VOC ENERGY TRUST The following discussion 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 interest and the Trust Units. The Trust derives substantially all of its income and cash flows from the net profits interest. All information regarding operations has been provided to the Trustee by VOC Brazos.
Results of Operations
Results of Operations for the Quarters Ended
The following is a summary of income from net profits interest received by the
Trust for the three months ended
Three months ended
September 30,
2022 2021
Sales volumes:
Oil (Bbl) 131,018 128,814
Natural gas (Mcf) 74,199 78,734
Total (BOE) 143,385 141,936
Average sales prices:
Oil (per Bbl) $ 104.64 $ 59.62
Natural gas (per Mcf) $ 6.65 $ 3.29
Gross proceeds:
Oil sales $ 13,709,782 $ 7,679,568
Natural gas sales 493,468 258,788
Total gross proceeds 14,203,250 7,938,356
Costs:
Production and development costs:
Lease operating expenses 3,851,595 3,069,270
Production and property taxes 645,568 608,076
Development expenses 1,084,572 706,669
Total costs 5,581,735 4,384,015
Excess of revenues over direct operating expenses and lease equipment and development costs
8,621,515 3,554,341
Times net profits interest over the term of the Trust 80 % 80 %
Income from net profits interest before reserve
adjustments 6,897,212 2,843,473
VOC Brazos reserve for future development, maintenance or operating expenditures
- -
Income from net profits interest $ 6,897,212 $ 2,843,473 The cash received by the Trust from VOC Brazos during the quarter ended
Gross proceeds. Oil and natural gas sales were
6
Costs. Lease operating expenses were
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
7
Results of Operations for the Nine Months Ended
The following is a summary of income from net profits interest received by the
Trust for the nine months ended
Nine months ended
September 30,
2022 2021
Sales volumes:
Oil (Bbl) 391,719 386,416
Natural gas (Mcf) 239,254 263,871
Total (BOE) 431,595 430,395
Average sales prices:
Oil (per Bbl) $ 85.73 $ 47.89
Natural gas (per Mcf) $ 6.27 $ 2.68
Gross proceeds:
Oil sales $ 33,583,941 $ 18,505,051
Natural gas sales 1,500,934 708,133
Total gross proceeds 35,084,875 19,213,184
Costs:
Production and development costs:
Lease operating expenses 10,557,018 8,563,799
Production and property taxes 1,629,778 1,479,730
Development expenses 1,907,355 2,004,473
Total costs 14,094,151 12,048,002
Excess of revenues over direct operating expenses and lease equipment and development costs
20,990,724 7,165,182
Times net profits interest over the term of the Trust 80 % 80 %
Income from net profits interest before reserve
adjustments 16,792,579 5,732,146
VOC Brazos reserve for future development, maintenance or operating expenditures
- -
Income from net profits interest $ 16,792,579 $ 5,732,146 The cash received by the Trust from VOC Brazos during the nine months ended
Gross proceeds. Oil and natural gas sales were
Costs. Lease operating expenses were
8
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
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. Administrative expenses include payments to
the Trustee as well as a quarterly administrative fee to VOC Brazos pursuant to
an administrative services agreement. Each quarter, the Trustee determines the
amount of funds available for distribution. 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 paid for that quarter. Available funds are
reduced by any cash that the Trustee decides to reserve for future development,
maintenance or operating expenses. As of
The Trustee may cause the Trust to borrow funds required to pay expenses if the
Trustee determines that the cash on hand and the cash to be received are
insufficient to cover the Trust's expenses. If the Trust borrows funds, the
Trust unitholders will not receive distributions until the borrowed funds are
repaid. During the three and nine months ended
As previously disclosed, the Trustee intends to build a reserve for the payment
of future known, anticipated or contingent expenses or liabilities. The Trustee
intends to withhold a portion of the proceeds otherwise available for
distribution each quarter to gradually build a cash reserve to approximately
Income to the Trust from the net profits interest is based on the calculation and definitions of "gross proceeds" and "net proceeds" contained in the conveyance.
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 compared to recent historical costs other than changes due to
fluctuations in the general cost of oilfield services. VOC Brazos may establish
a cash reserve of up to
9
Note Regarding Forward-Looking Statements
This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements
other than statements of historical fact included in this Form 10-Q, including
without limitation the statements under "Trustee's Discussion and Analysis of
Financial Condition and Results of Operations", are forward-looking statements.
Although VOC Brazos advised the Trust that it believes that the expectations
reflected in the forward-looking statements contained herein are reasonable, no
assurance can be given that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
expectations ("Cautionary Statements") are disclosed in this Form 10-Q and in
the Trust's Annual Report on Form 10-K for the year ended
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