VOC Energy Trust Income Plummets 26% Amidst Energy Price Volatility

TL;DR

**VOC's distributions are getting crushed; sell before the next dividend cut.**

AI Summary

VOC Energy Trust reported a significant decline in income from net profits interest for the three and six months ended June 30, 2025. For the three months, income decreased by 26.4% to $2,484,950 from $3,377,463 in the prior year. The six-month period saw an even steeper drop of 37.2% to $4,383,770 from $6,981,577 in 2024. This reduction directly impacted distributable income, which fell to $2,423,891 for the quarter and $4,322,711 for the six months, down from $3,316,404 and $6,920,518 respectively. The Trust also withheld cash for expenses, totaling $61,059 for the quarter and $61,059 for the six months in 2025. No significant business changes or strategic outlook were detailed in this 10-Q, as the Trust's primary function is to distribute income from its net profits interest. The main risk highlighted is the variability of oil and natural gas prices, which directly affects the Trust's income.

Why It Matters

This significant decline in income from net profits interest directly impacts VOC Energy Trust's ability to distribute income to its unitholders, making it a critical concern for investors. The 26.4% quarterly drop and 37.2% six-month decline signal a challenging environment for energy trusts, potentially reflecting broader market trends in crude petroleum and natural gas prices. For employees, while the Trust itself has minimal operational staff, the underlying energy producers could face pressure. Customers of the energy sector might see price fluctuations, and the competitive landscape for energy trusts will intensify as income streams become more volatile.

Risk Assessment

Risk Level: high — The risk level is high due to the substantial decline in income from net profits interest, which fell by 26.4% for the three months ended June 30, 2025, and by 37.2% for the six months ended June 30, 2025. This direct and significant reduction in the Trust's primary income source indicates high exposure to commodity price volatility and a direct impact on distributable income.

Analyst Insight

Investors should re-evaluate their position in VOC Energy Trust, considering the significant and sustained decline in income from net profits interest. Given the Trust's structure, which relies heavily on these distributions, a continued downward trend could lead to further reductions in unitholder payouts. Consider divesting or reducing exposure if your investment thesis relies on stable or growing distributions.

Financial Highlights

revenue

$2,484,950

net Income

$2,423,891

revenue Growth

-26.4%

Revenue Breakdown

Key Numbers

• $2.48M — Income from net profits interest (down 26.4% from $3.38M in Q2 2024)
• $4.38M — Income from net profits interest (down 37.2% from $6.98M in H1 2024)
• $2.42M — Distributable income (for the three months ended June 30, 2025)
• $4.32M — Distributable income (for the six months ended June 30, 2025)
• 17,000,000 — Units of Beneficial Interest (outstanding as of August 12, 2025)
• $61,059 — Cash withheld for Trust expenses (for the three and six months ended June 30, 2025)

Key Players & Entities

• VOC Energy Trust (company) — registrant
• The Bank of New York Mellon Trust Company, N.A. (company) — Trustee
• $2,484,950 (dollar_amount) — income from net profits interest for Q2 2025
• $3,377,463 (dollar_amount) — income from net profits interest for Q2 2024
• $4,383,770 (dollar_amount) — income from net profits interest for H1 2025
• $6,981,577 (dollar_amount) — income from net profits interest for H1 2024
• $61,059 (dollar_amount) — cash on hand withheld for Trust expenses for Q2 2025 and H1 2025
• New York Stock Exchange (regulator) — exchange where Units of Beneficial Interest are registered
• Delaware (regulator) — state of incorporation
• Houston, Texas (person) — principal executive offices location

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: The Trust's income is directly tied to the fluctuating prices of oil and natural gas. A significant decline in these prices, as evidenced by the 26.4% and 37.2% drops in income from net profits interest for the three and six months ended June 30, 2025, respectively, directly impacts distributable income and cash available for distribution.

Industry Context

VOC Energy Trust operates within the crude petroleum and natural gas sector. The industry is characterized by its high capital intensity and significant exposure to volatile commodity prices. Recent performance indicates a challenging market environment impacting revenue generation for entities reliant on oil and gas production revenues.

Regulatory Implications

As a publicly traded entity, VOC Energy Trust is subject to SEC regulations, including timely filing of financial reports like the 10-Q. Compliance with these regulations is crucial for maintaining market access and investor confidence.

What Investors Should Do

1. Monitor oil and natural gas price trends closely.
2. Analyze the Trust's expense management.
3. Evaluate the Trust's operational efficiency and production levels (if disclosed in future filings).

Key Dates

• 2025-06-30: Quarterly period ended — Key period for financial performance reporting, showing significant declines in income from net profits interest and distributable income.
• 2025-08-12: Filing as of date — Indicates the date up to which information is current in the 10-Q filing.

