VOC Energy Trust: Form 10-Q for the period ended Jun 30, 2026

The following discussion of the Trust’s financial condition and results of operations should be read in conjunction with the financial statements and notes thereto. The Trust’s purpose is, in general, to hold the net profits interest, to distribute to the Trust unitholders cash that the Trust receives in respect of the net profits interest and to perform certain administrative functions in respect of the net profits interest and the Trust Units. The Trust derives substantially all of its income and cash flows from the net profits interest. All information regarding operations has been provided to the Trustee by VOC Brazos.

Results of Operations

Results of Operations for the Quarters Ended June 30, 2026 and 2025

The following is a summary of income from net profits interest received by the Trust for the three months ended June 30, 2026 and 2025 consisting of the April distribution for each respective year:

The cash received by the Trust from VOC Brazos during the quarter ended June 30, 2026 substantially represents the production by VOC Brazos from December 2025 through February 2026. The cash received by the Trust from VOC Brazos during the quarter ended June 30, 2025 substantially represents the production by VOC Brazos from December 2024 through February 2025. The revenues from oil production are typically received by VOC Brazos one month after production.

Gross proceeds. Oil and natural gas sales were $6,210,768 for the three months ended June 30, 2026, a decrease of $1,601,740 or 20.5% from $7,812,508 for the three months ended June 30, 2025. Revenues are a function of oil and natural gas sales prices and volumes sold. The decrease in gross proceeds was due to decreases in market prices for oil and in oil and natural gas sales volumes, offset slightly by an increase in market prices for natural gas, during the second quarter of 2026. During the three months ended June 30, 2026, the average price for oil decreased 16.4% to $57.95 per Bbl and the average price for natural gas increased 4.5% to $3.73 per Mcf. Oil sales volumes were 103,524 Bbls for the three months ended June 30, 2026, a decrease of 6,143 Bbls or 5.6% from 109,667 Bbls for the three months ended June 30, 2025, while natural gas sales volumes were 56,696 Mcf, a decrease of 2,275 Mcf or 3.9% from 58,971 Mcf for the same period in 2025.

Costs. Lease operating expenses were $3,190,384 for the three months ended June 30, 2026, a decrease of $496,766 or 13.5% from $3,687,150 for the three months ended June 30, 2025. Production and property taxes were $357,191 for the three months ended June 30, 2026, an increase of $151,615 or 73.8% from $205,576 for the same period in 2025. This increase is the result of a $50,026 decrease in production taxes, primarily due to lower sales prices, and a $201,641 increase in property taxes. Development expenses were $537,324 for the three months ended June 30, 2026, a decrease of $276,271 or 34.0% from $813,595 for the same period in 2025. This decrease was primarily due to reduced workovers during the three months ended June 30, 2026.

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 $2,125,869 for the three months ended June 30, 2026, a decrease of $980,318 or 31.6% from $3,106,187 for the three months ended June 30, 2025. The Trust’s 80% net profits interest of these totals was $1,700,695 and $2,484,950 for the three months ended June 30, 2026 and 2025, respectively. During the three months ended June 30, 2026 and 2025, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the previously established cash reserve for future development, maintenance or operating expenditures, which resulted in income from the net profits interest of $1,700,695 and $2,484,950 for such periods, respectively. These amounts were reduced by a Trustee holdback for current estimated Trust expenses of $85,695 and $274,950 for the three months ended June 30, 2026 and 2025, respectively. The Trustee paid general and administrative expenses of $327,961 for the three months ended June 30, 2026, an increase of $114,070 from $213,891 for the three months ended June 30, 2025. These factors resulted in distributable income of $1,615,000 for the three months ended June 30, 2026, a decrease of $595,000 or 26.9% from $2,210,000 for the three months ended June 30, 2025.

Results of Operations for the Six Months Ended June 30, 2026 and 2025

The following is a summary of income from net profits interest received by the Trust for the six months ended June 30, 2026 and 2025 consisting of the January and April distributions for each respective year:

The cash received by the Trust from VOC Brazos during the six months ended June 30, 2026 substantially represents the production by VOC Brazos from September 2025 through February 2026. The cash received by the Trust from VOC Brazos during the six months ended June 30, 2025 substantially represents the production by VOC Brazos from September 2024 through February 2025. The revenues from oil production are typically received by VOC Brazos one month after production.

Gross proceeds. Oil and natural gas sales were $12,706,840 for the six months ended June 30, 2026, a decrease of $2,667,286 or 17.3% from $15,374,126 for the six months ended June 30, 2025. Revenues are a function of oil and natural gas sales prices and volumes sold. The decrease in gross proceeds was due to decreases in market prices for oil and natural gas and in oil and natural gas sales volumes during the six months ended June 30, 2026. During the six months ended June 30, 2026, the average price for oil decreased 15.0% to $58.23 per Bbl and the average price for natural gas increased 9.5% to $3.33 per Mcf. During the six months ended June 30, 2026, oil sales volumes were 211,556 Bbls, a decrease of 7,269 Bbls or 3.3% from 218,825 Bbls for the six months ended June 30, 2025, while natural gas sales volumes were 116,562 Mcf, a decrease of 9,007 Mcf or 7.2% from 125,569 Mcf for the same period in 2025.

