SABINE ROYALTY TRUST

Previous wording

The Trust makes monthly distributions to the holders of Units of the excess of the preceding month’s royalty income received over expenses incurred. Upon receipt, royalty income is invested in short-term investments until its subsequent distribution. In accordance with the Trust Agreement, the Trust’s only long-term assets consist of royalty interests in producing and proved undeveloped oil and gas properties. Although the Trust is permitted to borrow funds if necessary to continue its operations, borrowings are not anticipated in the foreseeable future. Accordingly, the Trust is dependent on receipt of royalty income to generate excess cash flows utilized in making distributions. These cash flows are largely dependent on such factors as oil and gas prices and production volumes, which are influenced by many factors beyond the control of the Trust. The Trust does not undertake capital projects or make capital expenditures, and is not liable for any production costs or liabilities attributable to the

Current wording

The Trust makes monthly distributions to the holders of Units of the excess of the preceding month’s royalty income received over expenses incurred. Upon receipt, royalty income is invested in short-term investments until its subsequent distribution. In accordance with the Trust Agreement, the Trust’s only long-term assets consist of royalty interests in producing and proved undeveloped oil and gas properties. Although the Trust is permitted to borrow funds if necessary to continue its operations, borrowings are not anticipated in the foreseeable future. Accordingly, the Trust is dependent on receipt of royalty income to generate excess cash flows utilized in making distributions. These cash flows are largely dependent on such factors as oil and gas prices and production volumes, which are influenced by many factors beyond the control of the Trust. The Trust does not undertake capital projects or make capital expenditures, and is not liable for any production costs or liabilities attributable to the Royalty Properties.

Previous wording

The Trust’s income and monthly distributions are heavily influenced by commodity prices. Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market uncertainty and (iii) a variety of additional factors that are beyond the Trustee’s control. The price of oil and natural gas showed weakness in early 2024, unable to gain much strength through the fourth quarter, due mainly to higher inflation, the uncertainty brought about by the November U.S. presidential election, and warmer weather in the fall and early winter in 2024. The price of oil rose in early 2025 and then fell through the remainder of the first quarter of 2025 primarily due to weak demand, increasing supply, and tariffs and trade tensions between the U.S. and China. Natural gas prices rose in the first quarter of 2025 amid tight conditions and rising demand. Colder-than-normal weather in January and February 2025 led to increased natural gas consumption and large natural gas withdrawals from inventories, which contributed to higher prices in the first quarter 2025. Factors which may affect commodity prices are discussed below and under “Item 1A—Risk Factors” in the Trust’s Form 10-K for the year ended December 31, 2024. Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

Current wording

The Trust’s income and monthly distributions are heavily influenced by commodity prices. Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market uncertainty and (iii) a variety of additional factors that are beyond the Trustee’s control. The price of oil and natural gas showed weakness in early 2024, unable to gain much strength through the fourth quarter, due mainly to higher inflation, the uncertainty brought about by the November U.S. presidential election, and warmer weather in the fall and early winter in 2024. The price of oil rose in early 2025 and then fell through the remainder of the first quarter of 2025 primarily due to weak demand, increasing supply, and tariffs and trade tensions between the U.S. and China. In early May 2025 prices dropped sharply, to a nearly two-year low. The decline was driven by a combination of weak demand and rising supply concerns after a surge in global inventories. As concerns over a trade war and energy tariffs subsided, prices were able to rally throughout the rest of May and June 2025. The natural gas markets faced heightened volatility, driven by a milder-than-expected winter in late 2024 in major consuming regions like the US and Europe leading to weaker heating demand. Natural gas prices rose in the first quarter of 2025 amid tight conditions and rising demand. Colder-than-normal weather in January and February 2025 led to increased natural gas consumption and large natural gas withdrawals from inventories, which contributed to higher prices in the first quarter 2025. Geopolitical tensions, particularly instability in the Middle East affecting shipping routes, added upward pressure through May and June 2025, pushing prices back above US $4.00 by mid-June 2025. Factors which may affect commodity prices are discussed below and under “Item 1A—Risk Factors” in the Trust’s Form 10-K for the year ended December 31, 2024. Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

Previous wording

Distributable income consists of royalty income plus interest income plus any decrease in cash reserves established by the Trustee less general and administrative expenses of the Trust less any increase in cash reserves established by the Trustee. Distributable income for the three months ended March 31, 2025, was $18,146,483, or $1.24 per unit. Royalty income for the three months ended March 31, 2025, amounted to $19,394,566 while interest income was $106,960. General and administrative expenses totaled $1,355,043 for the three months ended March 31, 2025.

Current wording

Distributable income consists of royalty income plus interest income plus any decrease in cash reserves established by the Trustee less general and administrative expenses of the Trust less any increase in cash reserves established by the Trustee. Distributable income for the three months ended June 30, 2025, was $17,788,995, or $1.22 per unit. Royalty income for the three months ended June 30, 2025, amounted to $18,583,570 while interest income was $119,730. General and administrative expenses totaled $914,305 for the three months ended June 30, 2025.

