Forward Looking Information



Certain information included in this report contains, and other materials filed
or to be filed by the Trust with the Securities and Exchange Commission (as well
as information included in oral statements or other written statements made or
to be made by the Trust) may contain or include, forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. Such forward
looking statements may be or may concern, among other things, capital
expenditures, drilling activity, development activities, production efforts and
volumes, hydrocarbon prices and the results thereof, and regulatory matters.
Although the Trustee believes that the expectations reflected in such
forward-looking statements are reasonable, such expectations are subject to
numerous risks and uncertainties and the Trustee can give no assurance that they
will prove correct. There are many factors, none of which are within the
Trustee's control, that may cause such expectations not to be realized,
including, among other things, factors such as actual oil and gas prices and the
recoverability of reserves, capital expenditures, general economic conditions,
actions and policies of petroleum-producing nations and other changes in the
domestic and international energy markets. Such forward looking statements
generally are accompanied by words such as "estimate," "expect," "predict,"
"anticipate," "goal," "should," "assume," "believe," or other words that convey
the uncertainty of future events or outcomes.

Commodity Prices



The Trust's income and monthly distributions are heavily influenced by commodity
prices. Commodity prices may fluctuate widely in response to (i) relatively
minor changes in the supply of and demand for oil and natural gas, (ii) market
uncertainty and (iii) a variety of additional factors that are beyond the
Trustee's control. In 2020, there was a substantial decrease in oil and natural
gas prices due in part to significantly decreased demand as a result of the
novel coronavirus ("COVID-19") pandemic and an oversupply of crude oil driven by
a dispute between members of the Organization of Petroleum Exporting Countries
("OPEC") and Russia over production cuts; however, prices increased
significantly beginning in 2021 and continued into the second quarter of 2022
before falling a bit in the third quarter 2022. Factors which may affect
commodity prices are discussed below and under "Item 1A-Risk Factors" in the
Trust's Form 10-K for the year ended December 31, 2021. A combination of these
factors resulted in the price of oil falling below zero to $(37.63) per barrel
of oil on April 20, 2020, and recovering the following day to $10.01 per barrel
of oil. As of October 31, 2022, the price of oil was $86.54 per barrel. Factors
that may impact future commodity prices, including the price of oil and natural
gas, include but are not limited to:

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     •    political conditions in major oil producing regions, especially in the
          Middle East and Russia;



  •   worldwide economic conditions;



  •   weather conditions;



  •   trade barriers;



  •   public health concerns, including the COVID 19 pandemic;



  •   the supply and price of domestic and foreign crude oil or natural gas;



  •   the level of consumer demand;



  •   the price and availability of alternative fuels;



  •   the proximity to, and capacity of, transportation facilities;



  •   the effect of worldwide energy conservation measures; and



  •   the nature and extent of governmental regulation and taxation.


Although the Trustee cannot predict the occurrence of events that may affect
future commodity prices or the degree to which these prices will be affected,
gas royalty income for a given period generally relates to production three
months prior to the period and crude oil royalty income for a given period
generally relates to production two months prior to the period and will
generally approximate current market prices in the geographic region of the
production at the time of production. When crude oil and natural gas prices
decline, the Trust is affected in two ways. First, distributable income from the
Royalty Properties is reduced. Second, exploration and development activity by
operators on the Royalty Properties may decline as some projects may become
uneconomic and are either delayed or eliminated. It is impossible to predict
future crude oil and natural gas price movements, and this reduces the
predictability of future cash distributions to Unit holders.

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021



For the quarter ended September 30, 2022, royalty income received by the Trust
amounted to $27,323,759 compared to royalty income of $3,344,086 during the
third quarter of 2021. The increase in royalty income is primarily attributable
to an increase in oil and gas pricing and an increase in oil and gas production.
Average oil and gas prices were $108.75 and $6.60, respectively, for the quarter
ending September 30, 2022 compared to $68.34 and $3.36 for the quarter ended
September 30, 2021.

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Interest income for the quarter ended September 30, 2022 was $11,452 compared to
$1,273 during the third quarter of 2021. The increase in interest income is
primarily attributable to substantially increased amounts of funds available for
investment. Total expenses during the third quarter of 2022 amounted to $136,712
compared to $361,096 during the third quarter of 2021. The decrease in total
expenses can be primarily attributed to decreased expense for professional
services, printing expenses and the timing of payment of expenses.

These transactions resulted in distributable income for the quarter ended
September 30, 2022 of $27,198,499 or $0.58 per Unit of beneficial interest.
Distributions of $0.163979, $0.195923 and $0.223645 per Unit were made to Unit
holders of record as of July 29, 2022, August 31, 2022, and September 30, 2022,
respectively. For the third quarter of 2021, distributable income was $2,984,263
or $0.06 per Unit of beneficial interest.

