NDRO Enduro Royalty Trust Trust Units Representing Beneficial Interest IN The Trust

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

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ENDURO ROYALTY TRUST
The Bank of New York Mellon Trust Company, N.A., Trustee
Global Corporate Trust
919 Congress Avenue, Suite 500
Austin, Texas 78701

June         , 2017

Dear Unitholder:

You are cordially invited to attend a Special Meeting (“ Special Meeting ”) of unitholders (“ Unitholders ”) of Enduro Royalty Trust, a Delaware statutory trust (the “ Trust ”) to be held on                , 2017, at                [a/p].m., local time, at                , Fort Worth, Texas                .  The Special Meeting has been called by Enduro Resource Partners LLC, a Delaware limited liability company (“ Enduro ”), pursuant to Section 8.02 of the Amended and Restated Trust Agreement of the Trust, dated as of November 3, 2011 (the “ Trust Agreement ”).  Please find enclosed a notice to Unitholders, a Proxy Statement describing the business to be transacted at the meeting, and a form of proxy card (“ Proxy ”) for use in voting at the meeting.

At the Special Meeting, you will be asked to consider and act upon proposals (each, a “ Proposal ” and collectively, the “ Proposals ”) to approve:  (1) eight transactions ( the “ Transactions ”) pursuant to which (a) Enduro Operating LLC, a Delaware limited liability company (“ Enduro Operating ”) will sell its interests in certain oil and natural gas properties that constitute part of the oil and natural gas properties burdened by the Net Profits Interest (as defined herein) held by the Trust, (b) the Trust will release the related Net Profits Interest associated with such oil and natural gas properties, and (c) the net proceeds received by the Trust with respect to each such sale will be distributed to the Unitholders, (2) amendments to the Trust Agreement to permit the Transactions, (3) amendments to the Conveyance of Net Profits Interest, executed as of November 8, 2011, from Enduro Operating to Enduro Texas LLC, a Texas limited liability company (“ Enduro Texas ”), as supplemented by that certain Supplement to Conveyance of Net Profits Interest, executed as of November 8, 2011, among Enduro Operating, Enduro Texas and the Trust to permit the Transactions, (4) amendments to the Trust Agreement to permit the costs associated with calling any Unitholder meeting, including, without limitation, meeting costs, proxy preparation costs, proxy solicitation costs and costs of counsel and other advisors associated therewith, pursuant to the proposed Section 3.02(d) to be paid pro rata by the Trust and Enduro, and (5) an adjournment of the Special Meeting, if necessary or appropriate, to permit solicitation of additional proxies in favor of the Proposals.

Proposals 1, 2 and 3 above comprise a group of related and interdependent proposals for Unitholder action.  Implementation of each such Proposal is contingent upon the implementation of each of the other Proposals.  Accordingly, Proposals 1, 2 and 3 will not be implemented unless all such Proposals are approved by Unitholders of record holding at least 75% of the then outstanding units of beneficial interest (“ Trust Units ”) of the Trust.

Implementation of Proposal 4 is contingent upon the implementation of each of Proposals 2 and 3.  Accordingly, Proposal 4 will not be implemented unless Proposals 2 and 3 are approved by Unitholders of record holding at least 75% of the then outstanding Trust Units; however, the Unitholders are being asked to separately consider and act upon Proposal 4 and have the ability to reject Proposal 4 even if Proposals 2 and 3 are approved.

We hope that you will be able to attend the Special Meeting, and we urge you to read the enclosed Proxy Statement before you decide to vote.  Even if you do not plan to attend, please complete, sign, date and return the enclosed Proxy as promptly as possible.  It is important that your Trust Units be represented at the meeting.

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YOUR VOTE IS IMPORTANT

All Unitholders are cordially invited to attend the Special Meeting in person.  However, to ensure your representation at the meeting, you are urged to complete, sign, date and return the enclosed Proxy as promptly as possible in the enclosed postage paid envelope.  Returning your Proxy will help the Trust assure that a quorum will be present at the meeting and avoid the additional expense of duplicate proxy solicitations.  Any Unitholder attending the meeting may vote in person even if he or she has returned the Proxy.

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ENDURO ROYALTY TRUST
The Bank of New York Mellon Trust Company, N.A., Trustee
Global Corporate Trust
919 Congress Avenue, Suite 500
Austin, Texas 78701

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A list of Unitholders entitled to vote at the Special Meeting will be available for inspection by any Unitholder for any purpose germane to the Special Meeting during ordinary business hours for the ten days preceding the Special Meeting at the Trustee’s offices at 919 Congress Avenue, Suite 500, Austin, Texas 78701, and also at the Special Meeting.

Whether or not you plan to attend the Special Meeting in person, please submit your Proxy as promptly as possible (1) through the Internet, (2) by telephone or (3) by marking, signing and dating the enclosed Proxy and returning it in the postage-paid envelope provided.  If you hold your Trust Units in “street name,” you should instruct your broker how to vote in accordance with your voting instruction card.  If you do not submit your Proxy, do not instruct your broker how to vote your shares or do not vote in person at the Special Meeting, it will have the same effect as a vote “AGAINST” each of the Proposals.  You may revoke your Proxy before the Special Meeting as described in the Proxy Statement under the heading “Solicitation and Revocability of Proxies.”

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ENDURO ROYALTY TRUST
The Bank of New York Mellon Trust Company, N.A., Trustee
Global Corporate Trust
919 Congress Avenue, Suite 500
Austin, Texas 78701

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·                   “FOR” the approval of the sale of the DE Midland Properties (as defined herein), release of related Net Profits Interest and distribution of proceeds from such sale;

·                   “FOR” the approval of the sale of the Parsley Properties (as defined herein), release of related Net Profits Interest and distribution of proceeds from such sale;

·                   “FOR” the approval of the sale of the Tracker Properties (as defined herein), release of related Net Profits Interest and distribution of proceeds from such sale;

·                   “FOR” the approval of the sale of the QEP Properties (as defined herein), release of related Net Profits Interest and distribution of proceeds from such sale;

·                   “FOR” the approval of amendments to the Trust Agreement in order to permit asset sales and the release of the Net Profits Interest;

·                   “FOR” the approval of amendments to the Conveyance in order to permit asset sales and the release of the Net Profits Interest;

·                   “FOR” the approval of amendments to the Trust Agreement to permit the costs associated with calling any Unitholder meeting, including, without limitation, meeting costs, proxy preparation costs, proxy solicitation costs and costs of counsel and other advisors associated therewith, pursuant to the proposed Section 3.02(d) to be paid pro rata by the Trust and Enduro; and

·                   “FOR” the approval of any adjournment of the Special Meeting, if necessary or appropriate, to permit solicitation of additional proxies in favor of Proposals 1, 2, 3, and 4.

VOTING AND QUORUM

The only outstanding voting securities of the Trust are the Trust Units.  As of the close of business on                           , 2017 (the “ Record Date ”), there were                                          Trust Units outstanding and entitled to be voted at the Special Meeting.

Each outstanding Trust Unit is entitled to one vote.  The presence, in person or by proxy, of Unitholders who, on the Record Date, held Trust Units representing a majority of the Trust Units outstanding as of the Record Date will constitute a quorum at the Special Meeting.  The Trustee, upon approval by the holders of a majority of the Trust Units who are present or represented by proxy at the Special Meeting, will have the power to adjourn the Special Meeting from time to time without notice, other than an announcement at the Special Meeting of the time and place of the holding of the adjourned meeting, until a quorum is present.  At any such adjourned meeting at which a quorum is present, any business may be transacted that may have been transacted at the Special Meeting had a quorum originally been present.  If the adjournment is for more than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each Unitholder of record entitled to vote at the adjourned meeting.

Proxies solicited by this Proxy Statement may be used to vote in favor of any motion to adjourn the Special Meeting, even if a quorum is not present.  If a motion to adjourn the Special Meeting is approved but sufficient proxies are not received by the time set for the resumption of the Special Meeting, this process may be repeated until sufficient proxies to vote in favor of the Proposals described in this Proxy Statement have been received or it appears that sufficient proxies will not be received.

If you hold your Trust Units in “street name,” you should instruct your broker how to vote in accordance with your voting instruction card.  If you do not submit your Proxy, do not instruct your broker how to vote your shares or do not vote in person at the Special Meeting, it will have the same effect as a vote “AGAINST” each of the Proposals.

