VOC Energy Trust
For the period ended Dec 31, 2024. Filed Mar 20, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 20, 2025
VOC$2.95+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-20.
0001104659-24-036700
Item 7. Trustee’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-20.
0001104659-25-026133
Item 7. Trustee’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 47 previous paragraphs and 57 current paragraphs.
35 unchanged; 9 reworded; 12 added; 2 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.
Current report
The Trust Units commenced trading on the New York Stock Exchange on May 10, 2011 under the symbol “VOC.” As of March 20, 2025, the 17,000,000 units outstanding were held by six unitholders of record.
Current report
Equity Compensation Plans
Current report
The Trust does not have any employees and, therefore, does not maintain any equity compensation plans.
Current report
Recent Sales of Unregistered Securities
Current report
There were no equity securities sold by the Trust during the year ended December 31, 2023 that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).
Current report
Purchases of Equity Securities
Current report
There were no purchases of Trust Units by the Trust or any affiliated purchaser during the fourth quarter of the year ended December 31, 2024.
Current report
[Reserved]
Current report
Development expenses were $2,452,213 for the year ended December 31, 2024, an increase of $600,042 or 32.4% from $1,852,171 for the year ended December 31, 2023. Such increase was primarily due to increased development activity during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Current report
The Trust is not directly obligated to pay any portion of the capital expenditures made with respect to the Underlying Properties; however, capital expenditures made by VOC Brazos with respect to the Underlying Properties will be deducted from the gross proceeds in calculating the net proceeds from which cash will be paid to the Trust. As a result, the Trust will indirectly bear an 80% (subject to certain limitations during the final three years of the Trust, as described above under “Item 1. Business — Computation of Net Proceeds — Net Profits Interest”) share of any capital expenditures made with respect to the Underlying Properties. Accordingly, higher or lower capital expenditures will, in general, directly decrease or increase, respectively, the cash received by the Trust in respect of its net profits interest, which will have a corresponding effect on cash available for distribution to Trust unitholders. As the cash received by the Trust in respect of the net profits interest will be reduced by the Trust’s pro rata share of these capital expenditures, VOC Brazos expects that it will incur capital expenditures with respect to the Underlying Properties throughout the term of the Trust on a basis that balances the impact of the capital expenditures on current cash distributions to the Trust unitholders with the longer term benefits of increased oil and natural gas production expected to result from the capital expenditures. In addition, VOC Brazos may establish a capital reserve of up to $1.0 million in the aggregate at any given time to reduce the impact on distributions of uneven capital expenditure timing. However, if annual cash proceeds attributable to the net profits interest are less than $1 million for each of two consecutive years, then under the terms of the Trust Agreement, the Trust would be required to dissolve.
Current report
VOC Brazos, as the designated operator of the Underlying Properties, is entitled to make all determinations related to capital expenditures with respect to the Underlying Properties, and there are no limitations on the amount of capital expenditures that VOC Brazos may incur with respect to the Underlying Properties. VOC Brazos is required under the Conveyance to use commercially reasonable efforts to cause the operators of the Underlying Properties to operate these properties as would a reasonably prudent operator acting with respect to its own properties (without regard to the existence of the net profits interest). As the Trust unitholders would not be expected to fully realize the benefits of capital expenditures made with respect to the Underlying Properties towards the end of the term of the Trust, during each twelve-month period beginning on the later to occur of (1) December 31, 2027 and (2) the time when 9.8 MMBoe have been produced from the Underlying Properties and sold (which is the equivalent of 7.8 MMBoe in respect of the
Removed paragraphs (2)
Previous report
Development expenses were $1,852,171 for the year ended December 31, 2023, a decrease of $1,322,554 or 41.7% from $3,174,725 for 2022. Of this decrease, $1,226,807 is attributable to the difference between $214,576 in expenses associated with the completion of two horizontal wells in 2023 as compared to the associated $1,441,382 in expenses from the drilling and partial completion of these same wells in 2022. The remaining portion of the decrease was due to decreases in other drilling activity and development expenses during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Previous report
In 2018, VOC Brazos also entered into a joint venture agreement with MD America Energy, LLC (“MD America”) to develop the LWOS, within the north half of the Kurten Woodbine Unit (the “North Contract Area”). Under the terms of the joint venture agreement, MD America was to carry VOC Brazos for its share of drilling and completion costs for up to four LWOS wells (the “MD Earning Wells”), with the first MD Earning Well to be spud by December 31, 2018 and the fourth MD Earning Well to be spud by November 20, 2020. In exchange, MD America had the opportunity to earn a working interest representing 50% of VOC Brazos’ interest in each MD Earning Well and up to a 50% interest in VOC Brazos’ acreage in the North Contract Area. After the MD Earning Wells were to be completed, MD America had the right to propose and drill up to three LWOS wells per year. MD America spudded the first MD Earning Well on November 20, 2018 and drilled and set production casing for the well; however, the well was not completed by MD America. No additional MD Earning Wells were drilled and the joint venture agreement expired. As a result, MD America did not earn any interest in the MD Earning Well or an interest in VOC Brazos’ acreage in the North Contract Area. VOC Brazos completed this well in 2021.
