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VOC Energy Trust(VOC) - 2022 Q4 - Annual Report
VOCVOC Energy Trust(VOC)2023-03-16 20:19

Financial Performance - Distributable income for the year 2022 was 21,675,000,significantlyupfrom21,675,000, significantly up from 8,670,000 in 2021, representing a growth of approximately 149%[298] - Income from net profits interest for 2022 reached 23,594,050,comparedto23,594,050, compared to 9,302,296 in 2021, indicating an increase of about 153%[298] - Cash distributions per Trust unit increased to 1.275in2022from1.275 in 2022 from 0.510 in 2021, reflecting a rise of approximately 150%[298] - For the year ended December 31, 2022, income from net profits interest was 23,594,050,reflectingasignificantincreasefrom23,594,050, reflecting a significant increase from 9,302,296 in 2021 and 5,006,227in2020[322]AssetsandReserves−AsofDecember31,2022,totalassetsofVOCEnergyTrustamountedto5,006,227 in 2020[322] Assets and Reserves - As of December 31, 2022, total assets of VOC Energy Trust amounted to 15,048,316, a decrease from 16,005,190in2021[296]−TheTrust′scorpusattheendof2022was16,005,190 in 2021[296] - The Trust's corpus at the end of 2022 was 15,048,316, down from 16,005,190attheendof2021[300]−AsofDecember31,2022,theTrust′sprovedreserveswere2,824,491barrelsofoiland1,985,722Mcfofgas,totaling3,155,444Boe[345]−Futurecashinflowsfromprovedreservesincreasedfrom16,005,190 at the end of 2021[300] - As of December 31, 2022, the Trust's proved reserves were 2,824,491 barrels of oil and 1,985,722 Mcf of gas, totaling 3,155,444 Boe[345] - Future cash inflows from proved reserves increased from 91.08 million in 2020 to 269.71millionin2022,whilefuturecostsalsorosesignificantly[351]−Thestandardizedmeasureofdiscountedfuturenetcashflowsincreasedfrom269.71 million in 2022, while future costs also rose significantly[351] - The standardized measure of discounted future net cash flows increased from 17.48 million in 2020 to 98.38millionin2022[352]ExpensesandFees−Generalandadministrativeexpensesfor2022werereportedat98.38 million in 2022[352] Expenses and Fees - General and administrative expenses for 2022 were reported at 957,377, slightly up from 948,096in2021[298]−TheTrustpaysanannualadministrativefeeof948,096 in 2021[298] - The Trust pays an annual administrative fee of 150,000 to the Trustee, with additional fees paid to the Delaware Trustee amounting to 2,500in2020and2021,and2,500 in 2020 and 2021, and 2,510 in 2022[330] Cash Management - The targeted cash reserve of 1.175millionwasfullyfundedbyFebruary2023tocoverfutureknown,anticipated,orcontingentexpenses[326]−TheTrustwithheld1.175 million was fully funded by February 2023 to cover future known, anticipated, or contingent expenses[326] - The Trust withheld 943,970 from distributions to build a cash reserve of approximately 1.175millionforfutureexpensesasofDecember31,2022[337]−TheTrust′sdistributionstounitholdersareexpectedtobemadeonorbeforethe45thdayfollowingtheendofeachquarter,withadjustmentsforcashreservesestablishedforfutureexpenses[326]ProductionandJointVentures−Cumulatively,sinceinception,theTrusthasreceivedpaymentfor801.175 million for future expenses as of December 31, 2022[337] - The Trust's distributions to unitholders are expected to be made on or before the 45th day following the end of each quarter, with adjustments for cash reserves established for future expenses[326] Production and Joint Ventures - Cumulatively, since inception, the Trust has received payment for 80% of the net proceeds from the sale of 8.1 million barrels of oil equivalent (MMBoe) from the underlying properties[306] - VOC Brazos entered a joint venture with Hawkwood Energy, allowing Hawkwood to earn a 50% working interest in four wells and additional acreage in the Kurten Woodbine Unit[332] - In 2022, Wildfire Energy acquired Hawkwood, retaining the rights under the joint venture agreement[334] - VOC Brazos is evaluating the economic benefits of developing the Lower Woodbine Organic Shale, which may temporarily reduce cash available for distribution[335] Market Conditions - The average oil price per barrel rose from 36.48 in 2020 to 90.85in2022,whiletheaveragegaspriceperMcfincreasedfrom90.85 in 2022, while the average gas price per Mcf increased from 0.97 to 5.59duringthesameperiod[352]−Ifannualcashproceedsarelessthan5.59 during the same period[352] - If annual cash proceeds are less than 1 million for two consecutive years, the Trust may be required to dissolve under its agreement[335] Impairment and Accounting - The Trust recorded an impairment expense of 41,261,354duringthequarterendedMarch31,2020,duetoasubstantialdeclineinoilfuturemarkets,buthasnotincurredadditionalimpairmentsincethen[321]−TheTrust′sfinancialstatementsarepreparedonamodifiedcashbasisofaccounting,whichisconsideredmostmeaningfulforreportingrevenuesanddistributions[311]−Thenetprofitsinterestwasrecordedatahistoricalcostof41,261,354 during the quarter ended March 31, 2020, due to a substantial decline in oil future markets, but has not incurred additional impairment since then[321] - The Trust's financial statements are prepared on a modified cash basis of accounting, which is considered most meaningful for reporting revenues and distributions[311] - The net profits interest was recorded at a historical cost of 140,591,606, representing an 80% net profits interest to the Trust[321]