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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K



(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                    to


Commission file number 001-35160



VOC ENERGY TRUST(Exact name of registrant as specified in its charter)



Delaware(State or other jurisdiction of
incorporation or organization)

80-6183103(I.R.S. Employer
Identification No.)The Bank of New York Mellon
Trust Company, N.A., Trustee
Global Corporate Trust
601 Travis Street, Floor 16
Houston, Texas(Address of principal executive offices)

77002(Zip Code)


Registrant's
telephone number, including area code:(512) 236-6599

Securities registered pursuant to Section 12(b) of the Act:



Title of each class

Trading Symbol(s)

Name of each exchange on which registeredUnits of Beneficial Interest

VOC

New York Stock Exchange


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ý    No o

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý

Smaller reporting company ý Emerging growth company o


If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o    No ý

The aggregate market value of the 12,747,750 Units of Beneficial Interest in VOC Energy Trust held by non-affiliates of the registrant, computed using the closing
sales price of $5.07 on June 28, 2019, was approximately $64,631,093.

Indicate
the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of March 13, 2020, 17,000,000 Units of
Beneficial Interest in VOC Energy Trust were outstanding.

DOCUMENTS
INCORPORATED BY REFERENCE:None





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TABLE OF CONTENTS





PageFORWARD LOOKING STATEMENTS


1GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS


2PART I


6Item 1.

Business


6Item 1A.

Risk Factors


30Item 1B.

Unresolved Staff Comments


45Item 2.

Properties


45Item 3.

Legal Proceedings


45Item 4.

Mine Safety Disclosures


45PART II


46Item 5.

Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities


46Item 6.

Selected Financial Data


46Item 7.

Trustee's Discussion and Analysis of Financial Condition and Results of Operations


46Item 7A.

Quantitative and Qualitative Disclosures About Market Risk


54Item 8.

Financial Statements and Supplementary Data


55Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


70Item 9A.

Controls and Procedures


70Item 9B.

Other Information


70PART III


71Item 10.

Directors, Executive Officers and Corporate Governance


71Item 11.

Executive Compensation


71Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters


71Item 13.

Certain Relationships and Related Transactions, and Director Independence


72Item 14.

Principal Accounting Fees and Services


73PART IV


74Item 15.

Exhibits, Financial Statement Schedules


74Item 16

Form 10-K Summary


75SIGNATURES


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FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K, which we refer to as this "Form 10-K," contains forward looking statements about VOC Brazos
Energy Partners, L.P., a Texas limited partnership, which we refer to as "VOC Brazos," and VOC Energy Trust, which we refer to herein as the "trust," that are subject to risks and uncertainties
and that are intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934,
as amended, which we refer to as the "Exchange Act". All statements other than statements of historical fact included in this document, including, without limitation, statements under "Business" and
"Risk Factors" regarding the financial position, business strategy, production and reserve growth, and other plans and objectives for the future operations of VOC Brazos and the trust, are
forward-looking statements. Such statements may be influenced by factors that could cause actual outcomes and results to differ materially from those projected. Forward-looking statements are subject
to risks and uncertainties and include statements pertaining to future development activities and costs and other statements in this Form 10-K that are prospective and constitute
forward-looking statements.

When
used in this document, the words "believes," "expects," "anticipates," "intends" or similar expressions are intended to identify such forward-looking statements. The following
important factors, in addition to those discussed elsewhere in this Form 10-K, could affect the future results of the energy industry in general, and VOC Brazos and the trust in particular, and
could cause actual results to differ materially from those expressed in such forward looking statements:



This
Form 10-K describes other important factors that could cause actual results to differ materially from expectations of VOC Brazos and the trust, including under the heading
"Risk Factors." All written and oral forward-looking statements attributable to VOC Brazos or the trust or persons acting on behalf of VOC Brazos or the trust are expressly qualified in their entirety
by such factors.

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GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS

In this Form 10-K the following terms have the meanings specified below.

BblOne stock tank barrel, or 42 U.S. gallons liquid volume, of crude oil or other liquid hydrocarbons.

BoeOne stock tank barrel of oil equivalent, computed on an approximate energy equivalent basis that one Bbl of crude oil equals six Mcf of natural
gas and one Bbl of crude oil equals 1.54 Bbls of natural gas liquids.

Btu or British Thermal UnitThe quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit.

CompletionThe installation of permanent equipment for the production of oil or natural gas, or, in the case of a dry well, the reporting to the
appropriate authority that the well has been abandoned.

Developed AcreageThe number of acres that are allocated or assignable to productive wells or wells capable of production.

Development WellA well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be
productive.

DUCsDrilled but uncompleted. A well that has been drilled but has not undergone the final steps of perforating/acidizing or hydraulic fracturing and
procedures necessary to place the well on production.

Estimated Future Net RevenuesAlso referred to as "estimated future net cash flows." The result of applying current prices of oil and natural gas to
estimated future production from oil and
natural gas proved reserves, reduced by estimated future expenditures, based on current costs to be incurred, in developing and producing the proved reserves.

FieldAn area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature
and/or stratigraphic condition. There may be two or more reservoirs in a field that are separated vertically by intervening impervious, strata, or laterally by local geologic barriers, or by both.
Reservoirs that are associated by being in overlapping or adjacent fields may be treated as a single or common operational field. The geological terms structural feature and stratigraphic condition
are intended to identify localized geological features as opposed to the broader terms of basins, trends, provinces, plays, areas-of-interest, etc.

Gross Acres or Gross WellsThe total acres or wells, as the case may be, in which a working interest is owned.

Henry HubA distribution hub on the natural gas pipeline system in Erath, Louisiana. It is the pricing point for natural gas futures contracts traded
on the New York Mercantile Exchange and the over the counter swaps traded on the Intercontinental Exchange, Spot and future natural gas prices set at Henry Hub are denominated in USD per MMBtu.

MBblOne thousand barrels of crude oil or other liquid hydrocarbons.

MBoeOne thousand barrels of oil equivalent.

McfOne thousand standard cubic feet of natural gas. For purposes of this Form 10-K, references to Mcf include an insignificant amount of
natural gas liquid measurement.

MMBblsOne million barrels of crude oil or other liquid hydrocarbons.

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MMBoeOne million barrels of oil equivalent.

MMBtuOne million British Thermal Units.

MMcfOne million standard cubic feet of natural gas. For purposes of this Form 10-K, references to MMcf include an insignificant amount of
natural gas liquid measurement.

Net Acres or Net WellsThe sum of the fractional working interests owned in gross acres or wells, respectively.

Net Profits InterestA nonoperating interest that creates a share in gross production from an operating or working interest in oil and natural gas
properties. The share is measured by net profits from the sale of production after deducting costs associated with that production.

Net Revenue InterestAn interest in all oil and natural gas produced and saved from, or attributable to, a particular property, net of all royalties,
overriding royalties, net profits interests, carried interests, reversionary interests and any other burdens to which the person's interest is subject.

NYMEXNew York Mercantile Exchange.

Plugging and AbandonmentActivities to remove production equipment and seal off a well at the end of a well's economic life.

Proved Developed Non-Producing ReservesProved developed reserves expected to be recovered from zones behind casing in existing wells.

Proved Developed Oil and Gas ReservesProved Oil and Gas Reserves that can be expected to be recovered:



Proved Developed Producing ReservesProved developed reserves that are expected to be recovered from completion intervals currently open in existing
wells and capable of production to market.

Proved Oil and Gas ReservesThose quantities of oil and gas that, by analysis of geoscience and engineering data, can be estimated with reasonable
certainty to be economically
produciblefrom a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulationsprior to the time at which
contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.



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Proved Undeveloped Oil and Gas ReservesProved Oil and Gas Reserves that are expected to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is required for recompletion.



PV-10The present value of estimated future net revenues using a discount rate of 10% per annum.

RecompletionThe process of re-entering an existing wellbore that is either producing or not producing and completing new reservoirs in an attempt to
establish or increase existing production.

ReservoirA porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by
impermeable rock or water barriers and is individual and separate from other reservoirs.

Standardized Measure of Discounted Future Net Cash FlowsAlso referred to herein as "standardized measure." It is the present value of estimated
future net revenues computed by discounting estimated future net revenues at a rate of 10% annually.

The
Financial Accounting Standards Board requires disclosure of standardized measure of discounted future net cash flows relating to proved oil and gas reserve quantities per accounting
literature for extractive activitiesoil and gas, as follows: A standardized measure of discounted future

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net
cash flows relating to an enterprise's interests in (a) proved oil and gas reserves and (b) oil and gas subject to purchase under long-term supply, purchase, or similar agreements
and contracts in which the enterprise participates in the operation of the properties on which the oil or gas is located or otherwise serves as the producer of those reserves shall be disclosed as of
the end of the year. The standardized measure of discounted future net cash flows relating to those two types of interests in reserves may be combined for reporting purposes. The following information
shall be disclosed in the aggregate and for each geographic area for which reserve quantities are disclosed:



Working InterestAlso called an operating interest. The right granted to the lessee of a property to explore for and to produce and own oil, gas or
other minerals. The working interest owner bears the exploration, development and operating costs on either a cash, penalty or carried basis.

WorkoverOperations on a producing well to restore or increase production.

WTI CushingWest Texas Intermediate, a type of crude oil used as a benchmark in oil pricing and the underlying commodity of the New York Mercantile
Exchange's oil future contracts for delivery at Cushing, Oklahoma.

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PART I

Item 1.    Business.

General

VOC Energy Trust, which we refer to as the "trust," was formed in November 2010 by VOC Brazos Energy Partners, L.P., which we refer to as
"VOC Brazos." Much of the information disclosed herein has been provided to the trust by VOC Brazos, including information associated with the underlying properties such as production and well counts,
major producing areas, customer relationships, competition, marketing and post-production services, and certain information on which reserve data is based.

The
trust is a statutory trust created under the Delaware Statutory Trust Act. The business and affairs of the trust are managed by The Bank of New York Mellon Trust Company, N.A., as
trustee. The trust maintains its offices at the office of the trustee, at 601 Travis Street, Floor 16, Houston, Texas 77002. The telephone number of the trustee is 1-855-802-1094. In addition,
Wilmington Trust Company acts as the Delaware trustee of the trust. The Delaware trustee has only minimal rights and duties as are necessary to satisfy the requirements of the Delaware Statutory Trust
Act. The trust does not have any employees, and the business and affairs of the trust are managed by the trustee.

The
trustee does not maintain a website for filings by the trust with the Securities and Exchange Commission, which we refer to as the "SEC." Electronic filings by the trust with the SEC
are available free of charge through the SEC's website at www.sec.gov and athttp://voc.investorhq.businesswire.com.

On
May 10, 2011, VOC Brazos and the trust completed an initial public offering of units of beneficial interest in the trust, which are referred to herein as the "trust units." In
connection with the closing of the initial public offering, on May 10, 2011, VOC Brazos conveyed a net profits interest to the trust,
which entitles the trust to receive 80% of the net proceeds (calculated as described below) from the sale and production of substantially all of the interests in oil and natural gas properties in the
states of Kansas and Texas held by VOC Brazos as of May 10, 2011, which is referred herein as the "net profits interest." VOC Brazos' net interests in such properties, after deduction of all
royalties and other burdens on production thereon as of May 10, 2011, is referred to herein as the "underlying properties." As of December 31, 2019, the underlying properties included
interests in 776 gross (475.9 net) producing wells and included 84,812 gross (52,233.0 net) acres. The net profits interest will terminate on the later to occur of
(1) December 31, 2030, or (2) the time from and after January 1, 2011 when 10.6 MMBoe have been produced from the underlying properties and sold (which amount is the
equivalent of 8.5 MMBoe in respect of the trust's right to receive 80% of the net proceeds from the underlying properties pursuant to the net profits interest), and the trust will soon thereafter wind
up its affairs and terminate. As of December 31, 2019, cumulatively, since inception, the trust has received payment for approximately 5.1 MMBoe of the trust's 8.5 MMBoe interest.

The
trust will make quarterly cash distributions of substantially all of its quarterly cash receipts, after deducting the trust's administrative expenses, on or about 45 days
following the completion of each quarter through (and including) the quarter ending December 31, 2030. Because payments to the trust will be generated by depleting assets and the trust has a
finite life with the production from the underlying properties diminishing over time, a portion of each distribution will represent a return of the original investment in the trust units.

The
amount of trust revenues and cash distributions to trust unitholders will depend on, among other things:



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The
trust was created to acquire and hold the net profits interest for the benefit of the trust unitholders. The net profits interest is passive in nature and neither the trust nor the
trustee has any control over or responsibility for costs relating to the operation of the underlying properties. The business and affairs of the trust are managed by the trustee, and neither VOC
Brazos nor any of its affiliates has the ability to manage or influence the operations of the trust. Vess Oil Corporation, which we refer to as "Vess Oil," L.D. Drilling, Inc. and Davis
Petroleum, Inc., which are collectively referred to herein as the "VOC Operators," are currently the operator or contract operator of substantially all of the underlying properties. VOC Brazos
does not, as a matter of course, make public projections as to future sales, earnings or other results relating to the underlying properties.

Description of the Trust Units

Each trust unit is a unit of beneficial interest in the trust and is entitled to receive cash distributions from the trust on a pro rata basis.
Each trust unitholder has the same rights regarding each of his trust units as every other trust unitholder has regarding his units. The trust units are in book-entry form only and are not represented
by certificates. The trust had 17,000,000 trust units outstanding as of March 13, 2020.

Distributions and Income Computations

Each quarter, the trustee determines the amount of funds available for distribution to the trust unitholders. Available funds are the excess
cash, if any, received by the trust from the net profits interest and other sources (such as interest earned on any amounts reserved by the trustee) in that quarter, over the trust's expenses for that
quarter. Available funds are reduced by any cash the trustee decides to hold as a reserve against future expenses. Quarterly cash distributions during the term of the trust are made by the trustee on
or before the 45th day following the end of each quarter to the trust unitholders of record on the 30th day following the end of each quarter (or the next succeeding business day).

Unless
otherwise advised by counsel or the Internal Revenue Service, which we refer to herein as the "IRS," the trustee will treat the income and expenses of the trust for each quarter
as belonging to the trust unitholders of record on the quarterly record date. For federal income tax purposes, trust unitholders must take into account items of income, gain, loss, deduction and
credit consistent with their methods of accounting and without regard to the taxable year or accounting method employed by the trust and without regard to the quarter in which the trust makes
distributions related to those items to the trust unitholders. Variances between taxable income and cash distributions may occur. For example, the trustee could establish a reserve in one quarter
using funds that would be included in income in the quarter in which the reserve is created but may not result in a tax deduction or a distribution until a later quarter or possibly in a later taxable
year. Similarly, the trustee could also make a payment in one quarter that would be amortized for income tax purposes over several quarters. See "Federal Income Tax Matters."

Periodic Reports

The trustee files all required trust federal and state income tax and information returns. The trustee prepares and provides the tax information
that trust unitholders need to correctly report their share of the income and deductions of the trust. The trustee also causes to be prepared and filed

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reports
required to be filed under the Exchange Act and by the rules of any securities exchange or quotation system on which the trust units are listed or admitted to trading, and also causes the
trust to comply with the provisions of the Sarbanes-Oxley Act of 2002, including but not limited to, by establishing, evaluating and maintaining a system of internal control over financial reporting
in compliance with the requirements of Section 404 thereof.

Each
trust unitholder and his or her representatives may examine, for any proper purpose, during reasonable business hours, the records of the trust and the trustee.

Liability of Trust Unitholders

Under the Delaware Statutory Trust Act, trust unitholders are entitled to the same limitation of personal liability extended to stockholders of
private corporations for profit under the General Corporation Law of the State of Delaware. Courts in jurisdictions outside of Delaware, however, may not give effect to such limitation.

Voting Rights of Trust Unitholders

The trustee or trust unitholders owning at least 10% of the outstanding trust units may call meetings of trust unitholders. The trust is
responsible for all costs associated with calling a meeting of trust unitholders unless such meeting is called by the trust unitholders, in which case the trust unitholders are responsible for all
costs associated with calling such meeting of trust unitholders. Meetings must be held in such location as is designated by the trustee in the notice of such meeting. The trustee must send written
notice of the time and place of the meeting and the matters to be acted upon to all of the trust unitholders at least 20 days and not more than 60 days before the meeting. Trust
unitholders representing a majority of trust units outstanding must be present or represented by proxy to have a quorum. Each trust unitholder is entitled to one vote for each trust unit owned.

Unless
otherwise required by the trust agreement, a matter may be approved or disapproved by the vote of a majority of the trust units held by the trust unitholders at a meeting where
there is a quorum.
This is true even if a majority of the total trust units did not approve it. The affirmative vote of the holders of a majority of the outstanding trust units is required
to:



In
addition, certain amendments to the trust agreement may be made by the trustee without approval of the trust unitholders. The trustee must consent before all or any part of the trust
assets can be sold except in connection with the dissolution of the trust or limited sales directed by VOC Brazos in conjunction with its sale of underlying properties.

Duration of the Trust; Sale of the Net Profits Interest

The trust will remain in existence until the later to occur of (1) December 31, 2030 or (2) the time when 10.6 MMBoe (which
is the equivalent of 8.5 MMBoe in respect of the trust's right to receive 80% of the net proceeds from the underlying properties pursuant to the net profits interest) have been produced and sold. The
trust will dissolve prior to its termination if:



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Upon
dissolution, the trustee would sell all of the trust's assets, either by private sale or public auction, and distribute the net proceeds of the sale to the trust unitholders.

Computation of Net Proceeds

The provisions of the conveyance governing the computation of the net proceeds are detailed and extensive. The following information summarizes
the material information contained in the conveyance related to the computation of the net proceeds. For more detailed provisions concerning the net profits interest, please see the conveyance, which
is referenced as an exhibit to this Form 10-K.

Net Profits Interest

The net profits interest was conveyed to the trust by VOC Brazos on May 10, 2011 by means of a conveyance instrument that has been
recorded in the appropriate real property records in each county in Kansas and Texas where the oil and natural gas properties to which the underlying properties relate are located. The net profits
interest burdens the net interest owned by VOC Brazos in the underlying properties in existence as of May 10, 2011.

The
amounts paid to the trust for the net profits interest are based on the definitions of "gross proceeds" and "net proceeds" contained in the conveyance and described below. Under the
conveyance, net proceeds are computed quarterly, and 80% of the aggregate net proceeds attributable to a computation period will be paid to the trust on or before the 30th day of the month
following the computation period. VOC Brazos will not pay to the trust any interest on the net proceeds held by VOC Brazos prior to payment to the trust. The trustee will make distributions to trust
unitholders quarterly, if sufficient funds are available. See "Description of the Trust UnitsDistributions and Income Computations."

"Gross
proceeds" means the aggregate amount received by VOC Brazos from sales of oil and natural gas produced from the underlying properties (other than amounts received for certain
future non-consent operations). However, gross proceeds does not include consideration for the transfer or sale of any underlying property by VOC Brazos or any subsequent owner to any new owner. Gross
proceeds also does not include any amount for oil or natural gas lost in production or marketing or used by the owner of the underlying properties in drilling, production and plant operations. Gross
proceeds includes payments for future production if they are not subject to repayment in the event of insufficient subsequent production.

"Net
proceeds" means gross proceeds less the following:



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Certain
non-production revenues, including salvage value for equipment related to plugged and abandoned wells, as detailed in the conveyance, offset the costs outlined above in
calculating the net proceeds. If any excess amounts have not been used to offset costs at the time when the later to occur of (1) December 31, 2030 or (2) the time when 10.6 MMBoe
(which is the equivalent of 8.5 MMBoe in respect of the net profits interest) have been produced from the underlying properties and sold, then trust unitholders will not be entitled to receive the
benefit of such excess amounts.

During
each twelve-month period beginning on the later to occur of (1) December 31, 2027 and (2) the time when 9.8 MMBoe have been produced from the underlying
properties and sold (which is the equivalent of 7.8 MMBoe in respect of the net profits interest), which we refer to, in either case, as the "Capital Expenditure Limitation Date," the sum of the
development expenditures and amounts reserved for approved development expenditure projects for such twelve-month period may not exceed the Average Annual Capital Expenditure Amount. The "Average
Annual Capital Expenditure Amount" means the quotient of (x) the sum of the development expenditures and amounts reserved for approved development expenditure projects with respect to the three
twelve- month periods ending on the Capital Expenditure Limitation Date, divided by (y) three. Commencing on the Capital Expenditure Limitation Date, and each anniversary of the Capital
Expenditure Limitation Date thereafter, the Average Annual Capital Expenditure Amount will be increased by 2.5% to account for expected increased costs due to inflation.

As
is customary in the oil and natural gas industry, VOC Brazos pays an overhead fee to the VOC Operators to operate the underlying properties on behalf of VOC Brazos. The operating
activities include various engineering, accounting and administrative functions. The fee is based on a monthly charge per active operated well, which totaled $1.7 million paid to the VOC
Operators in each of 2017 and 2018 and $1.8 million paid in 2019 for all of the underlying properties for which VOC Brazos was

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designated
as the operator. The fee is adjusted annually and will increase or decrease each year based on changes in the Overhead Adjustment Index ("OAI") published by the Council of Petroleum
Accountants Society ("COPAS") for that year.

In
the event that the net proceeds for any computation period is a negative amount, the trust will receive no payment for that period, and any such negative amount plus accrued interest
at the prime rate will be deducted from gross proceeds in the following computation period for purposes of determining the net proceeds for that following computation period.

Gross
proceeds and net proceeds are calculated on a cash receipts and cash disbursements basis except that certain costs, primarily ad valorem taxes and expenditures of a material
amount, may be determined on an accrual basis.

