VOC Energy Trust's Income Plunges 39% Amidst Lower Oil Prices

TL;DR

**Sell VOC, distributions are tanking due to falling oil prices and a depleting asset base, making it a poor income play.**

AI Summary

VOC Energy Trust reported a significant decline in distributable income for the three and nine months ended September 30, 2025. For the three-month period, distributable income fell by 38.9% to $1,870,000 from $3,060,000 in the prior year. This was primarily driven by a 36.5% decrease in income from net profits interest, which dropped from $3,398,618 in Q3 2024 to $2,157,519 in Q3 2025. Gross proceeds from oil and natural gas sales decreased by $2,045,847, or 22.1%, to $7,225,060, mainly due to a 22.1% drop in average oil sales price from $78.36 per Bbl to $61.11 per Bbl. For the nine-month period, distributable income decreased by 40.9% to $5,525,000 from $9,350,000 in 2024, with income from net profits interest declining by 37.0% to $6,541,289. Total assets also decreased to $10,770,116 as of September 30, 2025, from $11,871,877 at December 31, 2024. The Trust's distributions per unit consequently decreased from $0.18 in Q3 2024 to $0.11 in Q3 2025, and from $0.55 to $0.325 for the nine-month period. The Trust continues to operate as a passive holder of a net profits interest, with its term set to expire on the later of December 31, 2030, or when 8.5 MMBoe in respect of the net profits interest have been produced.

Why It Matters

This significant decline in distributable income directly impacts VOC Energy Trust unitholders, who rely on these distributions for their returns. The 38.9% drop in quarterly distributable income and the 40.9% decrease year-to-date signal a challenging environment for passive energy trusts, primarily due to volatile commodity prices. For investors, this highlights the inherent risk in trusts tied to a finite asset base and fluctuating energy markets, making it less attractive compared to more diversified energy investments. The competitive landscape for energy trusts is tough, and sustained lower distributions could lead to a re-evaluation of VOC's long-term viability as its asset base depletes towards the 8.5 MMBoe termination threshold.

Risk Assessment

Risk Level: high — The Trust's income from net profits interest, and consequently its distributable income, is highly sensitive to commodity prices, as evidenced by the 22.1% decrease in average oil sales price from $78.36/Bbl to $61.11/Bbl, directly leading to a 36.5% drop in income from net profits interest for the quarter. Furthermore, the Trust has a finite life, terminating on the later of December 31, 2030, or when 8.5 MMBoe have been produced, with 7.6 MMBoe already produced as of September 30, 2025, indicating a depleting asset base.

Analyst Insight

Investors should consider divesting VOC Energy Trust units due to the significant and sustained decline in distributable income driven by lower commodity prices and the finite, depleting nature of its underlying assets. Reallocate capital to energy investments with more diversified revenue streams or stronger growth prospects beyond 2030.

Financial Highlights

debt To Equity

N/A

revenue

$7,225,060

operating Margin

N/A

total Assets

$10,770,116

total Debt

$0

net Income

$1,870,000

eps

$0.11

gross Margin

N/A

cash Position

$1,978,362

revenue Growth

-22.1%

Revenue Breakdown

Key Numbers

• $1.87M — Distributable Income (Q3 2025) (Decreased 38.9% from $3.06M in Q3 2024)
• $2.16M — Income from Net Profits Interest (Q3 2025) (Decreased 36.5% from $3.40M in Q3 2024)
• $0.11 — Distributions per Trust unit (Q3 2025) (Decreased from $0.18 in Q3 2024)
• $61.11 — Average Oil Sales Price per Bbl (Q3 2025) (Decreased 22.1% from $78.36 in Q3 2024)
• 123,777 — Total BOE Sales Volumes (Q3 2025) (Decreased from 126,975 BOE in Q3 2024)
• $10.77M — Total Assets (Sept 30, 2025) (Decreased from $11.87M at Dec 31, 2024)
• 7.6 MMBoe — Cumulative Production (Net Profits Interest) (Represents 89.4% of the 8.5 MMBoe termination threshold)
• 22.1% — Decrease in Gross Proceeds (Q3 2025) (From $9.27M in Q3 2024 to $7.23M in Q3 2025)

