UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended June 30, 2025

OR

For the transition period ________ to ________

Commission File Number: 001-08032

SAN JUAN BASIN ROYALTY TRUST

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (855) 588-7839

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No ☒

Number of Units of beneficial interest outstanding at August 13, 2025: 46,608,796

Table of Contents

SAN JUAN BASIN ROYALTY TRUST

PART I FINANCIAL INFORMATION

Item 1. Financial Statements.

CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein.

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein.

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

These Condensed Financial Statements should be read in conjunction with the accompanying

Notes to Financial Statements included herein.

Notes to Financial Statements

1. Trust Organization and Administration

The San Juan Basin Royalty Trust (the “Trust”) was established on November 1, 1980 when Southland Royalty Company (“Southland”) conveyed to the Trust a 75% net overriding royalty interest (the “Royalty”) that burdens certain oil and gas interests (the “Subject Interests”) in properties owned by Southland and located in the San Juan Basin of northwestern New Mexico. Subsequent to the conveyance of the Royalty, through a series of sales, assignments and mergers, Southland’s successor became Hilcorp San Juan L.P. (“Hilcorp”), which acquired the Subject Interests from Burlington Resources Oil & Gas Company LP (“Burlington”) on July 31, 2017. Through an acquisition completed on March 24, 2006, Compass Bank succeeded TexasBank as trustee of the Trust. On September 7, 2007, Compass Bancshares, Inc. was acquired by Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”) and became a wholly-owned subsidiary of BBVA. Effective June 10, 2019, Compass Bank changed its name to BBVA USA. On June 1, 2021, The PNC Financial Services Group, Inc. (“PNC”) announced that it had completed the purchase of BBVA USA Bancshares, Inc., a financial holding company, including its U.S. banking subsidiary, BBVA USA, an Alabama-chartered bank and trustee of the Trust (“BBVA USA”).

On October 8, 2021, PNC Bank, an indirect wholly-owned subsidiary of PNC, succeeded BBVA USA as the trustee of the Trust following BBVA USA’s merger with and into PNC Bank. On February 15, 2024, Argent Trust Company succeeded PNC Bank as the trustee of the Trust following the resignation of PNC Bank. The defined term “Trustee” as used herein shall refer to PNC Bank for periods from October 8, 2021 through February 14, 2024, and shall refer to Argent Trust Company for periods on and after February 15, 2024. For all periods prior to October 8, 2021, use of the defined term “Trustee” herein shall refer to the entity serving as Trustee of the Trust during the applicable time period.

On November 3, 1980, 46,608,796 Units in the Trust were distributed to the Trustee for the benefit of Southland shareholders of record as of November 3, 1980, who received one Unit in the Trust for each share of Southland common stock held. The Trust’s initial public offering was completed in 1980. The Units are traded on the New York Stock Exchange. Holders of Units are referred to herein as “Unit Holders.”

The Trust is an express trust created under the laws of the state of Texas by the San Juan Basin Royalty Trust Indenture entered into on November 1, 1980, between Southland and The Fort Worth National Bank (the “Original Indenture”). The Trust refers to the Original Indenture as it was amended and restated on September 30, 2002, further amended and restated on December 12, 2007, and further amended by the First Amendment to the San Juan Basin Amended and Restated Royalty Trust Indenture on February 24, 2024 as the "Indenture” in this Quarterly Report. The terms of the Indenture provide, among other things, that:

2. Net Overriding Royalty Interest and Distribution to Unit Holders

The amounts to be distributed to Unit Holders (“Monthly Distribution Amounts”) are determined on a monthly basis by the Trustee. The Monthly Distribution Amount is an amount equal to the sum of cash received by the Trustee during a calendar month attributable to the Royalty, any reduction in cash reserves and any other cash receipts of the Trust, including interest, reduced by the sum of liabilities paid and any increase in cash reserves. If the Monthly Distribution Amount for any monthly period is a negative number, then the distribution will be zero for such month and such negative amount will be carried forward and deducted from future monthly distributions until the cumulative distribution calculation becomes a positive number, at which time a distribution will be made. Unit Holders of record will be entitled to receive the calculated Monthly Distribution Amount for each month on or before 10 business days after the monthly record date, which is generally the last business day of each calendar month.

The cash received by the Trustee consists of the Net Proceeds generated by the owner of the Subject Interests multiplied by 75%.

The initial carrying value of the Royalty of $133,275,528 represented Southland’s historical net book value at the date of the transfer of the Trust. Accumulated amortization as of June 30, 2025 and December 31, 2024, was $130,597,911.

3. Basis of Presentation

The preceding condensed statement of assets, liabilities, and trust corpus as of December 31, 2024, which has been derived from audited financial statements, and the unaudited interim condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Trust's Annual Report on Form 10-K for the year ended December 31, 2024. In the opinion of the Trustee and based upon information provided to the Trust by Hilcorp, the present owner of Subject Interests originally owned by Southland in properties located in the San Juan Basin of northwestern New Mexico, all adjustments, consisting only of normal recurring adjustments, have been included that are necessary to fairly present the assets, liabilities and trust corpus of the Trust at June 30, 2025, and the distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 2025 and 2024. The distributable income for such interim period is not necessarily indicative of the distributable income for the full year.