Additional Provisions

If a controversy arises as to the sales price of any production, then for purposes of determining gross
proceeds:



The
trustee is not obligated to return any cash received from the net profits interest. Any overpayments that VOC Brazos makes to the trust due to adjustments to prior calculations of
net proceeds or otherwise will reduce future amounts payable to the trust until VOC Brazos recovers the overpayments plus interest at the prime rate.

The
conveyance generally permits VOC Brazos to transfer without the consent or approval of the trust unitholders all or any part of its interest in the underlying properties, subject to
the net profits interest. The trust unitholders are not entitled to any proceeds of a sale or transfer of VOC Brazos' interest unless certain conditions set forth in the following paragraph are
satisfied. Except in certain cases where the net profits interest is released, following a sale or transfer, the underlying properties will continue to be subject to the net profits interest, and the
net proceeds attributable to the transferred property will be calculated as part of the computation of net proceeds described in this Form 10-K.

In
addition, VOC Brazos may, without the consent of the trust unitholders, require the trust to release the net profits interest associated with any lease that accounts for less than or
equal to 0.25% of the total production from the underlying properties in the prior 12 months and provided that the net profits interest covered by such releases cannot exceed, during any
12-month period, an aggregate fair market value to the trust of $500,000. These releases will be made only in connection with a sale by VOC Brazos to a non-affiliate of the relevant underlying
properties and are conditioned upon the trust receiving an amount equal to the fair value to the trust of such net profits interest. Any net sales proceeds paid to the trust are distributable to trust
unitholders for the quarter in which they are received.

As
the designated operator of a property comprising the underlying properties, VOC Brazos may enter into farm-out, operating, participation and other similar agreements to develop the
property. VOC Brazos may enter into any of these agreements without the consent or approval of the trustee or any trust unitholder.

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VOC
Brazos and any transferee of an underlying property will have the right to abandon its interest in any well or property if it reasonably believes the well or property ceases to
produce or is not capable of producing in commercially paying quantities. In making such decisions, VOC Brazos or any transferee of an underlying property is required under the applicable conveyance
to operate, or to use commercially reasonable efforts to cause the operators of the underlying properties to operate these properties as would a reasonably prudent operator in the State of Kansas or
Texas under the same or similar circumstances would act if it were acting with respect to its own properties, disregarding the existence of the net profits interest as a burden on such property. Upon
termination of the lease, the portion of the net profits interest relating to the abandoned property will be extinguished.

VOC
Brazos must maintain books and records sufficient to determine the amounts payable for the net profits interest to the trust. Quarterly and annually, VOC Brazos must deliver to the
trustee a statement of the computation of the net proceeds for each computation period. The trustee has the right to inspect and copy the books and records maintained by VOC Brazos during normal
business hours and upon reasonable notice.

Federal Income Tax Matters

The following is a summary of certain U.S. federal income tax matters that may be relevant to trust unitholders. This summary is based upon
current provisions of the Internal
Revenue Code of 1986, as amended, which we refer to as the "Code," existing and proposed Treasury regulations thereunder and current administrative rulings and court decisions, all of which are
subject to changes that may or may not be retroactively applied. No attempt has been made in the following summary to comment on all U.S. federal income tax matters affecting the trust or the trust
unitholders.

The
summary is limited to trust unitholders who are individual citizens or residents of the United States. Accordingly, the following summary has limited application to domestic
corporations and persons subject to specialized federal income tax treatment.Each trust unitholder should consult his or her own tax advisor with respect to his or her
particular circumstances.

Classification and Taxation of the Trust

Tax counsel to the trust advised the trust at the time of formation that, for federal income tax purposes, in its opinion the trust will be
treated as a grantor trust and not as an unincorporated business entity. No ruling has been or will be requested from the IRS with respect to the federal income tax treatment of the trust, including
as to the status of the trust as a grantor trust for such purposes. Thus, no assurance can be provided that the tax treatment of the trust would be sustained by a court if contested by the IRS or
another taxing authority. The remainder of the discussion below is based on tax counsel's opinion, at the time of formation, that the trust will be classified as a grantor trust for federal income tax
purposes. As a grantor trust, the trust will not be subject to federal income tax at the trust level. Rather, each trust unitholder will be considered for federal income tax purposes to own its
proportionate share of the trust's assets directly as though no trust were in existence. The income of the trust is deemed to be received or accrued by the trust unitholder at the time such income is
received or accrued by the trust, rather than when distributed by the trust. Each trust unitholder will be subject to tax on its proportionate share of the income and gain attributable to the assets
of the trust and will be entitled to claim its proportionate share of the deductions and expenses attributable to the assets of the trust, subject to applicable limitations, in accordance with the
trust unitholder's tax method of accounting and without regard to the taxable year or accounting method employed by the trust.

The
trust will allocate items of income, gain, loss, deductions and credits to trust unitholders based on record ownership at each quarterly record date. It is possible that the IRS or
another taxing authority could disagree with this allocation method and could assert that income and deductions of the

12

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Table of Contents

trust
should be determined and allocated on a daily, prorated or other basis, which could require adjustments to the tax returns of the trust unitholders affected by this issue and result in an
increase in the administrative expense of the trust in subsequent periods.

Classification of the Net Profits Interest

Tax counsel to the trust also advised the trust at the time of formation that, for federal income tax purposes, based upon representations made
by VOC Brazos regarding the expected economic life of the underlying properties and the expected duration of the net profits interest, in its opinion the net profits interest should be treated as a
"production payment" under Section 636 of the Code or otherwise as a debt instrument. On the basis of that advice, the trust will treat the net profits interest as indebtedness subject to
Treasury regulations applicable to contingent payment debt instruments, and by purchasing trust units, a trust unitholder will agree to be bound by the trust's application of those regulations,
including the trust's determination of the rate at which interest will be deemed to accrue on the net profits interest. No assurance can be given that the IRS or another taxing authority will not
assert that the net profits interest should be treated differently. Any such different treatment could affect the amount, timing and character of income, gain or loss in respect of an investment in
trust units and could require a trust unitholder to accrue income at a rate different than that determined by the trust.

Widely Held Fixed Investment Trust Reporting Information

The trustee assumes that some trust units are held by middlemen, as such term is broadly defined in Treasury regulations (and includes
custodians, nominees, certain joint owners, and brokers holding an interest for a custodian in street name). Therefore, the trustee considers the trust to be a non-mortgage widely held fixed
investment trust ("WHFIT") for U.S. federal income tax purposes. The Bank of New York Mellon Trust Company, N.A., 601 Travis Street, Floor 16, Houston, Texas 77002, telephone
number 1-855-802-1094, is the representative of the trust that will provide tax information in accordance with applicable Treasury regulations governing the information reporting requirements
of the trust as a WHFIT. Notwithstanding the foregoing, the middlemen holding trust units on behalf of trust unitholders, and not the trustee of the trust, are solely responsible for complying with
the information reporting requirements under the Treasury regulations with respect to such trust units, including the issuance of IRS Forms 1099 and certain written tax statements. Trust
unitholders whose trust units are held by middlemen should consult with such middlemen regarding the information that will be reported to them by the middlemen with respect to the trust units. Any
generic
tax information provided by the trustee of the trust is intended to be used only to assist trust unitholders in the preparation of their federal and state income tax returns.

Available Trust Tax Information

In compliance with the reporting requirements for WHFITs and the dissemination of trust tax reporting information, the trustee provides a
generic tax information reporting booklet that is intended to be used only to assist unitholders in the preparation of their 2018 federal and state income tax returns. The projected payment schedule
for the net profits interest is included with the tax information booklet. This tax information booklet can be obtained at http://voc.investorhq.businesswire.com.

Description of the Underlying Properties

The underlying properties consist of VOC Brazos' net interests in substantially all of its oil and natural gas properties after deduction of all
royalties and other burdens on production thereon as of May 10, 2011, which properties are located in the states of Kansas and Texas. The VOC Operators are currently the operators or contract
operators of substantially all of the underlying properties.

13

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Table of Contents

VOC
Brazos' interests in the properties comprising the underlying properties require VOC Brazos to bear its proportionate share along with the other working interest owners of the costs
of development and operation of such properties. The underlying properties are burdened by non-working interests owned by third parties consisting primarily of overriding royalty and royalty interests
retained by the owners of the land subject to the working interests. These landowners' royalty interests typically entitle the landowner to receive 12.5% of the revenue derived from oil and natural
gas production resulting from wells drilled on the landowner's land, without any deduction for drilling costs or other costs related to production of oil and natural gas. A working interest percentage
represents a working interest owner's proportionate ownership interest in a property in relation to all other working interest owners in that property, whereas a net revenue interest percentage is a
working interest owner's percentage of production after reducing such percentage by the percentage of burdens on such production such as royalties and overriding royalties.

Based
on the reserve report, the net profits interest would entitle the trust to receive net proceeds from the sale of production of not less than 10.6 MMBoe of proved reserves
attributable to the underlying properties expected to be produced over the term of the trust. The trust is entitled to receive 80% of the net proceeds from the sale of production of oil and natural
gas attributable to the underlying properties that are produced during the term of the trust, whereas total reserves as reflected on the summary reserve reports and attributable to the underlying
properties include all reserves expected to be economically produced during the economic life of the properties.

In
general, the producing wells included in the underlying properties have stable production profiles and their production is long-lived. Based on the reserve report, annual production
from the underlying properties is expected to decline at an average annual rate of 8.4% over the next 20 years assuming no additional development drilling or other development expenditures are
made on the underlying properties after 2022. VOC Brazos expects total development expenditures for the underlying properties through December 31, 2022 will be approximately
$32.7 million, which it expects will partially offset the natural decline in production otherwise expected to occur with respect to the underlying properties as described in more detail below.

Reserves

The engineering department of Vess Oil Corporation, who serves as contract operator for VOC Brazos, maintains oversight and compliance
responsibility for the internal reserve estimate process and, in accordance with internal policies and procedures, provides appropriate data to independent third party engineers for the annual
estimation of year-end reserves. This engineering department accumulates historical production data for the underlying properties, calculates historical lease operating expenses and differentials,
updates working interests and net revenue interests, and obtains logs, 3-D seismic and other geological and geophysical information. This data is forwarded to Cawley, Gillespie &
Associates, Inc., which we refer to as "CG&A," thereby allowing CG&A to prepare estimated proved reserves in their entirety based on such data.

Estimates
of the proved oil and gas reserves attributable to the trust as of December 31, 2017, 2018 and 2019 are based on reports prepared by CG&A. CG&A has been in business
since 1961 and serves many organizations and individuals in the petroleum industry, including owners and operators of oil and gas properties, exploration groups, planners, and professionals in
investment and finance. One of the principal businesses of CG&A is providing detailed assessment of producing reservoirs. CG&A is an independent firm of petroleum engineers, geologists, geophysicists
and petrophysicists and does not own an interest in the underlying properties and is not employed on a contingent basis. Mr. W. Todd Brooker, Senior Vice President, is the technical person at
CG&A who is primarily responsible for overseeing CG&A's preparation of the reserve estimates. Mr. Brooker is a graduate of the University of Texas at Austin with a Bachelor of Science degree in
Petroleum Engineering and has 28 years of

14

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Table of Contents

experience
in petroleum engineering. He is a licensed professional engineer in the State of Texas (License #83462).

Oil
and gas proved reserves are disclosed by significant geographic area, using the 12-month average beginning-of-month price for the year, based on the use of reliable technologies to
estimate proved oil and gas reserves, if those technologies have been demonstrated to result in reliable conclusions about reserves volumes. Reserve and related information for 2017, 2018 and 2019 is
presented consistent with these requirements.

Proved Reserves of VOC Energy Trust.The following table sets forth, as of December 31, 2019, estimated proved reserves
attributable to the
trust derived from the reserve report. A summary of the reserve report is included below.



Oil
(MBbls)

Natural
gas
(MMcf)

Oil
equivalents
(MBoe)Proved Developed


3,178


1,561


3,438Proved Undeveloped


985


390


1,050Total Proved


4,163


1,951


4,488


Information
concerning historical changes in net proved reserves attributable to the trust, and the calculation of the standardized measure of discounted future net revenues related
thereto, is contained in Note J to the financial statements of the trust included in this Form 10-K. VOC Brazos has not filed reserve estimates covering the underlying properties with
any other federal authority or agency.

15

---



Table of Contents

The
following table summarizes the changes in estimated proved reserves of the trust for the periods indicated.



VOC Energy TrustOil
(MBbl)

Natural
Gas
(MMcf)

Oil
Equivalents
(MBoe)Proved Reserves:Balance, December 31, 2016


4,838


2,021


5,176Revisions of previous estimates


(407
)

(46
)

(415
)Production(1)


(431
)

(268
)

(476
)​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2017


4,000


1,707


4,285Revisions of previous estimates


809


824


946Production(1)


(420
)

(253
)

(462
)​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2018


4,389


2,278


4,769Revisions of previous estimates


263


(40
)

256Production(1)


(489
)

(287
)

(537
)​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2019


4,163


1,951


4,488​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Proved Developed Reserves:Balance, December 31, 2016


3,667


1,311


3,886​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2017


3,343


1,320


3,564​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2018


3,416


1,574


3,680​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2019


3,178


1,561


3,438​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Proved Undeveloped Reserves:Balance, December 31, 2016


1,172


711


1,290Proved undeveloped reserves converted to proved developed by drilling


0


0


0Additional proved undeveloped reserves added


377


232


416Revisions of previous estimates


(892
)

(556
)

(985
)​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2017


657


387


721Proved undeveloped reserves converted to proved developed by drilling


(6
)

0


(6
)Additional proved undeveloped reserves added


321


0


321Revisions of previous estimates


0


317


53​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2018


972


704


1,089Proved undeveloped reserves converted to proved developed by drilling


(165
)

0


(165
)Additional proved undeveloped reserves added


401


0


401Revisions of previous estimates


(223
)

(314
)

(275
)​
​
​
​
​
​
​
​
​
​
​Balance, December 31, 2019


985


390


1,050​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


(1)Reflects
sales volumes produced during the noted year regardless whether royalty payments thereon have been remitted to the Trust by VOC Brazos.


None
of the proved undeveloped reserves have remained undeveloped for five years or more after they were initially disclosed as proved undeveloped reserves.

The
reserves above represent the trust's 80% net profits interest in the underlying properties for the remainder of the term of the trust.

16

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Table of Contents

The
following table sets forth the estimates of total proved reserves and forecasts of economics attributable to the underlying properties as of December 31, 2019 for the
remainder of the term of the trust, as presented in the summary prepared by CG&A of its reserve report as of December 31, 2019 for the trust. The estimates of proved reserves have not been
filed with or included in reports to any federal authority or agency. The discounted cash flow value shown in the table is not intended to represent the current market value of the trust's estimated
oil and natural gas reserves.



Proved
Developed
Producing

Proved
Developed
Non-Producing

Proved
Undeveloped

Total
Proved(dollars in thousands)Net ReservesOil (MBbl)


3,870.7


101.8


1,230.8


5,203.3Gas (MMcf)


1,888.9


0.0


487.3


2,376.2NGL (MBbl)


16.1


0.0


0.0


16.1RevenueOil

$
203,211.8

$
5,449.1

$
66,794.3

$
275,455.2Gas


3,625.7


0.0


890.8


4,516.4NGL


242.4


0.0


0.0


242.4Severance Taxes


5,425.4


211.0


2,969.2


8,605.6Ad Valorem Taxes


5,691.8


188.0


2,267.0


8,146.7Operating Expenses


81,868.5


155.4


2,523.8


84,547.7Workover Expenses


10,515.1


0.0


0.0


10,515.1COPAS Overhead


12,715.3


58.6


872.8


13,646.8Other Deductions


983.0


150.3


1,549.5


2,682.7Investments


5,852.3


391.8


26,472.1


32,716.380% Net Profits Interest Net Operating Income (NPI)(1)

$
67,222.8

$
3,435.2

$
24,824.5

$
95,482.580% NPI(2)

$
46,024.4

$
2,428.7

$
13,676.0

$
62,129.1


(1)Before
interest and taxes.(2)Discounted
at 10%.


The
net profits interest entitles the trust to receive 80% of the net proceeds attributable to the underlying properties. The net profits interest will terminate on the later to occur of
(1) December 31, 2030, or (2) the time when 10.6 MMBoe have been produced from the underlying properties and sold, and the trust will soon thereafter wind up its affairs and
terminate. Based on the reserve report for the
year ended December 31, 2019, CG&A estimated that the trust would terminate December 31, 2030 based on the calculation that 10.6 MMBoe would have been produced from the underlying
properties and sold (which amount is the equivalent of 8.5 MMBoe in respect of the trust's right to receive 80% of the net proceeds from the underlying properties pursuant to the net profits interest)
prior to this date.

Oil
and gas prices were adjusted to a WTI Cushing oil price of $55.69 per Bbl and a Henry Hub natural gas price of $2.578 per MMBtu. As specified by the SEC, these prices are 12-month
averages based upon the price on the first day of each month during 2019. The price adjustments were based on oil price differentials forecast at $4.75 per Bbl for the Kansas
underlying properties, $1.00 per Bbl for the Kurten (Woodbine) Field wells in Texas, $2.65 per Bbl for the Sand Flat Unit and Hitts Lake North Field wells in Texas
and $1.00 per Bbl for all other Texas underlying properties. Oil price differentials were not escalated. Gas price differentials varied by property as provided by VOC Brazos and were
also not escalated. NGL price differentials were applied at 27% of the WTI oil price and not escalated. The base price differentials may include local basis differentials, transportation, gas

17

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Table of Contents

shrinkage,
gas heating value (BTU content) and/or crude quality and gravity corrections. Operating expenses, workover expenses, COPAS overhead charges and investments were forecast on a per property
basis as furnished by VOC Brazos. Expenses and investments were held constant in accordance with SEC rules and guidelines. For Kansas properties, severance taxes were applied at 4.33 percent of
revenue until exemption levels were forecasted to be reached. The severance tax rate was dropped to zero when a rate of 6 Bbl/day per well was reached or when gross gas production value reached
$87/day per gas well. Severance taxes were forecasted at 4.6 percent of oil revenue and 7.5 percent of gas revenue for properties in Texas. Ad valorem taxes for Kansas properties were
applied at 6.0 percent of revenue but dropped to 2.0 percent as properties qualified for the tax exemption. Kansas oil and gas conservation taxes were included within the severance tax
estimates. Ad valorem taxes were applied at 3.29 percent of revenue (after severance taxes) for the Texas properties.

The
estimates of proved oil and natural gas reserves attributable to the underlying properties are based on estimates prepared by CG&A. Rules and guidelines established by the SEC
regarding the present value of future net revenues were used to prepare these reserve estimates. Oil and natural gas reserve engineering is a subjective process of estimating underground accumulations
of oil and natural gas that cannot be measured in an exact manner, and estimates of other engineers might differ materially from those included in the report. The accuracy of any reserve estimate is a
function of the quality of available data and engineering, and estimates may justify revisions based on the results of drilling, testing, and production activities. Accordingly, reserve estimates are
inherently imprecise and should not be construed as representing the actual quantities of future production or cash flows to be realized from oil and natural gas properties or the fair market value of
such properties.

Producing Acreage and Well Counts

For the following data, "gross" refers to the total wells or acres in which VOC Brazos owns a working interest and "net" refers to gross wells
or acres multiplied by the percentage working interest owned by VOC Brazos. Although many of VOC Brazos' wells produce both oil and natural gas, a well is categorized as an oil well or a natural gas
well based upon the ratio of oil to natural gas production.

The
underlying properties are interests in developed properties located in oil and natural gas producing regions of Kansas and Texas. The following is a summary of the approximate
acreage of the underlying properties at December 31, 2019.



Gross

Net(acres)Developed Acreage:Kansas


61,119


35,391.7Texas


23,693


16,841.3​
​
​
​
​
​
​
​Total


84,812


52,233.0​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​Undeveloped Acreage:





​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​


The
following is a summary of the producing wells on the underlying properties as of December 31, 2019:



Operated Wells

Non-
Operated
Wells

TotalGross

Net

Gross

Net

Gross

NetOil


729


462.2


33


7.4


762


469.6Natural gas


11


5.6


3


0.7


14


6.3​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​Total


740


467.8


36


8.1


776


475.9​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​


18

---





Table of Contents

The following is a summary of the number of developmental wells drilled by VOC Brazos on the underlying properties during the last three years. VOC Brazos did not
drill any exploratory wells during the periods presented.



Year Ended December 31,2017

2018

2019Gross

Net

Gross

Net

Gross

NetCompleted:Oil wells


2


1.9


2


0.7


9


3.6Natural gas wells

















Non-productive

















​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​Total


2


1.9


2


0.7


9


3.6​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​


In
2018, two Hawkwood Earning Wells (as defined below) were drilled and completed at no cost to VOC Brazos, one MD Earning Well (as defined below) was drilled and is waiting on
completion at no cost to VOC Brazos, and one well was drilled with capital expenditures of $201,253 and is waiting on completion.

In
2019, the remaining two Hawkwood Earning Wells were drilled and completed at no cost to VOC Brazos. An additional four Hawkwood Development Wells were drilled and completed under the
joint venture agreement. The one MD Earning Well is still waiting on completion. In addition, two non-joint venture agreement wells were drilled and completed and the well awaiting completion at
December 31, 2018 was completed. Total capital expenditures for 2019 for these wells was $6,429,767. VOC Brazos continues to develop further proved undeveloped reserves pursuant to its planned
development and workover program. See "Item 7. Trustee's Discussion and Analysis of Financial Condition and Results of OperationsPlanned Development and Workover Program" for more
information regarding VOC Brazos' joint venture agreements with Hawkwood Energy East Texas, LLC and MD America Energy, LLC and the Hawkwood Earning Wells, Hawkwood Development Wells and
MD Earning Wells (each as defined therein).