Previous wording

Distributions during the period were $0.448330, $0.439510, and $0.301230 per Unit payable to Unit holders of record on January 15, February 18, and March 17, 2025, respectively.

Current wording

Distributions during the period were $0.503880, $0.447780, and $0.426490 per Unit payable to Unit holders of record on April 15, May 15, and June 16, 2025, respectively.

Previous wording

Royalty income for the quarter ended March 31, 2025, decreased approximately $1,364,000, or 7%, compared with the first quarter of 2024. This decrease was primarily the result of lower prices for both oil and natural gas ($4.4 million) and lower gas production ($0.1 million), partially offset by increased production for oil ($2.2 million), miscellaneous receipts ($0.7 million) and lower ad valorem taxes ($0.3 million).

Current wording

Royalty income for the quarter ended June 30, 2025, decreased approximately $4,024,000 or 18%, compared with the second quarter of 2024. This decrease was primarily the result of a decrease in both oil and natural gas production ($7.1 million) and a decrease in oil prices ($2.4 million), offset by an increase in natural gas prices ($4.9 million) and decreased production taxes, operating expenses, and ad valorem taxes ($0.5 million).

Previous wording

Oil royalty income for the three months ended March 31, 2025, related primarily to production for November 2024 through January 2025. The average price of oil as reported by NYMEX for that time period was $71.94 per barrel. The average price of oil was $71.78 per barrel for January through March 2025. Gas royalty income received for the three months ended March 31, 2025, related primarily to production for October through December 2024. The average price of gas reported by Henry Hub for the same time period was $2.79 per Mcf. The average price of gas for Henry Hub was $3.15 per Mcf for January through March 2025. As of April 28, 2025, the average price of gas reported by Henry Hub was $2.66 per Mcf and the average price of oil reported by NYMEX was $63.30 per barrel. It is difficult to estimate future prices of oil and gas, and any assumptions concerning future prices may prove to be incorrect.

Current wording

Oil royalty income for the three months ended June 30, 2025, related primarily to production for February through April 2025. The average price of oil as reported by NYMEX for that time period was $67.65 per barrel. The average price of oil was $68.12 per barrel for January through June 2025. Gas royalty income received for the three months ended June 30, 2025, related primarily to production for January through March 2025. The average price of gas reported by Henry Hub for the same time period was $3.73 per Mcf. The average price of gas for Henry Hub was $3.30 per Mcf for January through June 2025. As of July 30, 2025, the average price of gas for Henry Hub was $2.81 per Mcf and the average price of oil reported by NYMEX was $67.81 per barrel. It is difficult to estimate future prices of oil and gas, and any assumptions concerning future prices may prove to be incorrect.

Previous wording

Interest income for the quarter ended March 31, 2025, decreased $44,966 compared with the first quarter of 2024. Compared to the preceding quarter ended December 31, 2024, interest income decreased $21,348. Changes in interest income are the result of changes in interest rates and funds available for investment.

Current wording

Interest income for the quarter ended June 30, 2025, decreased $55,623 compared with the second quarter of 2024. Compared to the preceding quarter ended March 31, 2025, interest income increased $12,770. Interest income for the six months ended June 30, 2025 decreased approximately $100,589 compared to the same period in 2024. Changes in interest income are the result of changes in interest rates and funds available for investment.

Previous wording

Compared to the previous quarter ended December 31, 2024, general and administrative expenses increased approximately $379,000 primarily due to timing of audit and legal fees of approximately $195,700, a bonus fee to Argent of $92,200, unitholder and printing services of approximately $81,300, and miscellaneous expenses of approximately $9,300.

Current wording

Compared to the previous quarter ended March 31, 2025, general and administrative expenses decreased approximately $440,700 primarily due to a decrease in Escrow Agent Fees of approximately $18,000, and decreases related to timing of payment of legal and professional services of approximately $343,000, unitholder services of approximately $82,000, and ad valorem service fee of approximately $3,600. These were slightly offset by an increase in other expenses of approximately $5,900.

Previous wording

General and administrative expenses increased approximately $365,700 for the three months ended March 31, 2025, compared to the same time period in 2024 due primarily to an increase in Escrow Agent/Trustee fees of approximately $163,400, a bonus fee to Argent of approximately $92,200, professional and legal fees of approximately $101,600, and miscellaneous expenses of approximately $8,800.

Current wording

General and administrative expenses increased approximately $576,600 for the six months ended June 30, 2025, compared to the same time period in 2024 due primarily to increases in Escrow Agent/Trustee/Bonus fees of approximately $459,000, professional services of approximately $116,000 and tax reporting services of approximately $5,800. These were slightly offset by a decrease in other expenses of approximately $4,200.