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Abstentions and broker non-votes will count in determining if a quorum is present at the Special Meeting.  A broker non-vote occurs if a broker or other nominee attending the meeting in person or submitting a Proxy does not have discretionary authority to vote on a particular item and has not received voting instructions with respect to that item.

There are no appraisal rights available to the Unitholders in connection with the approval of any of the Proposals to be voted upon in this Proxy Statement.

THE TRUST

The Trust is a Delaware statutory trust created in May 2011 pursuant to a trust agreement (the “ Trust Agreement ”), dated May 3, 2011 (as amended and restated on November 3, 2011) among Enduro, as trustor, The Bank of New York Mellon Trust Company, N.A., a national organization organized under the laws of the State of New York (the “ Trustee ”), as trustee, and Wilmington Trust Company, a trust company organized under the laws of the State of Delaware (the “ Delaware Trustee ”), as Delaware Trustee.  The principal offices of the Trust are located at 919 Congress Avenue, Suite 500, Austin, Texas 78701, and its telephone number is (512) 236-6555.

The Trust was created to acquire and hold for the benefit of the Unitholders a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico held by Enduro as of the date Enduro conveyed the net profits interest to the Trust (the “ Net Profits Interest ”).  The properties in which the Trust holds the Net Profits Interest are referred to as the “ Underlying Properties .”

In connection with the closing of the initial public offering in November 2011, Enduro contributed the Net Profits Interest to the Trust in exchange for 33,000,000 Trust Units.  Through the initial public offering in 2011 and a secondary offering in 2013, Enduro has sold a total of 24,400,000 Trust Units.  As of March 31, 2017, Enduro owned 8,600,000 Trust Units, or 26% of the issued and outstanding Trust Units.  Please read “Security Ownership of Certain Beneficial Owners and Management.”

The Net Profits Interest is passive in nature and neither the Trust nor the Trustee has any management control over or responsibility for costs relating to the operation of the Underlying Properties.  The Trust Agreement provides, among other provisions, that:

·                                          the Trust’s business 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 of Net Profits Interest, dated effective as of July 1, 2011 (as supplemented to date, the “ Conveyance ”).  As a result, the Trust is not permitted to acquire other oil and natural gas properties or net profits interests or otherwise to engage in activities beyond those necessary for the conservation and protection of the Net Profits Interest;

·                                          the Trustee may not dispose of any part of the assets of the Trust (including the sale of the Net Profits Interest) except as provided in the Trust Agreement or if approved by Unitholders of record holding at least 75% of the then outstanding Trust Units;

·                                          the Trustee will make monthly payments of the monthly cash distributions (as defined in the Trust Agreement) to Unitholders;

·                                          the Trustee may create a cash reserve to pay for future liabilities of the Trust;

·                                          the Trustee may authorize the Trust to borrow money to pay liabilities, including administrative or incidental expenses of the Trust that exceed its cash on hand and available reserves.  No further distributions will be made to Unitholders until such amounts borrowed are repaid; and

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·                                          the Trust is not subject to any pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage of time.  The Trust will dissolve upon the earliest to occur of the following:

·                                          the Trust, upon approval of the holders of at least 75% of the then outstanding Trust Units, sells the Net Profits Interest;

·                                          the annual cash proceeds received by the Trust attributable to the Net Profits Interest are less than $2 million for each of any two consecutive years;

·                                          the holders of at least 75% of the outstanding Trust Units vote in favor of dissolution; or

·                                          the Trust is judicially dissolved.

As discussed more fully in Proposal 1, Enduro initiated the process for the proposed transactions that resulted in the calling of the Special Meeting by Enduro and the solicitation of proxies from the Unitholders requesting approval of the Proposals herein.  The Trustee is not making any recommendation to Unitholders as to how to vote on Proposals 1, 2, 3, 4 or 5.  In addition, due to the nature of the Trust as a passive entity and in light of the contractual arrangements pursuant to which the Trust was created, including the provisions of the Trust Agreement and the Conveyance, the Trust’s disclosures necessarily rely upon information provided by Enduro, including information relating to results of operations, plans for future operating and capital expenditures, reserve information and other information relating to the status and results of the Underlying Properties.  Accordingly, much of the following disclosure is based upon certain information provided by Enduro as well as assumptions made by Enduro and the Trust.

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market certain oil and natural gas properties to other oil and natural gas operators, subject in all cases to receipt of appropriate Unitholder approvals for amounts in excess of the limitations set forth in the Trust Agreement and the Conveyance.  Enduro believes this divestiture process achieved its goal of generating a relatively large one-time cash distribution without a significant drop in the Trust’s monthly distribution.

In September 2016 and January 2017, Enduro met separately with a land broker in Midland, Texas and representatives from an independent investment bank to discuss market interest for and valuation of certain identified properties in the Permian Basin.  In connection with these discussions, Enduro, in consultation with the independent investment bank, organized the identified Permian Basin properties into twelve separate packages and began to identify potentially interested purchasers.  Enduro targeted a variety of companies, primarily the operators, companies that owned adjacent properties or those that had recently completed acquisitions in the target areas, or had shown interest in bidding on acquisitions in the area.  Enduro contacted 53 companies on a confidential basis to obtain a general level of market interest in the target properties and sent information on acreage positions to 35 companies that expressed interest.  Enduro conducted a marketing period for the properties from March 1, 2017 through April 14, 2017.  On April 17, 2017, Enduro began to receive bids for the packages, and Enduro commenced negotiating purchase and sale agreements with purchasers from mid-April until execution of the agreements in early June.

Enduro received a total of eleven offers on nine of the packages.  There were three packages for which Enduro did not receive any offers, and one of the offers was rescinded due to the company deciding to sell their entire company.  As a result, Enduro executed eight separate purchase and sale agreements.  For the properties with accepted offers, as listed in the table below, the aggregate value range from the Midland, Texas based broker was $15 million on the low end and $39 million on the high end, with a midpoint of $27 million.  The aggregate value range from the independent investment bank for the same set of properties was $37 million on the low end and $54 million on the high end, with a midpoint of $45 million.

The following table summarizes various aspects of the transactions with respect to which Unitholders are being asked to approve the sale of certain oil and natural gas properties described in this Proxy Statement (the “ Divestiture Properties ”), the release of the related Net Profits Interest and the distribution of net proceeds received by the Trust in connection therewith:

(1)          Represents average daily sales volumes from the Divestiture Properties, representing the amounts included in the net profits calculation for distributions paid to Unitholders during the year ended December 31, 2016.

(2)          Represents total proved reserves of the Divestiture Properties associated with the transactions as calculated by Enduro based upon information included in the Enduro Royalty Trust 2016 reserve report filed with the Securities and Exchange Commission in the Trust’s Annual Report on Form 10-K for the year ended December   31, 2016.

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(3)          Subject to ordinary closing adjustments and the retained holdback amount to cover possible indemnification obligations under the purchase and sale agreements.

The following table details the net purchase price and outlines the estimated net proceeds to be distributed to the Trust from the sale of the Divestiture Properties:

(1)          Includes estimated expenses to be incurred relating to the transactions.

(2)          Based upon the Net Profits Interest representing the right to receive 80% of the net profits. If Proposals 1, 2 and 3 are approved by the Unitholders but Proposal 4 is not also approved, then 80% of the estimated Proxy/Meeting Expenses, or $560,000, will be added to the amount of net proceeds to be distributed to Unitholders.

(3)          Estimated amount to cover possible indemnification obligations under the purchase and sale agreements being retained by Enduro pursuant to the Holdback Agreement.  This amount will be released no later than 25 months after the closing of the transactions.

(4)          Estimate of special distribution resulting from the transactions to the 33,000,000 Trust Units   outstanding.

Unitholders should be aware that the estimates in the table above are preliminary and subject to change based on numerous factors, most of which are beyond the control of the Trust and Enduro.  The actual amount of proceeds distributed from the sale of the Divestiture Properties could vary materially.

