Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Lower prices for natural gas and oil
• Volatility in the energy industry
• Depleting assets
• Terrorism and hostilities in the Middle East
• Creditworthiness of third parties
• Failure of operators to conduct operations properly
• Potential sale of Royalty Properties and Trust termination
• Limited voting rights of Unit holders
• Financial information not prepared in accordance with GAAP
• Uncertainty of Unit holder limited liability
• Potential retroactive impact of legislative changes

Mitigation Strategies

• Investing royalty income in short-term investments
• Establishing cash reserves for contingent liabilities
• Borrowing funds to pay liabilities (if necessary)
• Regular reserve studies by independent petroleum engineers
• Transparency through website with SEC filings, annual tax booklet, and press releases

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Lower prices for natural gas and oil, higher operating expenses, decreased global demand due to COVID-19, geopolitical uncertainties.
• Depleting assets, potential reduction in depletion tax benefits.
• Terrorism and hostilities in the Middle East.
• Risks related to the creditworthiness of third parties.
• Potential for operator failure or abandonment of properties.
• Regulatory changes affecting oil and gas production (environmental regulations, climate change initiatives, hydraulic fracturing regulations).
• Adverse effects of COVID-19 pandemic on operators' business and operations.

Mitigation Strategies

• The Trust is passive and has no control over operations. Mitigation strategies are largely dependent on the actions of the operators of the Royalty Properties.
• The Trust's financial statements are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Regulatory changes
• Market shifts (reduced demand due to renewables)

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Volatility in the energy industry and fluctuating oil and gas prices.
• Depleting assets of the trust.
• Government actions and policies to discourage oil and gas production.
• Cybersecurity risks.
• Creditworthiness of third parties.
• Limited ability to influence operations on royalty properties.
• Potential for retroactive legislative changes affecting tax treatment.
• Impact of COVID-19 pandemic on oil and gas demand.
• Environmental regulations (CERCLA, RCRA, SDWA, CWA, Endangered Species Act, MBTA, etc.)
• Climate change and its impact on oil and gas demand and regulations.

Mitigation Strategies

• Robust cybersecurity protocols.
• Review of remittances to ensure correct royalty interest and deductions.
• Internal policies and controls for estimating reserves.
• The Trust is passive in nature and does not control operations on royalty properties.
• The Trust is not subject to taxation at the trust level.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Government policies to reduce oil and gas demand
• Increased competition from renewable energy sources

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Volatility in the energy industry due to geopolitical factors (e.g., war in Ukraine, sanctions against Russia), impacting oil and gas prices.
• Depleting assets: The Trust's assets are finite and will eventually cease production.
• Regulatory changes: Extensive regulations at various levels (national, state, local) governing oil and gas exploration, production, and environmental protection. These regulations can impact production rates, costs, and potentially lead to well abandonment.
• Climate change: Growing concerns about climate change and related policies (e.g., carbon taxes, renewable energy mandates) could reduce demand for oil and gas, impacting revenue.
• Cybersecurity risks: Potential for cybersecurity disruptions affecting the Trustee's operations and data security.

Mitigation Strategies

• Robust cybersecurity protocols (technical and non-technical) are in place to mitigate cybersecurity risks.
• The Trust is passive in nature and does not control operations, limiting direct exposure to some risks.
• The Trustee reviews leases for accuracy and viability.
• The Trustee monitors regulatory changes and their potential impact.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Government policies to reduce GHG emissions
• Reduced demand for oil and gas due to climate concerns

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Lower prices for natural gas and oil, lower natural gas production volumes.
• Historic volatility of the energy industry.
• War in Ukraine and resulting sanctions against Russia causing decreased global supply of oil and gas.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Government action, policies or regulations designed to discourage production of, reduce demand for, or promote alternatives to oil and natural gas.