Gulf Coast Ultra Deep Royalty Trust

Previous wording

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations.

Previous wording

At September 30, 2025, HOGA owned interests in approximately 122 gas leases onshore in South Louisiana, covering approximately 8,968 gross acres (6,457 acres net to HOGA’s interests) associated with the onshore Highlander subject interest. As of September 30, 2025, the onshore Highlander subject interest had no production due to the shutting in and subsequent abandonment of the sole well producing from the onshore Highlander subject interest as discussed in “– Status of the Onshore Highlander Subject Interest” below.

Current wording

At March 31, 2026, HOGA owned interests in approximately 152 gas leases onshore in South Louisiana, covering approximately 9,000 gross acres (6,480 acres net to HOGA’s interests) associated with the onshore Highlander subject interest. As of March 31, 2026, the onshore Highlander subject interest had no production due to the shutting in and subsequent abandonment of the sole well producing from the onshore Highlander subject interest as discussed in “– Status of the Onshore Highlander Subject Interest” below.

Previous wording

The onshore Highlander subject interest is the only subject interest that has established commercial production. Abandoning the well eliminated any production from the onshore Highlander subject interest, which also eliminated any proceeds to which the Royalty Trust would be entitled pursuant to its overriding royalty interests. Unless another well is drilled on the onshore Highlander subject interest and produces hydrocarbons in commercial quantities, the Royalty 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 Royalty Trust unitholders in future periods. HOGA informed the Trustee that a new well on the onshore Highlander subject interest was spudded on January 30, 2025. Drilling of the new well remains in progress, and HOGA currently expects to reach the planned depth of approximately 30,000 feet in the fourth quarter of 2025. Nevertheless, the future production status of this well remains unknown. Neither the Trustee nor the Royalty Trust unitholders has any right to control or influence operations of the subject interest.

Current wording

The onshore Highlander subject interest is the only subject interest that has established commercial production. Abandoning the well eliminated any production from the onshore Highlander subject interest, which also eliminated any proceeds to which the Royalty Trust would be entitled pursuant to its overriding royalty interests. Unless another well is drilled on the onshore Highlander subject interest and produces hydrocarbons in commercial quantities, the Royalty 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 Royalty Trust unitholders in future periods. HOGA previously informed the Trustee that a new well on the onshore Highlander subject interest was spudded on January 30, 2025 and recently reported that the well had reached total depth of 30,862 feet on February 17, 2026; however, the future production status of this well remains unknown. Neither the Trustee nor the Royalty Trust unitholders has any right to control or influence operations of the subject interest.

Previous wording

Pursuant to the Royalty Trust Agreement, the Depositor has agreed to pay annual trust expenses up to a maximum amount of $350,000, with no right of repayment or interest due, to the extent the Royalty Trust lacks sufficient funds to pay administrative expenses. On February 1, 2024, pursuant to this provision, the Depositor contributed approximately $166,000 for the payment of trust expenses incurred during the year ended December 31, 2023, and contributed the maximum of $350,000 for the payment of trust expenses incurred during the year ending December 31, 2024. On April 4, 2025, pursuant to this provision, the Depositor contributed $200,750 for the payment of trust expenses incurred during the first quarter of 2025. On May 15, 2025, the Depositor contributed $149,250 for the payment of trust expenses incurred during the second quarter of 2025, thereby reaching the maximum contribution amount of $350,000 for 2025.

Current wording

Pursuant to the Royalty Trust Agreement, the Depositor has agreed to pay annual trust expenses up to a maximum amount of $350,000 (the “Depositor Annual Expense Cap”), with no right of repayment or interest due, to the extent the Royalty Trust lacks sufficient funds to pay administrative expenses. Pursuant to this provision, on January 12, 2026, HOGA contributed $28,923 for fourth quarter 2025 administrative expenses, and on March 2, 2026, HOGA contributed $86,988 for fourth quarter 2025 and first quarter 2026 administrative expenses, all of which funds were applied toward the Depositor Annual Expense Cap for 2026. In the prior year, HOGA contributed the maximum of $350,000 for the payment of trust expenses incurred during the year ended December 31, 2025.

Previous wording

In addition to such annual contributions, the Depositor has agreed to lend money, on an unsecured, interest-free basis, to the Royalty Trust to fund the Royalty Trust’s ordinary administrative expenses as set forth in the Royalty Trust Agreement. All funds the Trustee borrows to cover the Royalty Trust’s expenses or liabilities, whether from the Depositor or from any other source, must be repaid before the Royalty Trust unitholders will receive any distributions. During 2024, the Depositor loaned the Royalty Trust $200,000 on November 6, 2024. During the nine months ended September 30, 2025, HOGA loaned the Royalty Trust $10,750 on May 16, 2025, $42,469 on June 27, 2025, $58,007 on July 31, 2025 and $50,438 on September 26, 2025. As of September 30, 2025, the Royalty Trust has an outstanding note payable to HOGA of $361,664.

Current wording

In addition to such annual contributions, the Depositor has agreed to lend money, on an unsecured, interest-free basis, to the Royalty Trust to fund the Royalty Trust’s ordinary administrative expenses as set forth in the Royalty Trust Agreement. All funds the Trustee borrows to cover the Royalty Trust’s expenses or liabilities, whether from the Depositor or from any other source, must be repaid before the Royalty Trust unitholders will receive any distributions. The Depositor has loaned funds to the Royalty Trust in the following amounts on the dates set forth below:

Previous wording

In accordance with the terms of the master conveyance, royalties are paid to the Royalty Trust on the last day of the month following the month in which production payments are received by HOGA. The Royalty Trust did not receive royalties during the three- and nine-month periods ended September 30, 2025 and 2024.