The
following table shows the average sales prices per Bbl of oil and Mcf of natural gas produced and the production costs and production and property taxes per Boe received by the trust
from the underlying properties.



Year Ended December 31,2017

2018

2019Sales prices:Oil (per Bbl)

$
45.26

$
59.18

$
56.11Natural gas (per Mcf)

$
2.78

$
3.26

$
2.90Lease operating expense (per Boe)

$
19.41

$
21.40

$
20.29Production and property taxes (per Boe)

$
2.59

$
3.56

$
2.81


19

---



Table of Contents

Major Producing Areas

The following table summarizes the estimated proved reserves by operating area attributable to the underlying properties according to the
reserve report and the corresponding pre-tax PV-10 value as of December 31, 2019.



Proved Reserves(1)Operating Area

Oil
(MBbls)

Natural
Gas
(MMcf)

Total
(MBoe)

% of
Total
Reserves

Pre-Tax
PV-10%
Value(2)

% of
Pre-Tax
PV-10%
Value(In Thousands)Kansas (157 Fields)Fairport


652


0


652


7.3
%
$
7,774


8.8
%Marcotte


244


0


244


2.7


3,156


3.6Chase-Silica


233


0


233


2.6


2,746


3.1Mueller


118


0


118


1.3


1,699


1.9Codell


106


0


106


1.2


1,566


1.8Bindley


132


0


132


1.5


1,143


1.3Grison SW


36


0


36


0.4


748


0.8Rosa Northwest


48


0


48


0.5


717


0.8Zurich


48


0


48


0.5


693


0.8Wesley


50


0


50


0.6


672


0.8Otis-Albert


33


0


33


0.4


453


0.5Diebolt


82


0


82


0.9


446


0.5Fabricius


46


0


46


0.5


419


0.5Other


1,221


659


1,331


15.1


6,959


7.7​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​Kansas Total


3,049


659


3,159


35.5


29,191


32.9Texas (5 Fields)Kurten


3,941


3,243


4,482


50.4


45,276


51.0Hitts Lake North


654


0


654


7.3


10,348


11.7Sand Flat


567


3


568


6.4


3,422


3.9Other


24


59


33


0.4


446


0.5​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​Texas Total


5,186


3,305


5,737


64.5


59,492


67.1​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​Total


8,235


3,964


8,896


100.0
%
$
88,683


100.0
%​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​


(1)In
accordance with the rules and regulations promulgated by the SEC, the proved reserves presented above were determined using the twelve-month unweighted arithmetic
average of the first-day-of-the-month price for the period from January 1, 2019 through December 1, 2019 and were held constant for the life of the properties. This yielded a price for
oil of $55.69 per barrel and a price for natural gas of $2.578 per MMBtu.(2)Because
the trust bears no federal tax expense and taxable income is passed through to the unitholders of the trust, no provision for federal or state income taxes
is included in the summary reserve reports and therefore the standardized measure of discounted future net cash flows attributable to the underlying properties is equal to the pre-tax PV-10 value.
PV-10 may not be considered a GAAP financial measure as defined by the SEC and is derived from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP
financial measure. The pre-tax PV-10 value and the standardized measure of discounted future net cash flows do not purport to present the fair value of the oil and natural gas reserves attributable to
underlying properties.


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Kansas.As of December 31, 2019, proved reserves attributable to the portion of the Kansas underlying properties were approximately
3.2 MMBoe
and were located in three primary areas: Central Kansas Uplift, Western Kansas and South Central Kansas. As of December 31, 2019, the VOC Operators operated 96.4% of the total proved reserves
attributable to the Kansas underlying properties based on PV-10 value.

The
major fields in the Central Kansas Uplift include Fairport Field, Marcotte Field and Chase-Silica Field, all of which are producing primarily from the Arbuckle and Lansing Kansas
City zones. The major fields in Western Kansas include the Bindley, Griston SW and Rosa Northwest fields, which are producing primarily from the Mississippian, Morrow, Lansing Kansas City and Cherokee
zones. The major fields in South Central Kansas include the Gerberding, Spivey Grabs and Alford fields, which are producing primarily from the Mississippian, Simpson and Lansing Kansas City zones.

Texas.As of December 31, 2019, proved reserves attributable to the Texas underlying properties were approximately 5.7 MMBoe and
are located
in two areas: Central Texas and East Texas. As of December 31, 2019, the VOC Operators operated approximately 99.4% of the total proved reserves attributable to the Texas underlying properties
based on PV-10 value.

Central
Texas production is attributable to the Kurten Woodbine Unit, which is producing primarily from the EagleBine Interval, Buda and Georgetown zones. East Texas properties include
the Sand Flat field and Hitts Lake North field, each of which is producing primarily from the Paluxy and Chisum zones.

The
following table summarizes the production by product for the years indicated for the only field, Kurten, that contains 15% or more of total proved reserves attributable to the
underlying properties from the above table:



Oil
(MBbl)

Natural
Gas
(MMcf)

Oil
Equivalents
(MBoe)2017


96


136


1192018


95


141


1192019


169


193


201


Marketing and Post-Production Services

Pursuant to the terms of the conveyance that created the net profits interest, VOC Brazos has the responsibility to market, or cause to be
marketed, the oil and natural gas production attributable to the underlying properties. The terms of the conveyance that created the net profits interest do not permit VOC Brazos to charge any
marketing fee when determining the net proceeds upon which the net profits interest is calculated. As a result, the net proceeds to the trust from the sales of oil and natural gas production from the
underlying properties are determined based on the same price that VOC Brazos receives for oil and natural gas production attributable to VOC Brazos' remaining interest in the underlying properties.

Texas
is a mature oil producing state with a well-developed crude oil refining, transportation and marketing infrastructure. According to the Texas Railroad Commission, more than 5,000
operators reported aggregate oil production of approximately 1.520 billion barrels for the State of Texas during 2019. There were 30 operating oil refineries located in Texas in 2019 with
combined capacity to refine over 5.79 million barrels of oil per day. With oil production in the state of Texas averaging approximately 4.55 million barrels of oil per day, Texas
refineries are net importers of crude oil. As a result, oil producers in Texas benefit from competitive marketing conditions for their oil production as a result of the high demand from the crude oil
marketing companies and refineries located in Texas.

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Kansas
is a mature oil producing state with a well-developed transportation infrastructure for crude oil transportation and marketing. According to the Kansas Geological Society, more
than 1,900 operators reported aggregate oil production of approximately 33.0 million barrels for the state of Kansas in 2019. Kansas is home to three oil refineries located in McPherson, El
Dorado and Coffeyville, Kansas. These refineries have combined capacity to refine approximately 390,000 barrels of oil per day. With oil production in the state of Kansas averaging approximately
91,000 barrels of oil per day, Kansas is a net importer of crude oil. As a result, Kansas operators benefit from the competitive marketing conditions for their oil production as a result of the high
demand from the refineries located in Kansas.

Vess
Oil Corporation generally sells production from the underlying properties to several purchasers, including MV Purchasing, LLC, an affiliate of VOC Brazos, which we refer to
as "MV Purchasing," under short-term arrangements using market sensitive pricing. These sales to purchasers are under terms ranging from one month to six months, using market sensitive pricing. Five
purchasers, including MV Purchasing, have been purchasing substantially all of the crude oil production, and a substantial portion of the crude oil production may continue be acquired by one or more
single purchasers. For the years ended December 31, 2017, 2018 and 2019, MV Purchasing purchased 38%, 38% and 32%, respectively, of the production sold from the underlying properties. VOC
Brazos does not believe that loss of any of these parties as a purchaser would have a material adverse impact on the business of VOC Brazos, as substitute purchasers are generally available; however,
a purchaser's failure to pay for purchased crude oil could have a significant adverse impact on VOC Brazos' business.

Oil
production is typically transported by truck from the field to the closest gathering facility or refinery. VOC Brazos sells the majority of the oil production from the underlying
properties under short-term arrangements using market sensitive pricing. The price received by VOC Brazos for the oil production from the underlying properties is usually based on the NYMEX price
applied to equal daily quantities on the month of delivery, which price is then reduced for differentials based upon delivery location and oil quality. The average differential for oil production
during the years ended December 31, 2017, 2018 and 2019 received by the trust from the underlying properties was $3.78, $3.05 and $2.48 per barrel, respectively.

All
natural gas produced by VOC Brazos is marketed and sold to third-party purchasers. The natural gas is sold on a contract basis and, in all but two cases, the contracts are in their
secondary terms and are on a month-to-month basis. In all cases, the contract price is based on a percentage of a published regional index price, after adjustments for Btu content, transportation and
related charges.

Vess
Oil Corporation has committed to sell all of its natural gas production attributable to the Kurten Woodbine Unit in Texas to ETC Texas Pipeline, Ltd., on a year-to-year basis
effective October 1, 2014. Vess Oil Corporation has also committed to sell to ONEOK Field Services Company, L.L.C. all of its natural gas production attributable to three wells in Kingman and
Barber Counties, Kansas on a month-to-month basis effective as of August 31, 2015.

VOC
Brazos does not have any volume commitments or take or pay arrangements.

Sale and Abandonment of Underlying Properties

VOC Brazos and any transferee of any of an underlying property will have the right to abandon its interest in any well or property if it
reasonably believes a well or property ceases to produce or is not capable of producing in commercially paying quantities. To reduce the potential conflict of interest between VOC Brazos and the trust
in determining whether a well is capable of producing in commercially paying quantities, VOC Brazos is required under the applicable conveyance to use commercially reasonable efforts to cause the
operators of the underlying properties to operate these properties as would a reasonably prudent operator acting with respect to its own properties, disregarding the existence of the net profits
interest as a burden on such property. Upon termination of

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the
lease, the portion of the net profits interest relating to the abandoned property will be extinguished. For the years ended December 31, 2017, 2018 and 2019, VOC Brazos plugged and
abandoned 11, 17 and 13 wells, respectively, located on leases within the underlying properties based on its determination that such wells could no longer produce oil or natural gas in commercially
economic quantities.

VOC
Brazos generally may sell all or a portion of its interests in the underlying properties, subject to and burdened by the net profits interest, without the consent of the trust
unitholders. In addition, VOC Brazos may, without the consent of the trust unitholders, require the trust to release the net profits
interest associated with any lease that accounts for less than or equal to 0.25% of the total production from the underlying properties in the prior 12 months and provided that the net profits
interest covered by such releases cannot exceed, during any 12-month period, an aggregate fair market value to the trust of $500,000. These releases will be made only in connection with a sale by VOC
Brazos to a non-affiliate of the relevant underlying properties and are conditioned upon the trust receiving an amount equal to the fair value to the trust of such net profits interest. Any net sales
proceeds paid to the trust are distributable to trust unitholders for the quarter in which they are received. No underlying properties were sold, and therefore no net sales proceeds were paid to the
trust for its share of interest in any such underlying properties, during 2018 or 2019. VOC Brazos has not identified any of the underlying properties for sale as of December 31, 2019.

Title to Properties

The underlying properties are subject to certain burdens that are described in more detail below. To the extent that these burdens and
obligations affect VOC Brazos' rights to production and the value of production from the underlying properties, they have been taken into account in calculating the trust's interests and in estimating
the size and the value of the reserves attributable to the underlying properties.

VOC
Brazos' interests in the underlying properties are typically subject, in one degree or another, to one or more of the following:



VOC
Brazos has informed the trustee that VOC Brazos believes that the burdens and obligations affecting the underlying properties are conventional in the industry for similar properties.
VOC Brazos

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also
has informed the trustee that VOC Brazos believes that the existing burdens and obligations do not, in the aggregate, materially interfere with the use of the underlying properties and do not
materially adversely affect the value of the net profits interest.

VOC
Brazos recorded the conveyance of the net profits interest in Kansas and Texas in the real property records in each Kansas or Texas county in which the underlying properties are
located. Although under Texas law it is well-established that the recording in the appropriate real property records of an interest such as the net profits interest constitutes the conveyance of a
fully vested real property interest to the trust, the law in Kansas is less certain. VOC Brazos and the trust believe that the recording in the appropriate real property records in Kansas of the net
profits interest should constitute the conveyance of a fully vested real property interest, interests in hydrocarbons in place or to be produced or a production payment as such is defined under the
United States Bankruptcy Code. In a bankruptcy of VOC Brazos, creditors of VOC Brazos would be able to claim the net profits interest as an asset of the bankruptcy estate to satisfy obligations to
them if the conveyance of the net profits interest did not constitute the conveyance of a real property interest or interests in hydrocarbons in place or to be produced under applicable state law or a
production payment, in which case the trust would be an unsecured creditor of VOC Brazos at risk of losing the entire value of the net profits interest to senior creditors.

VOC
Brazos believes that its title to the underlying properties is, and the trust's title to the net profits interest is, good and defensible in accordance with standards generally
accepted in the oil and gas industry, subject to such exceptions as are not so material to detract substantially from the use or value of such properties or royalty interests. Please see
"Item 1A. Risk FactorsThe trust units may lose value as a result of title deficiencies with respect to the underlying properties."

Competition and Markets

The oil and natural gas industry is highly competitive. VOC Brazos competes with major oil and natural gas companies and independent oil and
natural gas companies for oil and natural gas, equipment, personnel and markets for the sale of oil and natural gas. Many of these competitors are financially stronger than VOC Brazos, but even
financially troubled competitors can affect the market because of their need to sell oil and natural gas at any price to attempt to maintain cash flow. The trust is subject to the same competitive
conditions as VOC Brazos and other companies in the oil and natural gas industry.

Oil
and natural gas compete with other forms of energy available to customers, primarily based on price. These alternate forms of energy include electricity, coal and fuel oils. Changes
in the availability or price of oil, natural gas or other forms of energy, as well as business conditions, conservation, legislation, regulations and the ability to convert to alternate fuels and
other forms of energy may affect the demand for oil and natural gas.

Future
price fluctuations for oil and natural gas will directly impact trust distributions, estimates of reserves attributable to the trust's interests and estimated and actual future
net revenues to the trust. In
view of the many uncertainties that affect the supply and demand for oil and natural gas, neither the trust nor VOC Brazos can make reliable predictions of future oil and natural gas supply and
demand, future product prices or the effect of future product prices on the trust.

Regulation

The production of oil and gas from the underlying properties is affected by many state and federal regulations with respect to allowable rates
of production, drilling permits, well spacing, marketing, environmental matters and pricing. Future regulations could change allowable rates of production or the manner in which oil and gas operations
may be lawfully conducted.

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Historically, the transportation and sale for resale of natural gas in interstate commerce has been regulated by the Federal Energy Regulatory
Commission, or FERC, under the Natural Gas Act of 1938, or NGA, the Natural Gas Policy Act of 1978, or NGPA, and regulations issued under those statutes. Over the last two decades, the FERC has issued
orders and adopted regulations resulting in a restructuring of the natural gas industry. The principal elements of this restructuring were the requirement that interstate pipelines separate, or
"unbundle," into individual components the various services offered on their systems, with all transportation services to be provided on a non-discriminatory basis, and the prohibition against an
interstate pipeline providing gas sales services except through separately organized affiliates. In various rulemaking proceedings following its initial unbundling requirement, the FERC has refined
its regulatory program applicable to interstate pipelines in various respects, and it has announced that it will continue to monitor these and other regulations to determine whether further changes
are needed. In addition to rulemaking proceedings, the FERC establishes new policies and regulations through policy statements and adjudications of individual pipeline matters. Further, additional
changes to regulations may occur based on actions taken by the United States Congress and/or the courts.

In
the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at market prices, Congress
could reenact price controls in the future. Deregulation of wellhead natural gas sales began with the enactment of the
NGPA and culminated in adoption of the Natural Gas Wellhead Decontrol Act which removed all price controls affecting wellhead sales of natural gas effective January 1, 1993.

Sales
of crude oil, condensate, and natural gas liquids are not currently regulated and are made at negotiated prices. Nevertheless, Congress could reenact price controls in the future.
Sales of crude oil are affected by the availability, terms and cost of transportation. The transportation of oil in common carrier pipelines is subject to rate and access regulation. The FERC
regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. In general, interstate oil pipeline rates must be just and reasonable and may not be unduly discriminatory or
confer any undue preference upon any shipper. Rates generally are cost-based, although settlement rates agreed to by all shippers are permitted and market-based rates may be permitted in certain
circumstances.

Although
the price at which VOC Brazos sells oil and natural gas is not currently subject to federal rate regulation and, for the most part, is not subject to state regulation, with
regard to physical sales of natural gas and oil, VOC Brazos is required to observe anti-market manipulation laws and related regulations enforced by the FERC and/or the Commodity Futures Trading
Commission, or the CFTC, and the Federal Trade Commission, or FTC. If VOC Brazos were to violate the anti-market manipulation laws and regulations, VOC Brazos could also be subject to related
third-party damage claims by, among others, sellers, royalty owners and taxing authorities.

As
to these various developments, VOC Brazos has advised the trust that the on-going and evolving nature of these regulatory initiatives makes it impossible to predict their ultimate
impact on the prices, markets or terms of sale of natural gas related to the trust.



In general, the jurisdictions in which royalty properties are located have statutory provisions regulating the production and sale of crude oil
and natural gas. The regulations often require permits for the drilling of wells but extend also to the spacing of wells, the prevention of waste of oil and gas resources, the rate of production,
prevention and clean-up of pollution and other matters.

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General.The operations of the underlying properties are subject to stringent and complex federal, regional, state and local laws and
regulations
governing environmental protection as well as the discharge of materials into the environment. These laws and regulations may impose significant obligations on VOC Brazos' operations, including
requirements to, among other things:



Failure
to comply with environmental laws and regulations may result in the assessment of administrative, civil and criminal sanctions, including monetary penalties, the imposition of
investigatory and remedial obligations, and the issuance of injunctions limiting or prohibiting some or all of VOC Brazos' operations. Moreover, these laws, rules and regulations may restrict the rate
of oil and natural gas production below the rate that would otherwise be possible. The regulatory burden on the oil and natural gas industry increases the cost of doing business in the industry and
consequently affects profitability. VOC Brazos believes that it is in substantial compliance with all existing environmental laws and regulations applicable to its current operations and that its
continued compliance with existing requirements will not have a material adverse effect on the cash distributions to the trust unitholders. However, the clear trend in environmental regulation is to
place more restrictions and limitations on activities that may affect the environment, and thus, any changes in environmental laws and regulations or re-interpretation of enforcement policies that
result in more stringent and costly emission or discharge limits or waste handling, disposal or remediation obligations could have a material adverse effect on VOC Brazos' development expenditures,
results of operations and financial position. VOC Brazos may be unable to pass on those increases to its customers.

The
following is a summary of the more significant existing environmental, health and safety laws and regulations, each as amended from time to time, to which VOC Brazos' business
operations are subject:

Hazardous substance and wastes.The Comprehensive Environmental Response, Compensation and Liability Act, or "CERCLA," also known as
the Superfund
law, and comparable state laws impose liability without regard to fault or the legality of the original conduct on certain classes of persons who are considered to be responsible for the release of a
"hazardous substance" into the environment. Under CERCLA, these "responsible persons" may include the owner or operator of the site where the release occurred, and entities that transport or disposed
or arranged for the transport or disposal of hazardous substances released at the site. These responsible persons may be subject to joint and several, strict liability for the costs of cleaning up the
hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. CERCLA also authorizes the U.S. Environmental
Protection Agency, or "EPA," and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons
the costs they incur. It is not uncommon for neighboring landowners and other third-parties to file claims for personal injury and property damage

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allegedly
caused by the hazardous substances released into the environment. VOC Brazos generates materials in the course of its operations that may be regulated as hazardous substances.

The
Resource Conservation and Recovery Act, or "RCRA," and comparable state laws regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and
non-hazardous wastes. Under the auspices of the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.
Drilling fluids, produced waters and most of the other wastes associated with the exploration, production and development of crude oil or natural gas are currently regulated under RCRA's non-hazardous
waste provisions. In December 2016, the EPA and environmental groups entered into a consent decree to address the EPA's alleged failure to timely assess its RCRA Subtitle D criteria regulations
exempting certain exploration and production-related oil and natural gas wastes from regulation as hazardous wastes under RCRA. The consent decree required the EPA to propose a rulemaking no later
than March 15, 2019 for revision of certain Subtitle D criteria regulations pertaining to oil and natural gas wastes or to sign a determination that revision of the regulations is not
necessary. EPA fulfilled its obligation under the consent decree by issuing a determination on April 23, 2019 that revisions to existing RCRA Subtitle D regulations governing oil and natural
gas wastes are not necessary, along with a report supporting that determination. Any future change in the exclusion for such wastes could potentially result in an increase in the cost of managing and
disposing of those wastes.

The
real properties upon which VOC Brazos conducts its operations have been used for oil and natural gas exploration and production for many years. Although VOC Brazos believes that it
has utilized operating and disposal practices that were standard in the industry at the time, petroleum hydrocarbons and wastes may have been disposed of or released on or under the real properties
upon which VOC Brazos conducts its operations, or on or under other, offsite locations, where these petroleum hydrocarbons and wastes have been taken for recycling or disposal. In addition, the
underlying properties may have been operated by third parties or by previous owners or operators whose treatment and disposal of hazardous substances, wastes or hydrocarbons was not under VOC Brazos'
control. These properties and the substances disposed or released thereon may be subject to CERCLA, RCRA and analogous state laws. Under such laws, VOC Brazos could be required to remove or remediate
previously disposed wastes, to clean up contaminated property, and to perform remedial operations such as restoration of pits and plugging of abandoned wells to prevent future contamination.