Reworded paragraphs (9)
Previous wording
Item 7. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.
Current wording
Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous wording
Total oil and natural gas sales. Oil and natural gas sales were $38,733,390 for the year ended December 31, 2023, a decrease of $10,178,251 or 20.8% from $48,911,641 for the year ended December 31, 2022. Revenues are a function of oil and natural gas sales prices and volumes sold. The decrease in gross proceeds was due to a decrease in market prices for oil and natural gas sales during 2023 compared to 2022 and a decrease in oil and gas sales volumes compared to 2022. Oil sales volumes were 495,672 Bbls for the year ended December 31, 2023, a decrease of 27,707 Bbls or 5.3% from 523,379 Bbls for the year ended December 31, 2022, while natural gas sales volumes were 297,928 Mcf, a decrease of 17,798 Mcf from 315,726 Mcf for the year ended December 31, 2022. During the year ended December 31, 2023, the average price for oil decreased 15.7% to $75.33 per Bbl and the average price for natural gas decreased 31.2% to $4.68 per Mcf.
Current wording
Total oil and natural gas sales. Oil and natural gas sales were $35,788,624 for the year ended December 31, 2024, a decrease of $2,944,766 or 7.6% from $38,733,390 for the year ended December 31, 2023. Revenues are a function of oil and natural gas sales prices and volumes sold. The decrease in gross proceeds was due to a decrease in oil and gas sales volumes compared to 2023 and a decrease in the market price for natural gas sales offset slightly by an increase in the market price for oil sales during 2024 compared to 2023. Oil sales volumes were 456,682 Bbls for the year ended December 31, 2024, a decrease of 38,990 Bbls or 7.9% from 495,672 Bbls for the year ended December 31, 2023, while natural gas sales volumes were 263,696 Mcf, a decrease of 34,232 Mcf from 297,928 Mcf for the year ended December 31, 2023. These oil and natural gas sales volume decreases are partially the result of severe winter storms in January 2024 that affected Kansas and Texas and resulted in curtailment of production on certain of the Underlying Properties, as discussed in the Trust’s Current Report on Form 8-K filed on January 19, 2024. The snow and ice associated with those storms disabled electrical power to the affected Underlying Properties for an extended period, rendering some properties inaccessible and generally created difficult working periods. During the year ended December 31, 2024, the average price for oil increased 1.8% to $76.66 per Bbl and the average price for natural gas decreased 37.0% to $2.95 per Mcf.
Previous wording
Costs. Lease operating expenses were $14,268,658 for the year ended December 31, 2023, an increase of $20,785 or 0.1% from $14,247,873 for the year ended December 31, 2022. The increase was primarily due to increases in the costs of oilfield goods and services. Production and property taxes were $2,037,664 for the year ended December 31, 2023, an increase of $41,182 or 2.1% from $1,996,482 for the year ended December 31, 2022. The increase is primarily due to an increase in property taxes of $357,641 or 56.3% offset by a decrease in production taxes of $316,459 or 23.3% as a result of lower prices for oil and natural gas sales.
Current wording
Costs. Lease operating expenses were $14,552,598 for the year ended December 31, 2024, an increase of $283,940 or 2.0% from $14,268,658 for the year ended December 31, 2023. The increase was primarily due to increases in the costs of oilfield goods and services. Production and property taxes were $1,755,415 for the year ended December 31, 2024, a decrease of $282,249 or 13.9% from $2,037,664 for the year ended December 31, 2023. The decrease is primarily due to a decrease in production taxes of $224,273 or 21.5% as a result of lower sales volumes for oil and natural gas sales along with a decrease in property taxes of $57,976 or 5.8%.