The condensed financial statements of the Trust are prepared on the following basis and are not intended to present the financial position and results of operations of the Trust in conformity with U.S. generally accepted accounting principles (“GAAP”):

The financial statements of the Trust differ from financial statements prepared in accordance with GAAP because revenues are not accrued in the month of production; certain cash reserves may be established for liabilities and contingencies, which would not be accrued in financial statements prepared in accordance with GAAP; expenses are recorded when paid, instead of when incurred; and amortization of the Royalty is calculated on a unit-of-production basis and is charged directly to the Trust corpus instead of as an expense. Most accounting pronouncements apply to entities whose financial statements are prepared in accordance with GAAP, directing such entities to accrue or defer revenues and expenses in a period other than when such revenues were received, or expenses were paid. Because the Trust’s financial statements are prepared on the modified cash basis, as described above, most accounting pronouncements

are not applicable to the Trust’s financial statements. This comprehensive basis of accounting corresponds to the accounting permitted for royalty trusts by the SEC, as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

The Trustee routinely reviews the Trust’s royalty interests in oil and natural gas properties for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment event occurs and it is determined that the carrying value of the Trust’s royalty interests may not be recoverable, an impairment will be recognized as measured by the amount by which the carrying amount of the royalty interests exceeds the fair value of these assets, which would likely be measured by discounting projected cash flows and is charged directly to the Trust corpus instead of as an expense. There was no impairment of the Trust’s assets as of June 30, 2025 or 2024.

Certain amounts from previously presented condensed financial statements have been reclassified to conform to the current period's presentation. These reclassifications had no impact on previously reported distributable income or trust corpus. The reclassification adjustments were made to improve consistency and comparability of the financial information across periods.

4. Liquidity and Going Concern

In each of the months from May 2024 through June 2025, the Trust did not receive any Royalty Income, and interest income received was insufficient to pay Trust liabilities. Due to these circumstances, the Trust used cash reserves to pay the Trust’s liabilities that interest income did not cover. The cash reserve balance was $32,968 on June 30, 2025.

The anticipated deficit in income to pay the Trust’s liabilities described above raises substantial doubt about the Trust’s ability to continue as a going concern within one year after issuance date of the financial statements. The Trust is permitted under the Indenture to borrow funds against the Royalty to cover the Trust’s operating expenses, and on May 21, 2025, the Trust entered into a promissory note (the “Note”) to establish a line of credit (the “Line of Credit”) in the amount of $2,000,000 with Texas Bank, together with a mortgage to secure that Note. The Line of Credit bears interest at a rate of prime plus 1% per annum (8.5% at June 30, 2025) and matures on May 21, 2027. The Trust is required to make interest-only payments on the Note until May 21, 2027, at which time, the Trust will be required to also make monthly payments toward the principal. The Line of Credit is secured by substantially all of the assets of the Trust, including (a) all mineral interests owned by the Trust, (b) the oil, gas, and other minerals attributable to those mineral interests, (c) the personal property related to those mineral interests, and (d) the proceeds of the sale of the property described in (a) through (c), above. The agreement securing repayment of the Line of Credit contains customary covenants and events of default.

The Line of Credit is intended to cover the Trust’s administrative expenses until the Trust receives Royalty Income in amounts sufficient to (a) repay the balance of Excess Production Costs, (b) replenish a reserve in the amount of $2,000,000, and (c) repay the Note in full, after which time, the Trust will resume distributions to the holders of the Trust’s Units of beneficial interest. The Trust utilized $29,932 in May 2025 to cover administrative fees associated with obtaining the Line of Credit and $132,851 in June 2025 to help cover Trust administrative costs. As of June 30, 2025, the outstanding balance on the Line of Credit was $162,783.

The accompanying financial statements have been prepared assuming that the Trust will continue as a going concern; however, the above conditions raise substantial doubt about the Trust’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Trust be unable to continue as a going concern.

5. Federal Income Taxes

For federal income tax purposes, the Trust constitutes a fixed investment trust that is taxed as a grantor trust. A grantor trust is not subject to tax at the trust level. The Unit Holders are considered to own the Trust’s income and principal as though no trust were in existence. The income of the Trust is deemed to have been received or accrued by each Unit Holder at the time such income is received or accrued by the Trust rather than when distributed by the Trust.

The Trust is a widely held fixed investment trust (“WHFIT”) classified as a non-mortgage widely held fixed investment trust (“NMWHFIT”) for federal income tax purposes. The Trustee is the representative of the Trust that will provide tax information in accordance with the applicable U.S. Treasury Regulations governing the information reporting requirements of the Trust as a WHFIT and a NMWHFIT.

The Royalty constitutes an “economic interest” in oil and natural gas properties for federal income tax purposes. Unit Holders must report their share of the production revenues of the Trust as ordinary income from oil and natural gas royalties and are entitled to claim depletion with respect to such income. The Royalty is treated as a single property for depletion purposes. The Trust has on file technical advice memoranda confirming such tax treatment.

Under present law, the Trust’s production and sale of natural gas from coal seam wells does not qualify for tax credit under Section 45K of the Code (the “Section 45 Tax Credit”). Congress has at various times since 2002 considered energy legislation, including

provisions to reinstate the Section 45 Tax Credit in various ways and to various extents, but no legislation that would qualify the Trust’s current production for such credit has been enacted. No prediction can be made as to what future tax legislation affecting Section 45K of the Code may be proposed or enacted or, if enacted, its impact, if any, on the Trust and the Unit Holders.

The classification of the Trust’s income, for purposes of the passive loss rules, may be important to a Unit Holder. Royalty Income, such as that derived through the Trust, will generally be treated as portfolio income that may not be offset or reduced by passive losses.