Water discharges and hydraulic fracturing.The federal Clean Water Act, or "CWA," and analogous state laws impose restrictions and
strict controls
with respect to the discharge of pollutants, including spills and leaks of oil, into waters of the United States and waters of the state, respectively. The discharge of pollutants into regulated
waters is prohibited, except in accordance with the terms of a permit issued by EPA or an analogous state agency. Federal and state regulatory agencies can impose administrative, civil and criminal
penalties for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations. The discharge of wastewater from most onshore oil and gas activities
exploration and production activities is currently prohibited east of the 98th meridian.
Additionally, in June 2016, the EPA issued a final rule implementing wastewater pretreatment standards that prohibit onshore unconventional oil and natural gas extraction facilities from sending
wastewater directly to publicly owned treatment works, or POTW. Unconventional extraction facilities are in certain circumstances allowed by federal regulations to send wastewater to an off-site
private centralized wastewater treatment facility that can either discharge treated water or send it to a POTW. The EPA is conducting a study of the treatment and discharge of oil and gas wastewater.
Any restriction of disposal options for hydraulic fracturing waste and other changes to CWA discharge requirements may result in increased costs.

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The
discharge of dredge and fill material in regulated waters, including wetlands, is also prohibited, unless authorized by a permit issued by the U.S. Army Corps of Engineers, or ACE.
CWA Section 401 provides that the applicant for an individual National Pollutant Discharge Elimination System, or NPDES, permit to be issued by the EPA or an individual Section 404
permit to be issued by the ACE must notify the state in which the discharge will occur and provide an opportunity for the state to determine if the discharge will comply with the state's approved
water quality program. In some instances, this process could result in delay in issuance of the permit, more stringent permit requirements, or denial of the permit.

How
the EPA and the ACE define "waters of the United States" ("WOTUS") can impact MV Partners' regulatory and permitting obligations under the CWA. The EPA and the ACE promulgated rules
defining the scope of WOTUS that became effective in September 2015. On October 22, 2019, the EPA and the ACE published a final rule that repealed the 2015 definition of WOTUS and recodified
longstanding regulatory definitions of WOTUS that existed prior to the 2015 rule to promote regulatory consistency across the United States. On February 14, 2019, the EPA and the ACE had
published a proposed revised definition of WOTUS intended to clarify and narrow the definition from that in the 2015 rule. The comment period on the proposed changes to the definition of WOTUS closed
on April 15, 2019, and a final rule is expected to be published in early 2020. It is anticipated that petitions for review of any 2020 WOTUS rule will be filed and that litigation over the
definition of WOTUS will continue. To the extent that VOC Brazos must obtain permits for the discharge of pollutants or for dredge and fill activities in wetland areas or other waters of the United
States, VOC Brazos could face increased costs and delays associated with obtaining such permits under any broader definition of WOTUS that expands the scope of CWA jurisdiction.

It
is customary to recover oil and natural gas from deep shale and tight sand formations through the use of hydraulic fracturing, combined with sophisticated horizontal drilling.
Hydraulic fracturing involves the injection of water, sand and chemical additives under pressure into rock formations to stimulate gas production. The federal Energy Policy Act of 2005 amended the
Underground Injection Control provisions of the federal Safe Drinking Water Act to exclude certain hydraulic fracturing activities from the definition of "underground injection." At present, hydraulic
fracturing is regulated at the state and local level. Due to public concerns raised regarding potential impacts of hydraulic fracturing on groundwater quality, legislative and regulatory efforts at
the federal, state and local level
and in some states have been initiated to require or make more stringent the permitting and compliance requirements for hydraulic fracturing operations. Repeal of the exemption would allow the EPA to
promulgate new regulations. Many states have adopted rules that required operators to disclose chemicals and water volumes associated with hydraulic fracturing. In addition, the EPA finalized a study
of the potential environmental impacts of hydraulic fracturing activities in 2016, finding that under certain circumstances the "water cycle" activities associated with hydraulic fracturing could
impact drinking water resources. More recently, the injection of water produced as a result of hydraulic fracturing has been associated with seismic activity leading to restrictions on injection in
some areas. If new laws or regulations that significantly restrict hydraulic fracturing are adopted, such legal requirements could make it more difficult or costly for VOC Brazos to perform hydraulic
fracturing activities. Moreover, required disclosure without protection for trade secret or proprietary products could discourage service companies from using such products and as a result impact the
degree to which some oil and gas wells may be efficiently and economically completed or brought into production. Finally, VOC Brazos believes that enactment of legislation regulating hydraulic
fracturing at the federal level may have a material adverse effect on its business.

Air emissions.The federal Clean Air Act, or "CAA," and comparable state laws restrict the emission of air pollutants from many sources
through air
emissions permitting programs and also impose various monitoring and reporting requirements. In addition, the EPA has developed, and continues to develop, stringent regulations governing emissions of
toxic air pollutants at specified

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sources
and has recently proposed rules that define the terms used to determine whether a source is considered to be a major source under the CAA. Federal and state regulatory agencies may impose
administrative, civil and criminal penalties for non-compliance with air permits or other requirements of the CAA and associated state laws and regulations.

The
EPA has established pollution control standards for oil and gas sources under the CAA. In 2012, the EPA adopted federal New Source Performance Standards that require the reduction of
volatile organic compound emissions from certain fractured and refractured natural gas wells for which well completion operations are conducted and further require that most wells use reduced emission
completions, also known as "green completions." These regulations also establish specific new requirements regarding emissions from production-related wet seal and reciprocating compressors, and from
pneumatic controllers and storage vessels. The EPA is also charged with establishing ambient air quality standards, the implementation of which can indirectly impact VOC Brazos' operations. For
example, in October 2015, the EPA lowered the National Ambient Air Quality Standard, or NAAQS, for ozone from 75 to 70 parts per billion. State implementation of the revised NAAQS could result in
stricter permitting requirements, delay or prohibit VOC Brazos' ability to obtain such permits, and result in increased expenditures for pollution control equipment, the costs of which could be
significant.

Climate change.In response to certain scientific studies suggesting that emissions of certain gases, commonly referred to as
greenhouse gases, or
"GHGs," and including carbon dioxide and methane, are contributing to the warming of the Earth's atmosphere and other climatic conditions the EPA issued regulations restricting GHGs. These
restrictions include additional reductions of volatile organic compounds, hazardous air pollutants and methane emissions from the oil and gas sector. Such regulations limiting emissions of GHGs from
the equipment and operations of VOC Brazos could require VOC Brazos to incur costs to monitor and report on GHG emissions or reduce emissions of GHGs associated with its operations, and such
requirements also could adversely affect demand for the oil and natural gas that VOC Brazos produces.

In
December 2015, the EPA finalized rules that added new sources to the scope of GHG monitoring and reporting rule. These new sources include gathering and boosting facilities. The
revisions also include the addition of well identification reporting requirements for certain facilities. In addition, as described above, in June 2016 the EPA published a final rule that requires
operators to reduce methane emissions from certain new, modified or reconstructed oil and gas facilities, including production, processing, transmission and storage activities, or the "Methane Rule."
However, following the November 2016 presidential election and change in administrations, the EPA convened a reconsideration proceeding that culminated in a 2019 rule proposal that would eliminate the
obligation to control methane emissions under the NSPS, while maintaining the rule's substantive emissions control requirements because they serve to control emissions of other, non-methane
pollutants. While the ultimate fate of the Methane Rule is unclear, it may require VOC Brazos to incur development expenses to install and utilize specific equipment, technologies, or work practices
to control methane emissions from its operations.

Apart
from the EPA, almost one-half of the states have already taken legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories
and/or regional GHG cap and trade programs. Most of these cap and trade programs work by requiring either major sources of emissions or major producers of fuels to acquire and surrender emission
allowances, with the number of allowances available for purchase reduced each year until the overall GHG emission reduction goal is achieved. These allowances would be expected to escalate
significantly in cost over time. Although it is not possible at this time to predict if Congress may pass climate change legislation, any future federal or state laws that may be adopted to address
GHG emissions could require VOC Brazos to incur increased operating costs and could adversely affect demand for the oil and natural gas VOC Brazos produces.

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Finally,
it should be noted that some scientists have concluded that increasing concentrations of greenhouse gases in the Earth's atmosphere may produce climate changes that have
significant physical effects, such as increased frequency and severity of storms, floods, drought and other climatic events. If
any such effects were to occur, they could adversely affect or delay demand for the oil or natural gas produced by VOC Brazos or otherwise cause VOC Brazos to incur significant costs in preparing for
or responding to those effects.

Endangered Species Act.The federal Endangered Species Act, or "ESA," restricts activities that may affect endangered and threatened
species or their
habitats. If endangered species are located in areas of the underlying properties where seismic surveys, development activities or abandonment operations may be conducted, the work could be prohibited
or delayed, or expensive mitigation may be required. The designation of previously unidentified endangered or threatened species could cause VOC Brazos to incur additional costs arising from species
protection measures or could result in limitations on exploration and production activities that could have an adverse impact on the ability to develop and produce reserves from the underlying
properties. While some of VOC Brazos' facilities or leased acreage may be located in areas that are designated as habitat for endangered or threatened species, VOC Brazos believes that it is in
substantial compliance with the ESA.

Employee health and safety.The operations of VOC Brazos are subject to a number of federal and state laws and regulations, including
the federal
Occupational Safety and Health Act, or "OSHA," and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the EPA
community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous
materials used or produced in operations and that this information be provided to employees, state and local government authorities and citizens. VOC Brazos believes that it is in substantial
compliance with all applicable laws and regulations relating to worker health and safety.

Item 1A.    Risk Factors.

Prices of oil and natural gas fluctuate, and lower prices could reduce proceeds to the trust and cash
distributions to unitholders.

The reserves attributable to the underlying properties and quarterly cash distributions of the trust are highly dependent upon the prices
realized from the sale of oil and natural
gas. Prices of oil and natural gas can fluctuate widely on a quarter-to-quarter basis in response to a variety of factors that are beyond the control of the trust and VOC Brazos. These factors
include, among others:



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Crude
oil prices have been volatile over the last several years, and in 2019 ranged from a high of $66.30 to a low of $46.54. The NYMEX crude oil spot prices per Bbl were $60.42, $45.41
and $61.06 as of December 31, 2017, 2018 and 2019, respectively. Meanwhile, crude oil spot prices per Bbl have dropped sharply in the first quarter of 2020, from $61.17 on January 2,
2020 to $30.24 on March 9, 2020. Neither VOC Brazos nor the trust can predict the timing or the duration of any economic cycle and, depending on the prices realized, the operating results of
VOC Brazos and the financial condition of the trust could be materially and adversely affected.

Continued
low prices of oil and natural gas will reduce the amount of the net proceeds to which the trust is entitled and may ultimately reduce the amount of oil and natural gas that is
economic to produce from the underlying properties. As a result, the operator of any of the underlying properties could determine during periods of low commodity prices to shut in or curtail
production from wells on the underlying properties. In addition, the operator of the underlying properties could determine during periods of low commodity prices to plug and abandon marginal wells
that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices. Specifically, VOC Brazos may abandon any well or property if it reasonably believes
that the well or property can no longer produce oil or natural gas in commercially paying quantities. This could result in termination of the net profits interest relating to the abandoned well or
property. In making such decisions, VOC Brazos and any transferee will be required under the applicable conveyance to operate, or to use commercially reasonable efforts to cause the operators of the
underlying properties to operate, these properties as would a reasonably prudent operator, acting with respect to its own properties (without regard to the existence of the net profits interest).
Because substantially all the underlying properties are located in mature fields, decreases in commodity prices could have a more significant effect on the economic viability of these properties
compared to more recently discovered properties. The commodity price sensitivity of these mature wells is due to a variety of factors that vary from well-to-well, including the additional costs
associated with water handling and disposal, chemicals, surface equipment maintenance, downhole casing repairs and reservoir pressure maintenance activities that are necessary to maintain production.
As a result, the volatility of commodity prices may cause the amount of future cash distributions to trust unitholders to fluctuate, and a substantial decline in the price of oil or natural gas will
reduce the amount of cash available for distribution to the trust unitholders. The volatility of commodity prices also reduces the accuracy of estimates of future cash distributions to trust
unitholders.

Actual reserves and future production may be less than current estimates of proved reserves, which could
reduce cash distributions by the trust and the value of the trust units.

The value of the trust units and the amount of future cash distributions to the trust unitholders will depend upon, among other things, the
accuracy of the reserves and future production estimated to be attributable to the underlying properties and the net profits interest. It is not possible to measure underground accumulations of oil
and natural gas in an exact manner, and estimating reserves is inherently uncertain. Ultimately, actual production and revenues for the underlying properties could vary negatively and in material
amounts from estimates. Furthermore, development expenditures and production costs relating to the underlying properties could be higher than current estimates.

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Petroleum
engineers are required to make subjective estimates of underground accumulations of oil and natural gas based on factors and assumptions that
include:



Changes
in these assumptions and amounts of actual production and development costs could materially decrease reserve estimates.

The
estimated reserves attributable to the net profits interest and the estimated future net revenues attributable to the net profits interest are based on estimates of reserve
quantities and revenues for the underlying properties. See "Item 1. BusinessDescription of the Underlying PropertiesReserves" for a discussion of the method of
allocating proved reserves to the underlying properties and the net profits interest. The quantities of reserves attributable to the underlying properties and the net profits interest may decrease in
the future as a result of future decreases in the price of oil, natural gas or natural gas liquids.

The processes of drilling and completing wells are high risk activities.

The processes of drilling and completing wells are subject to numerous risks beyond the trust's and VOC Brazos' control, including risks that
could delay VOC Brazos' current drilling schedule and the risk that drilling will not result in commercially viable oil production. VOC Brazos is not obligated to undertake any development activities,
so any drilling and completion activities will be subject to the reasonable discretion of VOC Brazos. Furthermore, VOC Brazos' future business, financial condition, results of operations, liquidity or
ability to finance its share of planned development expenditures could be materially and adversely affected by any factor that may curtail, delay or cancel drilling, including the
following:



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In
the event that drilling of development wells is delayed or cancelled, or development wells have lower than anticipated production, due to one or more of the factors above or for any
other reason, estimated future distributions to trust unitholders may be reduced.

Risks associated with the production, gathering, transportation and sale of oil and natural gas could
adversely affect cash distributions by the trust.

The amount of cash to be received by the trust from VOC Brazos with respect to the net profits interest, the value of the trust units and the
amount of cash distributions to the trust unitholders will depend upon, among other things, oil and natural gas production and prices and the costs incurred by VOC Brazos to develop and produce oil
and natural gas reserves attributable to the underlying properties. Drilling, production or transportation accidents as well as adverse weather conditions that temporarily or permanently halt the
production and sale of oil or natural gas at any of the underlying properties will reduce trust distributions by reducing the amount of net proceeds received by the trust and available for
distribution. For example, accidents may occur that result in personal injuries, property damage, damage to productive formations or equipment and environmental damages. To the extent VOC Brazos is
not able to recover from insurance any costs incurred by VOC Brazos in connection with any such accidents, the net proceeds available for distribution to the trust may be reduced or delayed. In
addition, curtailments or damage to pipelines used by VOC Brazos to transport oil and natural gas production to markets for sale could reduce the amount of net proceeds received by the trust and
available for distribution. Any such curtailment or damage to the gathering systems used by VOC Brazos could also require VOC Brazos to find alternative means to transport the oil and natural gas
production from the underlying properties, which could require VOC Brazos to incur additional costs that will have the effect of reducing net proceeds received by the trust and available for
distribution. The trust does not maintain any type of insurance against any of the risks of conducting oil and gas exploration and production or related activities.

Production of oil and natural gas on the underlying properties could be materially and adversely affected by
severe or unseasonable weather.

Production of oil and natural gas on the underlying properties could be materially and adversely affected by severe weather. Repercussions of
severe weather conditions may include:



Interruptions
in production could have a material adverse effect on the trust's financial condition, results of operations and cash flows, and could reduce the amount of cash
distributions to unitholders.

VOC Brazos does not have any long-term contracts related to the sale of production of oil and natural gas
from the underlying properties and may be unable to find purchasers.

VOC Brazos does not have any firm commitment contracts for the sale of any production nor has it received security or other guaranty of payment
for the production it sells. Therefore, there can be no assurance that VOC Brazos will be able to find buyers for its production, that buyers will pay the purchase price therefor or that the price at
which the production is sold will be the current market price for such hydrocarbons at the time of delivery. During the year ended December 31, 2019, VOC

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Brazos
sold approximately 32% of the oil produced from the underlying properties to MV Purchasing, an affiliate of VOC Brazos. Any nonpayment by a purchaser of production, including MV Purchasing, or
inability by VOC Brazos to sell any production, could reduce cash available for distribution to trust unitholders.

Neither the trust nor the trust's unitholders have the ability to influence VOC Brazos or control the
operations or development of the underlying properties.

The trust and the trust's unitholders have no voting rights with respect to VOC Brazos and therefore have no managerial, contractual or other
ability to influence VOC Brazos' activities or the operations of the underlying properties. Oil and natural gas properties are typically managed pursuant to an operating agreement among the working
interest owners of oil and natural gas properties. Vess Oil Corporation operates, or operates on a contract basis, substantially all of the underlying properties. The typical operating agreement
contains procedures whereby the owners of the working interests in the property designate one of the interest owners to be the operator of the property. Under these arrangements, the operator is
typically responsible for making all decisions relating to drilling activities, sale of production, compliance with regulatory requirements and other matters that affect the property.

Shortages or increases in costs of equipment, services and qualified personnel could result in a reduction in
the amount of cash available for distribution to the trust unitholders.

The demand for qualified and experienced personnel to conduct field operations, geologists, geophysicists, engineers and other professionals in
the oil and natural gas industry can fluctuate significantly, often in correlation with oil and natural gas prices, causing periodic shortages. Historically, there have been shortages of drilling rigs
and other equipment as demand for rigs and equipment has increased along with the number of wells being drilled. These factors also cause significant increases in costs for equipment, services and
personnel. Higher oil and natural gas prices generally stimulate demand and result in increased prices for drilling rigs, crews and associated supplies, equipment and services. Shortages of field
personnel and equipment or price increases could significantly decrease the amount of cash received by the trust and available for distribution to the trust unitholders or restrict the ability of VOC
Brazos to drill the development wells and conduct the operations which it currently has planned for the underlying properties.

The trust units may lose value as a result of title deficiencies with respect to the underlying properties.

VOC Brazos acquired the underlying properties over approximately the past 30 years. The existence of a material title deficiency with
respect to the underlying properties could reduce the value of a property or render it worthless, thus adversely affecting the net profits interest and distributions to trust unitholders. VOC Brazos
does not obtain title insurance covering mineral leaseholds, and VOC Brazos' failure to cure any title defects may cause VOC Brazos to lose its rights to production from the underlying properties. In
the event of any such material title problem, proceeds available for distribution to trust unitholders and the value of the trust units may be reduced.

VOC Brazos may transfer all or a portion of the underlying properties at any time without trust unitholder
consent, subject to specified limitations.

VOC Brazos may at any time transfer all or part of the underlying properties, subject to and burdened by the net profits interest, and may
abandon individual wells or properties that it reasonably believes would no longer produce oil or natural gas in commercially paying quantities. For the years ended December 31, 2017, 2018 and
2019, VOC Brazos plugged and abandoned 11, 17 and 13 wells, respectively, located on leases on the underlying properties. Trust unitholders will not be entitled to vote on any transfer of the
underlying properties, and the trust will not receive any proceeds from any such transfer, except in certain limited circumstances when the net profits interest is released in

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connection
with such transfer, in which case the trust will receive an amount equal to the fair market value (net of sales costs) of the net profits interest released. Following any sale or transfer
of any of the underlying properties, if the net profits interest is not released in connection with such sale or transfer, the net profits interest will continue to burden the transferred property and
net proceeds attributable to such property will be calculated as part of the computation of net proceeds described in this Form 10-K. VOC Brazos may delegate to the transferee responsibility
for all of VOC Brazos' obligations relating to the net profits interest on the portion of the underlying properties transferred.

In
addition, VOC Brazos may, without the consent of the trust unitholders, require the trust to release the net profits interest associated with any lease that accounts for less than or
equal to 0.25% of the total production from the underlying properties in the prior 12 months and provided that the net profits interest covered by such releases cannot exceed, during any
12-month period, an aggregate fair market value to the trust of $500,000. These releases will be made only in connection with a sale by VOC Brazos of the relevant underlying properties and are
conditioned upon the trust's receiving an amount equal to the fair market value to the trust of such net profits interest. Any net sales proceeds paid to the trust will be distributable to trust
unitholders for the quarter in which they are received. No underlying properties were sold, and therefore no net sales proceeds were paid to the trust for its share of interest in any such underlying
properties, during 2018 or 2019. VOC Brazos has not identified any of the underlying properties for sale as of December 31, 2019.

The reserves attributable to the underlying properties are depleting assets and production from those
properties will diminish over time. Furthermore, the trust is precluded from acquiring other oil and natural gas properties or net profits interests to replace the depleting assets and production.

The net proceeds payable to the trust attributable to the net profits interest are derived from the sale of production of oil and natural gas
from the underlying properties. The reserves attributable to the underlying properties are depleting assets, which means that the reserves and the quantity of oil and natural gas produced from the
underlying properties will decline over time. Furthermore, over approximately 87% of the estimated oil recovery attributable to the underlying properties has already been extracted from the producing
wells located on the underlying properties. Based on the estimated production volumes in the reserve report as of December 31, 2019, the oil and natural gas production from proved reserves
attributable to the underlying properties is projected to decline at an average rate of approximately 8.4% per year over the next 20 years, assuming the level of development drilling and
development expenditures on the underlying properties disclosed elsewhere in this Form 10-K through 2021 and none thereafter. Actual decline rates may vary from this projected decline rate. In
the event expected future development is delayed, reduced or cancelled, the average rate of decline will likely exceed 8.4% per year.