Costs. Lease operating expenses were $6,588,088 for the six months ended June 30, 2026, a decrease of $530,263 or 7.4% from $7,118,351 for the six months ended June 30, 2025. Production and property taxes were $785,393 for the six months ended June 30, 2026, a decrease of $262,532 or 25.1% from $1,047,925 for the six months ended June 30, 2025. This decrease is the result of a $76,296 decrease in production taxes and a $186,236 decrease in property taxes, primarily due to lower values of properties based on reduced sales prices for oil and natural gas. Development expenses were $1,224,835 for the six months ended June 30, 2026, a decrease of $503,303 or 29.1% from $1,728,138 for the same period in 2025. This decrease was primarily due to reduced workovers during the six months ended June 30, 2026.

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 $4,108,524 for the six months ended June 30, 2026, a decrease of $1,371,188 or 25.0% from $5,479,712 for the six months ended June 30, 2025. The Trust’s 80% net profits interest of these totals was $3,286,819 and $4,383,770 for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 and 2025, VOC Brazos did not withhold or release any dollar amounts due to the Trust from the previously established cash reserve for future development, maintenance or operating expenditures, which resulted in income from the net profits interest of $3,286,819 and $4,383,770 for such periods, respectively. These amounts were reduced by a Trustee holdback for current estimated Trust expenses of $141,819 and $728,770 for the six months ended June 30, 2026 and 2025, respectively. The Trustee paid general and administrative expenses of $639,611 for the six months ended June 30, 2026, an increase of $13,199 from $626,412 for the six months ended June 30, 2025. These factors resulted in distributable income of $3,145,000 for the six months ended June 30, 2026, a decrease of $510,000 or 14.0% from $3,655,000 for the six months ended June 30, 2025.

Liquidity and Capital Resources

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. Administrative expenses include payments to the Trustee as well as a quarterly administrative fee to VOC Brazos pursuant to an administrative services agreement. Each quarter, the Trustee determines the amount of funds available for distribution. 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) in that quarter, over the Trust’s expenses paid for that quarter. Available funds are reduced by any cash that the Trustee decides to reserve for future development, maintenance or operating expenses. As of June 30, 2026, the Trustee held $1,528,847 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 Trustee may cause the Trust to borrow funds required to pay expenses if the Trustee determines that the cash on hand and the cash to be received are insufficient to cover the Trust’s expenses. If the Trust borrows funds, the Trust unitholders will not receive distributions until the borrowed funds are repaid. During the three and six months ended June 30, 2026 and 2025, there were no such borrowings. VOC Brazos has provided a letter of credit in the amount of $1.7 million to the Trustee to protect the Trust against the risk that it does not have sufficient cash to pay future expenses.

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 and built a $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 $1.7 million letter of credit described above. The Trustee may increase or decrease this reserve 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 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.

Income to the Trust from the net profits interest is based on the calculation and definitions of “gross proceeds” and “net proceeds” contained in the conveyance.

As substantially all of the underlying properties are located in mature fields, VOC Brazos does not expect future costs for the underlying properties to change significantly compared to recent historical costs other than changes due to fluctuations in the general cost of oilfield services. VOC Brazos may establish a cash reserve of up to $1,000,000 in the aggregate at any given time from the dollar amount otherwise distributable to the Trust to reduce the impact on distributions of uneven capital expenditure timing. The cash reserve balance was $1,000,000 on June 30, 2026 and 2025.

Note Regarding Forward-Looking Statements

This Form 10-Q includes “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 (the “Exchange Act”). All statements other than statements of historical fact included in this Form 10-Q, including without limitation the statements under “Trustee’s Discussion and Analysis of Financial Condition and Results of Operations”, are forward-looking statements. Although VOC Brazos advised the Trust that it believes that the expectations reflected in the forward-looking statements contained herein are reasonable, such expectations may not prove to have been correct. Important factors that could cause actual results to differ materially from expectations (“Cautionary Statements”) are disclosed in this Form 10-Q and in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”), including under the section “Item 1A. Risk Factors”. All subsequent written and oral forward-looking statements attributable to the Trust or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements.

The Trust is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this Item.

Evaluation of Disclosure Controls and Procedures. The Trustee maintains disclosure controls and procedures designed to ensure that information required to be disclosed by the Trust in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations promulgated by the SEC. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Trust is accumulated and communicated by VOC Brazos to the Trustee, as trustee of the Trust, and its employees who participate in the preparation of the Trust’s periodic reports as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Trustee carried out an evaluation of the Trust’s disclosure controls and procedures. A Trust Officer of the Trustee has concluded that the disclosure controls and procedures of the Trust are effective.

Due to the contractual arrangements of (i) the Trust Agreement and (ii) the conveyance of the net profits interest, the Trustee relies on (A) information provided by VOC Brazos, including historical operating data, plans for future operating and capital expenditures, reserve information and information relating to projected production and (B) conclusions and reports regarding reserves by the Trust’s independent reserve engineers. See “Risk Factors—Neither the Trust nor the Trust’s unitholders have the ability to influence VOC Brazos or control the operations or development of the underlying properties” in the Form 10-K.

Changes in Internal Control over Financial Reporting. During the quarter ended June 30, 2026, there was no change in the Trust’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting. The Trustee notes for purposes of clarification that it has no authority over, and makes no statement concerning, the internal control over financial reporting of VOC Brazos.

There have not been any material changes from the risk factors previously disclosed in the Trust’s response to Item 1A to Part I of the Form 10-K.