Rationale for the Release of the Net Profits Interest

Enduro believes the release of the Net Profits Interest on the Divestiture Properties is advantageous to Unitholders due to the capital-intensive nature of any future development, for which capital would be deducted from the net proceeds allocable to the Trust; the potential risk profile of any development; the minimal production currently associated with the Divestiture Properties; and the limited proved reserves.  As further described in the Proposals below, the purchase of the Divestiture Properties by the purchasers listed in the table above is subject to receipt of the requisite Unitholder approval of each of Proposals 1, 2 and 3 in this Proxy Statement.

Enduro believes that the following considerations, and characteristics of the Divestiture Properties, provide the rationale for the release of the Net Profits Interest:

·                   The total sales price of $50.4 million is above the midpoint of ranges that Enduro obtained from independent parties, and the current competitive nature of the Permian Basin makes this an advantageous market in which to sell the Divestiture Properties.

·                   The Divestiture Properties historically have contributed an immaterial amount to the distributions paid to Unitholders.  Net profits allocable to the Trust from the Divestiture Properties were only approximately $0.003 per unit for distributions paid during 2016, compared to total distributions paid during 2016 of approximately $0.26 per unit.

·                   The Divestiture Properties comprise a small amount of the proved reserves of the Underlying Properties.  Total proved developed producing reserves for the Divestiture Properties from the December 31, 2016

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SEC reserve report were 254 MBOE of the 10,152 MBOE total proved reserves of the Underlying Properties, or 2.5%.

·                   The Divestiture Properties produce a relatively small amount of the oil and gas volumes in comparison to the total Underlying Properties.  Sales volumes related to the Divestiture Properties totaled 14,303 Bbls of oil (39 Bbls/D) and 137,932 Mcf of natural gas (377 Mcf/D) for periods related to distributions paid in the year ended December 31, 2016.  This amounts to 37,292 BOE (102 BOE/D) compared to 1,545,954 BOE (4,224 BOE/D) for all the Underlying Properties; therefore, the sales volumes represented approximately 2% of the sales volumes of the Underlying Properties for such period.

·                   Upside potential related to the Divestiture Properties is capital-intensive and uncertain and is not reflected in the Trust reserve report.  The anticipated capital necessary to develop the Divestiture Properties is significant, and fluctuations in oil and natural gas prices could significantly alter the anticipated payout of the projects and estimated profitability.

·                   The Divestiture Properties are non-operated and Enduro has limited control over the timing of capital investments and development of the Underlying Properties.  Significant capital investments by operators could reduce the distribution to Unitholders substantially or create a deficit.  On the other hand, the projects may never be implemented or the timing could be many years away, thereby delaying, reducing or eliminating any realization of the anticipated present value of the projects.

Amendments to Trust Agreement and Conveyance

In order to permit the release of the Net Profits Interest as necessary to effect the transactions described under Proposals 1(a) through 1(h) below and to permit, with Unitholder approval, similar transactions in the future, the Unitholders must vote to approve the amendments to both the Trust Agreement and the Conveyance set forth in Proposals 2 and 3 below.  If the Unitholders fail to approve the amendments to both the Trust Agreement and the Conveyance set forth in Proposals 2 and 3 below, then none of the transactions contemplated by Proposals 1(a) through 1(h) below will occur even if Proposals 1(a) through 1(h) are individually approved by the Unitholders.  It is not necessary for the Unitholders to approve Proposal 4 in order to approve Proposals 1, 2 and 3.

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PROPOSAL 1(a)

APPROVAL OF SALE OF THE CHISHOLM PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 5, 2017, Enduro Operating LLC, a Delaware limited liability company and wholly owned subsidiary of Enduro (“ Enduro Operating ”), entered into a purchase and sale agreement (the “ Chisholm PSA ”) with Chisholm Energy Holdings, LLC, a Delaware limited liability company, located at 801 Cherry Street, Suite 1200, Unit 20, Fort Worth, Texas 76102 (“ Chisholm ”).  The Chisholm PSA covers 2,842.73 net acres located in Eddy and Lea Counties, New Mexico, of which 1,858 net acres are prospective for various zones including the Delaware, Bone Spring and Wolfcamp formations, as well as 34 wells (the “ Chisholm Properties ”).

The Chisholm Properties generated $118,589 and $92,165 net to the Trust for the years ended December 31, 2016 and 2015, respectively, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, respectively, for the same periods.  The Chisholm PSA provides for the sale of the Chisholm Properties by Enduro Operating to Chisholm for a purchase price equal to $28,000,000, subject to (1) customary accounting adjustments and (2) customary adjustments for title defects.

Subject to the satisfaction of customary conditions to closing, the receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest requested by this Proposal, the closing date of the transactions contemplated by the Chisholm PSA is expected to occur on or about September 1, 2017.  The Chisholm PSA may be terminated, among other reasons, by either Enduro Operating or Chisholm if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017.  The Chisholm PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the Chisholm Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The Chisholm PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the Chisholm PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the Chisholm PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments or other payments directly relating to the production of hydrocarbons from the Chisholm Properties or the proper accounting or payment to parties for their interests, to the extent (a) not attributable to any suspense funds and (b) relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          any disposal or transportation of any hazardous materials or hazardous substances attributable to Enduro Operating’s ownership or operation of the Chisholm Properties to any location that is not a part or portion of the Chisholm Properties;

·                                          personal injury (including death) claims relating to the ownership or operation of the Chisholm Properties during the period which Enduro Operating owned the Chisholm Properties;

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the Chisholm Properties to the extent attributable to periods of time prior to the effective time; and

·                                          assets excluded from the Chisholm PSA.

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Holdback Amount

The Holdback Agreement provides that Enduro will retain an aggregate of $750,000 from the sales proceeds of the Divestiture Properties to provide a procedure for the Trust to bear its share of any losses resulting from any such indemnities contained in the purchase and sale agreements.  The amount of the holdback is allocated among the respective Divestiture Properties based upon the sales price of each Divestiture Property.  Pursuant to the Holdback Agreement, Enduro intends to retain $425,000 of the net proceeds from the sale of the Chisholm Properties in a segregated account (the “ Chisholm Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

No Material Relationships

Enduro and Enduro Operating, on the one hand, and Chisholm, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the Chisholm PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the Chisholm PSA is expected to be:  (1) $22,400,000 (80% of $28,000,000) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Chisholm PSA less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the Chisholm Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $5,600,000 (20% of $28,000,000) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Chisholm PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(a).  Accordingly, abstentions and broker non-votes on Proposal 1(a) will have the effect of a vote “AGAINST” Proposal 1(a).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(a), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(a).

Enduro intends to vote its Trust Units “FOR” Proposal 1(a).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(a).

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PROPOSAL 1(b)

APPROVAL OF SALE OF THE OXY PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 5, 2017, Enduro Operating entered into a purchase and sale agreement (the “ OXY PSA ”) with OXY USA, Inc., a Delaware corporation, located at 5 Greenway Plaza, Houston, Texas 77046 (“ OXY ”).  The OXY PSA covers 1,528.35 net acres located in Eddy County, New Mexico, of which 1,259 net acres are prospective for various zones, including the Bone Spring and Wolfcamp formations (the “ OXY Properties ”).

The OXY Properties do not include any producing wells and therefore did not generate any proceeds to the Trust for the years ended December 31, 2016 and 2015.  The OXY PSA provides for the sale of the OXY Properties by Enduro Operating to OXY for a purchase price equal to $10,073,355 subject to customary accounting adjustments.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest requested by this Proposal, the closing date of the transactions contemplated by the OXY PSA is expected to occur on or about September 1, 2017.  The OXY PSA may be terminated, among other reasons, by either Enduro Operating or OXY if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017, or such later date as the parties may agree.  Oxy will not be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the OXY Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The OXY PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the OXY PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the OXY PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments or other payments directly relating to the production of hydrocarbons from the OXY Properties or the proper accounting or payment to parties for their interests relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          to the extent applicable to any period prior to the effective time, any obligations to pay the applicable governmental body any amounts subject to escheat obligations;

·                                          any expenses incurred by Enduro Operating during the periods prior to the effective time relating to the OXY Properties;

·                                          any proceeding relating to the OXY Properties existing on or prior to the closing date;

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the OXY Properties to the extent attributable to periods of time prior to the effective time; and

·                                          assets excluded from the OXY PSA.

Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to holdback $150,000 of the net proceeds from the sale of the OXY Properties in a segregated account (the “ OXY Holdback Amount ”) for a period of two years after the

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closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

No Material Relationships

Enduro and Enduro Operating, on the one hand, and OXY, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the OXY PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the OXY PSA is expected to be:  (1) $8,058,684 (80% of $10,073,355) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the OXY PSA less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the OXY Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $2,014,671 (20% of $10,073,355) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the OXY PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(b).  Accordingly, abstentions and broker non-votes on Proposal 1(b) will have the effect of a vote “AGAINST” Proposal 1(b).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(b), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(b).

Enduro intends to vote its Trust Units “FOR” Proposal 1(b).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(b).

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PROPOSAL 1(c)

APPROVAL OF SALE OF THE FORGE PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 5, 2017, Enduro Operating entered into a purchase and sale agreement (the “ Forge PSA ”) with Forge Energy, LLC, a Delaware limited liability company, located at 10999 IH-10 West, Suite 900, San Antonio, Texas 78230 (“ Forge ”).  The Forge PSA covers 214.93 net acres located in Ward County, Texas that are prospective for the Bone Spring and Wolfcamp formations, as well as seven (7) wells (the “ Forge Properties ”).

The Forge Properties generated $2,991 and $21,290 net to the Trust for the year ended December 31, 2016 and 2015, respectively, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, respectively, for the same periods.  The Forge PSA provides for the sale of the Forge Properties by Enduro Operating to Forge for a purchase price equal to $5,000,000, subject to (1) customary accounting adjustments and (2) customary adjustments for title defects.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest request by this Proposal, the closing date of the transactions contemplated by the Forge PSA is expected to occur on or about September 1, 2017.  The Forge PSA may be terminated, among other reasons, by either Enduro Operating or Forge if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017.  The Forge PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the Forge Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The Forge PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the Forge PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the Forge PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments or other payments directly relating to the production of hydrocarbons from the Forge Properties or the proper accounting or payment to parties for their interests, to the extent not attributable to any suspense funds and relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the Forge Properties to the extent attributable to periods of time prior to the effective time; and

·                                          assets excluded from the Forge PSA.

Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to retain $75,000 of the net proceeds from the sale of the Forge Properties in a segregated account (the “ Forge Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

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No Material Relationships

Enduro and Enduro Operating, on the one hand, and Forge, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the Forge PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the Forge PSA is expected to be:  (1) $4,000,000 (80% of $5,000,000) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Forge PSA less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the Forge Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $1,000,000 (20% of $5,000,000) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Forge PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(c).  Accordingly, abstentions and broker non-votes on Proposal 1(c) will have the effect of a vote “AGAINST” Proposal 1(c).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(c), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(c).

Enduro intends to vote its Trust Units “FOR” Proposal 1(c).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(c).

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PROPOSAL 1(d)

APPROVAL OF SALE OF THE SUMMIT PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 6, 2017, Enduro Operating entered into a purchase and sale agreement (the “ Summit PSA ”) with Summit West Resources LP, a Texas limited partnership, located at 550 W. Texas Avenue #700, Midland, Texas 79701 (“ Summit ”).  The Summit PSA covers 65.25 net acres located in Upton County, Texas that are prospective for the Spraberry and Wolfcamp formations, as well as 26 wells (the “ Summit Properties ”).

The Summit Properties generated $32,968 and $85,934 net to the Trust for the year ended December 31, 2016 and 2015, respectively, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, respectively, for the same periods.  The Summit PSA provides for the sale of the Summit Properties by Enduro Operating to Summit for a purchase price equal to $2,300,000, subject to (1) customary accounting adjustments and (2) customary adjustments for title defects.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest requested by this Proposal, the closing date of the transactions contemplated by the Summit PSA is expected to occur on or about September 1, 2017.  The Summit PSA may be terminated, among other reasons, by either Enduro Operating or Summit if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017.  The Summit PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the Summit Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The Summit PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the Summit PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the Summit PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments or other payments directly relating to the production of hydrocarbons from the Summit Properties or the proper accounting or payment to parties for their interests, to the extent not attributable to any suspense funds and relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the Summit Properties to the extent attributable to periods of time prior to the effective time; and

·                                          assets excluded from the Summit PSA.

Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to retain $35,000 of the net proceeds from the sale of the Summit Properties in a segregated account (the “ Summit Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

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No Material Relationships

Enduro and Enduro Operating, on the one hand, and Summit, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the Summit PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the Summit PSA is expected to be:  (1) $1,840,000 (80% of $2,300,000) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Summit PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the Summit Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $460,000 (20% of $2,300,000) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Summit PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(d).  Accordingly, abstentions and broker non-votes on Proposal 1(d) will have the effect of a vote “AGAINST” Proposal 1(d).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(d), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(d).

Enduro intends to vote its Trust Units “FOR” Proposal 1(d).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(d).

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PROPOSAL 1(e)

APPROVAL OF SALE OF THE DE MIDLAND PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 6, 2017, Enduro Operating entered into a purchase and sale agreement (the “ DE Midland PSA ”) with DE Midland III LLC, a Delaware limited liability company, located at 1401 Ballinger Street, Suite 200, Fort Worth, Texas 76102 (“ DE Midland ”).  The DE Midland PSA covers 156.18 net acres located in Glasscock County, Texas that are prospective for the Spraberry and Wolfcamp formations, as well as nine (9) wells (the “ DE Midland Properties ”).

The DE Midland Properties caused net profits allocable to the Trust to be reduced by $11,532 for the year ended December 31, 2016 and generated $47,045 net to the Trust for the year ended December 31, 2015, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, for the years ended December 31, 2016 and 2015, respectively.  The DE Midland PSA provides for the sale of the DE Midland Properties by Enduro Operating to DE Midland for a purchase price equal to $1,600,000, subject to (1) customary accounting adjustments and (2) customary adjustments for title defects.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest, the closing date of the transactions contemplated by the DE Midland PSA is expected to occur on or about September 1, 2017.  The DE Midland PSA may be terminated, among other reasons, by either Enduro Operating or DE Midland if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017.  The DE Midland PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the DE Midland Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The DE Midland PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the DE Midland PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the DE Midland PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments, delay rentals or other payments directly relating to the production of hydrocarbons from the DE Midland Properties or the proper accounting or payment to parties for their interests, to the extent not attributable to any suspense funds and relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          offsite disposal at a facility that is not located on or a part of the DE Midland Properties of any substance defined or regulated as a “pollutant,” “hazardous waste,” or “hazardous substance” under any environmental law that was generated or used on the DE Midland Properties, to the extent that such disposal occurred prior to the closing date;

·                                          personal injury, death of any person, or property damage attributable to Enduro Operating’s ownership or operation of the DE Midland Properties arising prior to the closing date;

·                                          liabilities related to the employment relationship between Enduro Operating and any of Enduro Operating’s present or former employees or the termination of any such employment relationship;

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·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the DE Midland Properties to the extent attributable to periods of time prior to the effective time; and

·                                          assets excluded from the DE Midland PSA.

Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to retain $25,000 of the net proceeds from the sale of the DE Midland Properties in a segregated account (the “ DE Midland Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

No Material Relationships

Enduro and Enduro Operating, on the one hand, and DE Midland, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the DE Midland PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the DE Midland PSA is expected to be:  (1) $1,280,000 (80% of $1,600,000) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the DE Midland PSA less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the DE Midland Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $320,000 (20% of $1,600,000) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the DE Midland PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(e).  Accordingly, abstentions and broker non-votes on Proposal 1(e) will have the effect of a vote “AGAINST” Proposal 1(e).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(e), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(e).

Enduro intends to vote its Trust Units “FOR” Proposal 1(e).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(e).

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PROPOSAL 1(f)

APPROVAL OF SALE OF THE PARSLEY PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 6, 2017, Enduro Operating entered into a purchase and sale agreement (the “ Parsley PSA ”) with Parsley Energy, LP, a Texas limited partnership, located at 303 Colorado Street, Suite 3000, Austin, Texas 78701 (“ Parsley ”).  The Parsley PSA covers 50.96 net acres located in Howard County, Texas that are prospective for the Spraberry and Wolfcamp formations, as well as one (1) well (the “ Parsley Properties ”).

