Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 29

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 29
---
 substantial amounts of water entering the well, which caused a shut in
of the well before production resumed at significantly reduced levels. Following an evaluation by HOGA’s field operations team,
HOGA determined that it would be necessary to commence operations to control the water production, in expectation of eventually initiating
“kill” operations on the well. HOGA informed the Trustee that the well was shut in effective March 31, 2023 and production
from the well has ceased. After that time the well flowed intermittently but not on a continuous basis. In October 2023, HOGA informed
the Trustee that due to the underground flow of fluids into the wellbore, the well could not be salvaged and would be required to be
plugged and abandoned. HOGA subsequently informed the Trustee that operations to permanently plug and abandon the well commenced in early
March 2024. See Note 8.

The
Royalty Trust fully impaired the carrying value of the onshore Highlander subject interest by $308,071 during the year ended December
31, 2023. Unless another well is drilled on the onshore Highlander subject interest and produces hydrocarbons in commercial quantities,
the Royalty Trust does not expect to receive any income attributable to its overriding royalty interests. Therefore, the Royalty Trust
recognized the remaining carrying value of the onshore Highlander subject interest as of March 31, 2023 as an impairment loss.

The
Royalty Trust has no ability to direct or influence the exploration or development of the onshore Highlander subject interest. In addition,
HOGA is not under any obligation to fund or to commit any other resources to the exploration or development of the onshore Highlander
subject interest. Further, HOGA has the right to elect not to participate in drilling or other operations conducted by other working
interest owners with respect to the onshore Highlander subject interest.

The
Royalty Trust will dissolve on the earliest to occur of (i) June 3, 2033, (ii) the sale of all of the overriding royalty interests, (iii)
the election by the Trustee following its resignation for cause (as more fully described in the Royalty Trust Agreement), (iv) a vote
of the holders of 66⅔% or more of the outstanding Royalty Trust units held by persons other than FCX, any of its affiliates, or
HOGA at a duly called meeting of the Royalty Trust unitholders at which a qu