Key Players & Entities

• VOC Energy Trust (company) — registrant and owner of net profits interest
• The Bank of New York Mellon Trust Company, N.A. (company) — Trustee of VOC Energy Trust
• VOC Brazos Energy Partners, L.P. (company) — trustor and operator of underlying properties
• MV Purchasing, LLC (company) — affiliate of VOC Brazos and significant purchaser of production
• Delaware Statutory Trust Act (regulator) — governing law for Trust formation
• $1,870,000 (dollar_amount) — distributable income for Q3 2025
• $3,060,000 (dollar_amount) — distributable income for Q3 2024
• $61.11 (dollar_amount) — average oil sales price per Bbl for Q3 2025
• $78.36 (dollar_amount) — average oil sales price per Bbl for Q3 2024
• 17,000,000 (dollar_amount) — Units of Beneficial Interest outstanding

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: The Trust's distributable income is highly sensitive to fluctuations in oil and natural gas prices. For Q3 2025, the average oil sales price decreased by 22.1% to $61.11 per Bbl, directly impacting gross proceeds and income from net profits interest.
• Production Volume Decline [medium — operational]: While oil volumes remained relatively stable, natural gas volumes decreased by 20.2% in Q3 2025 compared to Q3 2024. A continued decline in production volumes could further reduce income.
• Declining Distributable Income [high — financial]: Distributable income fell by 38.9% in Q3 2025 to $1.87 million from $3.06 million in Q3 2024. This trend, if sustained, will lead to lower distributions per unit.
• Asset Value Decline [medium — financial]: Total assets decreased to $10.77 million as of September 30, 2025, from $11.87 million at December 31, 2024. This reflects the amortization of the net profits interest and potentially lower future revenue expectations.
• Trust Term Expiration [high — regulatory]: The Trust's net profits interest has a finite term, expiring on the later of December 31, 2030, or when 8.5 MMBoe (in respect of the net profits interest) have been produced. Cumulative production has reached 7.6 MMBoe, representing 89.4% of the threshold, indicating the Trust's operational life is nearing its end.

Industry Context

The oil and gas royalty trust sector is highly sensitive to commodity prices and production volumes. Companies like VOC Energy Trust operate as passive investors, relying on upstream operators for production and revenue generation. The current market environment is characterized by price volatility, with recent declines in oil prices impacting profitability across the sector.

Regulatory Implications

As a statutory trust, VOC Energy Trust is subject to regulations governing trusts and financial reporting. The finite term of its net profits interest is a critical factor, and the Trust must manage its operations and distributions within this timeframe, ensuring compliance with all relevant securities and trust laws.

What Investors Should Do

1. Monitor commodity price trends
2. Assess production forecasts and reserve life
3. Evaluate operational efficiency of underlying producers

Key Dates

• 2025-09-30: End of Q3 2025 — Reported a 38.9% decrease in distributable income and a 22.1% decrease in gross proceeds compared to Q3 2024, driven by lower oil prices.
• 2024-09-30: End of Q3 2024 — Prior period for comparison, showing higher distributable income and gross proceeds.
• 2030-12-31: Scheduled Trust Term Expiration — One of the conditions for the termination of the net profits interest, indicating a finite operational life for the Trust.

Glossary

Net Profits Interest

A right to receive a specified percentage of the net profits from the sale of oil and natural gas produced from specified properties. It is a passive interest, meaning the holder does not manage operations. (This is the primary asset and income-generating source for VOC Energy Trust.)

Distributable Income

The income available for distribution to Trust unitholders after deducting Trust expenses. (A key metric for unitholders, directly impacting the distributions received per unit.)

BOE

Barrels of Oil Equivalent. A standard unit used to measure and report combined oil and natural gas reserves and production. (Used to quantify total production volumes for the Trust's net profits interest.)

Trust Corpus

The total value of the Trust's assets, representing the capital contributed by unitholders and accumulated earnings. (Reflects the overall financial position and value of the Trust.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, VOC Energy Trust has experienced a significant downturn. Distributable income for Q3 2025 fell by 38.9% to $1.87 million, and for the nine months by 40.9% to $5.53 million. This decline is primarily attributed to a 22.1% decrease in the average oil sales price, which dropped from $78.36 to $61.11 per barrel. Consequently, distributions per unit have also decreased substantially, reflecting the reduced profitability and the ongoing amortization of the Trust's primary asset.

