MESA ROYALTY TRUST/TX

Previous wording

Item 5. Market for the Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.

Current wording

Market for the Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.

Previous wording

At December 31, 2024, the 1,863,590 units outstanding were held by 406 unitholders of record. The Trust did not repurchase any units during the period covered by this Form 10-K.

Current wording

At December 31, 2025, the 1,863,590 units outstanding were held by 374 unitholders of record. The Trust did not repurchase any units during the period covered by this Form 10-K.

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

Pursuant to past conveyances, Scout, Hilcorp, Simcoe and Red Willow are the operators of certain portions of the Hugoton Royalty Properties and San Juan Basin Royalty Properties (each of Scout, Hilcorp, Simcoe, and Red Willow being a “Working Interest Owner”, and together, the “Working Interest Owners”). As used in this report, Scout refers to the current operator of the Hugoton Royalty Properties, Hilcorp refers to the current operator of the San Juan Basin — New Mexico Properties, and Simcoe and Red Willow refer to the current co-operators of certain tracts of land included in the San Juan Basin — Colorado Properties, unless otherwise indicated.

Current wording

Pursuant to past conveyances, Scout, Hilcorp, Simcoe, now a subsidiary of Mach and Red Willow are the operators of certain portions of the Hugoton Royalty Properties and San Juan Basin Royalty Properties (each of Scout, Hilcorp, Mach and Red Willow being a “Working Interest Owner”, and together, the “Working Interest Owners”). As used in this report, Scout refers to the current operator of the Hugoton Royalty Properties, Hilcorp refers to the current operator of the San Juan Basin — New Mexico Properties, and Simcoe, now a subsidiary of Mach, and Red Willow refer to the current co-operators of certain tracts of land included in the San Juan Basin — Colorado Properties, unless otherwise indicated.

Previous wording

Net Proceeds and the Trust’s quarterly distributions are highly dependent upon the prices realized from the sale of natural gas. Natural gas prices can fluctuate widely in response to a variety of factors that are beyond the control of the Trust and the Working Interest Owners. The Trust’s Royalty income and its distributions to unitholders are heavily influenced by the sale prices received from marketing of production, whether prices received by the Working Interest Owners are market prices or prices determined from time to time by contract. The trading price of the units is substantially related to commodity prices and the Trust’s Royalty income.

Current wording

Net Proceeds and the Trust’s quarterly distributions are highly dependent upon the prices realized from the sale of natural gas. Natural gas prices can fluctuate widely in response to a variety of factors that are beyond the control of the Trust and the Working Interest Owners. The Trust’s Royalty income and its distributions to unitholders are heavily influenced by the sale prices received from marketing of production, whether prices received by the Working Interest Owners are market prices or prices determined from time to time by contract. Depending on the contractual arrangements and pricing applicable to production by the Working Interest Owners, the Trust may not benefit from increases in commodity prices as reported on the spot markets. The trading price of the units is substantially related to commodity prices and the Trust’s Royalty income.

Previous wording

The net effects of such adjustments for the year ended December 31, 2024 resulted in the balance of the Contingent Reserve being equal to $1,872,026 as of December 31, 2024. The Trustee intends to increase the Contingent Reserve to a total of $2.0 million, which will reduce Net Proceeds available to the Trust and distributions to Trust unitholders. The amount and timing of the addition to the Contingent Reserve will be determined by the Trustee on a monthly basis and is expected to vary in future periods depending on circumstances at the time.

Current wording

The net effects of such adjustments for the year ended December 31, 2025 resulted in the balance of the Contingent Reserve being equal to $1,949,017 as of December 31, 2025. The Trustee intends to increase the Contingent Reserve to a total of $2.0 million, which will reduce Net Proceeds available to the Trust and distributions to Trust unitholders. The amount and timing of the addition to the Contingent Reserve will be determined by the Trustee on a monthly basis and is expected to vary in future periods depending on circumstances at the time.

Previous wording

Capital Resources. The Trust is a passive entity that does not undertake or control any capital projects or make capital expenditures. While the Trust’s Royalty income is net of capital expenditures, these capital expenditures are controlled and paid by the Working Interests Owners, and the Trust receives Royalty income net of these expenses. Therefore, the Trust has no material commitments for capital expenditures.