Previous wording
Excess of revenues over direct operating expenses and lease equipment and development costs. The excess of revenues over direct operating expenses and lease equipment and development costs from the Underlying Properties was $20,574,897 for the year ended December 31, 2023, a decrease of $8,917,664 or 30.2% from $29,492,561 for the year ended December 31, 2022. The Trust’s 80% net profits interest of these totals was $16,459,918 and $23,594,050, respectively. During the years ended December 31, 2023 and 2022, VOC Brazos did not withhold or release any dollar amounts due to the Trust from previously established cash reserves for future development, maintenance or operating expenditures, which resulted in income from the net profits interest of $16,459,918 and $23,594,050, respectively, for such years. These amounts were further reduced by a Trustee holdback for current estimated expenses of $1,013,888 and $975,080 for the years ended December 31, 2023 and 2022, respectively, and a Trustee holdback for future estimated expenses of $231,030 and $943,970 for the years ended December 31, 2023 and 2022, respectively. The Trustee paid general and administrative expenses of $1,064,494 for the year ended December 31, 2023, an increase of $107,117 from $957,377 for the year ended December 31, 2022. These factors resulted in distributable income for the year ended December 31, 2023 of $15,215,000, a decrease of $6,460,000 from $21,675,000 for the year ended December 31, 2022.
Current wording
Excess of revenues over direct operating expenses and lease equipment and development costs. The excess of revenues over direct operating expenses and lease equipment and development costs from the Underlying Properties was $17,028,398 for the year ended December 31, 2024, a decrease of $3,546,499 or 17.2% from $20,574,897 for the year ended December 31, 2023. The Trust’s 80% net profits interest of these totals was $13,622,718 and $16,459,918, respectively. During the years ended December 31, 2024 and 2023, VOC Brazos did not withhold or release any dollar amounts due to the Trust from previously established cash reserves for future development, maintenance or operating expenditures, which resulted in income from the net profits interest of $13,622,718 and $16,459,918, respectively, for such years. These amounts were reduced by a Trustee holdback for current estimated expenses of $1,212,718 and $1,013,888 for the years ended December 31, 2024 and 2023, respectively, and a Trustee holdback for future estimated expenses of $231,030 for the year ended December 31, 2023. The Trustee paid general and administrative expenses of $897,342 for the year ended December 31, 2024, a decrease of $167,152 from $1,064,494 for the year ended December 31, 2023. These factors resulted in distributable income for the year ended December 31, 2024 of $12,410,000, a decrease of $2,805,000 from $15,215,000 for the year ended December 31, 2023.
Previous wording
Other than Trust administrative expenses, including any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to Trust unitholders. Available funds are the excess cash, if any, received by the Trust from the net profits interest and payments from other sources (such as interest earned on any amounts reserved by the Trustee) in that quarter, over the Trust’s expenses paid for that quarter. Available funds are reduced by any cash the Trustee decides to hold as a reserve against future expenses. As of December 31, 2023, the Trustee held $1,429,301, which includes the $1.175 million cash reserve described below, as such a reserve. The Trust paid, out of the first cash payment received by the Trust, the Trustee’s and Delaware Trustee’s legal expenses incurred in forming the Trust, in connection with the initial public offering (that were not otherwise paid by VOC Brazos) and related matters, as well as the Delaware Trustee’s acceptance fee in the amount of $5,000.
Current wording
Other than Trust administrative expenses, including any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to Trust unitholders. Available funds are the excess cash, if any, received by the Trust from the net profits interest and payments from other sources (such as interest earned on any amounts reserved by the Trustee) in that quarter, over the Trust’s expenses paid for that quarter. Available funds are reduced by any cash the Trustee decides to hold as a reserve against future expenses. As of December 31, 2024, the Trustee held $1,744,677 as cash and cash equivalents on the accompanying Statements of Assets and Trust Corpus, which includes the $1.175 million cash reserve described below, as such a reserve. The Trust paid, out of the first cash payment received by the Trust, the Trustee’s and Delaware Trustee’s legal expenses incurred in forming the Trust, in connection with the initial public offering (that were not otherwise paid by VOC Brazos) and related matters, as well as the Delaware Trustee’s acceptance fee in the amount of $5,000.
Previous wording
Beginning in the first quarter of 2022, the Trustee withheld a portion of the proceeds otherwise available for distribution each quarter to gradually build an approximately $1.175 million cash reserve for the payment of future known, anticipated or contingent expenses or liabilities of the Trust. This amount is in addition to the letter of credit in the amount of $1.7 million provided to the Trustee by VOC Brazos to protect the Trust against the risk that it does not have sufficient cash to pay future expenses. The Trustee may increase or decrease the targeted amount at any time and may increase or decrease the rate at which it withholds funds to build the cash reserve at any time, without advance notice to the Trust unitholders. Cash held in reserve will be invested as required by the 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 Trust unitholders, together with interest earned on the funds. The targeted $1.175 million cash reserve was fully funded by February 2023.