The Trustee is of the opinion that the material tax positions taken by the Trust, related to the Trust’s pass-through status and state tax positions, would more likely than not be sustained by examination. As of June 30, 2025, the Trust’s tax years 2021 and thereafter remain subject to examination.

Each Unit Holder should consult his or her own tax advisor regarding tax compliance matters related to such Unit Holder’s interest in the Trust.

6. Commitments and Contingencies

Contingencies related to the Subject Interests that are unfavorably resolved would generally be reflected by the Trust as reductions to future Royalty Income payments to the Trust with corresponding reductions to cash distributions to Unit Holders. See Note 3 Basis of Presentation, for a summary of the terms of the Conveyance with respect to recovery of costs.

Hilcorp transitioned to a new accounting system in 2021. During and immediately following the transition period, revenue and severance taxes on the distributions to the Trust were estimated. Then, in 2021 and 2022, various adjustments were made to reconcile actual revenue and severance taxes to the previously reported estimates. Hilcorp conducted a process review of the new accounting system that included review of production volume allocations for 2017 through 2020 and resulted in reallocations of affected volumes for many of the Trust properties.

Through the Trustee's audit process, certain exceptions to the several different categories of expenses (specifically offsite labor, overhead, operator-owned compressors and saltwater disposal facilities) for the years 2017 through 2020 were identified that the Trustee believed resulted in an underpayment of royalties owed to the Trust for those years. The Trustee engaged in extensive discussions with Hilcorp regarding these exceptions that culminated in Hilcorp’s payment of the sum of $1,037,093, which included the accumulated interest incurred as a result of the underpayment. The audit settlement payment was included in the September 2023 distribution to Unit Holders.

Since the transition to Hilcorp's new accounting system in 2021, the Trustee has engaged and continues to engage with Hilcorp on an ongoing basis regarding Hilcorp's accounting and reporting to the Trust. The Trust’s third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments. The Trust’s auditing process has also included detailed analyses of Hilcorp’s pricing and rates charged. As previously disclosed in the Trust’s filings, these revenues and costs (along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by professional consultants and outside counsel to help evaluate compliance with the underlying operative Trust agreements and evaluate potential remedies in the event there is suspected non-compliance.

7. Certain Contracts

As part of the transition from Burlington to Hilcorp, Hilcorp has assumed, or been assigned, all the natural gas purchase, gathering and processing contracts affecting the Subject Interests. Natural gas produced from the Subject Interests is processed at the following sites: Chaco, Val Verde, Milagro, Ignacio or Kutz plants, all located in the San Juan Basin. Hilcorp sells natural gas produced from the Subject Interests under various contracts. The Trust is not a party to any of the purchase, gathering or processing contracts, and thus the Trust has limited knowledge over the terms of the various contracts and lacks the ability to influence such terms. As part of the 1996 settlement of litigation filed by the Trustee in 1992 against Burlington and Southland, the Trustee and Burlington established a formal protocol pursuant to which compliance auditors, retained by the Trustee, have access to Burlington and its successors’ books and records, which protocol has been adopted by Hilcorp.

8. Significant Customers

Information as to significant purchasers of oil and natural gas production attributable to the Trust's economic interests is included in Note 7 above.

9. Development Costs

Hilcorp’s capital budget plans for the Subject Interests are delivered to the Trustee at the beginning of each calendar year. The estimates are subject to change, based on, among other things, Hilcorp’s actual capital requirements, the pace of regulatory approvals, the mix of projects and swings in the price of natural gas.

Both the estimated annual capital expenditures and the actual expenses reported by Hilcorp include amounts attributable to capital budgets for prior years because capital expenditures are deducted in calculating Royalty Income in the month they accrue and projects within a given year’s budget often extend into subsequent years. Further, Hilcorp’s accounting period for capital expenditures runs from January through December 31 of each calendar year, which corresponds and is reported in Trust Distribution months March of the same calendar year through February of the following calendar year. In addition, with respect to wells not operated by Hilcorp, Hilcorp’s share of capital expenditures may not be paid until the following year(s) after those expenses were incurred by the operator.

On February 13, 2025, the Trust announced that Hilcorp had provided the Trust with its 2025 capital project plan for the Subject Interests (the “2025 Plan”), and Hilcorp has estimated its 2025 capital expenditures for the Subject Interests to be approximately $9.0 million. Hilcorp informed the Trust that its 2025 Plan for the Subject Interests includes 29 projects. Approximately $4.0 million of the $9.0 million budget in the 2025 Plan will be allocated to seven new vertical drill projects, all of which are to be completed in the Dakota/Mesa Verde formations. Approximately $4.5 million of the $9.0 million budget will be allocated to 22 projects for recompletions and workovers in the Fruitland Coal formation, and approximately $0.5 million of the $9.0 million budget will be allocated to facilities projects related to natural gas compression and other facility projects. Hilcorp further informed the Trust that its planned project status for 2025 is subject to revision if Hilcorp revises its assumptions underlying the 2025 Plan, and that actual capital costs may vary from these estimates. Hilcorp advised the Trustee that there were 18 workover wells completed, two new wells completed, and one new well in progress during the three months ended June 30, 2025.