The
trust agreement provides that the trust's activities are limited to owning the net profits interest and any activity reasonably related to such ownership, including activities
required or permitted by the terms of the conveyance. As a result, the trust is not permitted to acquire other oil and natural gas properties or net profits interests to replace the depleting assets
and production attributable to the net profits interest.

Because
the net proceeds payable to the trust are derived from the sale of depleting assets, the portion of the distributions to unitholders attributable to depletion may be considered
to have the effect of a return of capital as opposed to a return on investment. Eventually, the underlying properties burdened by the net profits interest may cease to produce in commercially paying
quantities and the trust may, therefore, cease to receive any distributions of net proceeds therefrom.

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The amount of cash available for distribution by the trust will be reduced by the amount of any costs and
expenses related to the underlying properties and other costs and expenses incurred by the trust.

The net profits interest will bear its share of all costs and expenses related to the underlying properties, such as lease operating expenses,
production and property taxes and development expenses, which will reduce the amount of cash received by the trust and thereafter distributable to trust unitholders. Accordingly, higher costs and
expenses related to the underlying properties will directly decrease the amount of cash received by the trust in respect of its net profits interest, including those costs and expenses related to
development pursuant to the joint venture arrangements described in "Item 7. Trustee's Discussion and Analysis of Financial Condition and Results of OperationsPlanned Development
and Workover Program." If the activities pursuant to such arrangements are pursued, other than with respect to certain excepted wells, such activities would result in increased development costs
burdening the net profits interest of the trust relative to historical development costs. As a result of such increased development costs, cash available for distribution by the Trust would be
temporarily reduced, and in some periods there may be no distributions to unitholders, until anticipated production for the various development efforts in the
Kurten Woodbine Unit can be brought on line. In addition, cash available for distribution by the trust will be further reduced by the trust's general and administrative expenses.

If
production and development costs on the underlying properties together with the other costs exceed gross proceeds of production from the underlying properties, the trust will not
receive net proceeds from those properties until future gross proceeds from production exceed the total of the excess costs, plus accrued interest. If the trust does not receive net proceeds pursuant
to the net profits interest, or if such net proceeds are reduced, the trust will not be able to distribute cash to the trust unitholders, or such cash distributions will be reduced, respectively.
Development activities may not generate sufficient additional revenue to repay the costs. If annual cash proceeds attributable to the net profits interest are less than $1 million for each of
two consecutive years, then under the terms of the trust agreement, the trust would be required to dissolve.

A purchaser's failure to pay VOC Brazos for purchased production could have a significant adverse impact on
VOC Brazos, which in turn could result in VOC Brazos not having sufficient net proceeds attributable to the net profits interest for VOC Brazos to distribute cash to the trust.

A purchaser's failure to pay for purchased production could have a significant adverse impact on VOC Brazos' business, which in turn could
adversely affect the trust. The recent tightening of credit in the financial markets may make it more difficult for purchasers to obtain financing and depending on the degree to which this occurs,
there may be a material increase in the nonpayment and nonperformance by such purchasers.

The trustee may, under certain circumstances, sell the net profits interest and dissolve the trust prior to
the expected termination of the trust. As a result, trust unitholders may not recover their investment.

The trustee must sell the net profits interest if the holders of a majority of the trust units approve the sale or vote to dissolve the trust.
The trustee must also sell the net profits interest if the annual cash proceeds from the underlying properties attributable to the net profits interest are less than $1.0 million for each of
any two consecutive years. The sale of the net profits interest will result in the dissolution of the trust. The net proceeds of any such sale will be distributed to the trust unitholders.

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The disposal by an affiliate of VOC Brazos of its remaining trust units may reduce the market price of the
trust units.

As of the date of this Form 10-K, an affiliate of VOC Brazos, VOC Partners, LLC, owned 25% of the outstanding trust units. VOC
Partners, LLC may use some or all of the remaining trust units it owns for a number of business purposes, including:



If
it sells additional trust units or exchanges trust units in connection with acquisitions, then additional trust units will be available for sale in the market. The sale of additional
trust units may reduce the market price of the trust units. The trust has entered into a registration rights agreement with VOC Partners, LLC pursuant to which the trust has agreed to
file a registration statement or a shelf registration statement to register the resale of the remaining trust units held by VOC Partners, LLC and any transferee of the trust units upon
request by such holders. See "Item 13. Certain Relationships and Related Transactions, and Director IndependenceRegistration Rights."

The market price for the trust units may not reflect the value of the net profits interest held by the trust.

The trading price for publicly traded securities similar to the trust units tends to be tied to recent and expected levels of cash
distributions. The amounts available for distribution by the trust will vary in response to numerous factors outside the control of the trust, including prevailing prices for sales of oil and natural
gas production from the underlying properties and the timing and amount of production and development costs. Consequently, the trading price for the trust units may not necessarily be indicative of
the value that the trust would realize if it sold the net profits interest to a third-party buyer. In addition, such market price may not necessarily reflect the fact that since the assets of the
trust are depleting assets, a portion of each cash distribution paid on the trust units should be considered by investors as a return of capital, with the remainder being considered as a return on
investment. As a result, distributions made to a trust unitholder over the life of these depleting assets may not equal or exceed the purchase price paid by the trust unitholder.

Conflicts of interest could arise between VOC Brazos and its affiliates, on the one hand, and the trust and
the trust unitholders, on the other hand.

As working interest owners in, and operators of substantially all the wells on, the underlying properties, VOC Brazos and its affiliates could
have interests that conflict with the interests of the trust and the trust unitholders. For example:



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The trust is managed by a trustee who cannot be replaced except by a majority vote of the trust unitholders
at a special meeting, which may make it difficult for trust unitholders to remove or replace the trustee.

The business and affairs of the trust are managed by the trustee. The voting rights of a trust unitholder are more limited than those of
stockholders of most public corporations. For example, there is no requirement for annual meetings of trust unitholders or for an annual or other periodic re-election of the trustee. The trust
agreement provides that the trustee may only be removed and replaced by the holders of a majority of the outstanding trust units, including trust units held by VOC Partners, LLC, at a special
meeting of trust unitholders called by either the trustee or the holders of not less than 10% of the outstanding trust units. As a result, it will be difficult for public unitholders to remove or
replace the trustee without the cooperation of VOC Partners, LLC as long as it holds a significant percentage of total trust units.

Trust unitholders have limited ability to enforce provisions of the net profits interest, and VOC Brazos'
liability to the trust is limited.

The trust agreement permits the trustee to sue VOC Brazos or any other future owner of the underlying properties to enforce the terms of the
conveyance creating the net profits interest. If the trustee does not take appropriate action to enforce provisions of the conveyance, trust unitholders' recourse would be limited to bringing a
lawsuit against the trustee to compel the trustee to take specified actions. The trust agreement expressly limits a trust unitholder's ability to directly sue VOC Brazos or any other third party other
than the trustee. As a result, trust unitholders will not be able to sue VOC Brazos or any future owner of the underlying properties to enforce these rights. Furthermore, the net profits interest
conveyance provides that, except as set forth in the conveyance,
VOC Brazos will not be liable to the trust for the manner in which it performs its duties in operating the underlying properties as long as it acts without gross negligence or willful misconduct.

Courts outside of Delaware may not recognize the limited liability of the trust unitholders provided under
Delaware law.

Under the Delaware Statutory Trust Act, trust unitholders are entitled to the same limitation of personal liability extended to stockholders of
corporations under the General Corporation Law of the State of Delaware. Courts in jurisdictions outside of Delaware, however, may not give effect to such limitation.

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The operations of the underlying properties are subject to environmental laws and regulations that may result
in significant costs and liabilities, which could reduce the amount of cash available for distribution to trust unitholders.

The oil and natural gas exploration and production operations of VOC Brazos are subject to stringent and comprehensive federal, state and local
laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may impose numerous obligations that apply
to VOC Brazos' operations, including the requirement to obtain a permit before conducting drilling, waste disposal or other regulated activities; the restriction of types, quantities and
concentrations of materials that can be released into the environment; the incurrence of significant development expenditures to install pollution or safety-related controls at the operated
facilities; the limitation or prohibition of drilling activities on certain lands lying within wilderness, wetlands and other protected areas; and the imposition of substantial liabilities for
pollution resulting from operations. Numerous governmental authorities, such as the EPA and analogous state environmental and oil and gas agencies, have the power to enforce compliance with these laws
and regulations and the permits issued under them, oftentimes requiring difficult and costly actions. Failure to comply with these laws and regulations may result in the assessment of administrative,
civil or criminal penalties; the imposition of investigatory or remedial obligations; and the issuance of injunctions limiting or preventing some or all of VOC Brazos' operations. Furthermore, the
inability to comply with environmental laws and regulations in a cost effective manner, such as removal and disposal of produced water and other generated oil and gas wastes, could impair VOC Brazos'
ability to produce oil and natural gas commercially from the underlying properties, which would reduce proceeds attributable to the net profits interest.

There
is inherent risk of incurring significant environmental costs and liabilities in the performance of VOC Brazos' operations as a result of its handling of petroleum hydrocarbons and
wastes, air emissions and wastewater discharges related to its operations, and historical industry operations and waste disposal practices. Under certain environmental laws and regulations, VOC Brazos
could be subject to joint and several strict liability for the removal or remediation of previously released materials or property contamination regardless of whether VOC Brazos was responsible for
the release or contamination or whether the operations were in compliance with all applicable laws at the time those actions were taken. Private parties, including the owners of properties upon which
VOC Brazos' wells are drilled and facilities where VOC Brazos' petroleum hydrocarbons or wastes are taken for reclamation or disposal, may also have the right to pursue legal actions to enforce
compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage. In addition, the risk of accidental spills or releases could
expose VOC Brazos to significant liabilities that could have a material adverse effect on its financial condition or results of operations. Changes in environmental laws and regulations occur
frequently, and any changes that result in more stringent or costly operational control requirements or waste handling, storage, transport, disposal or cleanup requirements could require VOC Brazos to
make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on its results of operations, competitive position or financial condition. VOC Brazos
may be unable to recover some or any of these costs from insurance, in which case the amount of cash received by the trust may be decreased. The net profits interest held by the trust will bear 80% of
all costs and expenses incurred by VOC Brazos in regard to environmental costs and liabilities associated with the underlying properties, including costs and liabilities resulting from conditions that
existed prior to VOC Brazos' acquisition of the underlying properties unless such costs and expenses result from VOC Brazos' gross negligence or willful misconduct. In addition, as a result of the
increased cost of compliance, VOC Brazos may decide to discontinue drilling.

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The operations of the underlying properties are subject to complex federal, state, local and other laws and
regulations that could adversely affect the cost, manner or feasibility of conducting its operations or expose VOC Brazos to significant liabilities, which could reduce the amount of cash available
for distribution to trust unitholders.

The production and development operations on the underlying properties are subject to complex and stringent laws and regulations. In order to
conduct its operations in compliance with these laws and regulations, VOC Brazos must obtain and maintain numerous permits, drilling bonds, approvals and certificates from various federal, state and
local governmental authorities and engage in extensive reporting. VOC Brazos may incur substantial costs in order to maintain compliance with these existing laws and regulations, and the net profits
interest will bear its share of these costs. In addition, VOC Brazos' costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations
become applicable to VOC Brazos' operations. Such costs could have a material adverse effect on VOC Brazos' business, financial condition and results of
operations and reduce the amount of cash received by the trust in respect of the net profits interest, VOC Brazos must also comply with laws and regulations prohibiting fraud and market manipulations
in energy markets. To the extent VOC Brazos is a shipper on interstate pipelines, it must comply with the tariffs of such pipelines and with federal policies related to the use of interstate capacity,
and such compliance costs will be borne indirectly in part by the trust.

Laws
and regulations governing exploration and production may also affect production levels. VOC Brazos is required to comply with federal and state laws and regulations governing
conservation matters, including: provisions related to the unitization or pooling of oil and natural gas properties; the establishment of maximum rates of production from wells; the spacing of wells;
the plugging and abandonment of wells; and the removal of related production equipment. These and other laws and regulations can limit the amount of oil and natural gas VOC Brazos can produce from its
wells, limit the number of wells it can drill, or limit the locations at which it can conduct drilling operations, which in turn could negatively impact trust distributions, estimated and actual
future net revenues to the trust and estimates of reserves attributable to the trust's interests.

New
laws or regulations, or changes to existing laws or regulations, may unfavorably impact VOC Brazos, could result in increased operating costs or have a material adverse effect on VOC
Brazos' financial condition and results of operations and reduce the amount of cash received by the trust. These and other potential regulations could increase the operating costs of the underlying
properties, reduce VOC Brazos' liquidity, delay VOC Brazos' operations or otherwise alter the way VOC Brazos conducts its business, any of which could have a material adverse effect on the net profits
interest and the trust's cash flows.

Climate change laws and regulations restricting emissions of "greenhouse gases" could result in increased
operating costs and reduced demand for the oil and natural gas that VOC Brazos produces while the physical effects of climate change could disrupt VOC Brazos' production and cause VOC Brazos to incur
significant costs in preparing for or responding to those effects.

The oil and gas industry is a direct source of certain greenhouse gases, or "GHG," emissions, namely carbon dioxide and methane, and future
restrictions on such emissions could impact VOC Brazos' future operations. In 2009, the EPA published its findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to
public health and the environment because emissions of such gases are, according to the EPA, contributing to the warming of the earth's atmosphere and other climate changes. The EPA has taken a number
of steps aimed at gathering information about, and reducing the emissions of, GHGs from industrial sources, including oil and natural gas sources. The EPA has adopted rules requiring the reporting of
GHG emissions from oil, natural gas and NGL production and processing facilities on an annual basis, as well as reporting GHG emissions from gathering and boosting systems, oil well completions and
workovers using hydraulic

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fracturing.
The EPA has also adopted and implemented regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant Deterioration, or "PSD,"
construction and Title V operating permit reviews for GHG emissions from certain large stationary sources that already are potential major sources of certain principal, or criteria, pollutant
emissions. Facilities required to obtain PSD permits for their GHG emissions also will be required to meet "best available control technology" standards that typically are established by the states.
This rule could adversely affect Avalon's operations upon the Underlying Properties and restrict or delay its ability to obtain air permits for new or modified facilities that exceed GHG emission
thresholds. In June 2016, the EPA published a final rule adopting New Source Performance Standards for new, modified, or reconstructed oil and gas facilities that require control of the GHG methane
from affected facilities, including requirements to find and repair fugitive leaks of methane emissions at well sites, or the "Methane Rule." However, following the November 2016 presidential election
and change in administrations, the EPA convened a reconsideration proceeding that culminated in a 2019 rule proposal that would eliminate the obligation to control methane emissions under the NSPS,
while maintaining the rule's substantive emissions control requirements because they serve to control emissions of other, non-methane pollutants. While the ultimate fate of the Methane Rule is
unclear, it may require VOC Brazos to incur development expenses to install and utilize specific equipment, technologies, or work practices to control methane emissions from its operations.

In
addition, in November 2016, the U.S. Department of the Interior Bureau of Land Management, or "BLM," issued final rules to reduce methane emissions from venting, flaring, and leaks
during oil and gas operations on federal and tribal lands (the "BLM Methane and Waste Prevention Rule") that are substantially similar to the EPA's Methane Rule. However, in December 2017, the BLM
published a final rule to temporarily suspend or delay certain requirements contained in the BLM Methane and Waste Prevention Rule until January 17, 2019, including those requirements relating
to venting, flaring and leakage from oil and gas production activities. Further, in September 2018, the BLM published a final rule to revise or rescind certain provisions of the BLM Methane and Waste
Prevention Rule. While the future implementation of the EPA and BLM rules aimed at controlling GHG emissions from oil and natural gas sources remains uncertain, future federal GHG regulations for the
oil and gas industry remain a possibility given the long-term trend towards increasing regulation. Moreover, several states have already adopted rules requiring operators of both new and existing
sources to develop and implement a LDAR program and to install devices on certain equipment to capture 95 percent of methane emissions. Compliance with these rules could require VOC Brazos to
purchase pollution control equipment and optical gas imaging equipment for LDAR inspections, and to hire additional personnel to assist with inspection and reporting requirements.

In
addition, almost half of the states have already taken legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or
regional GHG cap and trade programs. Most of these cap and trade programs work by requiring either major sources of emissions or major producers of fuels to acquire and surrender emission allowances,
with the number of allowances available for purchase reduced each year until the overall GHG emission reduction goal is achieved. These reductions would be expected to cause the cost of allowances to
escalate significantly over time. The adoption of any legislation or regulations that requires reporting of GHGs or otherwise limits emissions of GHGs from VOC Brazos' equipment and operations could
require VOC Brazos to incur costs to monitor and report on GHG emissions or reduce emissions of GHGs associated with its
operations, and such requirements also could adversely affect demand for the oil and natural gas produced, all of which could reduce proceeds attributable to the net profits interest and, as a result,
the trust's cash available for distribution.

Finally,
it should be noted that some scientists have concluded 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

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any
such effects were to occur, they could have an adverse effect on VOC Brazos' assets and operations and, consequently, may reduce the proceeds attributable to the net profits interest and, as a
result, the trust's cash available for distribution.

Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in
increased costs and additional operating restrictions or delays as well as adversely affect VOC Brazos' services.

Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from
tight formations. The process involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. The process is typically
regulated by state oil and gas commissions. The EPA finalized a study of the potential environmental impacts of hydraulic fracturing activities in December 2016, finding that under certain
circumstances the "water cycle" activities associated with hydraulic fracturing could impact drinking water resources. Some states have adopted, and other states are considering adopting, regulations
that could restrict or impose additional requirements relating to hydraulic fracturing in certain circumstances. If hydraulic fracturing is regulated at the federal level, VOC Brazos' fracturing
activities could become subject to additional permit requirements or operational restrictions and also to associated permitting delays and potential increases in costs. If new laws or regulations that
significantly restrict or otherwise impact hydraulic fracturing are passed by Congress or adopted in Texas or Kansas such legal requirements could make it more difficult or costly for VOC Brazos to
perform hydraulic fracturing activities and thereby affect the determination of whether a well is commercially viable. More recently, the injection of water produced as a result of hydraulic
fracturing has been associated with seismic activity leading to restrictions on injection in some areas. Restrictions on hydraulic fracturing and disposal of water from such production could reduce
the amount of oil and natural gas that VOC Brazos is ultimately able to produce in commercially paying quantities from the underlying properties.

The bankruptcy of VOC Brazos or any operator of the underlying properties could impede the operation of the
wells and the development of the proved undeveloped reserves.

VOC Brazos is a privately-held limited partnership engaged in the production and development of oil and natural gas from properties located in
Kansas and Texas. VOC Brazos intends to implement a development and workover program, including the expenditure through 2023 of approximately $32.7 million to drill additional wells and
recomplete and workover other wells. Without this development and workover program, the average decline rate over the life of the trust of the oil and natural gas production from the proved reserves
attributable to the underlying properties will likely exceed the 8.4% per year projected in the reserve report. The operator of substantially all of the underlying properties is a privately-held
corporation engaged in the operation of oil and natural gas wells in Kansas and Texas. Therefore, the value of the net profits interest and the trust's ultimate cash available for distribution will be
highly dependent on the financial condition of VOC Brazos and the operator. Neither VOC Brazos nor the operator is a reporting company or files periodic reports with the SEC. Therefore, trust
unitholders do not have access to financial information about VOC Brazos or the operator. Furthermore, neither VOC Brazos nor the operator has agreed with the trust to maintain a certain net worth or
to be restricted by other similar covenants.

The
ability of VOC Brazos to develop the underlying properties and the ability of the operator to operate the wells on the underlying properties depends on the future financial condition
and economic performance and access to capital of VOC Brazos and the operator, which in turn will depend upon the supply and demand for oil and natural gas, prevailing economic conditions and
financial, business and other factors, many of which are beyond the control of VOC Brazos and the operator.

In
the event of the bankruptcy of VOC Brazos or the operator, the trust would have to seek a new party to perform the development and workover program or the operations of the wells
operated by

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such
operator. The trust may not be able to find a replacement driller or operator, and it may not be able to enter into a new agreement with such replacement party on favorable terms within a
reasonable period of time. As a result, such a bankruptcy may result in reduced production from the reserves and decreased distributions to trust unitholders.

The trust may be treated as an unsecured creditor with respect to the net profits interest attributable to
properties in Kansas in the event of the bankruptcy of VOC Brazos if a court were to hold that the conveyance and recording of the net profits interest was not a conveyance of a fully vested real
property interest or an interest in hydrocarbons in place or to be produced.

VOC Brazos and the trust believe that the recording in the appropriate real property records in Kansas of the net profits interest should
constitute the conveyance of a fully vested real property interest, interests in hydrocarbons in place or to be produced or a production payment as such is defined under the United States Bankruptcy
Code. In a bankruptcy of VOC Brazos, creditors of VOC Brazos would be able to claim the net profits interest as an asset of the bankruptcy estate to satisfy obligations to them if the conveyance of
the net profits interest did not constitute the conveyance of a real property interest or interests in hydrocarbons in place or to be produced under applicable state law or a production payment, in
which case the trust would be an unsecured creditor of VOC Brazos at risk of losing the entire value of the net profits interest to senior creditors.

Due to lack of geographic diversification of the underlying properties, adverse developments in Kansas or
Texas could adversely impact the results of operations and cash flows of the underlying properties and reduce the amount of cash available for distributions to trust unitholders.

The operations of the underlying properties are focused on the production and development of oil and natural gas within the states of Kansas and
Texas. As a result, the results of operations and cash flows of the underlying properties depend upon continuing operations in these areas. Due to the lack of diversification in geographic location,
adverse developments in exploration and production of oil and natural gas in either of these areas of operation could have a significantly greater impact on the results of operations and cash flows of
the underlying properties than if the operations were more diversified.