Current wording

Capital Resources. The Trust is a passive entity that does not undertake or control any capital projects or make capital expenditures. While the Trust’s Royalty income is net of capital expenditures, these capital expenditures are controlled and paid by the Working Interest Owners, and the Trust receives Royalty income net of these expenses. Therefore, the Trust has no material commitments for capital expenditures.

Previous wording

Royalty and Other Income. The Trust’s Royalty and other income was $634,500 and $3,294,600 for the years ended December 31, 2024 and 2023, respectively. The decrease in Royalty income was primarily a result of decreases in pricing reported for natural gas and natural gas liquids and decreases in net production for natural gas, natural gas liquids and oil and condensate, offset in part by decreases in operating and capital expenses for natural gas and natural gas liquids for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Current wording

Royalty and Other Income. The Trust’s Royalty and other income was $601,408 and $634,500 for the years ended December 31, 2025 and 2024, respectively. All of the royalty income received in the year ended December 31, 2025 and the majority of royalty income received in the year ended December 31, 2024 was from Hilcorp. The decrease in Royalty income was primarily a result of decreases in pricing reported for natural gas liquids and oil and condensate, decreases in net production volumes for natural gas and an increase in operating costs for natural gas for Hilcorp. This was offset in part by an increase in pricing reported for natural gas, decreases in operating costs for natural gas liquids and oil and condensate, increases in net production volumes for natural gas liquids and oil and condensate, and decreases in capital costs for natural gas, natural gas liquids and oil and condensate for Hilcorp for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Previous wording

Interest Income. The Trust’s interest income for the years ended December 31, 2024 and 2023 was $96,855 and $99,057, respectively. In accordance with the Trust Indenture and as explained below, interest on cash on hand was paid at a rate equivalent to 1.5% below the prime interest rate.

Current wording

Interest Income. The Trust’s interest income for the years ended December 31, 2025 and 2024 was $81,330 and $96,855, respectively. In accordance with the Trust Indenture and as explained below, interest on cash on hand was paid at a rate equivalent to 1.5% below the prime interest rate.

Previous wording

General and Administrative Expense. General and administrative expense was $196,399 and $186,843 for the years ended December 31, 2024 and 2023, respectively. The Trustee’s fees are included in general and administrative expense.

Current wording

General and Administrative Expense. General and administrative expense was $171,832 and $196,399 for the years ended December 31, 2025 and 2024, respectively. The Trustee’s fees are included in general and administrative expense.

Previous wording

For the year ended December 31, 2024, the Trustee was due $475,000 for its services. The Trust paid $433,153 of this amount to the Trustee, and $41,847 was allocated to offset against interest due to the Trust under the Trust Indenture. The Trust Indenture requires that cash being held by the Trustee earn interest at 1.5% below the prime rate, which would have yielded the Trust a 7.00% annualized return from January 1, 2024 through September 18, 2024, a 6.50% annualized return from September 19, 2024 through November 7, 2024, a 6.25% annualized return from November 8, 2024 through December 18, 2024, a 6.00% annualized return from December 19, 2024 through December 31, 2024. However, due to the interest rate environment at the time, the Trustee was unable to obtain an account in which such an interest rate was available. In the event such an interest rate is unavailable in the future, the Trustee intends to allocate certain of its fees due to the Trust to meet the minimum interest rate payable under the Trust Indenture. In future periods the Trustee will continue to allocate a portion of the fees earned for its services to the Trust until all remaining interest due to the Trust is fully offset.

Current wording

For the year ended December 31, 2025, the Trustee was due $475,000 for its services. The Trust paid $433,153 of this amount to the Trustee, and $41,847 was allocated to offset against interest due to the Trust under the Trust Indenture. The Trust Indenture requires that cash being held by the Trustee earn interest at 1.5% below the prime rate, which would have yielded the Trust a 6.00% annualized return from January 1, 2025 through September 17, 2025, a 5.75% annualized return from September 18, 2025 through October 29, 2025, a 5.50% annualized return from October 30 through December 10, 2025, and a 5.25% annualized return from December 11, 2025 through December 31, 2025. However, due to the interest rate environment at the time, the Trustee was unable to obtain an account in which such an interest rate was available. In the event such an interest rate is unavailable in the future, the Trustee intends to allocate certain of its fees due to the Trust to meet the minimum interest rate payable under the Trust Indenture. In future periods the Trustee will continue to allocate a portion of the fees earned for its services to the Trust until all remaining interest due to the Trust is fully offset.