10. Excess Production Costs

Excess Production Costs occur when Production Costs and capital expenditures exceed the Gross Proceeds for a certain period. Excess Production Costs accrued due to significant lease operating expenses and capital expenditures associated with Hilcorp's drilling of two new horizontal wells. For the three months ended June 30, 2025, net proceeds of $6,972,006, which amount would otherwise have been payable to the Trust as royalty income, were applied to the balance of the Excess Production Costs. The balance of cumulative Excess Production Costs, as of June 30, 2025, was approximately $14,767,940 gross ($11,075,955 net to the Trust). The Conveyance provides that any Excess Production Costs applicable to the Subject Interests over the amount of Gross Proceeds from such properties must be recovered from future Net Proceeds before Royalty Income is again paid to the Trust. The Trust is not obligated to reimburse Hilcorp for any Excess Production Costs if future Gross Proceeds from the Subject Interests are insufficient to cover such costs.

11. Settlements and Litigation

None.

12. Trustee Fees

Trustee fees for the three-month period ending June 30, 2025 were $40,041. For the six-month period ended June 30, 2024, Trustee fees were $70,992.

13. Subsequent Events

On July 21, 2025 the Trust announced that it would not declare a monthly cash distribution to the holders of its Units of beneficial interest (the “Unit Holders”) due to additional Excess Production Costs for the Trust's subject interest during the production month of May 2025, as well as continued low natural gas pricing. Excess Production Costs have accrued as a result of Hilcorp drilling two new horizontal wells.

Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations. Overview

Introduction

The following discussion and analysis is intended to help the reader understand the Trust’s financial condition, results of operations, liquidity and capital resources. This discussion and analysis should be read in conjunction with the Trust’s unaudited condensed financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q (“Quarterly Report”) and the Trust’s audited financial statements and the accompanying notes included in the Trust’s 2024 Annual Report.

Cautionary Statement Regarding Forward Looking Statements

Certain information included in this Quarterly Report contains, and other materials filed or to be filed by the Trust with the SEC (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements may involve or may concern, among other things, the amount and variability in capital expenditures by Hilcorp, drilling activity, development activities, production efforts and volumes, hydrocarbon prices, estimated future net revenues, estimates of reserves, the results of the Trust’s activities, the differences between Hilcorp’s estimated revenue and actual revenue, and regulatory matters. Such forward-looking statements generally are accompanied by words such as “may,” “will,” “based,” “estimate,” “expect,” “predict,” “project,” “anticipate,” “believe,” “plan,” “intend,” or other words that convey the uncertainty of future events or outcomes. Such statements are based on certain assumptions of the Trustee and by Hilcorp, with respect to future events; are based on an assessment of, and are subject to, a variety of factors deemed relevant by the Trustee and Hilcorp; and involve risks and uncertainties. However, whether actual results and developments will conform with such expectations and predictions is subject to a number of risks and uncertainties which could affect the future results of the energy industry in general, and the Trust and Hilcorp in particular, and could cause those results to differ materially from those expressed in such forward- looking statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to, or effects on, Hilcorp’s business and the Trust. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in such forward-looking statements.

You should not place undue reliance on any forward-looking statements. All forward-looking statements speak as of the date of this Quarterly Report. The Trust does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events, unless required by applicable law.

Overview

The Trust is an express trust created under the laws of the state of Texas by the San Juan Basin Royalty Trust Indenture entered into on November 1, 1980, between Southland and The Fort Worth National Bank (the “Original Indenture”). The Trust refers to the Original Indenture as it was amended and restated on September 30, 2002, further amended and restated on December 12, 2007, and further amended by the First Amendment to the San Juan Basin Amended and Restated Royalty Trust Indenture on February 24, 2024 as the "Indenture” in this Quarterly Report.

PNC Bank, National Association (“PNC Bank”), served as the previous Trustee of the Trust from October 8, 2021, through February 14, 2024. Effective February 15, 2024, Argent Trust Company, a Tennessee chartered trust company (“Argent”), became the Trustee of the Trust. The principal office of the Trust is 3838 Oak Lawn Avenue, Suite 1720, Dallas, Texas 75219 (telephone number (855) 588-7839). Argent Trust Company, as successor trustee of the Trust, is subject to the terms and conditions of the Indenture. The defined term “Trustee” as used herein shall refer to PNC Bank (which maintains its offices at 2200 Post Oak Blvd., Floor 18, Houston, TX 77056) for periods from October 8, 2021, until February 14, 2024, and shall refer to Argent Trust Company (which maintains its offices at 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas 75219) for periods on and after February 15, 2024.

The Conveyance and the Royalty

Pursuant to the Net Overriding Royalty Conveyance effective November 1, 1980, Southland conveyed the Royalty that burdens the Subject Interests in properties located in the San Juan Basin of northwestern New Mexico to the Trust. Subsequent to the Conveyance of the Royalty, through a series of sales, assignments and mergers, Southland’s successor became Hilcorp, which acquired the Subject Interests from Burlington Resources Oil & Gas Company LP (“Burlington”), an indirect wholly-owned subsidiary of ConocoPhillips, on July 31, 2017.

The Royalty constitutes the principal asset of the Trust. The beneficial interest in the Royalty is divided into 46,608,796 units (the “Units”) representing undivided fractional interests in the beneficial interest of the Trust equal to the number of shares of the common stock of Southland outstanding as of the close of business on November 3, 1980. Each stockholder of Southland of record at the close

of business on November 3, 1980, received one freely tradable Unit for each share of the common stock of Southland then held. Holders of Units in the Trust are referred to herein as “Unit Holders.”

On August 30, 2023, the Trustee entered into a First Amendment to the Conveyance (the “Amendment”). The Amendment was entered into (i) pursuant to the terms of the Compromise and Settlement Agreement entered into August 30, 2023, which resolved certain disputed expenses for the period from 2017 through 2020 by payment to the Trust and (ii) to modify certain terms of the Conveyance of the Royalty with respect to expenses associated with the operator’s saltwater disposal facilities.

