Item 2.
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Trustees Discussion and Analysis
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Forward Looking Information
Certain information included
in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain
or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward looking statements may be or may concern,
among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, and regulatory matters. Although the Trustee believes that the expectations reflected in
such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove correct. There are many factors, none of which are within the Trustees
control, that may cause such expectations not to be realized, including, among other things, factors such as actual oil and gas prices and the recoverability of reserves, capital expenditures, general economic conditions, actions and policies of
petroleum-producing nations and other changes in the domestic and international energy markets. Such forward looking statements generally are accompanied by words such as estimate, expect, predict,
anticipate, goal, should, assume, believe, or other words that convey the uncertainty of future events or outcomes.
Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017
For the quarter ended June 30, 2018, royalty income received by the Trust amounted to $7,623,122 compared to royalty income of $7,473,738 during the
second quarter of 2017. The increase in royalty income is primarily attributable to a decrease in oil and gas production offset by an increase in price of oil for the quarter ending June 30, 2018, as compared to the quarter ended June 30,
2017. Average oil and gas prices were $60.94 and $3.12 for the quarter ending June 30, 2018, compared to $47.14 and $3.13 for the quarter ended June 30, 2017.
Interest income for the quarter ended June 30, 2018, was $6,754 compared to $3,056 during the second quarter of 2017. The increase in interest income is
primarily attributable to substantially increased amounts of funds available for investment. Total expenses during the second quarter of 2018 amounted to $581,462
compared to $504,997 during the second quarter of 2017. The increase in total
expenses can be primarily attributed to increased expense for professional services.
These transactions resulted in distributable income for the quarter
ended June 30, 2018, of $7,048,414 or $0.15 per Unit of beneficial interest. Distributions of $0.052172, $0.054973 and $0.044080 per Unit were made to Unit holders of record as of April 30, 2018, May 31, 2018, and June 29, 2018,
respectively. For the second quarter of 2017, distributable income was $6,971,797 or $0.15 per Unit of beneficial interest.
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