The Parsley Properties caused net profits allocable to the Trust to be reduced by $31,069 and $20,016 for the years ended December 31, 2016 and 2015, respectively, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, respectively, for the same periods.  The Parsley PSA provides for the sale of the Parsley Properties by Enduro Operating to Parsley for a purchase price equal to $1,273,935, subject to (1) customary accounting adjustments and (2) customary adjustments for title defects.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest, the closing date of the transactions contemplated by the Parsley PSA is expected to occur on or about September 1, 2017.  The Parsley PSA may be terminated, among other reasons, by either Enduro Operating or Parsley if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017.  The Parsley PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the Parsley Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The Parsley PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the Parsley PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the Parsley PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments, delay rentals or other payments directly relating to the production of hydrocarbons from the Parsley Properties or the proper accounting or payment to parties for their interests, to the extent not attributable to any suspense funds and relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          offsite disposal at a facility that is not located on or a part of the Parsley Properties of any substance defined or regulated as a “pollutant,” “hazardous waste,” or “hazardous substance” under any environmental law that was generated or used on the Parsley Properties, to the extent that such disposal occurred prior to the closing date;

·                                          personal injury, death of any person, or property damage attributable to Enduro Operating’s ownership or operation of the Parsley Properties arising prior to the closing date;

·                                          liabilities related to the employment relationship between Enduro Operating and any of Enduro Operating’s present or former employees or the termination of any such employment relationship;

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the Parsley Properties to the extent attributable to periods of time prior to the effective time; and

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·                                          assets excluded from the Parsley PSA.

Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to retain $20,000 of the net proceeds from the sale of the Parsley Properties in a segregated account (the “ Parsley Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

No Material Relationships

Enduro and Enduro Operating, on the one hand, and Parsley, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the Parsley PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the Parsley PSA is expected to be:  (1) $1,019,148 (80% of $1,273,935) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Parsley PSA,  less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the Parsley Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $254,787 (20% of $1,273,935) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Parsley PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(f).  Accordingly, abstentions and broker non-votes on Proposal 1(f) will have the effect of a vote “AGAINST” Proposal 1(f).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(f), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(f).

Enduro intends to vote its Trust Units “FOR” Proposal 1(f).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(f).

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PROPOSAL 1(g)

APPROVAL OF SALE OF THE TRACKER PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 5, 2017, Enduro Operating entered into a purchase and sale agreement (the “ Tracker PSA ”) with Tracker Resource Development III LLC, a Delaware limited liability company, located at 1050 17th Street, Suite 2200, Denver, Colorado 80265 (“ Tracker ”).  The Tracker PSA covers 201.13 net acres located in Irion County, Texas that are prospective for the Wolfcamp formation, as well as six (6) wells (the “ Tracker Properties ”).

The Tracker Properties caused net profits allocable to the Trust to be reduced by $17,671 and $11,460 for the years ended December 31, 2016 and 2015, respectively, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, respectively, for the same periods.  The Tracker PSA provides for the sale of the Tracker Properties by Enduro Operating to Tracker for a purchase price equal to $1,206,750, subject to customary accounting adjustments.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest, the closing date of the transactions contemplated by the Tracker PSA is expected to occur on or about September 1, 2017.  The Tracker PSA may be terminated, among other reasons, by either Enduro Operating or Tracker if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before September 30, 2017.  The Tracker PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the Tracker Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The Tracker PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the Tracker PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the Tracker PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments or other payments directly relating to the production of hydrocarbons from the Tracker Properties or the proper accounting or payment to parties for their interests, to the extent (a) not attributable to any suspense funds and (b) relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          any personal injury, casualty, or death occurring on or attributable to the Tracker Properties prior to the closing date;

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the Tracker Properties to the extent attributable to periods of time prior to the effective time;

·                                          any contamination or condition that is the result of any off-site transport or disposal of any hazardous substances from the Tracker Properties to a commercial disposal facility prior to the closing date;

·                                          the gross negligence or willful misconduct of Enduro Operating or its affiliates with respect to Enduro Operating’s ownership or operation of the Tracker Properties; and

·                                          assets excluded from the Tracker PSA.

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Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to retain $10,000 of the net proceeds from the sale of the Tracker Properties in a segregated account (the “ Tracker Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

No Material Relationships

Enduro and Enduro Operating, on the one hand, and Tracker, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the Tracker PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the Tracker PSA is expected to be:  (1) $965,400 (80% of $1,206,750) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Tracker PSA less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the Tracker Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $241,350 (20% of $1,206,750) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the Tracker PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(g).  Accordingly, abstentions and broker non-votes on Proposal 1(g) will have the effect of a vote “AGAINST” Proposal 1(g).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(g), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(g).

Enduro intends to vote its Trust Units “FOR” Proposal 1(g).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(g).

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PROPOSAL 1(h)

APPROVAL OF SALE OF THE QEP PROPERTIES, RELEASE OF RELATED NET PROFITS INTEREST AND DISTRIBUTION OF NET PROCEEDS FROM SUCH SALE

General

On June 6, 2017, Enduro Operating entered into a purchase and sale agreement (the “ QEP PSA ”) with QEP Energy Company, a Texas corporation, located at 1050 17th Street, Suite 800, Denver, Colorado 80265 (“ QEP ”).  The QEP PSA covers 19.20 net acres located in Martin County, Texas that are prospective for the Spraberry and Wolfcamp formations, as well as one (1) well (the “ QEP Properties ”).

The QEP Properties generated $8,572 and $17,824 net to the Trust for the years ended December 31, 2016 and 2015, respectively, compared to total Trust income from Net Profits Interest of $9,216,320 and $14,478,775, respectively, for the same periods.  The QEP PSA provides for the sale of the QEP Properties by Enduro Operating to QEP for a purchase price equal to $959,893.40, subject to (1) customary accounting adjustments and (2) customary adjustments for title defects.

Subject to the satisfaction of customary conditions to closing, receipt of the requisite Unitholder approval with respect to the transaction and the release of the Net Profits Interest, the closing date of the transactions contemplated by the QEP PSA is expected to occur on or about September 1, 2017.  The QEP PSA may be terminated, among other reasons, by either Enduro Operating or QEP if the Special Meeting has concluded and the requisite Unitholder approval shall not have been obtained or if the closing has not occurred on or before October 31, 2017.  The QEP PSA provides that neither party will be obligated to close if the Trustee and the Unitholders fail to approve the disposition of the QEP Properties free from and unburdened by the Net Profits Interest created by the Conveyance.

The QEP PSA contains customary indemnities from Enduro Operating for transactions of this nature, including, without limitation, the following:

·                                          any breach of the representations and warranties of Enduro Operating contained in the QEP PSA, or any breach or failure to perform any covenant or obligation of Enduro Operating contained in the QEP PSA;

·                                          the payment, underpayment or nonpayment of royalties, overriding royalties, production payments, net profits payments or other payments directly relating to the production of hydrocarbons from the QEP Properties or the proper accounting or payment to parties for their interests, to the extent  not attributable to any suspense funds and relating to the period of time prior to the effective time (which is May 1, 2017 at 7:00 am Central time);

·                                          the payment, underpayment or nonpayment by Enduro Operating of property taxes and excise taxes related to the QEP Properties to the extent attributable to periods of time prior to the effective time; and

·                                          assets excluded from the QEP PSA.

Holdback Amount

Pursuant to the Holdback Agreement, Enduro intends to retain $10,000 of the net proceeds from the sale of the QEP Properties in a segregated account (the “ QEP Holdback Amount ”) for a period of two years after the closing of such sale, after which any funds remaining in such account would be distributed with the next regularly scheduled monthly distribution to Unitholders.

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No Material Relationships

Enduro and Enduro Operating, on the one hand, and QEP, on the other hand, do not have any material relationship other than the purchase and sale transaction contemplated by the QEP PSA.

Amounts Distributed

If this Proposal is approved, the amount to be distributed to Unitholders within 45 days after the closing of the transaction contemplated by the QEP PSA is expected to be:  (1) $767,914 (80% of $959,893) less (2) eighty percent (80%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the QEP PSA less (3) the applicable portion of the Proxy/Meeting Expenses payable by the Trust, less (4) the QEP Holdback Amount.