The trust has not requested a ruling from the IRS regarding the tax treatment of ownership of the trust
units. If the IRS were to determine (and be sustained in that determination) that the trust is not a "grantor trust" for federal income tax purposes, or that the net profits interest is not properly
treated as a production payment (and thus would fail to qualify as a debt instrument) for federal income tax purposes, the trust unitholders may receive different and potentially less advantageous tax
treatment than expected.

If the trust were not treated as a grantor trust for federal income tax purposes, the trust should be treated as a partnership for such
purposes. Although the trust would not become subject to federal income taxation at the entity level as a result of treatment as a partnership, and items of income, gain, loss and deduction would flow
through to the trust unitholders, the trust's tax
reporting requirements would be more complex and costly to implement and maintain, and its distributions to trust unitholders could be reduced as a result.

If
the net profits interest were not treated as a production payment (and thus would fail to qualify as a debt instrument for federal income tax purposes) the amount, timing and
character of income, gain, or loss in respect of an investment in the trust could be affected.

Neither
VOC Brazos nor the trustee has requested a ruling from the IRS regarding these tax questions, and neither VOC Brazos nor the trust can provide assurance that such a ruling would
be granted if requested or that the IRS will not challenge these positions on audit.

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Cyber-attacks or other failures in telecommunications or information technology systems could result in
information theft, data corruption and significant disruption of the business operations of VOC Brazos and its VOC Operators.

VOC Brazos and its VOC Operators rely on information technology ("IT") systems and networks in connection with various business activities,
including exploration, development and production activities. VOC Brazos and its VOC Operators rely on digital technology, including information systems and related infrastructure, as well as cloud
applications and services, to, among other things, estimate quantities of oil and natural gas reserves, analyze seismic and drilling information, process and record financial and operating data and
communicate with employees and third parties. As dependence on digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer
systems and networks, have increased in frequency and sophistication. These threats pose a risk to the security of the systems and networks of VOC Brazos and its VOC Operators, the confidentiality,
availability and integrity of their data and the physical security of employees and assets. VOC Brazos and its VOC Operators have experienced, and expect to continue to experience, attempts from
hackers and other third parties to gain unauthorized access to IT systems and networks. Although prior cyber-attacks have not had a material adverse effect on the operations or financial performance
of VOC Brazos or of its VOC Operators, VOC Brazos and its VOC Operators may not be successful in preventing cyber-attacks or mitigating their effect. Any cyber-attack could have a material adverse
effect on the reputation, competitive position, business, financial condition and results of operations of VOC Brazos and its VOC Operators, and could have a material adverse effect on the trust.
Cyber-attacks or security breaches also could result in litigation or regulatory action, as well as significant additional expense to VOC Brazos and its VOC Operators to implement further data
protection measures.

In
addition to the risks presented to the systems and networks of VOC Brazos and its VOC Operators, cyber-attacks affecting oil and natural gas distribution systems maintained by third
parties, or the networks and infrastructure on which they rely, could delay or prevent delivery to markets. A cyber-attack of this nature would be outside the ability of VOC Brazos and its VOC
Operators to control, but could have a material adverse effect on the business, financial condition and results of operations of VOC Brazos and its VOC Operators, and could have a material adverse
effect on the trust.

Cyber-attacks or other failures in telecommunications or IT systems could result in information theft, data
corruption and significant disruption of the Trustee's operations.

The trustee depends heavily upon IT systems and networks in connection with its business activities. Despite a variety of security measures
implemented by the trustee, events such as the loss or theft of back-up tapes or other data storage media could occur, and the trustee's computer systems could be subject to physical and electronic
break-ins, cyber-attacks and similar disruptions from unauthorized tampering, including threats that may come from external factors, such as governments, organized crime, hackers and third parties to
whom certain functions are outsourced, or may originate internally from within the respective companies.

If
a cyber-attack were to occur, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, the trustee's
computer systems and networks, or otherwise cause interruptions or malfunctions in the operations of the trust, which could result in litigation, increased costs and regulatory penalties. Although
steps are taken to prevent and detect such attacks, it is possible that a cyber incident will not be discovered for some time after it occurs, which could increase exposure to these consequences.

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Item 1B.    Unresolved Staff Comments.

None.

Item 2.    Properties.

Reference is made to "Item 1Business" and "Item 7Trustee's Discussion and Analysis of Financial
Condition and Results of OperationsPlanned Development and Workover Program," which are incorporated herein by reference.

Item 3.    Legal Proceedings.

Currently, there are no legal proceedings pending to which the trust is a party or of which any of its property is the subject.

Item 4.    Mine Safety Disclosures.

None.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.

The trust units commenced trading on the New York Stock Exchange on May 10, 2011 under the symbol "VOC." As of March 13, 2020, the
17,000,000 units outstanding were held by 11 unitholders of record.

Each
quarter, the trustee determines the amount of funds available for distribution to the trust unitholders. Available funds are the excess cash, if any, received by the trust from the
net profits interest and other sources (such as interest earned on any amounts reserved by the trustee) that quarter, over the trust's expenses for that quarter. Available funds are reduced by any
cash that the trustee decides to hold as a reserve against future expenses. Quarterly cash distributions during the term of the trust are made by the trustee on or before the 45th day following
the end of each quarter to the trust unitholders of record on the 30th day following the end of each quarter (or the next succeeding business day).

Equity Compensation Plans

The trust does not have any employees and, therefore, does not maintain any equity compensation plans.

Recent Sales of Unregistered Securities

There were no equity securities sold by the trust during the year ended December 31, 2019 that were not registered under the Securities
Act of 1933, as amended, which we refer to as the "Securities Act."

Purchases of Equity Securities

There were no purchases of trust units by the trust or any affiliated purchaser during the fourth quarter of the year ended December 31,
2019.

Item 6.    Selected Financial Data.

The following table sets forth selected data for the trust as of December 31, 2015, 2016, 2017, 2018 and 2019, and for the years ended
December 31, 2015, 2016, 2017, 2018 and 2019, based on the audited statements of assets and trust corpus as of December 31, 2015, 2016, 2017, 2018 and 2019 and the audited statements of
distributable income for the years ended December 31, 2015, 2016, 2017, 2018 and 2019.



December 31,2015

2016

2017

2018

2019Net profits income

$
8,627,256

$
5,749,845

$
9,209,023

$
12,938,703

$
12,661,799Distributable income

$
7,990,000

$
4,845,000

$
8,415,000

$
12,070,000

$
11,815,000Distributions per trust unit

$
0.47

$
0.285

$
0.495

$
0.710

$
0.695Total assets at year end

$
93,455,545

$
85,466,531

$
77,711,186

$
70,013,155

$
63,345,900


Item 7.    Trustee's Discussion and Analysis of Financial Condition and Results of Operations.

The following review of the trust's financial condition and results of operations should be read in conjunction with the financial statements
and notes thereto. The trust's purpose is, in general, to hold the net profits interest, to distribute to the trust unitholders cash that the trust receives in respect of the net profits interest, and
to perform certain administrative functions in respect of the net profits

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interest
and the trust units. The trust derives substantially all of its income and cash flows from the net profits interest.

Critical Accounting Policies

The trust uses the modified cash basis of accounting to report receipts by the trust of the net profits interest and payments of expenses
incurred. The net profits interest represents the right to receive revenues (oil and natural gas sales), less direct operating expenses (lease operating expenses and production and property taxes) and
development expenses (which are capitalized in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP")) of the
underlying properties, times 80%. Cash distributions of the trust will be made based on the amount of cash received by the trust pursuant to terms of the conveyance creating the net profits interest.

The
financial statements of the trust, as prepared on a modified cash basis, reflect the trust's assets, trust corpus, earnings and distributions as follows:



While
these statements differ from financial statements prepared in accordance with U.S. GAAP, the modified cash basis of reporting revenues and distributions is considered most
meaningful because quarterly distributions to the trust unitholders are based on net cash receipts received from VOC Brazos.

This
comprehensive basis of accounting other than U.S. GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin Topic
12:E, Financial Statements of Royalty Trusts.

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The
following is a summary of income from net profits interest received by the trust for the years ended December 31, 2017, 2018 and 2019, consisting of the February, May, August
and November distributions for each respective year.



Year Ended December 31,2017

2018

2019Sales volumes:Oil (Bbl)


543,854
(1)

528,049
(2)

570,216
(3)Natural gas (Mcf)


338,930
(1)

330,982
(2)

330,906
(3)Total (BOE)


600,342


583,213


625,367Average sales prices:Oil (per Bbl)

$
45.26

$
59.18

$
56.11Natural gas (per Mcf)

$
2.78

$
3.26

$
2.90Gross proceeds:Oil sales

$
24,617,112
(1)
$
31,248,796
(2)
$
31,992,019
(3)Natural gas sales


941,397
(1)

1,079,120
(2)

959,126
(3)​
​
​
​
​
​
​
​
​
​
​Total oil and natural gas sales


25,558,509


32,327,916


32,951,145Lawsuit settlement


1,209,412


0


0​
​
​
​
​
​
​
​
​
​
​Total gross proceeds


26,767,921


32,327,916


32,951,145Costs:Production and development costs:Lease operating expenses


11,650,665


12,481,714


12,688,464Production and property taxes


1,556,968


2,073,953


1,755,076Development expenses


2,049,011


1,598,870


2,680,356​
​
​
​
​
​
​
​
​
​
​Total costs


15,256,644


16,154,537


17,123,896​
​
​
​
​
​
​
​
​
​
​Excess of revenues over direct operating expenses and lease equipment and development costs


11,511,277


16,173,379


15,827,249Times net profits interest over the term of the Trust


80
%

80
%

80
%​
​
​
​
​
​
​
​
​
​
​Income from net profits interest before reserve adjustments


9,209,023


12,938,703


12,661,799Cash reserve


0


0


0​
​
​
​
​
​
​
​
​
​
​Income from net profits interest

$
9,209,023

$
12,938,703

$
12,661,799​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


(1)Oil
and gas sales volumes and related revenues for the year ended December 31, 2017 (consisting of VOC Brazos' February, May, August and November 2017 net
profits interest distributions to the trust) generally represent the production by VOC Brazos from September 2016 through August 2017.(2)Oil
and gas sales volumes and related revenues for the year ended December 31, 2018 (consisting of VOC Brazos' February, May, August and November 2018 net
profits interest distributions to the trust) generally represent the production by VOC Brazos from September 2017 through August 2018.(3)Oil
and gas sales volumes and related revenues for the year ended December 31, 2019 (consisting of VOC Brazos' February, May, August and November 2019 net
profits interest distributions to the trust) generally represent the production by VOC Brazos from September 2018 through August 2019.


Included
in the results of operations for the year ended December 31, 2017 is the following information representing a one-time event associated with the collection of proceeds of
$1,209,412,

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which
VOC Brazos received in connection with the settlement of a lawsuit arising from an unaffiliated operator having drilled and completed a well across land partly owned by VOC Brazos without
observing VOC Brazos' legal ownership in such well. In connection with the settlement, VOC Brazos received a working interest in the well and the settlement proceeds. The following table includes the
well's volumes, average sales prices and net profits for the period from January 2015 through the quarter ended March 31, 2017. The extended period of time reflected in the table below is due
to the time it took for the settlement to be finally approved by the court and the parties to the lawsuit. As a result, VOC Brazos was not able to distribute the settlement proceeds and net proceeds
received from its net profits interest in such well until the quarter ended March 31, 2017.



Sales volumes:Oil (Bbl)


5,864Natural gas (Mcf)


6,420Total (BOE)


6,934Average sales prices:Oil (per Bbl)

$
43.75Natural gas (per Mcf)

$
1.43Gross proceeds:Oil sales

$
256,555Natural gas sales


9,168​
​
​
​
​Total gross proceeds


265,723Costs:Production and development costs:Lease operating expenses


43,369Production and property taxes


16,984Development expenses


0​
​
​
​
​Total costs reimbursed by working interest owner


60,353​
​
​
​
​Excess of revenues over direct operating expenses and lease equipment and development costs

$
205,370​
​
​
​
​​
​
​
​
​​
​
​
​
​


Comparison of Results of the Trust for the Years Ended December 31, 2019 and 2018

Income from Net Profits Interest.Income from net profits interest is recorded on a modified cash basis when the trust receives net
profits interest
proceeds from VOC Brazos. Net profits interest proceeds that VOC Brazos remits to the trust are based on the oil and gas production VOC Brazos has received payment for within one month following the
end of the most recent fiscal quarter. VOC Brazos receives payment for its crude oil sales generally within 30 days following the month in which it is produced. Income from net profits interest
is generally a function of oil and gas gross proceeds, lease operating expenses, production and property taxes and development expenses as follows:

Total oil and natural gas sales.Oil and natural gas sales were $32,951,145 for the year ended December 31, 2019, an increase of
$623,229 or
1.9% from $32,327,916 for the year ended December 31, 2018. Revenues are a function of oil and natural gas sales prices and volumes sold. The increase in gross proceeds was due to an increase
in oil sales volumes partially offset by a small decrease in gas sales volumes during 2019 compared to 2018. This increase was also partially offset by a decrease in market prices for oil and natural
gas sales during 2019 compared to 2018. Oil sales volumes were 570,216 Bbls for the year ended December 31, 2019, an increase of 42,167 Bbls or 8.0% from 528,049 Bbls for the year ended
December 31, 2018, while natural gas sales volumes were 330,906 Mcf, a decrease of 76 Mcf from 330,982 Mcf for the year ended December 31, 2018. During the year ended

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December 31,
2019, the average price for oil decreased 5.2% to $56.11 per Bbl and the average price for natural gas decreased 11.0% to $2.90 per Mcf.

Costs.Lease operating expenses were $12,688,464 for the year ended December 31, 2019, an increase of $206,750 or 1.7% from
$12,481,714 for
the year ended December 31, 2018. The increase was primarily due to increases in the costs of oilfield goods and services. Production and property taxes were $1,755,076 for the year ended
December 31, 2019, a decrease of $318,877 or 15.4% from $2,073,953 for the year ended December 31, 2018. The decrease is primarily due to a $380,540 or 30.6% decrease in property taxes
partially offset by an increase of $61,663 or 7.4% in production taxes as a result of higher oil sales volumes. Development expenses were $2,680,356 for the year ended December 31, 2019, an
increase of $1,081,486 or 67.6% from $1,598,870 for 2018. The increase was primarily due to an increase in the limited drilling activity and corresponding limited development expenses during the year
ended December 31, 2019 compared to the year ended December 31, 2018.

Excess of revenues over direct operating expenses and lease equipment and development costs.The excess of revenues over direct
operating expenses
and lease equipment and development costs from the underlying properties was $15,827,249 for the year ended December 31, 2019, a decrease of $346,130 or 2.1% from $16,173,379 for the year ended
December 31, 2018. The trust's 80% net profits interest of these totals were $12,661,799 and $12,938,703, respectively. During the years ended December 31, 2019 and 2018, VOC Brazos did
not withhold or release any dollar amounts due to the Trust from previously established cash reserve for future development, maintenance or operating expenditures, which resulted in income from the
net profits interest of $12,661,799 and $12,938,703 for such years, respectively. These amounts were further reduced by a trust holdback for future expenses of $846,799 and $868,703 for the years
ended December 31, 2019 and 2018, respectively. The trustee paid general and administrative expenses of $880,832 for the year ended December 31, 2019, an increase of $55,774 from
$825,058 for the year ended December 31, 2018. These factors resulted in distributable income for the year ended December 31, 2019 of $11,815,000, a decrease of $255,000 from $12,070,000
for the year ended December 31, 2018.

Comparison of Results of the Trust for the Years Ended December 31, 2018 and 2017

Income from Net Profits Interest.Income from net profits interest is recorded on a modified cash basis when the trust receives net
profits interest
proceeds from VOC Brazos. Net profits interest proceeds that VOC Brazos remits to the trust are based on the oil and gas production VOC Brazos has received payment for within one month following the
end of the most recent fiscal quarter. VOC Brazos receives payment for its crude oil sales generally within 30 days following the month in which it is produced. Income from net profits interest
is generally a function of oil and gas gross proceeds, lease operating expenses, production and property taxes and development expenses as follows:

Total oil and natural gas sales.Oil and natural gas sales were $32,327,916 for the year ended December 31, 2018, an increase of
$6,769,407 or
26.5% from $25,558,509 (including $265,723 as noted above for a one-time event) for the year ended December 31, 2017. Revenues are a function of oil and natural gas sales prices and volumes
sold. The increase in gross proceeds was due to higher market prices for oil and natural gas during 2018 compared to 2017. These increases were partially offset by a decrease in oil sales volumes and
gas sales volumes during 2018 compared to 2017. During the year ended December 31, 2018, the average price for oil increased 30.8% to $59.18 per Bbl and the average price for natural gas
increased 17.3% to $3.26 per Mcf. Oil sales volumes were 528,049 Bbls for the year ended December 31, 2018, a decrease of 15,805 Bbls or 2.9% from 543,854 Bbls (including 5,864 Bbls as noted
above for a one-time event) for the year ended December 31, 2017, while natural gas sales volumes were 330,982 Mcf a decrease of 7,948 Mcf or 2.3% from 338,930 Mcf (including 6,420 Mcf as noted
above for a one-time event).

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Costs.Lease operating expenses were $12,481,714 for the year ended December 31, 2018, an increase of $831,049 or 7.1% from
$11,650,665
(including $43,369 as noted above for a one-time event) for the year ended December 31, 2017. The increase was primarily due to increases in the costs of oilfield goods and services. Production
and property taxes were $2,073,953 for the year ended December 31, 2018, an increase of $516,985 or 33.2% from $1,556,968 (including $16,984 as noted above for a one-time event) for the year
ended December 31, 2017. The increase is primarily due to a 36.7% increase in property taxes and an increase of 28.2% in production taxes as a result of higher prices for oil and natural gas.
Development expenses were $1,598,870 for the year ended December 31, 2018, a decrease of $450,141 or 22.0% from $2,049,011 for 2017. The decrease was primarily due to limited drilling activity
and corresponding limited development expenses during the year ended December 31, 2018 compared to the year ended December 31, 2017.

Excess of revenues over direct operating expenses and lease equipment and development costs.The excess of revenues over direct
operating expenses
and lease equipment and development costs from the underlying properties was $16,173,379 for the year ended December 31, 2018, an increase of $4,662,102 or 40.5% from $11,511,277 (including
$205,370 and $1,209,412 as noted above for a one-time event and lawsuit settlement, respectively) for the year ended December 31, 2017. The trust's 80% net profits interest of these totals were
$12,938,703 and $9,209,023, respectively. During the years ended December 31, 2018 and 2017, VOC Brazos did not withhold or release any dollar amounts due to the Trust from previously
established cash reserve for future development, maintenance or operating expenditures, which resulted in income from the net profits interest of $12,938,703 and $9,209,023 for such years,
respectively. These amounts were further reduced by a trust holdback for future expenses of $868,703 and $794,023 for the years ended December 31, 2018 and 2017, respectively. The trustee paid
general and administrative expenses of $825,058 for the year ended December 31, 2018, an increase of $108,915 from $716,143 for the year ended December 31, 2017. These factors resulted
in distributable income for the year ended December 31, 2018 of $12,070,000, an increase of $3,655,000 from $8,415,000 for the year ended December 31, 2017.

Liquidity and Capital Resources

Other than trust administrative expenses, including any reserves established by the trustee for future liabilities, the trust's only use of cash
is for distributions to trust unitholders. Available funds are the excess cash, if any, received by the trust from the net profits interest and payments from other sources (such as interest earned on
any amounts reserved by the trustee) in that quarter, over the trust's expenses paid for that quarter. Available funds are reduced by any cash the trustee decides to hold as a reserve against future
expenses. As of December 31, 2019, the trustee held $326,132 as such a reserve. The trust paid, out of the first cash payment received by the trust, the trustee's and Delaware trustee's legal
expenses incurred in forming the trust, in connection with the initial public offering (that were not otherwise paid by VOC Brazos) and related matters, as well as the Delaware trustee's acceptance
fee in the amount of $5,000.

The
trustee can authorize the trust to borrow money to pay trust administrative or incidental expenses that exceed cash held by the trust. The trustee may authorize the trust to borrow
from the trustee as lender provided the terms of the loan are fair to the trust unitholders. The trustee may also deposit funds awaiting distribution in an account with itself, if the interest paid to
the trust at least equals amounts paid by the trustee on similar deposits, and make no other short-term investments with the funds distributed to the trust. The trustee has no current plans to
authorize the trust to borrow money. If the trust borrows funds, the trust unitholders will not receive distributions until the borrowed funds are repaid. During the year ended December 31,
2019, the trust made no borrowings.

As
substantially all of the underlying properties are located in mature fields, VOC Brazos does not expect future costs for the underlying properties to change significantly as compared
to recent historical costs other than changes due to fluctuations in the cost of oilfield services generally. However, see

51

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Table of Contents

"Item 7.
Trustee's Discussion and Analysis of Financial Condition and Results of OperationsPlanned Development and Workover Program" below. VOC Brazos has agreed to post a letter
of credit in the amount of $1.7 million in favor of the trustee to protect the trustee against the risk that the trust does not have sufficient cash to pay its expenses.

The
trust pays the trustee an administrative fee of $150,000 per year. The trust pays the Delaware trustee a fee of $2,500 per year. The trust also incurs, either directly or as a
reimbursement to the trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that are deducted by the trust before distributions are made to trust unitholders,
including the $18,750 administrative services fee payable quarterly to VOC Brazos pursuant to an administrative services agreement. The trust is also responsible for paying other expenses incurred as
a result of being a publicly traded entity, including costs associated with annual and quarterly reports to trust unitholders, tax return and Form 1099 preparation and distribution, NYSE
listing fees, independent auditor fees and registrar and transfer agent fees.