Glossary

Net Profits Interest

A type of overriding royalty interest that entitles the owner to a share of the net profits from the sale of oil and gas produced from a specified property, after the deduction of specified costs and expenses. (This is the primary source of income for VOC Energy Trust, and its decline directly impacts the Trust's distributable income.)

Distributable Income

The income available to be distributed to the Trust's unitholders after accounting for all expenses and withholdings. (This metric directly reflects the cash available for distribution to investors, which has seen a significant decrease.)

Units of Beneficial Interest

The ownership units in the VOC Energy Trust, representing a claim on the Trust's assets and income. (There were 17,000,000 units outstanding as of August 12, 2025, which are used to calculate per-unit distributions.)

Year-Over-Year Comparison

Compared to the prior year, VOC Energy Trust experienced a significant downturn in financial performance for the three and six months ended June 30, 2025. Income from net profits interest decreased by 26.4% and 37.2% respectively, leading to a corresponding drop in distributable income. This indicates a negative trend in revenue generation, likely driven by market conditions affecting commodity prices.

Key Financial Figures

• $32,464 — $ 0.18 $ 0.215 $ 0.37 (1) Includes $32,464 and $31,215 paid to VOC Brazos Energy P
• $31,215 — .215 $ 0.37 (1) Includes $32,464 and $31,215 paid to VOC Brazos Energy Partners, LP
• $63,679 — ne 30, 2025 and 2024, respectively, and $63,679 and $61,229 during the six months ended
• $61,229 — and 2024, respectively, and $63,679 and $61,229 during the six months ended June 30, 20
• $37,500 — 5 and 2024, respectively. Also includes $37,500 paid to The Bank of New York Mellon Tru
• $75,000 — eriods ended June 30, 2025 and 2024 and $75,000 during each of the six-month periods en
• $1.0 million — interest, VOC Brazos can reserve up to $1.0 million for future development, maintenance or
• $1.175 million — r distribution each quarter and built a $1.175 million cash reserve for the payment of future
• $1,445,000 — quarterly distribution during 2025 was $1,445,000, or $0.085 per Trust Unit, and was made
• $0.085 — ribution during 2025 was $1,445,000, or $0.085 per Trust Unit, and was made on Februar
• $2,210,000 — quarterly distribution during 2025 was $2,210,000, or $0.13 per Trust Unit, and was made
• $0.13 — ribution during 2025 was $2,210,000, or $0.13 per Trust Unit, and was made on May 15,
• $3,230,000 — quarterly distribution during 2024 was $3,230,000, or $0.19 per Trust Unit, and was made
• $0.19 — ribution during 2024 was $3,230,000, or $0.19 per Trust Unit, and was made on Februar
• $3,060,000 — quarterly distribution during 2024 was $3,060,000, or $0.18 per Trust Unit, and was made

Filing Documents

• tm2516756d1_10q.htm (10-Q) — 161KB
• tm2516756d1_ex31.htm (EX-31) — 10KB
• tm2516756d1_ex32.htm (EX-32) — 6KB
• 0001104659-25-076850.txt ( ) — 177KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. VOC ENERGY TRUST (Unaudited) Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Income from net profits interest $ 2,484,950 $ 3,377,463 $ 4,383,770 $ 6,981,577 Cash on hand withheld for Trust expenses (61,059 ) (196,626 ) (102,358 ) (214,281 ) General and administrative expenses (1) (213,891 ) (120,837 ) (626,412 ) (477,296 ) Distributable income $ 2,210,000 $ 3,060,000 $ 3,655,000 $ 6,290,000 Distributions per Trust unit (17,000,000 Trust units issued and outstanding at June 30, 2025 and 2024) $ 0.13 $ 0.18 $ 0.215 $ 0.37 (1) Includes $32,464 and $31,215 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended June 30, 2025 and 2024, respectively, and $63,679 and $61,229 during the six months ended June 30, 2025 and 2024, respectively. Also includes $37,500 paid to The Bank of New York Mellon Trust Company, N.A. during each of the three-month periods ended June 30, 2025 and 2024 and $75,000 during each of the six-month periods ended June 30, 2025 and 2024. June 30, 2025 December 31, 2024 (Unaudited) ASSETS Cash and cash equivalents $ 1,847,035 $ 1,744,677 Investment in net profits interest 140,591,606 140,591,606 Accumulated amortization and impairment (131,345,148 ) (130,464,406 ) Total assets $ 11,093,493 $ 11,871,877 TRUST CORPUS Trust corpus, 17,000,000 Trust units issued and outstanding at June 30, 2025 and December 31, 2024 $ 11,093,493 $ 11,871,877 (Unaudited) Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Trust corpus, beginning of period $ 11,471,407 $ 12,928,840 $ 11,871,877 $ 13,372,565 Income from net profits interest 2,484,950 3,377,463 4,383,770 6,981,577 Cash distributions (2,210,000 ) (3,060,000 ) (3,655,000 ) (6,290,

