trust’s ability to recover its recorded amounts related to the
overriding royalty interests. Indications of potential impairment with respect to the overriding royalty interests can include, among
other things, subject interest lease expirations, reductions in estimated reserve quantities or resource potential, changes in estimated
future oil and natural gas prices, exploration costs, and/or drilling plans, and other matters that arise that could negatively impact
the carrying values of the overriding royalty interests. If an impairment event occurs