Previous wording

Contingent Reserve is included in cash and short-term investments. The Trustee utilizes the Contingent Reserve in its discretion in accordance with the Conveyance, and adjusts the balance of the Contingent Reserve as necessary when funds are added or removed. The net effects of such adjustments for the year ended December 31, 2024 resulted in the balance of the Contingent Reserve being equal to $1,872,026 as of December 31, 2024 and equal to $1,730,214 as of December 31, 2023. The Trustee intends to increase the Contingent Reserve to a total of $2.0 million.

Current wording

The terms of the Trust Indenture provide, among other things, that the Trustee may establish cash reserves and borrow funds to pay liabilities of the Trust, and may pledge assets of the Trust to secure payment of the borrowings in accordance with the Trust Indenture. At any given time, the balance of the Contingent Reserve is included in cash and short-term investments. The Trustee utilizes the Contingent Reserve in its discretion in accordance with the Conveyance, and adjusts the balance of the Contingent Reserve as necessary when funds are added or removed. The net effects of such adjustments for the year ended December 31, 2025 resulted in the balance of the Contingent Reserve being equal to $1,949,017 as of December 31, 2025 and equal to $1,872,026 as of December 31, 2024. The Trustee intends to increase the Contingent Reserve to a total of $2.0 million.

Previous wording

Distributable Income Available for Distribution. The portion of the Trust’s distributable income available for distribution each year includes the Royalty income received from the Working Interest Owners during such period, plus interest income earned to the date of distribution (if any) and increases or withdrawals to and from the Contingent Reserve (if any). Distributable income available for distribution for the years ended December 31, 2024 and 2023 was $393,144 and $2,773,768, respectively. For the years ended December 31, 2024 and 2023, the Trust calculated total aggregate distributions of $0.2109 and $1.4884 per unit, respectively.

Current wording

Distributable Income Available for Distribution. The portion of the Trust’s distributable income available for distribution each year includes the Royalty income received from the Working Interest Owners during such period, plus interest income earned to the date of distribution (if any) and increases or withdrawals to and from the Contingent Reserve (if any). Distributable income available for distribution for the years ended December 31, 2025 and 2024 was $433,915 and $393,144, respectively. For the years ended December 31, 2025 and 2024, the Trust calculated total aggregate distributions of $0.2328 and $0.2109 per unit, respectively.

Previous wording

The West Texas Intermediate spot price of crude oil increased from $71.65 per barrel on December 29, 2023 to $71.72 per barrel on December 31, 2024. The Henry Hub Natural Gas Spot Prices increased from $2.58 per MMBtu on December 29, 2023 to $3.40 per MMBtu on December 31, 2024. Crude Oil prices have been impacted by certain actions by OPEC+, uneven global supply and demand trends, ongoing hostilities between Russia and Ukraine, hostilities and heightened geopolitical risks in the Middle East, and global trading sanctions and tariffs, among other factors. Global and domestic natural gas markets have experienced volatility due to macroeconomic conditions, infrastructure and logistical constraints, weather, and geopolitical issues, among other factors. If commodity prices for crude oil and natural gas fall or remain volatile, monthly distributions to unitholders could be substantially reduced or there may be no distributions in future periods. While inflationary pressures in the United States’ economy have begun to subside, high interest rates, trade barriers, including tariffs, and global supply disruptions continue to affect the cost of labor and supplies. In addition changes in economic conditions, including relatively high interest rates and lower global economic activity, could result in additional shifts in demand and supply for future periods.

