Gulf Coast Ultra Deep Royalty Trust Reports No Distributable Income for Fiscal Year 2024

Gulf Coast Ultra Deep Royalty Trust reported a significant decline in financial performance for the fiscal year ending December 31, 2024, with no distributable income recorded, compared to a distributable income of $197,331 in 2023. The Trust's royalty income was zero for 2024, a stark contrast to the $401,278 received in the previous year, primarily due to the cessation of production from the onshore Highlander subject interest, which was shut in following operational issues. Administrative expenses increased to $899,455 in 2024 from $469,821 in 2023, largely due to the timing of expense payments.

The Trust's total assets decreased to $1,036,027 as of December 31, 2024, down from $1,160,201 in 2023. This decline was attributed to the absence of royalty income and the impairment of the Highlander subject interest, which was fully impaired by $308,071 in 2023. The Trust's liabilities included a note payable to Highlander Oil & Gas Assets LLC (HOGA) of $200,000, and a reserve fund liability of $1,172,088, reflecting the Trust's reliance on HOGA for funding administrative expenses.

Operationally, the Highlander subject interest, which had been the sole source of production, faced significant challenges. The well experienced substantial water ingress, leading to its shut-in on March 31, 2023, and subsequent abandonment operations commenced in early March 2024. HOGA has indicated that a new well was spudded on January 30, 2025, but the future production status remains uncertain. The Trust does not expect to receive any income from its overriding royalty interests unless this new well produces hydrocarbons in commercial quantities.

The Trust's outlook remains cautious, as it does not anticipate cash distributions to unitholders in the near future. The financial health of HOGA, which has assumed operational responsibilities, is critical to the Trust's viability, as any adverse changes in HOGA's financial condition could further impact the Royalty Trust. The Trust's units are traded on the OTC Pink market, which is characterized by limited liquidity and price volatility, further complicating the investment landscape for unitholders.

In summary, the Gulf Coast Ultra Deep Royalty Trust faces significant operational and financial challenges, with no current income from its primary asset and increased administrative costs. The future hinges on the success of new drilling efforts by HOGA and the overall market conditions for natural gas.