If this Proposal is approved, Enduro is expected to receive, in addition to any distribution it receives with respect to the Trust Units it holds, an amount equal to:  (1) $191,979 (20% of $959,893) less (2) twenty percent (20%) of the legal, accounting and other fees and expenses associated with the transaction contemplated by the QEP PSA, less (3) the applicable portion of the Proxy/Meeting Expenses payable by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 1(h).  Accordingly, abstentions and broker non-votes on Proposal 1(h) will have the effect of a vote “AGAINST” Proposal 1(h).

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 1(h), your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 1(h).

Enduro intends to vote its Trust Units “FOR” Proposal 1(h).  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 1(h).

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(ii)           in connection with any sale pursuant to this paragraph (c), the Gross Fair Value of the portion of the Net Profits Interest released by the Trustee shall be an “Offset Amount” (as defined in the Conveyance) against the Gross Deductions when determining the amount of cash attributable to the Net Profits Interest; and

(iii)          the Trustee shall have received a certificate from Enduro certifying to the Trustee and the Trust that the amount to be offset pursuant to clause (ii) above represents the Gross Fair Value of the portion of the Net Profits Interest to be released by the Trustee.

Upon receipt of (a) written notice of such a sale given by Enduro or its Affiliates, (b) an accurate description of the Net Profits Interest to be conveyed, and (c) a certification of Enduro or other sufficient information to evidence conclusively that the conditions to transfer described in the Conveyance and in this paragraph (c) have been satisfied, the Trustee shall (subject to clauses (i) through (iii) above) terminate and release the Net Profits Interest with respect to the applicable Underlying Properties through execution and delivery of a Trustee Release at the closing of such sale, and such other instruments, agreements and documents as Enduro or its Affiliates may reasonably request, to evidence or effect the transfer of such portion of Enduro’s or its Affiliates’ interests in the Underlying Properties, free from and unburdened by the Net Profits Interest.

(d)            Notwithstanding Section 3.02(c)  to the contrary, Enduro and its Affiliates may from time to time sell a divided or undivided portion of their interests in the Underlying Properties, free from and unburdened by the Net Profits Interest, with the approval of Trust Unitholders of record holding at least 50% of the then outstanding Trust Units at a meeting held in accordance with the requirements of Article VIII .  The proceeds of any sale approved by the Trust Unitholders as set forth in this Section 3.02(d)  shall be distributed in the manner approved by such Trust Unitholders at such meeting.

(e)            Following the sale of all or any portion of the Underlying Properties, Enduro will be relieved of its obligations with respect to the Net Profits Interest that burdens such portion of the Underlying Properties.  Promptly after completion of any such sale, Enduro shall so notify the Trustee in writing.  Any purchaser of such Underlying Properties shall be the assignee of Enduro to the extent of the interest sold and shall be bound by the obligations of Enduro under this Agreement and the Conveyance to such extent.

(f)             Anything herein to the contrary notwithstanding, the Trustee shall not agree to any distribution of the Net Profits Interest or any other asset of the Trust that would cause the interest of a Trust Unitholder to be treated (except for tax purposes) as an interest other than an intangible personal property interest.  Unless required to sell pursuant to this Section 3.02 , or pursuant to Section 3.07 or Section 9.03 , or to distribute the Monthly Cash Distribution pursuant to Section 5.02 , the Trustee is authorized to retain any part of the Trust Estate in the form in which such property was transferred to the Trustee, without regard to any requirement to diversify investments or other requirements.

(g)            Any conveyance, transfer or other disposition not expressly addressed in this Agreement shall be governed by the provisions of the Conveyance.  In the event that there is a conflict between the provisions of the Conveyance and this Agreement, the provisions of the Conveyance shall control to the extent of such conflict.

Amendment of Section 10.01

The following set forth the proposed amendments to Section 10.01 of the Trust Agreement (with additions denoted by bold and italics ):

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Section 10.01       Prohibited Amendments .  After the Closing, no amendment may be made to any provision of this Agreement that would:

(a)           increase the power of the Delaware Trustee or the Trustee to engage in business or investment activities;

(b)           alter the rights of the Trust Unitholders vis-a-vis each other; or

(c)           unless consented to in writing by Enduro, have the effect of amending Sections 3.02 , 6.02 , 7.02 , 9.02 , 9.03 , 10.01 or 10.02 hereof.  If Enduro consents to an amendment of any of the foregoing sections, such amendment shall be considered a permitted amendment which may be made only if approved in accordance with Section   10.02(b) .

Amendment of Section 10.02(b)

The following set forth the proposed amendments to Section 10.02(b) of the Trust Agreement (with additions denoted by bold and italics ):

(b)           All other permitted amendments to the provisions of this Agreement or any other Transaction Document to which the Trust (or the Trustee as trustee of the Trust) is a party may be made only by the affirmative vote of the Trust Unitholders of record holding at least 75% of the then outstanding Trust Units at a meeting held in accordance with the requirements of Article VIII .

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 2.  Accordingly, abstentions and broker non-votes on Proposal 2 will have the effect of a vote “AGAINST” Proposal 2.

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 2, your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 2.

Enduro intends to vote its Trust Units “FOR” Proposal 2.  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 2.

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Amendment of Section 4.4(a)

The following set forth the proposed amendments to Section 4.4(a) of the Conveyance (with additions denoted by bold and italics ):

(a)           Except as provided in Section 6.1(a)(iii) , if Grantor ever pays Grantee more than the amount of money then due and payable to Grantee under this Conveyance, Grantee shall not be obligated to return the overpayment, but Grantor may at any time thereafter reduce the NPI Payout by, and retain for its own account, an amount equal to the overpayment, plus interest at the Prime Rate on such amount for the period between the fifteenth (15th) day after the date of the overpayment and the date such amount is recovered by Grantor.  In order to exercise its rights under this Section 4.4(a), Grantor must give Grantee written notice with respect to any such overpayment, together with supporting information and data.

Amendment of Section 6.1

The following set forth the proposed amendments to Section 6.1 of the Conveyance (with additions denoted by bold and italics ):

Section 6.1            Assignment by Grantor Subject to Net Profits Interest .

(a)           Right to Sell .

(i)            Grantor may from time to time Transfer its interest in the Subject Interests, or any part thereof or undivided interest therein, subject to the Net Profits Interest and this Conveyance.  Subject to Section 6.1(a)(ii)  and Section 6.1(a)(iii) , Grantor shall cause the assignee, purchaser, transferee or grantee of any such transaction to take the affected Subject Interests subject to the Net Profits Interest and this Conveyance and, from and after the actual date of any such Transfer, to assume Grantor’s obligations under this Conveyance with respect to such Subject Interests.

(ii)           Notwithstanding Section 6.1(a)(i) , Grantor may from time to time Transfer to non-Affiliates of Grantor, free and clear of the Net Profits Interest and this Conveyance, any of the Subject Interests that accounts for less than or equal to 0.25% of the total production of Subject Hydrocarbons from the Subject Interests in the preceding twelve (12) month period.  The aggregate Fair Value of all portions of the Net Profits Interest released in connection with such Transfers shall not exceed an aggregate Fair Value of five hundred thousand dollars ($500,000) during any consecutive twelve (12) month period.  In the event of any such Transfer, (A) the Gross Fair Value of the released portion of the Net Profits Interest shall be considered an Offset Amount for purposes hereof during the Payment Period in which the Transfer occurs, and (B) Grantee shall, upon receiving a written request from Grantor, immediately prior to any such Transfer, execute, acknowledge, and deliver to Grantor a recordable instrument (reasonably acceptable to Grantor) that terminates and releases the Net Profits Interest with respect to the Subject Interests being Transferred.

(iii)          Notwithstanding Section 6.1(a)(ii), Grantor may from time to time Transfer to non-Affiliates of Grantor, free and clear of the Net Profits Interest and this Conveyance, any of the Subject Interests with the approval of Trust Unitholders of record holding at least 50% of the then outstanding Trust Units at a meeting held in accordance with the requirements of Article VIII of the Trust Agreement.  The proceeds of any sale approved by the Trust Unitholders as set forth in this Section 6.1(a)(iii) shall be distributed in the manner approved by such Trust Unitholders at such meeting.