Current wording

The West Texas Intermediate spot price of crude oil decreased from $71.72 per barrel on December 31, 2024 to $57.42 per barrel on December 31, 2025. The Henry Hub Natural Gas Spot Prices increased from $3.40 per MMBtu on December 31, 2024 to $4.00 per MMBtu on December 31, 2025. Ongoing uncertainty across the global economy, including effects of the U.S. government shutdown, OPEC+ production plans, domestic economic growth, and Chinese economic growth create volatility that continues to affect the oil and gas industry and market prices. Oil prices have been impacted by certain actions such as by OPEC+, uneven global supply and demand trends, tariffs and trade policy, sanctions, Russia’s invasion into Ukraine and hostilities and heightened geopolitical risks in the Middle East, including the recent closure of the Strait of Hormuz and recent hostilities in the Middle East region, among other factors. Global and domestic natural gas markets have experienced volatility due to macroeconomic conditions, infrastructure and logistical constraints, weather events, and geopolitical issues, among other factors. If commodity prices for crude oil and natural gas fall or remain volatile, monthly distributions to unitholders could be substantially reduced or there may be no distributions in future periods. Inflationary pressures in the United States’ economy, trade related actions, high interest rates and global supply and transportation disruptions as well as global security concerns, continue to affect the cost of labor and supplies. In addition, changes in economic conditions, including effects of the U.S. government shutdown, relatively high interest rates and lower global economic activity, could result in additional shifts in demand and supply for future periods. High levels of inflation and interest rates, uncertainty regarding tariffs and trade policy, and shipping and supply chain disruptions are expected to increase expenses for Working Interest Owners and are expected to have an adverse impact on royalty income during 2026. While increases in oil and gas prices may temporarily enhance royalty income and distributions, these benefits remain subject to ongoing risks from global economic and political volatility.

Previous wording

Royalty Income. Royalty income attributable to the Hugoton Royalty Properties was $0 for both of the years ended December 31, 2024 and 2023. The lack of Royalty income was primarily a result of actual expenses being greater than actual revenues for the years ended December 31, 2024 and 2023, as reported by Scout. The Trust is engaged with Scout in reviewing the amount of Net Proceeds in past and current periods.

Current wording

Royalty Income. Royalty income attributable to the Hugoton Royalty Properties was $0 for both of the years ended December 31, 2025 and 2024. The lack of Royalty income was primarily a result of actual expenses being greater than actual revenues for the years ended December 31, 2025 and 2024, as reported by Scout.

Previous wording

Operating Costs and Capital Expenditures. Operating costs attributable to the Hugoton Royalty Properties for the year ended December 31, 2024 were $1,829,086, an increase of approximately 8% as compared to $1,693,857 for the year ended December 31, 2023.

Current wording

Operating Costs and Capital Expenditures. Operating costs attributable to the Hugoton Royalty Properties for the year ended December 31, 2025 were $1,693,614, a decrease of approximately 7.4% as compared to $1,829,086 for the year ended December 31, 2024. Capital expenditures on these properties were $426 for the year ended December 31, 2025, a decrease of $3,082, as compared to $3,508 for the year ended December 31, 2024.

Previous wording

In March 2023, Simcoe informed the Trustee that Simcoe performed a true-up of its production for the periods of 2020 through 2022, and a true-up report was received by the Trustee. Net Proceeds from the San Juan Basin — Colorado Properties operated by Simcoe were received by the Trust, indicating that the Trust was no longer in a deficit position with Simcoe at that time. In June 2023, Simcoe informed the Trustee that the true-up previously performed by Simcoe included revenues only and did not include any true-up for joint interest billing amounts. The result is that the Trust remains in a deficit position with Simcoe as of the year ended December 31, 2024. Net Proceeds from the San Juan Basin — Colorado Properties operated by Simcoe, adjusted against the outstanding expenses and recovered by Simcoe for the year ended December 31, 2024 were $22,600, leaving a balance of $36,622 to be recovered from future proceeds, if any. Because of the adjustments reported by Simcoe, the amounts of Net Proceeds reported during the year ended December 31, 2024 for the San Juan Basin — Colorado Properties operated by Simcoe may not be representative of Net Proceeds that will be received in future years. In March 2025, Simcoe informed the Trustee that it is in the process of performing a true-up for periods from 2020 to 2024. The Trust is engaged with Simcoe in reviewing the amount of Net Proceeds in past and current periods.

