Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 1

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 1
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has 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. Neither the Trustee nor the Royalty Trust unitholders has any right to control or influence
operations of the subject interest.

The
value of the Royalty Trust units is uncertain.

The
Royalty Trust’s only assets and sources of income are the overriding royalty interests burdening the onshore Highlander subject
interest. The onshore Highlander subject interest is the only subject interest in which HOGA has an interest, as McMoRan previously had
relinquished, allowed to expire or sold all of the other subject interests. The overriding royalty interests entitle the Royalty Trust
to receive a portion of the proceeds derived from the sale of hydrocarbons associated with the subject interests, if any.

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The
Royalty Trust has no ability to direct or influence the exploration or development of the subject interests. In addition, HOGA is not
under any obligation to fund or to commit any resources to the exploration or development of the subject interests.

To
the extent that HOGA does not fund the exploration and development of the onshore Highlander subject interest, or if for any other reason
sufficient production from the onshore Highlander subject interest is not achieved and maintained in commercial quantities, Royalty Trust
unitholders will not realize any additional value from their investment in the Royalty Trust units.

Future
Royalty Trust distributions are uncertain because the Royalty Trust does not control the operations of the subject interests and any
royalties received must exceed administrative expenses, any indebtedness and a minimum cash requirement.

The
Royalty Trust has no control over the operations of the subject interests, which are necessary to generate any royalties to be distributed
to the Royalty Trust unitholders. In addition, any royalties received by the Royalty Trust must first be used to (i) satisfy Royalty
Trust administrative expenses and (ii) reduce Royalty Trust indebtedness. Lastly, the Trustee has established a minimum cash reserve
of $302,500 as of December 31, 2024. As a result, distributions will be made to Royalty Trust unitholders only when royalties received
less administrative expenses incurred and repayment of all indebtedness exceeds the minimum cash reserve.

Although
distributions were paid to Royalty Trust unitholders in 2021, 2022