Current wording

In accordance with the terms of the master conveyance, royalties are paid to the Royalty Trust on the last day of the month following the month in which production payments are received by HOGA. The Royalty Trust did not receive royalties during the three-month periods ended March 31, 2026 and 2025.

Previous wording

Royalties received by the Royalty Trust must first be used to (i) satisfy Royalty Trust administrative expenses and (ii) reduce Royalty Trust indebtedness. As of September 30, 2025, the Royalty Trust has an outstanding note payable to HOGA of $361,664.

Current wording

Royalties received by the Royalty Trust must first be used to (i) satisfy Royalty Trust administrative expenses and (ii) reduce Royalty Trust indebtedness. As of March 31, 2026, the Royalty Trust has an outstanding note payable to HOGA of $416,489.

Previous wording

Commencing with the distribution to unitholders in the first quarter of 2022, the Royalty Trust withheld $8,750 from the funds otherwise available for distribution each quarter through the first quarter of 2023, with the intent of gradually building a cash reserve of approximately $350,000. As no proceeds were available for distribution in the third quarter of 2025, the Royalty Trust did not withhold any funds for the cash reserve. Unless another well is drilled on the onshore Highlander subject interest, as discussed in “Overview – Status of the Onshore Highlander Subject Interest” above, and produces hydrocarbons in commercial quantities, the Royalty Trust does not intend to withhold funds for the cash reserve as the Royalty Trust does not expect to have any cash available to distribute to unitholders in future periods. This cash is reserved for the payment of future known, anticipated or contingent expenses or liabilities of the Royalty 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.

Current wording

Commencing with the distribution to unitholders in the first quarter of 2022, the Royalty Trust withheld $8,750 from the funds otherwise available for distribution each quarter through the first quarter of 2023, with the intent of gradually building a cash reserve of approximately $350,000. As no proceeds were available for distribution in the first quarter of 2026, the Royalty Trust did not withhold any funds for the cash reserve. Unless another well is drilled on the onshore Highlander subject interest, as discussed in “Overview – Status of the Onshore Highlander Subject Interest” above, and produces hydrocarbons in commercial quantities, the Royalty Trust does not intend to withhold funds for the cash reserve as the Royalty Trust does not expect to have any cash available to distribute to unitholders in future periods. This cash is reserved for the payment of future known, anticipated or contingent expenses or liabilities of the Royalty 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.

Previous wording

There was no distributable income during the three- and nine-month periods ended September 30, 2025 and 2024 due to the shutting in and subsequent abandonment of the sole well producing from the onshore Highlander subject interest as discussed in “Overview – Status of the Onshore Highlander Subject Interest” above. Any distribution in a particular period is not necessarily indicative of future distributions.

Current wording

There was no distributable income during the three-month periods ended March 31, 2026 and 2025 due to the shutting in and subsequent abandonment of the sole well producing from the onshore Highlander subject interest as discussed in “Overview – Status of the Onshore Highlander Subject Interest” above. Any distribution in a particular period is not necessarily indicative of future distributions.

Previous wording

*Royalty Income.*In accordance with the terms of the master conveyance, during the three- and nine-month periods ended September 30, 2025 and 2024, the Royalty Trust did not receive royalty income, due to the shutting in and subsequent abandonment of the sole well producing from the onshore Highlander subject interest as discussed in “Overview – Status of the Onshore Highlander Subject Interest” above.

Current wording

*Royalty Income.*In accordance with the terms of the master conveyance, during the three-month periods ended March 31, 2026 and 2025, the Royalty Trust did not receive royalty income, due to the shutting in and subsequent abandonment of the sole well producing from the onshore Highlander subject interest as discussed in “Overview – Status of the Onshore Highlander Subject Interest” above.

Previous wording

*Administrative Expenses.*Administrative expenses consist primarily of audit, legal and trustee expenses incurred in connection with the administration of the Royalty Trust. During the three-month periods ended September 30, 2025 and 2024, the Royalty Trust paid administrative expenses of $108,445 and $84,282, respectively. During the nine-month periods ended September 30, 2025 and 2024, the Royalty Trust paid administrative expenses of $507,793 and $662,047, respectively. Administrative expenses were higher for the three-month period ended September 30, 2025, as compared to the corresponding 2024 period, primarily due to the Royalty Trust’s payment of third quarter 2024 administrative expenses in the fourth quarter of 2024. Administrative expenses were lower for the nine-month period ended September 30, 2025, as compared to the corresponding 2024 period, primarily due to the Royalty Trust’s payment of fourth quarter 2023 administrative expenses in the first quarter of 2024.

Current wording

*Administrative Expenses.*Administrative expenses consist primarily of audit, legal and trustee expenses incurred in connection with the administration of the Royalty Trust. During the three-month periods ended March 31, 2026 and 2025, the Royalty Trust paid administrative expenses of $115,911 and $0, respectively. Administrative expenses were lower during the three-month period ended March 31, 2025 as compared to the corresponding 2026 period, primarily because the Royalty Trust deferred payment of first quarter 2025 administrative expenses to the second quarter of 2025.