The Trustee

The primary function of the Trustee is to collect Royalty Income, to pay all expenses and charges of the Trust, and to distribute the remaining available income to the Unit Holders. The amount of income distributable to Unit Holders, which the Trust refers to as “Distributable Income,” depends on the amount of Royalty Income and interest received by the Trust, as well as the amount of expenses paid by the Trust and any change in cash reserves. The Trust has no employees, officers, or directors. The Trustee performs all administrative functions of the Trust. Argent Trust Company has served as Trustee since February 15, 2024.

Hilcorp

Hilcorp is the principal operator of the majority of the Subject Interests and is responsible, subject to the terms of a prior agreement with the Trust, for marketing the oil and natural gas production from such properties, either under existing sales contracts or under future arrangements, at the best prices and on the best terms it shall deem reasonably obtainable under the circumstances. A very high percentage of the Royalty Income is attributable to the production and sale of natural gas, from the Subject Interests, by Hilcorp. Accordingly, the market price and demand for natural gas produced and sold from the San Juan Basin heavily influences the amount of Royalty Income distributed by the Trust and, by extension, the price of the Units.

Natural Gas and Oil. The sale of San Juan Basin assets, including the Subject Interests, from Burlington to Hilcorp closed on July 31, 2017. Under the terms of the sale, Hilcorp is required to make payments to Burlington if natural gas prices are above a certain price. Hilcorp has confirmed that in accordance with the Conveyance, Hilcorp will not charge the Trust any portion of such payments.

Gross Proceeds and Severance Tax Estimates. Hilcorp transitioned to a new accounting system in 2021. During and immediately following the transition period, revenue and severance taxes on the distributions to the Trust were estimated. Then, in 2021 and 2022, various adjustments were made to reconcile actual revenue and severance taxes to the previously reported estimates. Hilcorp conducted a process review of the new accounting system that included review of production volume allocations for 2017 through 2020 and resulted in reallocations of affected volumes for many of the Trust properties.

Through the Trustee’s audit process, certain exceptions to the several different categories of expenses (specifically offsite labor, overhead, operator-owned compressors and saltwater disposal facilities) for the years 2017 through 2020 were identified that the Trustee believed resulted in an underpayment of royalties owed to the Trust for those years. The Trustee engaged in extensive discussions with Hilcorp regarding these exceptions that culminated in Hilcorp’s payment of the sum of $1,037,093.45, which included the accumulated interest incurred as a result of the underpayment. The audit settlement payment was included in the September 2023 distribution to Unit Holders.

Since the transition to Hilcorp’s new accounting system in 2021, the Trustee has engaged and continues to engage with Hilcorp on an ongoing basis regarding Hilcorp’s accounting and reporting to the Trust. The Trust’s third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments. The Trust’s auditing process has also included detailed analyses of Hilcorp’s pricing and rates charged. As previously disclosed in the Trust’s filings, these revenues and costs (along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by professional consultants and outside counsel to help evaluate compliance with the underlying operative Trust agreements and evaluate potential remedies in the event there is suspected non-compliance.

The amount of Gross Proceeds also depends on the volumes of natural gas and oil produced from the Subject Interests. Under the terms of the Indenture, the Trust cannot acquire new natural gas and oil assets, and as a result, Royalty Income is dependent on the natural gas and oil volumes attributable to the Subject Interests. Although Hilcorp and other operators of the Subject Interests may conduct drilling operations or well recompletions in the near term, the Subject Interests are depleting assets; Hilcorp has informed the Trust that it is unable to estimate the productive life of the Subject Interests. The reduction in proved reserve quantities is a common measure of depletion. Hilcorp’s (or a future operator’s) capital investments in the Subject Interests will affect the quantity of proved reserves and can offset any reduction in proved reserves. Lower commodity prices may also reduce the volume of natural gas and oil produced from the Subject Interests by Hilcorp.

On February 13, 2025, the Trust announced that Hilcorp had provided the Trust with its 2025 capital project plan for the Subject Interests (the “2025 Plan”), and Hilcorp has estimated its 2025 capital expenditures for the Subject Interests to be approximately $9.0 million. As of June 30, 2025, Hilcorp has spent $5.76 million of the $9.0 million budgeted under the 2025 Plan.

Hilcorp informed the Trust that its 2025 Plan for the Subject Interests includes 29 projects. Approximately $4.0 million of the $9.0 million budget in the 2025 Plan will be allocated to seven new vertical drill projects, all completed in the Dakota/Mesa Verde formations. Approximately $4.5 million of the $9.0 million budget will be allocated to 22 projects for recompletions and workovers in the Fruitland Coal formation, and approximately $0.5 million of the $9.0 million budget will be allocated to facilities projects related to natural gas compression and other facility projects. Hilcorp further informed the Trust that its planned project status for 2025 is subject to revision if Hilcorp revises its assumptions underlying the 2025 Plan, and that actual capital costs may vary from these estimates. Hilcorp advised the Trustee that there were 18 workover wells completed, two new wells completed, and one new well in progress during the three months ended June 30, 2025.

