Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 2

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 2
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 and the first quarter of 2023, distributions may not necessarily be
made in the future. As a result of the abandonment of the sole well producing on the onshore Highlander subject interest, the Royalty
Trust does not expect to receive any income attributable to its overriding royalty interests and accordingly, does not expect to have
any cash available to distribute to Royalty Trust unitholders in future periods, unless another well is drilled on the onshore Highlander
subject interest and produces hydrocarbons in commercial quantities. HOGA informed the Trustee that a new well on the onshore Highlander
subject interest was spudded on January 30, 2025; however, the future production status of this well remains unknown. The Royalty Trust’s
only other sources of liquidity are mandatory annual contributions, any loans and the required standby reserve account or letter of credit
from HOGA. As a result, any material adverse change in HOGA’s financial condition or results of operations could materially and
adversely affect the Royalty Trust and the Royalty Trust units.

Natural
gas prices fluctuate due to a number of factors that are beyond the control of the Royalty Trust and HOGA, and lower prices could reduce
proceeds to the Royalty Trust and cash distributions to Royalty Trust unitholders.

Natural
gas prices fluctuate widely in response to relatively minor changes in supply, market uncertainty and a variety of additional factors
that are beyond the control of HOGA and the Royalty Trust. These factors include, among others:

  regional, domestic and foreign                                                                                                      
  U. S. and worldwide political                                                                                                       
  trade barriers and tariffs;                                                                                                         
  the armed conflicts between                                                                                                         
  the occurrence or threat                                                                                                            
  weather conditions and seasonal                                                                                                     
  anticipated future prices                                                                                                           
  technological advances affecting                                                                                                    
  the proximity, capacity,                                                                                                            
  natural disasters and other                                                                                                         
  domestic and foreign governmental                                                                                                   
  energy conservation and environmental                                                                                               
  the price and availability                                                                                                          

  19  

These
factors and the volatility of the energy markets make it extremely difficult to predict future natural gas price movements with any certainty.
During 2024, the New York Mercantile Exchange (NYMEX) natural gas price fluctuated from a low of $1.21 per MMBtu to a high of $13.20
per MMBtu. On March 24, 2025, the NYM