The
trust does not have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the trust's liquidity or the
availability of capital resources.

Planned Development and Workover Program

The primary goals of VOC Brazos' development and workover program have been to develop proved undeveloped reserves, manage workovers and
minimize the natural decline in production in areas in which it operates. However, VOC Brazos is not obligated to undertake any development activities, so any drilling and completing activities will
be subject to the reasonable discretion of VOC Brazos. No assurance can be given, however, that any development well will produce in commercially paying quantities or that the characteristics of any
development well will match the characteristics of VOC Brazos' existing wells or VOC Brazos' historical drilling success rate. With respect to the underlying properties, VOC Brazos expects, but is not
obligated, to implement the following development strategies specific to each of its primary operating areas:



52

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The
trust is not directly obligated to pay any portion of the capital expenditures made with respect to the underlying properties; however, capital expenditures made by VOC Brazos with
respect to the

53

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Table of Contents

underlying
properties will be deducted from the gross proceeds in calculating the net proceeds from which cash will be paid to the trust. As a result, the trust will indirectly bear an 80% (subject to
certain limitations during the final three years of the trust, as described above under "Item 1. BusinessComputation of Net ProceedsNet Profits Interest") share of any
capital expenditures made with respect to the underlying properties. Accordingly, higher or lower capital expenditures will, in general, directly decrease or increase, respectively, the cash received
by the trust in respect of its net profits interest, which will have a corresponding effect on cash available for distribution to unitholders. As the cash received by the trust in respect of the net
profits interest will be reduced by the trust's pro rata share of these capital expenditures, VOC Brazos expects that it will incur capital expenditures with respect to the underlying properties
throughout the term of the trust on a basis that balances the impact of the capital expenditures on current cash distributions to the trust unitholders with the longer term benefits of increased oil
and natural gas production expected to result from the capital expenditures. In addition, VOC Brazos may establish a capital reserve of up to $1.0 million in the aggregate at any given time to
reduce the impact on distributions of uneven capital expenditure timing. However, if annual cash proceeds attributable to the net profits interest are less than $1 million for each of two
consecutive years, then under the terms of the trust agreement, the trust would be required to dissolve.

VOC
Brazos, as the designated operator of the underlying properties, is entitled to make all determinations related to capital expenditures with respect to the underlying properties, and
there are no limitations on the amount of capital expenditures that VOC Brazos may incur with respect to the underlying properties. VOC Brazos is required under the conveyance to use commercially
reasonable efforts to cause the operators of the underlying properties to operate these properties as would a reasonably prudent operator acting with respect to its own properties (without regard to
the existence of the net profits interest). As the trust unitholders would not be expected to fully realize the benefits of capital expenditures made with respect to the underlying properties towards
the end of the term of the trust, during each twelve-month period beginning on the later to occur of (1) December 31, 2027 and (2) the time when 9.8 MMBoe have been produced from
the underlying properties and sold (which is the equivalent of 7.8 MMBoe in respect of the net profits interest), capital expenditures that may be taken into account in calculating net proceeds
attributable to the net profits interest will be limited to the average annual capital expenditures during the preceding three years, as increased by 2.5% to account for expected increased costs due
to inflation.

Off-Balance Sheet Arrangements

The trust has no off-balance sheet arrangements. The trust has not guaranteed the debt of any other party, nor does the trust have any other
arrangements or relationships with other entities that could potentially result in unconsolidated debt, losses or contingent obligations.

Contractual Obligations

As of December 31, 2019, the trust had no obligations or commitments to make future contractual payments other than the administrative
services fee and trustee fee payable to VOC Brazos and the trustee, respectively. See "Item 8. Financial Statements and Supplementary DataNotes to Financial
StatementsNote GRelated Party Transactions."

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

The trust is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information
under this item.

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Table of Contents

Item 8.    Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Trustee and Unitholders
VOC Energy Trust

Opinion on the financial statements

We have audited the accompanying statements of assets and trust corpus of VOC Energy Trust (the "Trust") as of December 31, 2018 and
2019, the related statements of distributable income and changes in trust corpus for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred
to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the assets and trust corpus of the Trust as of December 31, 2018 and 2019,
and its distributable income and its changes in trust corpus for each of the three years in the period ended December 31, 2019, in conformity with the modified cash basis of accounting
described in Note B to the financial statements.

Basis of accounting

As described in Note B to the financial statements, these financial statements have been prepared on a modified cash basis of accounting,
which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Trustee. Our responsibility is to express an opinion on the Trust's financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect
to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness
of the Trust's internal control over financial reporting. Accordingly, we express no such opinion.

Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by the Trustee, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.

/s/
Grant Thornton LLP

We
have served as the Trust's auditor since 2010.

Oklahoma
City, Oklahoma
March 13, 2020

55

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Table of Contents

VOC ENERGY TRUST  STATEMENTS OF ASSETS AND TRUST CORPUS



December 31,2018

2019ASSETSCash

$
360,165

$
326,132Investment in net profits interest


140,591,606


140,591,606Accumulated amortization


(70,938,616
)

(77,571,838
)​
​
​
​
​
​
​
​Total assets

$
70,013,155

$
63,345,900​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​TRUST CORPUSTrust corpus, 17,000,000 Trust units issued and outstanding at December 31, 2018 and 2019, respectively

$
70,013,155

$
63,345,900​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​


STATEMENTS OF DISTRIBUTABLE INCOME



Year Ended December 31,2017

2018

2019Income from net profits interest

$
9,209,023

$
12,938,703

$
12,661,799Cash on hand used (withheld) for Trust expenses


(77,880
)

(43,645
)

34,033General and administrative expenses(1)


(716,143
)

(825,058
)

(880,832
)​
​
​
​
​
​
​
​
​
​
​Distributable income

$
8,415,000

$
12,070,000

$
11,815,000​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Distributions per Trust unit (17,000,000 Trust units issued and outstanding at December 31, 2017, 2018 and 2019, respectively)

$
0.495

$
0.710

$
0.695​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


(1)Includes
$70,260, $121,475 and $75,995 paid to VOC Brazos and $150,000, $150,000 and $150,000 paid to The Bank of New York Mellon Trust Company, N.A. for the years
ended December 31, 2017, 2018 and 2019, respectively.


STATEMENTS OF CHANGES IN TRUST CORPUS



Year Ended December 31,2017

2018

2019Trust corpus, beginning of year

$
85,466,531

$
77,711,186

$
70,013,155Income from net profits interest


9,209,023


12,938,703


12,661,799Cash distributions


(8,415,000
)

(12,070,000
)

(11,815,000
)Trust expenses


(716,143
)

(825,058
)

(880,832
)Amortization of net profits interest


(7,833,225
)

(7,741,676
)

(6,633,222
)​
​
​
​
​
​
​
​
​
​
​Trust corpus, end of year

$
77,711,186

$
70,013,155

$
63,345,900​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​




The accompanying notes are an integral part of these financial statements.

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Table of Contents

VOC Energy Trust        NOTES TO FINANCIAL STATEMENTS

NOTE AORGANIZATION OF THE TRUST

VOC Energy Trust (the "Trust") is a statutory trust formed on November 3, 2010 (capitalized on December 17, 2010) under the Delaware Statutory Trust Act pursuant to a trust
agreement dated November 3, 2010 (as amended and restated on May 10, 2011, the "Trust Agreement") among VOC Brazos Energy Partners, L.P., a Texas limited partnership ("VOC
Brazos"), as trustor, The Bank of New York Mellon Trust Company, N.A., as Trustee (the "Trustee"), and Wilmington Trust Company, as Delaware Trustee (the "Delaware Trustee"). The Trust was created to
acquire and hold a term net profits interest for the benefit of the Trust unitholders.

VOC
Brazos is a privately-held limited partnership engaged in the production and development of oil and natural gas from properties located in Texas. VOC Kansas Energy Partners, L.L.C.,
a Kansas limited liability company ("VOC Kansas"), is a privately-held limited liability company engaged in the production and development of oil and natural gas from properties primarily located in
Kansas along with a limited number of Texas properties. In connection with the closing of the initial public offering of units of beneficial interest in the Trust ("Trust Units") in May 2011, VOC
Brazos acquired all of the membership interests in VOC Kansas in exchange for newly issued limited partner interests in VOC Brazos pursuant to a Contribution and Exchange Agreement, dated
August 30, 2010, as amended, by and between VOC Brazos and VOC Kansas. This resulted in VOC Kansas becoming a wholly-owned subsidiary of VOC Brazos.

The
Trust was created to acquire and hold a term net profits interest representing the right to receive 80% of the net proceeds (calculated as described below in Note C) from
production from the Underlying Properties (as defined below). The net profits interest consists of working interests in substantially all of the oil and natural gas properties held by VOC Brazos and
VOC Kansas in the States of Kansas and Texas as of the date of the conveyance of the net profits interest to the Trust. We refer to the properties in which the Trust holds the net profits interest as
the "Underlying Properties."

The
net profits interest is passive in nature, and the Trustee has no management control over and no responsibility relating to the operation of the Underlying Properties. The net
profits interest entitles the Trust to receive 80% of the net proceeds attributable to VOC Brazos' interest from the sale of
production from the underlying properties during the term of the Trust. The net profits interest will terminate on the later to occur of (1) December 31, 2030 or (2) the time when
10.6 million barrels of oil equivalent ("MMBoe") (which is the equivalent of 8.5 MMBoe in respect of the net profits interest) have been produced from the Underlying Properties and sold, and
the Trust will soon thereafter wind up its affairs and terminate.

As
of December 31, 2019, cumulatively, since inception, the Trust has received payment for approximately 5.1 MMBoe (unaudited).

The
trust will dissolve prior to its termination if:



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VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE AORGANIZATION OF THE TRUST (Continued)

Upon
dissolution, the trustee would sell all of the trust's assets, either by private sale or public auction, and distribute the net proceeds of the sale to the trust unitholders.

The
Trustee can authorize the Trust to borrow money to pay administrative or incidental expenses of the Trust that exceed cash held by the Trust. The Trustee may authorize the Trust to
borrow from the Trustee or the Delaware Trustee as a lender provided the terms of the loan are similar to the terms it would grant to a similarly situated commercial customer with whom it did not have
a fiduciary relationship. The Trustee may also deposit funds awaiting distribution in an account with itself and make other short-term investments with the funds distributed to the Trust.

NOTE BTRUST ACCOUNTING POLICIES

A summary of the significant accounting policies of the Trust follows.

The
Trust uses the modified cash basis of accounting to report receipts by the Trust of the net profits interest and payments of expenses incurred. The net profits interest represents
the right to receive revenues (oil and natural gas sales), less direct operating expenses (lease operating expenses and production and property taxes) and development expenses (which are capitalized
in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP")) of the Underlying Properties times 80%. Cash
distributions of the Trust will be made based on the amount of cash received by the Trust pursuant to terms of the conveyance creating the net profits interest.

The
financial statements of the Trust, as prepared on a modified cash basis, reflect the Trust's assets, Trust corpus, and distributable income as follows:



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VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE BTRUST ACCOUNTING POLICIES (Continued)

While
these statements differ from financial statements prepared in accordance with U.S. GAAP, the modified cash basis of reporting revenues and distributions is considered most meaningful
because quarterly distributions to the Trust unitholders are based on net cash receipts.

This
comprehensive basis of accounting other than U.S. GAAP corresponds to the accounting permitted for royalty trusts by the U.S. Securities and Exchange Commission (the "SEC")
as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

No
new accounting pronouncements have been adopted or issued during the year ended December 31, 2018 that would impact the financial statements of the Trust.

For
purposes of these statements, the Trust considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

The
preparation of financial statements requires estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Significant
estimates affecting these financial statements include estimates of proved oil and gas reserves, which are used to compute the Trust's amortization of net profits interest.

NOTE CNET PROFITS INTEREST

Under the conveyance, 80% of the aggregate net proceeds attributable to the sale of oil and natural gas production from the Underlying Properties for each calendar quarter will be paid
to the Trust on or before the 30th day of the month following the end of each quarter. VOC Brazos will not pay to the Trust any interest on the net proceeds held by VOC Brazos prior to payment
to the Trust. The Trustee will make distributions to Trust unitholders quarterly.

"Gross proceeds" means the aggregate amount received by VOC Brazos from sales of oil and natural gas produced from the Underlying
Properties (other than amounts received for certain future non-consent operations). However, gross proceeds does not include consideration for the transfer or sale of any underlying property by VOC
Brazos or any subsequent owner to any new owner. Gross proceeds also does not include any amount for oil or natural gas lost in production or marketing or used by the owner of the Underlying
Properties in drilling, production and plant operations. Gross proceeds includes payments for future production if they are not subject to repayment in the event of insufficient subsequent production.

"Net proceeds" means gross proceeds less the following costs:



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VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE CNET PROFITS INTEREST (Continued)



Certain
other non-production revenues, including salvage value for equipment related to plugged and abandoned wells, as detailed in the conveyance, offset the costs outlined above in
calculating the net proceeds. If any excess amounts have not been used to offset costs at the time when the later to occur of (1) December 31, 2030, or (2) the time when 10.6
MMBoe (which is the equivalent of 8.5 MMBoe in respect of the net profits interest) have been produced from the Underlying Properties and sold, then Trust unitholders will not be entitled to receive
the benefit of such excess amounts.

During
each twelve-month period beginning on the later to occur of (1) December 31, 2027 and (2) the time when 9.8 MMBoe have been produced from the Underlying
Properties and sold (which is the equivalent of 7.8 MMBoe in respect of the net profits interest) (in either case, the "Capital

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VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE CNET PROFITS INTEREST (Continued)

Expenditure
Limitation Date"), the sum of the development expenditures and amounts reserved for approved development expenditure projects for such twelve-month period may not exceed the Average Annual
Capital Expenditure Amount. The "Average Annual Capital Expenditure Amount" means the quotient of (x) the sum of the development expenditures and amounts reserved for approved development
expenditure projects with respect to the three twelve-month periods ending on the Capital Expenditure Limitation Date, divided by (y) three. Commencing on the Capital Expenditure Limitation
Date, and each anniversary of the Capital Expenditure Limitation Date thereafter, the Average Annual Capital Expenditure Amount will be increased by 2.5% to account for expected increased costs due to
inflation.

In
the event that the net proceeds for any computation period is a negative amount, the Trust will receive no payment for that period, and any such negative amount plus accrued interest
will be deducted from gross proceeds in the following computation period for purposes of determining the net proceeds for that following computation period.

Gross
proceeds and net proceeds are calculated on a cash basis, except that certain costs, primarily ad valorem taxes and expenditures of a material amount, may be determined on an
accrual basis.

The
net profits interest was recorded at the historical cost of VOC Brazos on May 10, 2011, the date of the conveyance, and was calculated as follows:



Oil and gas properties

$
197,270,173Accumulated depreciation and depletion


(17,681,155
)Hedge liability


(1,717,713
)20-year asset retirement liability


(2,131,797
)​
​
​
​
​Net property value to be conveyed


175,739,508​
​
​
​
​Times 80% net profits interest to Trust

$
140,591,606​
​
​
​
​​
​
​
​
​​
​
​
​
​


NOTE DINCOME FROM NET PROFITS INTEREST



Year Ended December 31,2017

2018

2019Excess of revenues over direct operating expenses and lease equipment and development costs(1)

$
11,511,277

$
16,173,379

$
15,827,249Times net profits interest over the term of the Trust


80
%

80
%

80
%​
​
​
​
​
​
​
​
​
​
​Income from net profits interest before reserve adjustments


9,209,023


12,938,703


12,661,799Cash reserve(2)


0


0


0​
​
​
​
​
​
​
​
​
​
​Income from net profits interest

$
9,209,023
(3)
$
12,938,703
(4)
$
12,661,799
(5)​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


(1)Pursuant
to the terms of the conveyance of the net profits interest, lease equipment and development costs are to be deducted when calculating the distributable
income to the Trust.


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VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE DINCOME FROM NET PROFITS INTEREST (Continued)

(2)Pursuant
to the terms of the conveyance of the net profits interest, VOC Brazos can reserve up to $1.0 million for future development, maintenance or
operating expenditures at any time. The reserve balance was $1,000,000 at December 31, 2017, 2018 and 2019, respectively(3)The
income from the net profits interest for the year ended December 31, 2017 (consisting of VOC Brazos' February, May, August and November 2017 net profits
interest distributions to the Trust) generally represents the production by VOC Brazos from September 2016 through August 2017.(4)The
income from the net profits interest for the year ended December 31, 2018 (consisting of VOC Brazos' February, May, August and November 2018 net profits
interest distributions to the Trust) generally represents the production by VOC Brazos from September 2017 through August 2018.(5)The
income from the net profits interest for the year ended December 31, 2019 (consisting of VOC Brazos' February, May, August and November 2019 net profits
interest distributions to the Trust) generally represents the production by VOC Brazos from September 2018 through August 2019.


NOTE EINCOME TAXES

Tax counsel to the Trust advised the Trust at the time of formation that, under then current tax laws, in its opinion the net profits interest should be treated as a debt instrument for
federal income tax purposes, and the Trust should be required to treat a portion of each payment it receives with respect to the net profits interest as interest income in accordance with the
"noncontingent bond method" under the original issue discount rules contained in the Internal Revenue Code of 1986, as amended, and the corresponding regulations. Tax counsel to the Trust also advised
the Trust at the time of formation that in its opinion the Trust will be treated as a grantor trust for federal income tax purposes. On the basis of this advice, Trust unitholders will be considered
to own and receive the Trust's assets and income and will be directly taxable thereon as if no trust were in existence. No provision for federal or state income taxes has been made in the accompanying
statements.

NOTE FDISTRIBUTIONS TO UNITHOLDERS

The Trustee determines for each quarter the amount available for distribution to the Trust unitholders. This distribution is expected to be made on or before the 45th day
following the end of each quarter to the Trust unitholders of record on the 30th day of the month following the end of each quarter (or the
next succeeding business day). Such amounts will be equal to the excess, if any, of the cash received by the Trust relating to the preceding quarter, over the expenses of the Trust paid for

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VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE FDISTRIBUTIONS TO UNITHOLDERS (Continued)

such
quarter, subject to adjustments for changes made by the Trustee during such quarter in any cash reserves established for future expenses of the Trust.



Date paid

Period covered

Distribution
per unit

Available
distribution
before reserve
change

Reserve
released
(established)
to (from)
distribution(1)

Total
distributionFebruary 14, 2017

October 1, 2016 through December 31, 2016

$
0.080

$
1.36 million

$
0

$
1.36 millionMay 12, 2017

January 1, 2017 through March 31, 2017


0.21


3.57 million


0


3.57 millionAugust 14, 2017

April 1, 2017 through June 30, 2017


0.11


1.87 million


0


1.87 millionNovember 14, 2017

July 1, 2017 through September 30, 2017


0.095


1.615 million


0


1.615 millionFebruary 14, 2018

October 1, 2017 through December 31, 2017


0.11


1.87 million


0


1.87 millionMay 15, 2018

January 1, 2018 through March 31, 2018


0.18


3.06 million


0


3.06 millionAugust 14, 2018

April 1, 2018 through June 30, 2018


0.20


3.4 million


0


3.4 millionNovember 14, 2018

July 1, 2018 through September 30, 2018


0.22


3.74 million


0


3.74 millionFebruary 14, 2019

October 1, 2018 through December 31, 2018


0.145


2.465 million


0


2.465 millionMay 15, 2019

January 1, 2019 through March 31, 2019


0.16


2.72 million


0


2.72 millionAugust 14, 2019

April 1, 2019 through June 30, 2019


0.205


3.485 million


0


3.485 millionNovember 14, 2019

July 1, 2019 through September 30, 2019


0.185


3.145 million


0


3.145 million


(1)Pursuant
to the terms of the conveyance of the net profits interest, VOC Brazos can reserve up to $1.0 million for future development, maintenance or
operating expenditures at any time.


NOTE GRELATED PARTY TRANSACTIONS

Trustee Administrative Fee.Under the terms of the Trust Agreement, the Trust pays an annual administrative fee of $150,000 to the
Trustee and $2,500
to the Delaware Trustee.

63

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Table of Contents

VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE GRELATED PARTY TRANSACTIONS (Continued)

Agreement with VOC Brazos.In May 2011, the Trustee, not in its individual capacity but solely as Trustee of the Trust, entered into an
administrative services agreement with VOC Brazos whereby, in connection with the conveyance of the net profits interest to the Trust, VOC Brazos agreed to provide the Trust with accounting,
bookkeeping and informational services relating to the net profits interest in exchange for an administrative services fee of $18,750 that will be paid to VOC Brazos on a quarterly basis, The
administrative services agreement will terminate on the earliest to occur of: (i) the date the Trust shall have dissolved and commenced winding up in accordance with the Trust Agreement,
(ii) the date that all of the net profits interest has been terminated or is no longer held by the Trust and (iii) a date mutually agreed to by VOC Brazos and the Trustee. The quarterly
fee increases by 4% each year. For 2017, 2018 and 2019, $70,260 (representing three quarters), $121,475 (representing five quarters) and $75,995 (representing three quarters) respectively, was paid to
VOC Brazos as administrative fees.

Sales to MV Purchasing, LLC.For the year ended December 31, 2017, 2018 and 2019, MV Purchasing, LLC, an affiliate of
VOC Brazos
and referred to as MV Purchasing, purchased 38%, 38% and 32%, respectively, of the production sold from the Underlying Properties. Sales to MV Purchasing are under short-term arrangements, ranging
from one to six months, using market sensitive pricing.