Under the terms of the Conveyance, production costs are deducted from Gross Proceeds in calculating Net Proceeds, which is multiplied by 75% to calculate Royalty Income. “Production Costs” generally means costs incurred on an accrual basis by Hilcorp in operating the Subject Interests, including both capital and non-capital costs. For example, these costs include development drilling, production and processing costs, applicable taxes and operating charges. However, Hilcorp informed the Trust that for wells operated by Hilcorp it did not intend to accrue lease operating expenses to the Trust. If Production Costs exceed Gross Proceeds in any month, the excess is recovered out of future Gross Proceeds prior to making any further payments to the Trust. However, the Trust is not otherwise liable for any Production Costs or other costs or liabilities attributable to the Subject Interests or the minerals produced therefrom. If at any time the Trust receives more than the amount due under the Royalty, it is not obligated to return such overpayment, but the amounts payable to it for any subsequent period are reduced by such amount, plus interest, at a rate specified in the Conveyance. The Trust and the Trustee have very limited authority to control the amount and timing of Production Costs.

The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and the Trust’s third-party compliance auditors continue to audit all payments made by Hilcorp to the Trust, including adjustments, true-ups, and recoupments. In addition, the Trustee continues to consult with outside counsel to review the rights of the Trust with respect to these matters and to evaluate any available potential legal remedies.

Factors that Affect Net Proceeds. Generally, Net Proceeds are affected by (a) disruptions caused by weather, particularly winter storms that disrupt access to the production fields, (b) the timing and size of Hilcorp’s capital expenditures, and other Production Costs, and (c) commodity prices.

Weather. Hilcorp has advised the Trust that it is possible for it to experience disruptions during the winter months that could impact Hilcorp’s ability to access fields and maintain production.

Capital Expenditures. The timing and size of capital expenditures by Hilcorp have impacted and continue to impact Net Proceeds. Hilcorp’s capital expenditures were $2,509,627 and $16,556,987 for the three and six months ended June 30, 2025, respectively. This reflects an increase of $1,679,755 and $14,736,321 for the three and six months ended June 30, 2025, respectively, when compared to the same periods in 2024. These increases were primarily attributable to a substantially higher capital project spending related to Hilcorp's drilling of two new horizontal wells.

Excess Production Costs. Excess Production Costs (“Excess Production Costs”) occur when Production Costs (including capital expenditures and lease operating expenses) exceed the Gross Proceeds for a certain period. In 2024 and the first half of 2025, Excess Production Costs accrued due to significant lease operating expenses and capital expenditures associated with Hilcorp’s drilling of two new horizontal wells. The balance of Excess Production Costs was $14,767,940 ($11,075,955 net to the Trust) and $21,739,947 ($16,304,960 net to the Trust) as of June 30, 2025 and March 31, 2025, respectively. Hilcorp will not pay Royalty Income to the Trust, until the balance of Excess Production Costs is paid in full. Further, no cash distribution will be made by the Trust until (a) the balance of Excess Production Costs is paid in full, (b) the Trustee replenishes a cash reserve in the amount of $2,000,000, and (c)the Trust repays the Note in full.

Commodity Prices. The Trust’s income and monthly distributions from the Subject Interests are heavily influenced by the price of natural gas and oil. These prices may fluctuate widely in response to relatively minor changes in the supply of and demand for natural gas and oil based on market uncertainty or a variety of additional factors that are beyond the Trustee’s control.

Hilcorp has multiple gas purchase agreements that set forth the prices it will receive for the natural gas and oil produced from the Subject Interests. There is a differential in the prices reflected in the market indices and the prices received and reported because the prices received and reported vary by purchase agreement, and they are determined after deducting gathering, processing, and marketing costs for both gas and natural gas liquids. These purchase agreements and costs are subject to a comprehensive audit process by professional accountants and consultants.

Results of Operations – for the Three and Six Months Ended June 30, 2025 and 2024

Royalty Income. Royalty Income consists of 75% of the monthly Net Proceeds attributable to the Royalty. Royalty Income for the three and six months ended June 30, 2025, and 2024 was determined as shown in the following table:

There was no Royalty Income distributed to the Trust for the three and six months ended June 30, 2025. Royalty income of $1,854,915 and $6,945,974 was distributed for the three and six months ended June 30, 2024, respectively. The decrease in Royalty Income was due primarily to substantially higher capital project spending associated with Hilcorp's drilling of two new horizontal wells. The average natural gas price increased from $1.92 per Mcf for the three months ended June 30, 2024, to $2.42 per Mcf for the three months ended June 30, 2025. The average natural gas price increased from $2.56 per Mcf for the six months ended June 30, 2024 to $3.08 per Mcf for the six months ended June 30, 2025. Production of natural gas from the Subject Interests increased from 5,457,753 Mcf for the three months ended June 30, 2024, to 7,085,582 Mcf for the three months ended June 30, 2025. Production of natural gas from the Subject Interests also increased from 11,052,769 Mcf for the six months ended June 30, 2024 to 14,706,475 Mcf for the six months ended June 30, 2025.

Gross Proceeds from Subject Interests. Total Gross Proceeds increased approximately $8.1 million, or 72.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Total Gross Proceeds increased approximately $13.6 million or 46.2% for the six months ended June 30, 2025 compared to the same time period in 2024. The increases were primarily due to slightly higher natural gas prices and higher production volumes, mainly attributable to the two new horizontal wells installed in 2024.

Capital Expenditures. The timing and size of capital expenditures by Hilcorp have and will continue to impact Net Proceeds. Hilcorp's capital expenditures increased $1,679,755 for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and increased $14,736,321 for the six months ended June 30, 2025, compared to the same time period in 2024. The increase in capital costs in the three-month period ended June 30, 2025 was primarily attributable to Hilcorp's 2025 Plan (as defined below). The increase in capital costs in the six-month period was primarily attributable to Hilcorp's significantly higher capital project spending related to drilling two new horizontal wells in 2024.