Key Financial Figures

• $32,464 — $ 0.18 $ 0.325 $ 0.55 (1) Includes $32,464 and $31,215 paid to VOC Brazos Energy P
• $31,215 — .325 $ 0.55 (1) Includes $32,464 and $31,215 paid to VOC Brazos Energy Partners, LP
• $96,143 — er 30, 2025 and 2024, respectively, and $96,143 and $92,444 during the nine months ende
• $92,444 — and 2024, respectively, and $96,143 and $92,444 during the nine months ended September
• $37,500 — 5 and 2024, respectively. Also includes $37,500 paid to The Bank of New York Mellon Tru
• $112,500 — s ended September 30, 2025 and 2024 and $112,500 during each of the nine months ended Se
• $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,
• $1,870,000 — quarterly distribution during 2025 was $1,870,000, or $0.11 per Trust Unit, and was made
• $0.11 — ribution during 2025 was $1,870,000, or $0.11 per Trust Unit, and was made on August
• $3,230,000 — quarterly distribution during 2024 was $3,230,000, or $0.19 per Trust Unit, and was made

Filing Documents

• tm2524876d1_10q.htm (10-Q) — 165KB
• tm2524876d1_ex31.htm (EX-31) — 11KB
• tm2524876d1_ex32.htm (EX-32) — 6KB
• 0001104659-25-109167.txt ( ) — 182KB

—FINANCIAL

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. VOC ENERGY TRUST INCOME (Unaudited) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Income from net profits interest $ 2,157,519 $ 3,398,618 $ 6,541,289 $ 10,380,195 Cash on hand withheld for Trust expenses (131,327 ) (136,130 ) (233,685 ) (350,411 ) General and administrative expenses (1) (156,192 ) (202,488 ) (782,604 ) (679,784 ) Distributable income $ 1,870,000 $ 3,060,000 $ 5,525,000 $ 9,350,000 Distributions per Trust unit (17,000,000 Trust units issued and outstanding at September 30, 2025 and 2024) $ 0.11 $ 0.18 $ 0.325 $ 0.55 (1) Includes $32,464 and $31,215 paid to VOC Brazos Energy Partners, LP (“VOC Brazos”) during the three months ended September 30, 2025 and 2024, respectively, and $96,143 and $92,444 during the nine months ended September 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 months ended September 30, 2025 and 2024 and $112,500 during each of the nine months ended September 30, 2025 and 2024. September 30, 2025 December 31, 2024 (Unaudited) ASSETS Cash and cash equivalents $ 1,978,362 $ 1,744,677 Investment in net profits interest 140,591,606 140,591,606 Accumulated amortization and impairment (131,799,852 ) (130,464,406 ) Total assets $ 10,770,116 $ 11,871,877 TRUST CORPUS Trust corpus, 17,000,000 Trust units issued and outstanding at September 30, 2025 and December 31, 2024 $ 10,770,116 $ 11,871,877 (Unaudited) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Trust corpus, beginning of period $ 11,093,493 $ 12,687,168 $ 11,871,877 $ 13,372,565 Income from net profits interest 2,157,519 3,398,618 6,541,289 10,380,195 Cash distributi

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 September 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 September 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 )

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 September 30, 2025 and 2024 The following is a summary of income from net profits interest received by the Trust for the three months ended September 30, 2025 and 2024 consisting of the July distribution for each respective year: Three months ended September 30, 2025 2024 Sales volumes: Oil (Bbl) 115,025 116,006 Natural gas (Mcf) 52,514 65,815 Total (BOE) 123,777 126,975 Average sales prices: Oil (per Bbl) $ 61.11 $ 78.36 Natural gas (per Mcf) $ 3.72 $ 2.74 Gross proceeds: Oil sales $ 7,029,457 $ 9,090,488 Natural gas sales 195,603 180,419 Total gross proceeds 7,225,060 9,270,907 Costs: Production and development costs: Lease operating expenses 3,510,384 3,784,091 Production and property taxes 564,734 539,469 Development expenses 453,043 699,074 Total costs 4,528,161 5,022,634 Excess of revenues over direct operating expenses and lease equipment and development costs 2,696,899 4,248,273 Times net profits interest over the term of the Trust 80 % 80 % Income from net profits interest before reserve adjustments 2,157,519 3,398,618 VOC Brazos reserve for future development, maintenance or operat

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