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 1. Organization of the Trust VOC Energy Trust (the “Trust”) is a statutory trust formed on November 3, 2010 (capitalized on December 17, 2010), under the Delaware Statutory Trust Act pursuant to a Trust Agreement dated November 3, 2010 (as amended and restated on May 10, 2011, the “Trust Agreement”) among VOC Brazos Energy Partners, L.P., a Texas limited partnership (“VOC Brazos”), as trustor, The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), and Wilmington Trust Company, as Delaware Trustee (the “Delaware Trustee”). The Trust was created to acquire and hold a term net profits interest for the benefit of the Trust unitholders. VOC Brazos is a privately held limited partnership engaged in the production and development of oil and natural gas from properties located in Texas. VOC Kansas Energy Partners, L.L.C., a Kansas limited liability company (“VOC Kansas”), is a privately held limited liability company engaged in the production and development of oil and natural gas from properties primarily located in Kansas along with a limited number of Texas properties. In connection with the closing of the initial public offering of units of beneficial interest in the Trust (“Trust Units”) in May 2011, VOC Brazos acquired all of the membership interests in VOC Kansas in exchange for newly issued limited partner interests in VOC Brazos pursuant to a Contribution and Exchange Agreement, dated August 30, 2010, as amended, by and between VOC Brazos and VOC Kansas. This resulted in VOC Kansas becoming a wholly-owned subsidiary of VOC Brazos. The Trust was created to acquire and hold a term net profits interest representing the right to receive 80% of the net proceeds (calculated as described below in Note 5) from production from the underlying properties (as defined below). The net profits interest consists of working

Financial Statements of Royalty Trusts

Financial Statements of Royalty Trusts. Investment in the net profits interest was recorded initially at the historical cost of VOC Brazos and is periodically assessed to determine whether its aggregate value has been impaired below its total capitalized cost based on the underlying properties. The Trust will provide a write-down to its investment in the net profits interest if and when total capitalized costs, less accumulated amortization, exceeds undiscounted future net revenues attributable to the proved oil and gas reserves of the underlying properties. There was no impairment of the investment in the net profits interest during the quarters ended June 30, 2025 or 2024. The Trust has one business activity as the owner of an investment in net profits interest, as reported in accompanying the Statements of Assets and Trust Corpus, and operates in a single operating and reportable segment. Operating segments are defined as components of an entity for which separate financial information is evaluated regularly by the chief operating decision maker (the “CODM”), which is the Trustee. The segment participates in activities and derives its income from net profits interest as reported in the accompanying Statements of Distributable Income, and the CODM uses this in making decisions about the allocation of cash reserves for current and future Trust general and administrative expenses and the ultimate distribution to the Trust unitholders. No new accounting pronouncements were adopted or issued during the quarter ended June 30, 2025 that would impact the financial statements of the Trust. Note 4. Investment in Net Profits Interest The net profits interest was recorded at the historical cost of VOC Brazos on May 10, 2011, the date of the conveyance of the net profits interest to the Trust, and was calculated as follows: Oil and gas properties $ 197,270,173 Accumulated depreciation and depletion (17,681,155 ) Hedge liability (1,717,713 ) 20-year

Trustee’s Discussion and Analysis of Financial Condition

Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations. 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, 2025 and 2024 The following is a summary of income from net profits interest received by the Trust for the three months ended June 30, 2025 and 2024 consisting of the April distribution for each respective year: Three months ended June 30, 2025 2024 Sales volumes: Oil (Bbl) 109,667 110,534 Natural gas (Mcf) 58,971 64,808 Total (BOE) 119,496 121,335 Average sales prices: Oil (per Bbl) $ 69.32 $ 71.25 Natural gas (per Mcf) $ 3.57 $ 3.10 Gross proceeds: Oil sales $ 7,601,741 $ 7,875,193 Natural gas sales 210,767 201,034 Total gross proceeds 7,812,508 8,076,227 Costs: Production and development costs: Lease operating expenses 3,687,150 3,312,352 Production and property taxes 205,576 183,728 Development expenses 813,595 358,318 Total costs 4,706,321 3,854,398 Excess of revenues over direct operating expenses and lease equipment and development costs 3,106,187 4,221,829 Times net profits interest over the term of the Trust 80 % 80 % Income from net profits interest before reserve adjustments 2,484,950 3,377,463 VOC Brazos reserve for future development, maintenance or operating expenditure

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