VOC Energy Trust(VOC) - 2024 Q4 - Annual Report

Financial Performance - As of December 31, 2024, total assets decreased to $11,871,877 from $13,372,565 in 2023, reflecting a decline of approximately 11.2%[310] - Distributable income for the year ended December 31, 2024, was $12,410,000, down from $15,215,000 in 2023, representing a decrease of about 18.5%[312] - The cash distribution per Trust Unit for 2024 was $0.730, a decline of 18.5% compared to $0.895 in 2023[312] - Income from net profits interest for 2024 was $13,622,718, down from $16,459,918 in 2023, indicating a decrease of approximately 17.7%[312] - The Trust corpus at the end of 2024 was $11,871,877, down from $13,372,565 at the end of 2023, a reduction of about 11.2%[314] - General and administrative expenses for 2024 were $897,342, compared to $1,064,494 in 2023, reflecting a decrease of approximately 15.7%[312] Trust Operations - Cumulatively, since inception, the Trust has received payment for 80% of the net proceeds from the sale of 9.1 million barrels of oil equivalent (MMBoe) from the Underlying Properties[319] - The Trust's net profits interest will terminate upon the earlier of December 31, 2030, or when 10.6 MMBoe have been produced and sold[318] - The Trust has been audited by Grant Thornton LLP since 2010, with no critical audit matters identified in the current period[307] - The Trust adopted ASU 2023-07 during the year ended December 31, 2024, which requires enhanced disclosures about reportable segments[325] Revenue and Sales - The gross proceeds from oil and natural gas sales are defined as the total amount received by VOC Brazos, excluding certain costs and losses, with net proceeds calculated after deducting various expenses[331] - The Trust will receive 80% of the net proceeds attributable to oil and natural gas production, with distributions made quarterly to unitholders[330] - VOC Brazos sold 35% of the production from the Underlying Properties to MV Purchasing for the years 2022, 2023, and 2024 under short-term arrangements[339] Future Projections - The average annual capital expenditure amount will increase by 2.5% annually starting from the Capital Expenditure Limitation Date, which is set for December 31, 2027, or when 9.8 MMBoe have been produced[335] - Future cash inflows from proved reserves are estimated at $269.71 million for 2022, decreasing to $139.05 million by 2024[364] - The standardized measure of discounted future net cash flows was $98.38 million in 2022, dropping to $34.78 million by 2024[365] - The average oil price per barrel was $90.85 in 2022, decreasing to $72.58 in 2024, while gas prices fell from $5.59 per Mcf to $1.17[366] Cash Management - The cash reserve for future expenses was established at approximately $1.175 million, with the Trustee having the discretion to adjust this amount[342] - The Trust has a letter of credit of $1.7 million to cover future expenses, and a cash reserve of approximately $1.175 million has been built for anticipated liabilities[350][351] - The Trustee determines the distribution amount for unitholders based on cash received and expenses, with distributions expected to be made within 45 days after each quarter[341] Joint Ventures and Acquisitions - VOC Brazos entered a joint venture with Hawkwood Energy, granting Hawkwood a 50% working interest in four wells and up to 50% interest in VOC Brazos' acreage[347] - In 2022, Wildfire Energy acquired Hawkwood, retaining the rights under the joint venture agreement[348] - VOC Brazos is assessing economic benefits from the development of the Lower Woodbine Organic Shale, which may increase development costs and temporarily reduce cash distributions to Trust unitholders[349] Administrative Expenses - The administrative services fee paid to VOC Brazos was $18,750 per quarter, with total payments of $114,330, $118,902, and $123,659 for the years 2022, 2023, and 2024 respectively[346] Distribution Announcements - The Trust announced a distribution of $1,445,000, or $0.085 per unit, to unitholders for the period from October 1, 2024, to December 31, 2024[352] Reserves and Production - As of December 31, 2022, proved reserves were 3,155,444 Boe, down from 3,614,992 Boe in 2021, with production accounting for a decrease of 451,225 Boe[358][360]