Royalty income for the Trust for the third quarter of the calendar year is associated with actual oil and gas production for the period of May, June and July 2022 from the properties from which the Trust's net overriding royalty interests ("Royalties") were carved. Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:


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                                                           Three Months Ended
                                                              September 30,
                                                          2022            2021
    Royalties:
    Oil sales (Bbls)                                       468,501         264,235
    Gas sales (Mcf)                                      2,580,493         920,432

Properties From Which The Royalties Were Carved:


    Oil:
    Total oil sales (Bbls)                                 612,050         342,171
    Average per day (Bbls)                                   6,801           3,802
    Average price per Bbl                              $    108.75     $     68.34
    Gas:
    Total gas sales (Mcf)                                3,434,117       1,221,263
    Average per day (Mcf)                                   38,157          13,420
    Average price per Mcf                              $      6.60     $      3.36


The average received price of oil increased to an average price per barrel of
$108.75 in the third quarter of 2022, compared to $68.34 per Bbl in the third
quarter of 2021 due to worldwide market variables. The average price of gas
(including natural gas liquids) increased from $3.36 per Mcf in the third
quarter of 2021 to $6.60 (including pricing for gas liquids) per Mcf in the
third quarter of 2022 due to change in overall market variables.

Since the oil and gas sales attributable to the Royalties are based on an
allocation formula that is dependent on such factors as price and cost
(including capital expenditures), the production amounts in the Royalties
section of the above table do not provide a meaningful comparison. Oil sales
volumes increased and gas sales volumes increased from the Underlying Properties
(as defined in the Trust's Annual Report on Form 10-K for the year ended
December 31, 2021) for the applicable period in 2022 compared to 2021.

Capital expenditures for drilling, remedial and maintenance activities on the
Waddell Ranch properties during the third quarter of 2022 totaled $34.7 million
(gross) as compared to $26.8 million (gross) for the third quarter of 2021.
Blackbeard has previously informed the Trustee that the Trust's portion of the
2022 capital expenditures budget for the Waddell Ranch properties is
$92.6 million.

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The Trustee has been advised that there were 10.1 (net to the Trust) workover
wells completed, 12.4 (net to the Trust) new wells completed, 4.5 (net to the
Trust) new wells in progress and 2.6 (net to the Trust) workover wells in
progress during the three months ended September 30, 2022, as compared to 13.9
(net to the Trust) workover wells completed and 7.1 (net to the Trust) new wells
completed, 9.4 (net to the Trust) new wells in progress, and 12.6 (net to the
Trust) workover wells in progress for the three months ended September 30, 2021,
on the Waddell Ranch properties. There were various facility projects in
progress for the third quarter of 2022.

Lease operating expenses and property taxes totaled $11.5 million (gross) for
the third quarter of 2022, compared to $6.6 million (gross) for the same period
in 2021 on the Waddell Ranch properties due to increased maintenance work.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021



For the nine months ended September 30, 2022, royalty income received by the
Trust amounted to $39,032,624 compared to royalty income of $8,409,389 for the
nine months ended September 30, 2021. The increase in royalty income is
primarily attributable to an increase in oil and gas pricing, also by an
increase in oil and gas production, as compared to the nine months ended
September 30, 2021. The Waddell Ranch properties did not contribute to royalty
income for the nine months of 2021 due to excess costs. Average oil and gas
prices were $96.49 and $5.56 for the nine months ended September 30, 2022
compared to $58.79 and $2.92 for the nine months ended September 30, 2021.

Interest income for the nine months ended September 30, 2022, was $14,470
compared to $3,859 during the nine months ended September 30, 2021. The increase
in interest income is primarily attributable to substantially increased amounts
of funds available for investment. Total expenses during the nine months ended
September 30, 2022, amounted to $755,594 compared to $931,140 during the nine
months ended September 30, 2021. The decrease in total expenses can be primarily
attributed to decreased expenses for professional services, printing expenses
and the timing expenses, including lack of contribution to the expense reserve
in the current quarter.

These transactions resulted in distributable income for the nine months ended
September 30, 2022 of $38,291,500, or $0.82 per Unit. For the nine months ended
September 30, 2021, distributable income was $7,482,108, or $0.16 per Unit.

Royalty income for the Trust for the nine months ended September 30, 2022, is
associated with actual oil and gas production for the period November 2021
through July 2022 from the properties from which the Royalties were carved. Oil
and gas sales attributable to the Royalties and the properties from which the
Royalties were carved are as follows:

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                                                            Nine Months Ended
                                                          2022            2021
    Royalties:
    Oil sales (Bbls)                                     1,254,088         647,695
    Gas sales (Mcf)                                      6,653,864       2,646,613

Properties From Which The Royalties Were Carved:


    Oil:
    Total oil sales (Bbls)                               1,634,583         833,399
    Average per day (Bbls)                                   9,031           4,604
    Average price per Bbl                              $     96.49     $     58.79
    Gas:
    Total gas sales (Mcf)                                8,849,731       3,509,450
    Average per day (Mcf)                                   48,894          19,389
    Average price per Mcf                              $      5.56     $      2.92


The average received price of oil increased during the nine months ended
September 30, 2022 to $96.49 per barrel compared to $58.79 per barrel for the
same period in 2021 due to worldwide market variables. The increase in the
average price of gas (including natural gas liquids) from $2.92 per Mcf for the
nine months ended September 30, 2021, to $5.56 per Mcf for the nine months ended
September 30, 2022 was due to change in overall market variables.