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(b)           Effect of Sale .  From and after the actual date of any of the Transfers described in Section 6.1(a) by Grantor, Grantor (and in the case of Section 6.1(a)(ii)  and Section 6.1(a)(iii)  only, any grantee, purchaser, transferee or grantee of the Subject Interests) shall be relieved of all obligations, requirements, and responsibilities arising under this Conveyance with respect to the Subject Interests Transferred, except for those that accrued prior to such date.

(c)           Allocation of Consideration .  Except as provided in Section 6.1(a)(iii) , Grantee is not entitled to receive any share of the sales proceeds received by Grantor in any transaction permitted by this Section 6.1.

(d)           Separate Interest .  Effective on the effective date of any Transfer of any Subject Interest pursuant to this Section 6.1, Gross Profits, Excluded Proceeds, Net Deductions, Gross Deductions, Offset Amounts and Net Profits shall thereafter be calculated and determined separately (by the assignee, purchaser, transferee or grantee) with respect to such Subject Interests; and Debits and Credits during each Payment Period in respect of the Subject Interests Transferred shall reflect items received or incurred by the assignee, purchaser, transferee or grantee, and shall be calculated in accordance with Article IV hereof.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 3.  Accordingly, abstentions and broker non-votes on Proposal 3 will have the effect of a vote “AGAINST” Proposal 3.

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 3, your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 3.

Enduro intends to vote its Trust Units “FOR” Proposal 3.  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 3.

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Unitholders (including, without limitation, meeting costs, proxy preparation costs, proxy solicitation costs and costs of counsel and other advisors associated therewith) shall be paid eighty percent (80%) by the Trust and twenty percent (20%) by Enduro.

Required Vote

The affirmative vote of Unitholders, who as of the Record Date, held at least 75% of the Trust Units represented in person or by proxy at the Special Meeting is required to approve Proposal 4.  Accordingly, abstentions and broker non-votes on Proposal 4 will have the effect of a vote “AGAINST” Proposal 4.

If the enclosed Proxy is returned and you have indicated how you wish to vote, the Proxy will be voted in accordance with your instructions.  If the enclosed Proxy is returned without instructions on how you wish to vote on Proposal 4, your Proxy will be deemed to grant such authority and will be voted “FOR” Proposal 4.

Enduro intends to vote its Trust Units “FOR” Proposal 4.  The Trustee is not making a recommendation to Unitholders as to how to vote on Proposal 4.

Implementation of Proposal 4 is contingent upon the implementation of each of Proposals 2 and 3 .  Accordingly, Proposal 4 will not be implemented unless Proposals 2 and 3 are approved by Unitholders of record holding at least 75% of the then outstanding Trust Units; however, the Unitholders are being asked to separately consider and act upon Proposal 4 and have the ability to reject Proposal 4 even if Proposals 2 and 3 are approved.

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U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain U.S. federal income tax considerations related to the release of the Net Profits Interest in the properties that may be relevant to the Unitholders.  This summary is based upon current provisions of the Internal Revenue Code of 1986, as amended (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 Unitholders.  This discussion does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any United States federal laws other than those pertaining to income tax.

The following discussion is limited to U.S. Unitholders who hold the Trust Units as “capital assets” (generally, property held for investment).  All reference to “Unitholders” (including U.S. and non-U.S. Unitholders) are to beneficial owners of the Trust Units.  Moreover, the discussion has only limited application to non-U.S. persons and persons subject to special tax treatment such as, without limitation:  banks, insurance companies or other financial institutions; Unitholders subject to the alternative minimum tax; tax-exempt organizations; dealers in securities or commodities; regulated investment companies; real estate investment trusts; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; non-U.S. Unitholders that are “controlled foreign corporations” or “passive foreign investment companies”; persons that are S-corporations, partnerships or other pass-through entities; persons that own their interest in the Trust Units through S-corporations, partnerships or other pass-through entities; persons that at any time own more than 5% of the aggregate fair market value of the Trust Units; expatriates and certain former citizens or long-term residents of the United States; U.S. Unitholders whose functional currency is not the U.S. dollar; persons who hold the Trust Units as a position in a hedging transaction, “straddle”, “conversion transaction” or other risk reduction transaction; or persons deemed to sell the Trust Units under the constructive sale provisions of the Code.

Each Unitholder is urged to consult his tax advisors as to the particular tax consequences to them of the release of the Net Profits Interest in the Divestiture Properties, including the applicability of any U.S. federal income, federal estate or gift tax, state, local and foreign tax laws, changes in applicable tax laws and any pending or proposed legislation.

Classification and Taxation of the Trust

No ruling has been or will be requested from the IRS with respect to the U.S. federal income tax treatment of the Trust, including a ruling as to the status of the Trust as a grantor trust or as a partnership for U.S federal income tax purposes.  The remainder of the discussion below assumes that the Trust will be classified as a grantor trust for U.S. federal income tax purposes.  As a grantor trust, the Trust is not subject to U.S. federal income tax at the trust level.  Rather, each Unitholder is 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 Unitholder at the time such income is received or accrued by the Trust, rather than when distributed by the Trust.  Each Unitholder is subject to tax on its proportionate share of the income and gain attributable to the assets of the Trust and is 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 Unitholder’s tax method of accounting and taxable year without regard to the taxable year or accounting method employed by the Trust.

The Trust files annual information returns, reporting to the Unitholders all items of income, gain, loss, deduction and credit.  The Trust allocates these items of income, gain, loss, deduction and credit to Unitholders based on record ownership on the monthly record dates.  It is possible that the IRS or another taxing authority could disagree with this allocation method and assert that income and deductions of the Trust should be determined and allocated on a daily or prorated basis, which could require adjustments to the tax returns of the Unitholders affected by this issue and result in an increase in the administrative expense of the Trust in subsequent periods.

Under current law, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 39.6%, and the highest marginal U.S. federal income tax rate applicable to long-term capital gains (generally, gains from the sale or exchange of certain investment assets held for more than one year) of individuals is 20%.  Such marginal tax rates may be effectively increased due to the phaseout of personal exemptions and the

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limitations on itemized deductions.  The highest marginal U.S. federal income tax rate applicable to corporations is 35%, and such rate applies to both ordinary income and capital gains.

Section 1411 of the Code imposes a 3.8% Medicare tax on certain investment income earned by individuals, estates, and trusts.  For these purposes, investment income generally will include a Unitholder’s allocable share of the trust’s interest and royalty income plus the gain recognized from a sale of Trust units.  In the case of an individual, the tax is imposed on the lesser of (i) the individual’s net investment income from all investments, or (ii) the amount by which the individual’s modified adjusted gross income exceeds specified threshold levels depending on such individual’s federal income tax filing status.  In the case of an estate or trust, the tax is imposed on the lesser of (i) undistributed net investment income, or (ii) the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins for such taxable year.  The U.S. Department of the Treasury and the IRS have issued Treasury Regulations that provide guidance regarding the Medicare tax.  Unitholders are urged to consult with their tax advisors as to the impact of the Medicare tax.

If a taxpayer disposes of any “Section 1254 property” (certain oil, gas, geothermal or other mineral property), and the adjusted basis of such property includes adjustments for depletion deductions under Section 611 of the Code, the taxpayer generally must recapture the amount deducted for depletion as ordinary income (to the extent of gain realized on the disposition of the property).  This depletion recapture rule applies to any disposition of property that was placed in service by the taxpayer after December 31, 1986.  Detailed rules set forth in Sections 1.1254-1 through 1.1254-6 of the U.S. Treasury Regulations govern dispositions of property after March 13, 1995.  The IRS likely will take the position that a Unitholder must recapture depletion upon the disposition of a unit.

Federal Income Tax Consequences of the Proposed Transactions

The release of the Net Profits Interest in the Divestiture Properties and receipt of net proceeds described in Proposal 1 is a taxable transaction for U.S. federal income tax purposes.  Net proceeds to Unitholders from the proposed transactions are anticipated to be disseminated with a special cash distribution that will be reportable to Unitholders on Form 1099-B, Proceeds From Broker and Barter Exchange Transactions.  The amount of a Unitholder’s gain or loss attributable to the proceeds received from the proposed transactions is computed as the difference between the proceeds reported on Form 1099-B and the Unitholder’s adjusted basis for the portion of the Net Profits Interest sold.  The adjusted basis of the Net Profits Interest is the original cost or other basis of the Trust Units reduced by any depletion allowances previously claimed by the Unitholder.  Unitholders will be provided with the percentage of their Net Profits Interest sold from the proposed transactions to apply to their adjusted basis.  The Net Profits Interest is a Section 1254 oil and gas property for U.S. federal income tax purposes.  The amount of gain, if any, realized upon the disposition of the Net Profits Interest will be treated as ordinary income to the extent of the depletion previously claimed with respect to such property which reduced the Unitholder’s basis in the property.  The balance of any gain or any loss will be a capital gain or loss if the Trust Units were held by the Unitholder as a capital asset - either long-term, if held more than 12 months, or short-term if held less than 12 months.