Hilcorp informed the Trust that its 2025 Plan for the Subject Interests includes 29 projects. Approximately $4.0 million of the $9.0 million estimate in the 2025 Plan will be allocated to seven new vertical drill projects, all to be completed in the Dakota/Mesa Verde formations. Approximately $4.5 million of the $9.0 million estimate will be allocated to 22 projects for recompletions and workovers in the Fruitland Coal formation, and approximately $0.5 million of the $9.0 million estimate will be allocated to facilities projects related to natural gas compression and other facility projects. Hilcorp further informed the Trust that its planned project status for 2025 is subject to revision if Hilcorp revises its assumptions underlying the 2025 Plan, and that actual capital costs may vary from these estimates. As of June 30, 2025, Hilcorp has spent $1.25 million of the $5.76 million estimated under the 2025 Plan.

Severance Taxes. Aggregate severance taxes increased approximately $0.2 million, or 16%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and increased approximately $0.01 million or 0.3% for the six months ended June 30, 2025 compared to the same time period during 2024. The increase was primarily attributable to higher Gross Proceeds. Severance taxes represented approximately 8% of Gross Proceeds for the three months ended June 30, 2025 compared to approximately 12% for the same period of 2024. Severance taxes represented approximately 9% of Gross Proceeds for the six months ended June 30, 2025 and approximately 13% for the same period of 2024.

Lease Operating Expenses and Property Taxes. Lease operating expenses and property taxes increased $0.6 million or 7.1%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. For the six months ended June 30, 2025, lease operating expenses and property taxes increased approximately $0.5 million or 3% compared to the six months ended June 30, 2024.

Excess Production Costs. For the three months ended June 30, 2025, net proceeds of $6,972,006, 75% of which amount would otherwise have been payable to the Trust as Royalty Income, were applied to the balance of Excess Production Costs accrued as a result of Hilcorp's drilling of two new horizontal wells. The balance of cumulative Excess Production Costs, as of June 30, 2025, was approximately $14,767,940 gross ($11,075,955 net to the Trust). The Conveyance provides that any Excess Production Costs applicable to the Subject Interests over Gross Proceeds from such properties must be recovered from future Net Proceeds before Royalty Income is again paid to the Trust. The Trust is not obligated to reimburse Hilcorp for any Excess Production Costs if future Gross Proceeds from the Subject Interests are insufficient to cover such costs.

Distributable Income. Distributable Income for the three and six months ended June 30, 2025, and 2024 was determined as shown in the following table:

There was no Distributable Income for the three and six months ended June 30, 2025. This was a decrease from $1.1 million ($0.022864 per Unit) for the three months ended June 30, 2024 and $5.2 million ($0.110671 per Unit) for the six months ended June 30, 2024. The decrease in Distributable Income was primarily attributable to significantly increased capital expenditures. The net loss for the three and six months ended June 30, 2025, resulted from the Trust’s draw on the Line of Credit to cover administrative expenses.

Interest Income. Interest income decreased for the three and six months ended June 30, 2025, as compared to the same periods in 2024 primarily due to the decrease in Royalty Income.

General & Administrative Expenses. General and administrative expenses decreased by $367,369 (48.4%) for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. For the six months ended June 30, 2025, general and administrative expenses decreased by $472,904 (34.4%) compared to the six months ended June 30, 2024 due to differences in timing

of the receipt and payment of certain expenses by the Trust, as well as expenses in the first half of 2024 associated with the transition to Argent Bank as Trustee of the Trust.

Cash Reserves. Total cash reserves were $32,968 as of June 30, 2025. The Trustee is authorized to determine, in its discretion, the amount of cash reserves needed to cover liabilities and contingencies of the Trust. The Trustee previously maintained a cash reserve in the amount of $1,000,000. However, to cover Trust Expenses during any period of revenue shortfall, which has resulted and could continue to result from lower commodity prices or increased capital expenditures under Hilcorp's 2024 project plan for the Subject Interests, the Trustee increased the cash reserves in March and April of 2024, such that total cash reserves were $1,800,000 as of April 30, 2024. Cash reserves of $1,767,041, along with interest income, were utilized to pay the balance of Trust administrative expenses remaining (after applying interest income) each month from May 2024 through May 2025, when the Trust did not receive any Royalty Income. For the months ended May 31, 2025, and June 30, 2025, Trust administrative expenses were paid using funds in the amounts of $84,838 from the cash reserves and $132,851 from the Line of Credit, respectively, net of interest earned on Trust cash accounts. Prior to any distributions to Unitholders, the Trustee plans to replenish the cash reserves and continue to increase the cash reserves to $2,000,000.

Line of Credit. The Trust is permitted to borrow funds against the Royalty to cover the Trust’s operating expenses. On May 21, 2025, the Trust entered into a promissory note (the “Note”) to establish a line of credit (the “Line of Credit”) in the amount of $2,000,000 with Texas Bank, together with a mortgage to secure that Note. The Line of Credit bears interest at a rate of prime plus 1% per annum (8.5% at June 30, 2025) and matures on May 21, 2027. The Trust is required to make interest-only payments on the Note until May 21, 2027, at which time, the Trust will be required to also make monthly payments toward the principal. The Line of Credit is secured by substantially all of the assets of the Trust, including (a) all mineral interests owned by the Trust, (b) the oil, gas, and other minerals attributable to those mineral interests, (c) the personal property related to those mineral interests, and (d) the proceeds of the sale of the property described in (a) through (c), above. The agreement securing repayment of the Line of Credit contains customary covenants and events of default.

