Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 16, 2023

Gulf Coast Ultra Deep Royalty Trust

(Exact name of registrant as specified in its charter)

Delaware

001-36386

46-6448579

(State or other jurisdiction of

incorporation or organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

The Bank of New York Mellon Trust Company, N.A., as trustee
601 Travis Street, 16th Floor
Houston, Texas		77002
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (512) 236-6555

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to section 12(b) of the Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR § 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On October 16, 2023, Gulf Coast Ultra Deep Royalty Trust issued a press release titled “Gulf Coast Ultra Deep Royalty Trust Announces Quarterly Results.” A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information furnished in this Item 2.02 and in Exhibit 99.1 is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1

Press release dated October 16, 2023, titled “Gulf Coast Ultra Deep Royalty Trust Announces Quarterly Results.”

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Gulf Coast Ultra Deep Royalty Trust

	By:	The Bank of New York Mellon
		Trust Company, N.A., as Trustee

	By:	/s/ Sarah C. Newell
		Sarah C. Newell
		Vice President
Date: October 16, 2023

Exhibit 99.1

Gulf Coast Ultra Deep Royalty Trust

The Bank of New York Mellon Trust Company, N.A., Trustee

News Release

Gulf Coast Ultra Deep Royalty Trust Announces Quarterly Results

HOUSTON, Texas - October 16, 2023 - Gulf Coast Ultra Deep Royalty Trust (OTC Pink: GULTU) (the Trust) announced today that it will not make a cash distribution for the quarter ended September 30, 2023 to unitholders of record on October 30, 2023.

Natural gas (Mcf) sales volumes, average sales price and net cash proceeds available for distribution for the quarter ended September 30, 2023 are set forth in the table below:

Natural gas (Mcf) sales volumes ^(a)		770
Natural gas (per Mcf) average sales price	$	2.37
Gross proceeds	$	1,828
Post-production costs and specified taxes		(145	)
Royalty income		1,683
Interest and dividend income		1,696
Administrative expenses		(108,432	)
Administrative expenses in excess of income ^(b)		(105,053	)
Increase in minimum cash reserve ^(c)		-
Cash proceeds available for distribution	$	-

^(a)Attributable to the onshore Highlander subject interest which is the only subject interest with sales volumes.

^(b) Pursuant to the royalty trust agreement, Freeport-McMoRan Inc. (FCX) has agreed to pay annual trust expenses up to $350,000, with no right of repayment or interest due, to the extent the Trust lacks sufficient funds to pay administrative expenses. Pursuant to the royalty trust agreement, FCX also agreed to provide and maintain a $1.0 million stand-by reserve account or an equivalent letter of credit for the benefit of the Trust to enable the Trustee to draw on such reserve account or letter of credit to pay obligations of the Trust if its funds are inadequate to pay its obligations at any time. Currently, with the consent of the Trustee, FCX may reduce the reserve account or substitute a letter of credit with a different face amount for the original letter of credit or any substitute letter of credit. In connection with this arrangement, FCX has provided $1.0 million in the form of a reserve fund cash account to the Trust.

^(c)The Trust is withholding, and in the future intends to withhold, $8,750 from the funds otherwise available for distribution each quarter to gradually build a cash reserve of approximately $350,000. This cash is reserved for the payment of future known, anticipated or contingent expenses or liabilities of the Trust. The Trustee may increase or decrease the targeted cash reserve amount at any time, and may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance notice to the unitholders. Cash held in reserve will be invested as required by the royalty trust agreement. Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities eventually will be distributed to unitholders, together with interest earned on the funds. As no proceeds are available for distribution, the Trust is not withholding any funds for the cash reserve this quarter.

As previously disclosed, on February 1, 2023, Highlander Oil & Gas Assets LLC (HOGA), notified the Trustee that the sole well producing from the onshore Highlander subject interest experienced an operational issue on January 19, 2023, resulting in substantial amounts of water entering the well, which caused a shut in of the well before production resumed at significantly reduced levels. Following an evaluation by HOGA’s field operations team, HOGA determined that it would be necessary to commence operations to control the water production, in expectation of eventually initiating “kill” operations on the well. HOGA informed the Trustee that the well was shut in effective March 31, 2023 and production from the well has ceased. Since that time the well has flowed intermittently but not on a continuous basis. HOGA has informed the Trustee that due to the underground flow of fluids into the wellbore, the well cannot be salvaged and must be plugged and abandoned.

The onshore Highlander subject interest is the only subject interest that has established commercial production. Accordingly, abandoning the well will eliminate any production from the onshore Highlander subject interest which will also eliminate any proceeds to which the Trust would be entitled pursuant to its overriding royalty interest. Therefore, abandonment of the well means that the Trust will not receive income attributable to its overriding royalty interest. Further, unless the well is redrilled or another well is drilled on the onshore Highlander subject interest, the Trust does not expect to receive any income attributable to its overriding royalty interests and accordingly, does not expect to have any cash available to distribute to Trust unitholders in future periods.

# # #

About Gulf Coast Ultra Deep Royalty Trust. The Trust is a Delaware statutory trust created to hold a 5% gross overriding royalty interest in future production from specified Inboard Lower Tertiary/Cretaceous exploration prospects located in the shallow waters of the Gulf of Mexico and onshore in South Louisiana that existed as of December 5, 2012, which are collectively referred to as subject interests. The subject interests and the Trust’s overriding royalty interests are described in the Trust’s filings with the Securities and Exchange Commission (SEC). As described in the Trust’s SEC filings, future distributions are not guaranteed and will depend on the proceeds received by the Trust as a result of actual production volumes, oil and gas prices, post-production costs and specified taxes, and the amount and timing of the Trust’s administrative expenses, among other factors. For additional information on the Trust, please visit http://gultu.q4web.com/home/default.aspx.

Cautionary Statement Regarding Forward-Looking Information. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are all statements other than statements of historical facts, such as any statements regarding future operations on and production from the Highlander subject interest, expectations regarding any redrill of the well on the Highlander subject interest, the drilling of another well on the Highlander subject interest, the Trust’s future income from the overriding royalty interests, future distributions to Trust unitholders and the amount and date of quarterly distributions to unitholders. Forward-looking statements are not guarantees or assurances of future performance and actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that may cause actual results to differ materially from those anticipated by the forward-looking statements include, but are not limited to, the amount of cash received or expected to be received by the Trustee from the underlying properties on or prior to a record date for a quarterly cash distribution. Any differences in actual cash receipts by the Trust could affect the amount of quarterly cash distributions. Other important factors that may cause actual results to differ materially include risks inherent in production of oil and gas properties, the ability of commodity purchasers to make payment, and other risk factors described in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC. The Trust’s annual, quarterly and other filed reports are or will be available over the Internet at the SEC’s website at http://www.sec.gov. Statements made in this press release are qualified by the cautionary statements made in this press release. The Trust cautions investors that it does not intend, and assumes no obligation, to update any of the statements included in this press release.

The Bank of New York Mellon Trust Company, N.A. serves as trustee of the Trust. If you have any questions related to the Trust, please see below for contact information:

	Contact:	Gulf Coast Ultra Deep Royalty Trust
		The Bank of New York Mellon Trust Company, N.A., as Trustee
		Sarah Newell
		(512) 236-6555
		601 Travis Street, 16th Floor
		Houston, TX 77002