UNITHOLDERS ARE STRONGLY ENCOURAGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE NET PROFITS INTEREST IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.

EFFECT OF NEGATIVE VOTES ON PROPOSAL 1

If the Unitholders fail to approve any of the sales, releases of the related Net Profits Interest associated with such oil and natural gas properties or the distribution of proceeds from any such sales as set forth in Proposals 1(a) through 1(h), then (1) the oil and natural gas properties subject to the sale covered by such Proposal will not be sold, (2) the release of the related Net Profits Interest associated with such Proposal will not take effect and (3) no proceeds related to the sale of the oil and natural gas properties subject to such Proposal will be distributed to the Unitholders.

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EFFECT OF NEGATIVE VOTES ON PROPOSALS 2 OR 3

If the Unitholders fail to approve the amendments to the Trust Agreement as set forth in Proposal 2, then the amendments to the Trust Agreement will not occur.

If the Unitholders fail to approve the amendments to the Conveyance as set forth in Proposal 3, then the amendments to the Conveyance will not occur.

EFFECT OF NEGATIVE VOTES ON PROPOSALS 1, 2 OR 3

Proposals 1, 2 and 3 comprise a group of related and interdependent proposals for Unitholder action.  As a result, implementation of each such Proposal is contingent upon the implementation of the other Proposals.  Accordingly, Proposals 1, 2 or 3 will not be implemented unless each such Proposal is approved by the requisite Unitholder vote.  If any of Proposals 1, 2 or 3 is not approved by the requisite Unitholder vote, then (i) the transactions described in Proposal 1 will not occur and the associated net proceeds from such transactions will not be distributed to Enduro or the Unitholders, (ii) the Trust Agreement will not be amended to permit asset sales and the release of the Net Profits Interest as described in Proposal 2, and (iii) the Conveyance will not be amended to permit asset sales and the release of the Net Profits Interest as described in Proposal 3.

EFFECT OF NEGATIVE VOTES ON PROPOSAL 4

Implementation of Proposal 4 is contingent upon the implementation of each of Proposals 2 and 3.  As a result, implementation of such Proposal is contingent upon the implementation of Proposals 2 and 3.  If the Unitholders fail to approve Proposal 4, then meeting costs, proxy preparation costs, proxy solicitation costs and any related costs of calling the Special Meeting or any future meeting pursuant to proposed Section 3.02(d) of the Trust Agreement will be payable by Enduro.  The effect of a vote against Proposal 4 could be to discourage future transactions of the type contemplated by Proposals 1(a)-1(h) that could otherwise be presented by or on behalf of Enduro to Unitholders for approval.

EFFECT OF NEGATIVE VOTES ON PROPOSAL 5

If the Unitholders fail to approve Proposal 5, the Trust may be unable to hold the Special Meeting if a quorum is not reached.  If a quorum has been reached, any of Proposals 1, 2, 3 or 4 that has not achieved the required Unitholder vote would not be approved and would have the effects set forth above under “Effect of Negative Votes on Proposal 1,” “Effect of Negative Votes on Proposals 2 or 3,” “Effect of Negative Votes on Proposals 1, 2 or 3” and “Effect of Negative Votes on Proposal 4.”

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Officers .  The Trust has no directors or executive officers.  The Trustee is a corporate trustee which may be removed, with or without cause, at a meeting of the Unitholders, by the affirmative vote of the holders of a majority of all the Trust Units then outstanding.

Audit Committee and Nominating Committee .  Because the Trust has no directors, it does not have an audit committee, an audit committee financial expert or a nominating committee.

Section 16(a) Beneficial Ownership Reporting Compliance .  Section 16(a) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), requires the Trust’s directors, officers or beneficial owners of more than ten percent of a registered class of the Trust’s equity securities to file reports of ownership and changes in ownership with the SEC and to furnish the Trust with copies of all such reports.  The Trust has no directors and officers and based solely on its review of the reports received by it, the Trust believes that during the fiscal year of 2016, no person who was a beneficial owner of more than ten percent the Trust Units failed to file on a timely basis any report required by Section 16(a) of the Exchange Act.

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Code of Ethics .  Because the Trust has no employees, it does not have a code of ethics.  Employees of the Trustee, The Bank of New York Mellon Trust Company, N.A. must comply with the bank’s code of ethics.

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Security Ownership of Management .  The Trustee does not beneficially own any securities of the Trust.

Changes in Control .  The Trustee knows of no arrangements which may subsequently result in a change in control of the Trust.

Securities Authorized for Issuance Under Equity Compensation Plans .  The Trust has no equity compensation plans.

HOUSEHOLDING

As permitted by the Exchange Act, only one copy of this Proxy Statement is being delivered to Unitholders residing at the same address, unless such Unitholders have notified the Trust of their desire to receive multiple copies of this Proxy Statement.

The Trust will promptly deliver, upon oral or written request, a separate copy of this Proxy Statement to any Unitholder residing at an address to which only one copy was mailed.  Requests for additional copies or to request a single copy of this Proxy Statement for Unitholders sharing address (if they are receiving multiple copies) should be directed to   , by phone    or by fax at    or by mail to    or by e-mail to   .

ADDITIONAL INFORMATION

Unitholder Proposals

The Trust does not hold annual meetings of Unitholders.  Accordingly, the Trust does not publish a date by which Unitholders must make proposals for inclusion in an annual meeting.  Certain Unitholders, or groups of Unitholders, may call special meetings of Unitholders pursuant to the terms of the Trust Agreement to approve any appropriate matter.

Where You Can Find More Information

The Trust files annual, quarterly and special reports and other information with the SEC.  The Trust’s SEC filings are available to the public on the SEC’s website at http://www.sec.gov.  You may also read and copy any document the Trust files at the SEC’s public reference room at 100 F Street NE, Washington, D.C. 20549.  Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.

The Trust Units of the Trust are listed on the New York Stock Exchange under the symbol “NDRO.” The Trust’s reports and other information filed with the SEC can also be inspected at the offices of the New York Stock Exchange.

The Trust will provide copies of the reports and other information filed with the SEC to any Unitholder, at the actual cost of reproduction, upon written request to The Bank of New York Mellon Trust Company, N.A., Trustee, Global Corporate Trust, 919 Congress Avenue, Suite 500, Austin, Texas 78701.  Copies of these reports may also be found on the Trust’s web site at http://www.enduroroyaltytrust.com.

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NOTE : In its discretion as to such other business as may proper come before the special meeting or any adjournment thereof.

Please sign exactly as your name(s) appear(s) hereon.  When signing as attorney, executor, administrator, or other fiduciary, please give full title as such.  Joint owners should each sign personally.  All holders must sign.  If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

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This proxy is solicited by

ENDURO ROYALTY TRUST

ENDURO ROYALTY TRUST
Special Meeting of Unitholders
[    ], 2017 [    ] A.M./P.M. CST

The unitholder(s) hereby appoint(s) [     ], as proxy, with the power to appoint its substitute, and hereby authorizes it to represent and to vote, as designated on the reverse side of this ballot, all of the units of ENDURO ROYALTY TRUST that the unitholder(s) is/are entitled to vote at the Special Meeting of Unitholders to be held at [   ] A.M./P.M. CST on [    ], 2017, at [        ] Fort Worth, Texas, and any adjournment or postponement thereof, and to transact such other business as may properly come before the meeting and any adjournment or postponement thereof.

The units represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned unitholders.  If no direction is made, this proxy will be voted FOR proposals 1(a)-(h), FOR proposal 2, FOR proposal 3, FOR proposal 4 and FOR proposal 5 and in the discretion of the proxies with respect to such other business as may properly come before the meeting.

Continued and to be signed on reverse side