Joint Venture Agreement.In 2018, VOC Brazos entered into a joint venture agreement with Hawkwood Energy East Texas, LLC
("Hawkwood"). Under
the terms of the joint venture agreement, Hawkwood carried VOC Brazos for its share of drilling and completion costs for four wells in the Lower Woodbine Organic Shale (the "Hawkwood Earning Wells").
In exchange, Hawkwood earned a working interest representing 50% of VOC Brazos' interest in each Hawkwood Earning Well and up to a 50% interest in VOC Brazos' acreage in the south half of the Kurten
Woodbine Unit. After the Hawkwood Earning Wells were completed, Hawkwood had the right to propose and drill up to eight wells in the Lower Woodbine Organic Shale ("LWOS") in 2019 and twelve LWOS wells
in 2020, with no contractual limitation of the number of wells per year to propose and drill after 2020 (collectively, the "Hawkwood Development Wells").

In
2019, Hawkwood drilled and completed four Hawkwood Development Wells. VOC Brazos is paying Vess Oil, as the operator, for its share of costs and related interest in the Hawkwood
Development Wells, as net revenue from each of the wells is received, thereby having no current effect on Trust distributions. The balance of the unpaid drilling and completion costs that would have
had an effect on the distributions to Trust unitholders through the November 14, 2019 distribution was $2,220,352. The unpaid balance thru December 31, 2019 was $5,354,517.

VOC
Brazos is evaluating the potential economic benefits associated with development of the LWOS. If these activities are pursued, such activities would result in increased development
costs burdening the net profits interest of the trust relative to historical development costs. As a result of such increased development costs, cash available for distribution by the Trust would be
temporarily reduced, and in certain periods there may be no distributions to unitholders, until anticipated production from the various development efforts in the Kurten Woodbine Unit can be brought
on-line. If annual cash proceeds attributable to the net profits interest are less than $1 million for each of two consecutive years, then under the terms of the Trust Agreement, the Trust
would be required to dissolve. To address these emerging opportunities, VOC Brazos will continue to evaluate the appropriate strategy and capital plan to fund development for the Trust.

64

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Table of Contents

VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE HADVANCE FOR TRUST EXPENSES

Under the terms of the Trust Agreement, the Trustee is allowed to borrow money to pay Trust expenses. During 2017, 2018 and 2019, the Trust did not borrow any money. Any advances will be
shown as additions to Trust Corpus when the borrowing is made, and any repayments will be shown as reductions to Trust Corpus when the borrowing is repaid. Under the terms of the Trust Agreement, VOC
Brazos has provided a letter of credit in the amount of $1.7 million to the Trustee to protect the Trust against the risk that it does not have sufficient cash to pay future expenses.

NOTE IOTHER EVENTS



On January 16, 2020, the Trust announced a Trust distribution to unitholders of record on January 30, 2020 of $1,870,000, or $0.11
per unit, which was paid on February 14, 2020. Such distribution consisted of the net proceeds of production collected by VOC Brazos from October 1, 2019 through December 31,
2019.

NOTE JDISCLOSURES ABOUT OIL AND GAS ACTIVITIES (UNAUDITED)

The Trust is required to disclose proved reserves in accordance with the SEC's reporting rules, which require that the average, first-day-of-the-month price during the 12-month period
before the end of the year be used when estimating whether reserve quantities are economical to produce. This same 12-month average price is also used in calculating the aggregate amount of (and
changes in) future cash inflows related to the standardized measure of discounted future net cash flows. The rules also allow for the use of reliable technology to estimate proved oil and gas reserves
if those technologies have been demonstrated to result in reliable conclusions about reserve volumes. The unaudited supplemental information on oil and gas exploration and production activities for
2017, 2018 and 2019 has been presented in accordance with these rules.

Estimates
of the proved oil and gas reserves attributable to the Trust as of December 31, 2017, 2018 and 2019 are based on reports of Cawley, Gillespie &
Associates, Inc., independent petroleum and geological engineers, and the contract property management engineering staff of the manager of VOC Brazos who operates the Underlying Properties, in
accordance with the SEC's rules and definitions. Users of this information should be aware that the process of estimating quantities of "proved" and "proved developed" and "proved undeveloped" crude
oil and natural gas reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a
given reservoir may also change substantially over time as a result of numerous factors, including additional development activity, evolving production history and continual reassessment of the
viability of production under varying economic conditions. Consequently, material revisions to existing reserve estimates occur from time to time.

The
reserve data below represent estimates only and should not be construed as being exact. Moreover, the discounted values should not be construed as representative of the current
market value of the net profits interest. A market value determination would include many additional factors including: (i) anticipated future oil and gas prices; (ii) the effect of
federal income taxes, if any, on the Trust; (iii) an allowance for return on investment; (iv) the effect of governmental legislation; (v) the value of additional potential
reserves, not considered proved at present, which may be recovered as a result of further exploration and development activities; and (vi) other business risks.

65

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Table of Contents

VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE JDISCLOSURES ABOUT OIL AND GAS ACTIVITIES (UNAUDITED) (Continued)

The
following tables set forth (i) the estimated net quantities of proved, proved developed and proved undeveloped oil and natural gas reserves attributable to the Trust, and
(ii) the standardized measure of the discounted future net profits interest income attributable to the Trust and the nature of changes in such standardized measure between years. These tables
are prepared on the accrual basis, which is the basis on which VOC Brazos maintains its production records and is different from the basis on which the Trust is reporting.

66

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Table of Contents

VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE JDISCLOSURES ABOUT OIL AND GAS ACTIVITIES (UNAUDITED) (Continued)

ESTIMATED QUANTITIES OF OIL AND GAS RESERVES



Oil (Bbls)

Gas (Mcf)

Oil
Equivalents
(Boe)Proved reservesBalance at December 31, 2016


4,838,939


2,021,841


5,175,912Revisions of previous estimates


(407,656
)

(46,425
)

(415,394
)Production


(430,841
)

(268,423
)

(475,578
)​
​
​
​
​
​
​
​
​
​
​Balance at December 31, 2017


4,000,442


1,706,993


4,284,940Revisions of previous estimates


808,483


824,461


945,893Production


(419,865
)

(252,933
)

(462,021
)​
​
​
​
​
​
​
​
​
​
​Balance at December 31, 2018


4,389,060


2,278,521


4,768,812Revisions of previous estimates


263,151


(40,546
)

256,393Production


(489,538
)

(286,688
)

(537,319
)​
​
​
​
​
​
​
​
​
​
​Balance at December 31, 2019


4,162,673


1,951,287


4,487,886​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Proved developed reservesDecember 31, 2016


3,667,326


1,310,718


3,885,779​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​December 31, 2017


3,343,604


1,319,961


3,563,598​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​December 31, 2018


3,417,252


1,574,826


3,679,723​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​December 31, 2019


3,178,009


1,561,446


3,438,250​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​Proved undeveloped reservesDecember 31, 2016


1,171,613


711,123


1,290,134Proved undeveloped reserves converted to proved developed by drilling


0


0


0Additional proved undeveloped reserves added


377,472


232,134


416,161Revisions of previous estimates


(892,247
)

(556,225
)

(984,947
)​
​
​
​
​
​
​
​
​
​
​December 31, 2017


656,838


387,032


721,348Proved undeveloped reserves converted to proved developed by drilling


(6,138
)

0


(6,138
)Additional proved undeveloped reserves added


321,318


0


321,318Revisions of previous estimates


(210
)

316,663


52,563​
​
​
​
​
​
​
​
​
​
​December 31, 2018


971,808


703,695


1,089,091Proved undeveloped reserves converted to proved developed by drilling


(165,102
)

0


(165,102
)Additional proved undeveloped reserves added


400,768


0


400,768Revisions of previous estimates


(222,810
)

(313,854
)

(275,121
)​
​
​
​
​
​
​
​
​
​
​December 31, 2019


984,664


389,841


1,049,636​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


The
Trust recognized net decreases in reserves for its share of VOC Brazos' total during 2017 associated with the production of properties of 475,578 Boe. This decrease was compounded by
a

67

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Table of Contents

VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE JDISCLOSURES ABOUT OIL AND GAS ACTIVITIES (UNAUDITED) (Continued)

decrease
in reserves of 958,682 Boe as a result of the removal of proved undeveloped locations due to changes in a previously adopted development plan. This decrease was partially offset by a net
positive revision due to increases in realized prices during 2017.

The
Trust recognized net increases in reserves for its share of VOC Brazos' total during 2018. This increase was primarily the result of net positive revisions due to increases in
realized prices during 2018, including additional proved undeveloped reserve locations of 321,318 Boe due to changes in a previously adopted development plan, offset by production of properties of
462,021 Boe.

The
Trust recognized net decreases in reserves for its share of VOC Brazos' total during 2019 associated with the production of properties of 537,319 Boe. This decrease was partially
offset by additional undeveloped reserve locations of 400,768 Boe and decreased by reserves of 142,351 Boe due to the removal of proved undeveloped locations in a previously adopted development plan.
This decrease was also compounded by a net negative revision due to decreases in realized prices during 2019.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS        FROM PROVED OIL AND GAS RESERVES

Estimates of future net cash flows from proved reserves of crude oil and natural gas are computed using the average, first-day-of-the-month
price during the 12-month period for 2017, 2018 and 2019.



2017

2018

2019Future cash inflows

$
197,304,650

$
281,011,675

$
224,171,275Future costsProduction


(104,974,205
)

(119,188,552
)

(102,515,687
)Development


(17,896,289
)

(18,366,023
)

(26,173,044
)​
​
​
​
​
​
​
​
​
​
​Future net cash flows


74,434,156


143,457,100


95,482,544Less 10% discount factor


(29,192,122
)

(49,306,650
)

(33,353,400
)​
​
​
​
​
​
​
​
​
​
​Standardized measure of discounted future net cash flows

$
45,242,034

$
94,150,450

$
62,129,144​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


68

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Table of Contents

VOC Energy Trust

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE JDISCLOSURES ABOUT OIL AND GAS ACTIVITIES (UNAUDITED) (Continued)

CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH        FLOWS FROM PROVED OIL AND GAS RESERVES



2017

2018

2019Standardized measure at beginning of year

$
34,322,694

$
45,242,034

$
94,150,450Net proceeds to the Trust


(9,209,023
)

(12,938,703
)

(12,661,799
)Net changes in price and production costs


13,998,514


36,547,709


(22,184,499
)Changes in estimated future development costs


8,928,722


(1,475,007
)

(6,456,104
)Development costs incurred during the year


259,280


102,765


431,120Revisions of quantity estimates


(5,802,922
)

19,194,422


5,202,758Accretion of discount


3,432,269


4,524,203


9,415,045Changes in production rates, timing and other


(687,500
)

2,953,027


(5,767,827
)​
​
​
​
​
​
​
​
​
​
​Standardized measure at end of year

$
45,242,034

$
94,150,450

$
62,129,144​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


The
average, first-day-of-the-month price during the 12-month period for 2017, 2018 and 2019 used in determining future net revenues related to the standardized measure calculation are
as follows:



2017

2018

2019Oil (per Bbl)

$
47.98

$
62.58

$
52.94Gas (per Mcf)

$
3.14

$
2.78

$
1.90


NOTE KSELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



Summarized Quarterly Results
Three Months EndedMarch 31

June 30

September 30

December 31(All numbers in thousands except per unit amounts)2018:Income from net profits interest

$
2,030

$
3,284

$
3,677

$
3,947Distributable income

$
1,870

$
3,060

$
3,400

$
3,740Distributions per unit

$
0.1100

$
0.1800

$
0.2000

$
0.22002019:Income from net profits interest

$
2,610

$
2,959

$
3,752

$
3,341Distributable income

$
2,465

$
2,720

$
3,485

$
3,145Distributions per unit

$
0.1450

$
0.1600

$
0.2050

$
0.1850


69

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Table of Contents

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.    Controls and Procedures.

Evaluation of disclosure controls and procedures.The trustee maintains disclosure controls and procedures designed to ensure that
information to be
disclosed by the trust in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and regulations
promulgated by the SEC. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the trust is accumulated and communicated by
VOC Brazos to The Bank of New York Mellon Trust Company, N.A., as trustee of the trust, and its employees who participate in the preparation of the trust's periodic reports as appropriate to allow
timely decisions regarding required disclosure.

As
of the end of the period covered by this report, the trustee carried out an evaluation of the trust's disclosure controls and procedures. Mike Ulrich, as Trust Officer of the trustee,
has concluded that the disclosure controls and procedures of the trust are effective.

Due
to the contractual arrangements of (i) the trust agreement and (ii) the conveyance of the net profits interest, the trustee relies on (A) information provided by
VOC Brazos, including historical operating data, plans for future operating and capital expenditures, reserve information and information relating to projected production, and (B) conclusions
and reports regarding reserves by the trust's independent reserve engineers. See "Item 1A. Risk FactorsNeither the trust nor the trust's unitholders have the ability to influence
VOC Brazos or control the operations or development of the underlying properties" in this Form 10-K, and "Item 7. Trustee's Discussion and Analysis of Financial Condition and Results of
Operations" for a description of certain risks relating to these arrangements and reliance on information when reported by VOC Brazos to the trustee and recorded in the trust's results of operations.

Changes in Internal Control Over Financial Reporting.During the fourth quarter ended December 31, 2019, there has been no change
in the
trustee's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the trustee's internal control over financial reporting. The trustee
notes for purposes of clarification that it has no authority over, and makes no statement concerning, the internal control over financial reporting of VOC Brazos.

Trustee's Report on Internal Control Over Financial Reporting.The trustee is responsible for establishing and maintaining adequate
internal control
over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), by the trust. The trust's internal control over financial reporting is a process designed under the
supervision of the trustee to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the trust's financial statements for external purposes in accordance
with the accounting permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts, which is a comprehensive basis of accounting
other than generally accepted accounting principles.

As
of December 31, 2019, the trustee assessed the effectiveness of the trust's internal control over financial reporting based on the criteria for effective internal control over
financial reporting established in "Internal ControlIntegrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, the
trustee determined that the trust maintained effective internal control over financial reporting as of December 31, 2019, based on those criteria.

Item 9B.    Other Information.

None.

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Table of Contents

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

The trust has no directors or executive officers. The trustee is a corporate trustee that may be removed by the affirmative vote of the holders
of not less than a majority of the outstanding trust units at a meeting at which a quorum is present.

Audit Committee and Nominating Committee

Because the trust does not have a board of directors, it does not have an audit committee, an audit committee financial expert or a nominating
committee.

Code of Ethics

The trust does not have a principal executive officer, principal financial officer, principal accounting officer or controller and, therefore,
has not adopted a code of ethics applicable to such persons. However, employees of the trustee must comply with the bank's code of ethics.

Item 11.    Executive Compensation.

During the years ended December 31, 2017, 2018 and 2019, the trustee received compensation from the trust in the amount of $150,000 for
each year. The trust does not have any executive officers. Because the trust does not have a board of directors, it does not have a compensation committee.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters.

(a)   Security Ownership of Certain Beneficial Owners.

The following table sets forth certain information regarding the beneficial ownership of our trust units as of March 13, 2020 by each person who, to our
knowledge, beneficially owns more than 5% of the outstanding trust units.



Beneficial Owner

Trust Units
Beneficially
Owned

Percent of
Class(1)VOC Partners, LLC(2)


4,252,250


25.0
%Robert J. Raymond(3)


1,856,962


10.9
%


(1)Based
on 17,000,000 trust units outstanding as of March 13, 2020.(2)The
information is based on a Schedule 13D filing with the SEC on August 18, 2011. The address of the beneficial owner is 1700 Waterfront Parkway,
Building 500, Wichita, KS 67206.(3)The
information is based on a Schedule 13G dated February 8, 2019 filed jointly by Robert J. Raymond ("Raymond"), RR Advisors, LLC ("Advisors"),
RCH Black Fund GP, L.P. ("RCH GP"), and RCH Black Fund, L.P. ("RCH LP" and, together with Raymond, Advisors and RCH GP, the "Reporting Persons"). The
principal business address of the Reporting Persons is 3953 Maple Avenue, Suite 180, Dallas, Texas 75219. According to the filing, Raymond has sole voting power and dispositive power with
respect to 202,056 trust units; Raymond and Advisors each have shared voting and dispositive power with respect to 1,654,906 trust units; and RCH GP and RCH LP each have shared voting
and dispositive power with respect to 1,619,837 trust units. According to the filing, each Reporting Person expressly disclaims (a) the existence of any group and (b) beneficial
ownership with respect to any trust units other than the trust units owned of record by such Reporting Person.


71

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Table of Contents

(b)   Security Ownership of Management.

Not applicable.

(c)   Changes in Control.

The registrant knows of no arrangement, including any pledge by any person of securities of the registrant or any of its parents, the operation of which may at a
subsequent date result in a change of control of the registrant.

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

Under the terms of the conveyance governing the net profits interest, VOC Brazos is obligated to make certain payments to the trust on a
quarterly basis. Please see "Item 1. BusinessComputation of Net Proceeds" for more information about these agreements.

Administrative Services Agreement

The trust has entered into an administrative services agreement with VOC Brazos that obligates the trust, throughout the term of the trust, to
pay to VOC Brazos each quarter an administrative services fee for accounting, bookkeeping and informational services performed by VOC Brazos on behalf of the trust relating to the net profits
interest. The annual fee of $75,000 is payable in equal quarterly installments and increases by 4% each year. For 2017, 2018 and 2019, $70,260 (representing three quarters), $121,475 (representing
five quarters) and $75,995 (representing three quarters), respectively, was paid to VOC Brazos as administrative fees. The administrative services agreement will terminate upon the termination of the
net profits interest unless earlier terminated by mutual agreement of the trustee and VOC Brazos.

Registration Rights

The trust entered into a registration rights agreement with VOC Brazos in connection with VOC Brazos' conveyance to the trust of the net profits
interest. In the registration rights agreement, the trust agreed, for the benefit of VOC Brazos and any transferee of its trust units (each, a "holder"), to register the trust units it holds.
Specifically, the trust agreed:



72

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Table of Contents



The
holders will have the right to require the trust to file up to three registration statements and will have piggyback registration rights in certain circumstances.

In
connection with the preparation and filing of any registration statement, VOC Brazos will bear all costs and expenses incidental to any registration statement, excluding certain
internal expenses of the trust, which will be borne by the trustee, and any underwriting discounts and commissions, which will be borne by the seller of the trust units.

Item 14.    Principal Accounting Fees and Services.

The trust does not have an audit committee. Any pre-approval and approval of all services performed by the principal auditor or any other
professional service firms and related fees are granted by the trustee.

The
following table presents fees for professional audit services rendered by Grant Thornton LLP for the audit of the trust's financial statements for 2018 and 2019 and fees
billed for other services rendered by Grant Thornton LLP.



2018

2019Audit fees

$
215,250

$
210,000Audit related fees





Tax fees





All other fees





​
​
​
​
​
​
​
​Total fees

$
215,250

$
210,000​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​


73

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Table of Contents

PART IV

Item 15.    Exhibits, Financial Statement Schedules



The
following financial statements are set forth under Part II, Item 8 of this Form 10-K on the pages indicated:





Page in this
Form 10-KVOC Energy TrustReport of Independent Registered Public Accounting Firm


55Statements of Assets and Trust Corpus


56Statements of Distributable Income


56Statements of Changes in Trust Corpus


56Notes to Financial Statements


57




Schedules
have been omitted because they are not required, not applicable or the information required has been included elsewhere herein.





Exhibit
Number



Description3.1



Certificate of Trust of VOC Energy Trust. (Incorporated herein by reference to Exhibit 3.4 to the
Registration Statement on Form S-1, filed on December 30, 2010 (Registration No. 333-171474))3.2



Amended and Restated Trust Agreement of VOC Energy Trust, dated May 10, 2011, among VOC Brazos Energy
Partners, L.P., The Bank of New York Mellon Trust Company, N.A., as Trustee of VOC Energy Trust, and Wilmington Trust Company, as Delaware Trustee of VOC Energy Trust. (Incorporated herein by reference to Exhibit 3.1 to our Current Report
on Form 8-K filed on May 10, 2011 (File No. 001-35160))4.1



Registration Rights Agreement, dated as of May 10, 2011, by and between VOC Partners, LLC and VOC
Energy Trust. (Incorporated herein by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on May 10, 2011 (File No. 0001-35160))4.2
*


Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 193410.1



Conveyance of Term Net Profits Interest and Assignment of Pre-Effective Time Payment, dated May 10,
2011, from VOC Brazos Energy Partners, L.P. and VOC Kansas Energy Partners, LLC, to The Bank of New York Mellon Trust Company, N.A. in its capacity as Trustee of VOC Energy Trust. (Incorporated herein by reference to Exhibit 10.1 to
our Current Report on Form 8-K filed on May 10, 2011 (File No. 001-35160))10.2



Administrative Services Agreement, dated May 10, 2011, by and between VOC Brazos Energy Partners,
 L.P. and The Bank of New York Mellon Trust Company, N.A., in its capacity as Trustee of VOC Energy Trust. (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on May 10, 2011 (File
No. 001-35160))31.1
*


Certification filed pursuant to Section 302 of the Sarbanes Oxley Act of 2002


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Exhibit
Number



Description32.1
*


Certification furnished pursuant to Section 906 of the Sarbanes Oxley Act of 200299.1
*


Report of Cawley, Gillespie & Associates, Inc., Petroleum Consultants


*Filed
or furnished herewith.


Item 16.    Form 10-K Summary

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.



VOC ENERGY TRUSTBy:

THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., AS TRUSTEEBy

/s/ MICHAEL J. ULRICH Michael J. Ulrich Vice President


March 13,
2020

The
Registrant, VOC Energy Trust, has no principal executive officer, principal financial officer, board of directors or persons performing similar functions. Accordingly, no additional
signatures are available and none have been provided. In signing the report above, the trustee does not imply that it has performed any such function or that such function exists pursuant to the terms
of the trust agreement under which it serves.

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