Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 14

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 14
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,143,149 Royalty Trust units. HOGA and FCX each hold
13.5% of the outstanding Royalty Trust units. HOGA or FCX may sell Royalty Trust units in the public or private markets. Any such sales
may have a material adverse effect on the trading price of the Royalty Trust units. A small number of other Royalty Trust unitholders
also hold significant percentages of the outstanding Royalty Trust units, and sales by such holders also may have a material adverse
effect on the trading price of the Royalty Trust units. See Part III, Item 12. “ Security Ownership of Certain Beneficial Owners
and Management and Related Royalty Trust Unitholder Matters” of this Form 10-K.

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The
Royalty Trust is managed by a Trustee who cannot be replaced except by a majority vote of the Royalty Trust unitholders, which may make
it difficult for Royalty Trust unitholders to remove or replace the Trustee.

The
affairs of the Royalty Trust are managed by the Trustee. The voting rights of Royalty Trust unitholders are more limited than those of
stockholders of most public corporations. For example, there is no requirement for the Royalty Trust to hold annual meetings of Royalty
Trust unitholders or for an annual or other periodic re-election of the Trustee. The Royalty Trust does not intend to hold annual meetings
of Royalty Trust unitholders. The Royalty Trust Agreement provides that the Trustee may only be removed by the affirmative vote of holders
of a majority of the Royalty Trust units outstanding. As a result, it would be difficult for public Royalty Trust unitholders to remove
or replace the Trustee without the cooperation of FCX and HOGA so long as each holds a significant percentage of the total Royalty Trust
units.

Financial
information of the Royalty Trust is not prepared in accordance with GAAP.

The
financial statements of the Royalty Trust are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting
other than accounting principles generally accepted in the United States, or GAAP. Although this basis of accounting is permitted for
royalty trusts by the SEC, the financial statements of the Royalty Trust differ from GAAP financial statements because revenues are not
accrued in the month of production and cash reserves may be established for specified contingencies and deducted which could not be accrued
in GAAP