Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 6

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 6
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 financial condition and results of operations.

  21  

The
adoption and implementation of regulations imposing reporting obligations on, or limiting emissions of GHGs from, HOGA’s equipment
and operations could require HOGA to incur costs to reduce emissions of GHGs associated with its operations or could adversely affect
demand for the natural gas it produces. Legislation or regulations that may be adopted to address climate change could also affect the
markets for HOGA’s products by making its products more or less desirable than competing sources of energy. To the extent that
its products are competing with higher GHG-emitting energy sources, HOGA’s products may become more desirable in the market with
more stringent limitations on GHG emissions. To the extent that its products are competing with lower GHG-emitting energy, HOGA’s
products may become less desirable in the market with more stringent limitations on greenhouse gas emissions. HOGA cannot predict with
any certainty at this time how these possibilities may affect its operations.

In
addition, new and emerging regulatory initiatives in the U. S. related to climate change could adversely affect the Royalty Trust. On
March 6, 2024, the SEC issued a final rule regarding the enhancement and standardization of mandatory climate-related disclosures for
investors. The final rule mandates extensive disclosure of climate-related data, risks, and opportunities, including financial impacts,
physical and transition risks, related governance and strategy and greenhouse gas emissions, for certain public companies. Compliance
with the final rule may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming
and costly, and place strain on the personnel, systems and resources of HOGA or the Royalty Trust or both.

Finally,
some scientists have theorized that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that
have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.
If any such significant physical effects were to occur, they could have an adverse effect on HOGA’s assets and operations and cause
HOGA to incur costs in preparing for and responding to them. Additionally, energy needs could increase or decrease as a result of extreme
weather conditions, depending on the duration and magnitude of those conditions.

Risks
Related to Ownership of the Royalty Trust Units

There
is a limited public market for the Royalty Trust units, which could affect the market price, trading volume, liquidity