Company: GULTU
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021996
Chunk: 7

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 7
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 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 September 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 September 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 September 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.

In
addition to such annual contributions, the Depositor has agreed to lend money, on an unsecured, interest-free basis, to the Royalty Trust
to fund the Royalty Trust’s ordinary administrative expenses as set forth in the Royalty Trust Agreement. All funds the Trustee
borrows to cover