Since the oil and gas sales attributable to the Royalties are based on an
allocation formula that is dependent on such factors as price and cost
(including capital expenditures), the production amounts in the Royalties
section of the above table do not provide a meaningful comparison. Oil volume
increased and gas sales volumes increased from the properties from which the
Royalties are carved for the applicable period of 2022 compared to 2021.

Capital expenditures for drilling, remedial and maintenance activities on the
Waddell Ranch properties for the nine months ended September 30, 2022 totaled
$87.3 million (gross) compared to $46.8 million (gross) to the Trust for the
same period in 2021. Blackbeard has previously advised the Trustee that the 2022
capital expenditures budget for the Waddell Ranch properties is $92.6 million
(gross). As of August 31, 2022, approximately $62 million or 67% of the
$92 million budget for 2022 has been expended, with the remaining 33% to be
incurred through the remainder of the year.

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The Trustee has been advised that 30.4 (net to the Trust) workover wells were
completed and 2.6 (net to the Trust) workover wells were in progress, along with
30 (net to the Trust) new drill wells completed and 4.5 (net to the Trust)
waiting on completion on the Waddell Ranch properties during the nine months
ended September 30, 2022, as compared to 32.3 (net to the Trust) workover wells
completed and 25.6 (net to the Trust) workover wells in progress, along with
15.4 (net to the Trust) new wells completed and 16.9 (net to the Trust) waiting
on completion, on the Waddell Ranch properties during the nine months ended
September 30, 2020. All new wells drilled in 2022 have been fracturized, both
vertical and horizontal, both oil and gas. There were various facility projects
in progress for the first nine months of 2022.

Lease operating expenses and property taxes totaled $31.3 million for the nine
months ended September 30, 2022, compared to $13.3 million for the same period
in 2021. The increase in lease operating expense is primarily attributable to
increased spending on facilities and maintenance.

Calculation of Royalty Income



The Trust's royalty income is computed as a percentage of the net profit from
the operation of the properties in which the Trust owns net overriding royalty
interests. The royalty income received and recorded by the Trust was determined
by the operator as noted below. These percentages of net profits are 75% and 95%
in the case of the Waddell Ranch properties and the Texas Royalty properties,
respectively. Royalty income received by the Trust for the three months ended
September 30, 2022 and 2021, respectively, were computed as shown in the table
below:

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                                                       THREE MONTHS ENDED SEPTEMBER 30
                                                 2022                                  2021
                                      WADDELL             TEXAS            WADDELL               TEXAS
                                       RANCH             ROYALTY            RANCH               ROYALTY
                                     PROPERTIES        PROPERTIES         PROPERTIES          PROPERTIES
Gross proceeds of sales from
the Underlying Properties
Oil proceeds                        $ 60,385,100       $ 6,174,254       $ 19,713,038         $ 3,672,468
Gas proceeds                          22,274,172           385,270          3,863,742             243,784
Other (adjustment)                            -                 -          10,589,056 (1)              -

Total                                 82,659,272         6,559,524         34,165,836           3,916,252

Less:
Severance tax:
Oil                                    2,714,747           230,721            908,600             144,455
Gas                                    1,391,246            22,867             69,456              11,706
Other                                  3,824,716                -                  -                   -
Lease operating expense and
property tax:
Oil and gas                           11,236,250           240,000          6,396,277             240,000
Capital expenditures                  37,744,153                -          26,791,503                  -

Total                                 53,911,112           493,588         34,165,836             396,161

Net profits                           28,748,160         6,065,936                 -            3,520,091
Net overriding royalty
interests                                     75 %              95 %               75 %                95 %

Royalty income                      $ 21,561,120         5,762,639       $         -  (1)       3,344,086




(1) Due to the NPI deficit, the Waddell Ranch properties did not contribute to


      Royalty income for the three months ended September 30, 2021. As of
      September 30, 2022, the cumulative NPI deficit was fully recovered.



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Critical Accounting Policies and Estimates



A disclosure of critical accounting policies and the more significant judgments
and estimates used in the preparation of the Trust's financial statements is
included in Item 7 of the Trust's Annual Report on Form 10-K for the year ended
December 31, 2021. There have been no significant changes to the critical
accounting policies during the nine months ended September 30, 2022.

Distributable Income Per Unit



Basic distributable income per Unit is computed by dividing distributable income
by the weighted average of Units outstanding. Distributable income per Unit
assuming dilution is computed by dividing distributable income by the weighted
average number of Units and equivalent Units outstanding. The Trust had no
equivalent Units outstanding for any period presented. Therefore, basic
distributable income per Unit and distributable income per Unit assuming
dilution are the same.

New Accounting Pronouncements

There are no new accounting pronouncements that are expected to have significant impact on the Trust's financial statements.

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