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

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 8
Chunk 25
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 and it is determined that the carrying value of
the Royalty Trust’s overriding royalty interests in the subject interests may not be recoverable, an impairment will be recognized
as measured by the amount by which the carrying amount of the overriding royalty interests in the subject interests exceeds the fair
value of these assets, which would be measured by discounting projected cash flows. The related impairment amounts are recorded as a
reduction to the overriding royalty interest with an offsetting reduction to the Trust Corpus in the period such impairment is determined.
Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs)
and the lowest priority to unobservable inputs (Level 3). When indicators of impairment are present and it is determined that the carrying
value of the Royalty Trust’s overriding royalty interests in the subject interests exceeds the estimated undiscounted cash flows
of the subject interest, fair value estimates utilized in the impairment assessment are generally determined based on inputs not observable
in the market and thus represent Level 3 measurements.

2.
FORMATION OF THE ROYALTY TRUST

On
June 3, 2013, Freeport-McMoRan Inc. (FCX) and McMoRan Exploration Co. (MMR) completed the transactions contemplated by the Agreement
and Plan of Merger, dated as of December 5, 2012 (the merger agreement), by and among MMR, FCX, and INAVN Corp., a Delaware corporation
and indirect wholly owned subsidiary of FCX (Merger Sub). Pursuant to the merger agreement, Merger Sub merged with and into MMR, with
MMR surviving the merger as an indirect wholly owned subsidiary of FCX (the merger).

FCX’s
oil and gas assets are held through its wholly owned subsidiary, FCX Oil & Gas LLC (FM O& G). As a result of the merger, MMR and
McMoRan Oil & Gas LLC (McMoRan), MMR’s wholly owned operating subsidiary, are both indirect wholly owned subsidiaries of FM
O& G.

The
Royalty Trust is a statutory trust created as contemplated by the merger agreement by FCX under the Delaware Statutory Trust Act pursuant
to a trust agreement entered into on December 18, 2012 (inception), by and among FCX, as depositor,