Company: GULTU
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023391
Chunk: 7

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 7
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 $6,756,701 at June 30, 2025 and December 31, 2024.

4.
RELATED PARTY TRANSACTIONS

Royalty
Income.

Each
quarter, the Trustee will determine the amount of funds available for distribution to the Royalty Trust unitholders. Available funds
will equal the excess cash received by the Royalty Trust from the royalty interests and other sources during that quarter over the Royalty
Trust’s liabilities for that quarter. Available funds will be reduced by any cash the Trustee reserves against future liabilities.
As of June 30, 2025, the Trustee has established a minimum cash reserve of $302,500. The minimum cash reserve is not reflective of the
Royalty Trust’s operating cash balance as of June 30, 2025 and December 31, 2024.

   8  

Commencing
with the distribution to unitholders in the first quarter of 2022, the Royalty Trust withheld $8,750 from the funds otherwise available
for distribution each quarter through the first quarter of 2023, with the intent of gradually building a cash reserve of approximately
$350,000. As no proceeds were available for distribution in the three-month period ended June 30, 2025, the Royalty Trust did not withhold
any funds for the cash reserve. Unless a new well is drilled on the onshore Highlander subject interest, as discussed in Note 2 above,
and produces hydrocarbons in commercial quantities, the Royalty Trust does not intend to withhold funds for the cash reserve in the future,
as the Royalty Trust does not expect to have any cash available to distribute to unitholders in future periods. This cash is reserved
for the payment of future known, anticipated or contingent expenses or liabilities of the Royalty Trust. The Trustee may increase or
decrease the targeted cash reserve amount at any time and may increase or decrease the rate at which it withholds funds to build the
cash reserve at any time, without advance notice to the unitholders. Cash held in reserve will be invested as required by the Royalty
Trust Agreement. Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known, anticipated or
contingent expenses or liabilities eventually will be distributed to unitholders, together with interest earned on the funds. For additional
information regarding distributions to Royalty Trust unitholders, see Note 5.

Funding
of Administrative Expenses.

P