Current wording

Royalty Income. Royalty income attributable to the San Juan Basin — Colorado Properties for the years ended December 31, 2025 and 2024 was $0 and $35,115, respectively. The lack of royalty income for the twelve months ended December 31, 2025 was primarily a result of prior period adjustments related to joint interest billing amounts, reported by Simcoe in 2023, that were recovered by Simcoe by withholding the Net Proceeds that would otherwise be payable to the Trust in the twelve months ended December 31, 2025. In June 2023, Simcoe informed the Trustee that the true-up previously performed by Simcoe for the periods of 2020 through 2022 included revenues only and did not include any true-up for joint interest billing amounts. In addition, in March 2025, Simcoe informed the Trustee that it was in process of performing a true-up for periods from 2020 to 2024. The result is that the Trust remains in a deficit position with Simcoe as of the twelve months ended December 31, 2025. Net Proceeds from the San Juan Basin — Colorado Properties operated by Simcoe, adjusted against the outstanding expenses and recovered by Simcoe for the year ended December 31, 2025 were $24,252, leaving a balance of $12,371 to be recovered from future proceeds, if any. Due to prior adjustments reported by Simcoe and the true-up for joint interest billing and other amounts, the amounts of Net Proceeds reported during the twelve months ended December 31, 2025 for the San Juan Basin — Colorado Properties operated by Simcoe may not be representative of Net Proceeds that will be received in future quarters. On September 16, 2025, Mach completed the purchase of all membership interests of Simcoe, which included the interest in the San Juan Basin — Colorado Properties.

Previous wording

Per information provided by Simcoe, Simcoe pays Royalty amounts based on the same blended Weighted Average Sales Price (“WASP”) (fixed plus market) that Simcoe receives from their purchaser. WASP is defined as: for each delivery point, a price per MMBtu for each month equal to gas proceeds less transportation costs, divided by the total number of first of month baseload MMBtus of gas sold at such delivery point. Sales prices received by Simcoe may be lower than current market prices which may result in less than current market average gas prices received by the Trust.

Current wording

Per information previously provided by Simcoe, Simcoe paid Royalty amounts based on the same blended Weighted Average Sales Price (“WASP”) that Simcoe receives from their purchaser. WASP is defined as: for each delivery point, a price per MMBtu for each month equal to gas proceeds less transportation costs, divided by the total number of first of month baseload MMBtus of gas sold at such delivery point. Sales prices received by Simcoe may be higher or lower than current market prices which may result in gas prices received by the Trust that are higher or lower than current market average gas prices.

Previous wording

Royalty Income. Royalty income attributable to the San Juan Basin — New Mexico Properties for the years ended December 31, 2024 and 2023 was $614,049 and $3,214,827, respectively. The decrease was primarily a result of decreases in pricing reported for natural gas and natural gas liquids, decreases in net production volumes for natural gas, natural gas liquids and oil and condensate and increases in capital expense and operating costs for natural gas liquids and oil and condensate, offset in part by increases in pricing reported for oil and condensate and decreases capital expense and operating costs for natural gas for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Current wording

Royalty Income. Royalty income attributable to the San Juan Basin — New Mexico Properties for the years ended December 31, 2025 and 2024 was $601,840 and $614,049, respectively. The decrease was primarily a result of decreases in pricing reported for natural gas liquids and oil and condensate, a decrease in net production volumes for natural gas, and an increase in operating costs for natural gas. This was offset in part by an increase in pricing reported for natural gas, decreases in operating costs for natural gas liquids and oil and condensate, increases in net production volumes for natural gas liquids and oil and condensate and decreases in capital costs for natural gas, natural gas liquids and oil and condensate for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Previous wording

Capital expenditures on these properties for the years ended December 31, 2024 and 2023 were $142,351 and $110,621, respectively. The increase of approximately 29% for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily due to the general increase in activity in 2024, as there were two major recomplete projects in the twelve months ended December 31, 2024 as compared to one major recomplete project in the twelve months ended December 31, 2023.

Current wording

Capital expenditures on these properties for the years ended December 31, 2025 and 2024 were $102,300 and $142,351, respectively. The decrease of approximately 28% for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily due to completing over 114 fewer projects in 2025 as compared to 2024, which included seven (7) major recompletes in 2025 as compared to 16 major recompletes in 2024.