Current wording
From the first quarter of 2022 to the second quarter of 2023, the Trustee withheld a portion of the proceeds otherwise available for distribution each quarter to build an approximately $1.175 million cash reserve for the payment of future known, anticipated or contingent expenses or liabilities of the Trust. This amount is in addition to the letter of credit in the amount of $1.7 million provided to the Trustee by VOC Brazos to protect the Trust against the risk that it does not have sufficient cash to pay future expenses. The Trustee may increase or decrease the targeted amount at any time and may increase or decrease the rate at which it withholds funds to build the cash reserve at any time, without advance notice to the Trust unitholders. Cash held in reserve will be invested as required by the 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 Trust unitholders, The interest earned on this cash reserve is used to reduce the reported general and administrative expense each quarter on the statements of distributable income.
Previous wording
The Trust pays the Trustee an administrative fee of $150,000 per year. The Trust paid an annual fee to the Delaware Trustee of $2,500, $2,510 and $2,510 in 2021, 2022 and 2023, respectively. The Trust also incurs, either directly or as a reimbursement to the Trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that are deducted by the Trust before distributions are made to Trust unitholders, including the $18,750 administrative services fee payable quarterly to VOC Brazos pursuant to an administrative services agreement. The Trust is also responsible for paying other expenses incurred as a result of being a publicly traded entity, including costs associated with annual and quarterly reports to Trust unitholders, tax return and Form 1099 preparation and distribution, NYSE listing fees, independent auditor fees and registrar and transfer agent fees.
Current wording
The Trust pays the Trustee an administrative fee of $150,000 per year. The Trust paid an annual fee to the Delaware Trustee of $2,510 per year. The Trust also incurs, either directly or as a reimbursement to the Trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that are deducted by the Trust before distributions are made to Trust unitholders, including the $18,750 administrative services fee payable quarterly to VOC Brazos pursuant to an administrative services agreement. The Trust is also responsible for paying other expenses incurred as a result of being a publicly traded entity, including costs associated with annual and quarterly reports to Trust unitholders, tax return and Form 1099 preparation and distribution, NYSE listing fees, independent auditor fees and registrar and transfer agent fees.
Previous wording
Kansas. VOC Brazos’ historical development and workover program for the Kansas Underlying Properties has included recompleting certain existing wells, drilling infill development wells, conducting 3-D seismic surveys, completing workovers and applying new production technologies. VOC Brazos expects to incur future development expenditures for these properties through December 31, 2027 of
Current wording
Kansas. VOC Brazos’ historical development and workover program for the Kansas Underlying Properties has included recompleting certain existing wells, drilling infill development wells, conducting 3-D seismic surveys, completing workovers and applying new production technologies. VOC Brazos expects to incur future development expenditures for these properties through December 31, 2027 of approximately $1.1 million, of which VOC Brazos contemplates spending approximately $1.0 million to drill and complete three vertical wells. The remaining approximately $0.1 million is expected to be used for recompletions and workovers of three wells.
Previous wording
VOC Brazos expects to incur future development expenditures for the Texas Underlying Properties through December 31, 2029 of approximately $34.9 million to drill and complete four Hawkwood Development Wells and four non-joint venture agreement wells, all within the
Current wording
VOC Brazos expects to incur future development expenditures for the Texas Underlying Properties through December 31, 2032 of approximately $34.5 million to drill and complete eight non-joint venture agreement wells, all within the Woodbine Interval of the Kurten Woodbine Unit. Additionally, VOC Brazos expects to incur approximately $0.8 million to convert 15 horizontal wells from gas lift to rod pump and workover 2 wells. The Trust will indirectly bear an 80% share of these development expenditures as described below.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Each quarter, the Trustee determines the amount of funds available for distribution to the Trust unitholders. Available funds are the excess cash, if any, received by the Trust from the net profits interest and other sources (such as interest earned on any amounts reserved by the Trustee) that quarter, over the Trust’s expenses for that quarter. Available funds are reduced by any cash that the Trustee decides to hold as a reserve against future expenses. Quarterly cash distributions during the term of the Trust are made by the Trustee on or before the 45th day following the end of each quarter to the Trust unitholders of record on the 30th day following the end of each quarter (or the next succeeding business day).
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
approximately $1.1 million, of which VOC Brazos contemplates spending approximately $0.9 million to drill and complete three vertical wells. The remaining approximately $0.2 million is expected to be used for recompletions and workovers of two wells.