The Line of Credit is intended to cover the Trust’s administrative expenses until the Trust receives Royalty Income in amounts sufficient to (a) repay the balance of Excess Production Costs, (b) replenish a reserve in the amount of $2,000,000, and (c) repay the Note in full, after which time, the Trust will resume distributions to the holders of the Trust’s Units of beneficial interest. The Trust utilized $29,932 in May 2025 to cover fees associated with obtaining the Line of Credit and $132,851 in June 2025 to help cover Trust administrative costs. As of June 30, 2025, the outstanding balance on the Line of Credit was $162,783.

Liquidity and Capital Resources

The Trust’s principal source of liquidity and capital is Royalty Income. The Trust’s distribution of income to Unit Holders is funded by Royalty Income after payment of Trust expenses. The Trust is not liable for any Production Costs or liabilities attributable to the Royalty. If at any time the Trust receives more than the amount due under the Royalty, it is not obligated to return such overpayment, but the amounts payable to it for any subsequent period are reduced by such amount, plus interest, at a rate specified in the Conveyance. If the Trustee determines that the Trust does not have sufficient funds to pay its liabilities, the Trustee may borrow funds on behalf of the Trust, in which case no distributions will be made to Unit Holders until such borrowings are repaid in full. The Trustee may not sell or dispose of any part of the assets of the Trust without the affirmative vote of the Unit Holders of 75% of all of the Units outstanding; however, the Trustee may sell up to 1% of the value of the Royalty (as determined pursuant to the Indenture) during any 12-month period without the consent of the Unit Holders.

In each of the months from May 2024 through June 2025, the Trust did not receive any Royalty Income, and interest income received was insufficient to pay Trust liabilities. Since the Trust did not receive Royalty Income from Hilcorp and interest income was insufficient to pay the Trust’s liabilities during the period from May 2024 through June 2025, the Trust was able to use cash reserves to pay the Trust’s liabilities from May 2024 through May 2025. As of June 30, 2025, the balance of cash reserves was $32,968.

The Trust is permitted to borrow funds against the Royalty to cover the Trust’s operating expenses. On May 21, 2025, the Trust established the Line of Credit with Texas Bank, and intends to use the funds as needed to cover the Trust’s administrative expenses until the Trust receives Royalty Income in amounts sufficient to (a) repay the balance of Excess Production Costs, (b) replenish a reserve in the amount of $2,000,000, and (c) repay the Note in full, after which time, the Trust will resume distributions to the holders of the Trust’s Units of beneficial interest.

On June 18, 2025, cash reserves in the amount of $212 were utilized to pay interest accrued on the Line of Credit, such that the balance of cash reserves maintained by the trust as of June 30, 2025 was $32,968. For the months ended May 31, 2025, and June 30, 2025, Trust administrative expenses were paid using funds in the amounts of $84,838 from cash reserves and $132,851 from the Line of Credit, respectively, net of interest earned on Trust cash accounts.

The anticipated deficit in income to pay the Trust’s liabilities described above raises substantial doubt about the Trust’s ability to continue as a going concern within one year after issuance date of the financial statements.

The accompanying financial statements have been prepared assuming that the Trust will continue as a going concern; however, the above conditions raise substantial doubt about the Trust’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Trust be unable to continue as a going concern.

Natural Gas and Oil Production

The natural gas volumes reported to the Trust by Hilcorp are based on plant residue gas volumes plus equivalent volumes for natural gas liquids. Hilcorp converts one barrel of natural gas liquids to six Mcf of natural gas using industry standards.

Royalty Income, if any, for the three months ended June 30, 2025, is associated with natural gas and oil production during the period from February 2025 through April 2025. Royalty Income, if any, for the six months ended June 30, 2025, is associated with natural gas and oil production from the Subject Interests during the period from November 2024 through April 2025.

Production of natural gas and oil and related average sales prices attributable to each of the Subject Interests and the Royalty for the three months ended June 30, 2025, and 2024 were as follows:

Production of natural gas and oil and related average sales prices attributable to each of the Subject Interests and the Royalty for the six months ended June 30, 2025 and 2024 were as follows:

Based on Hilcorp’s reporting methodology, the Trust recognizes production during the month in which the related Royalty Income is paid to the Trust. Royalty Income for a calendar year is based on the actual natural gas and oil production during the period beginning with November of the preceding calendar year through October of the current calendar year. Sales volumes attributable to the Royalty are determined by dividing the net profits by the Trust from the sale of natural gas and oil, respectively, by the prices received for sales of such volumes from the Subject Interests, taking into consideration production taxes attributable to the Subject Interests. Because the natural gas and oil sales attributable to the Royalty are based upon an allocation formula dependent on such factors as price and cost, including capital expenditures, the aggregate sales amounts from the Subject Interests may not provide a meaningful comparison to sales attributable to the Royalty.

Production Volumes

Natural Gas

Natural gas production volumes increased for the Subject Interests and the Royalty by 1,627,829 Mcf (29.8%) and 2,171,136 Mcf (494%), respectively for the three months ended June 30, 2025, as compared to the same period in 2024. For the six months ended June 30, 2025, natural gas production volumes increased 3,653,706 Mcf (33.1%) for the Subject Interests and decreased 1,182,701 Mcf (91.9%) for the Royalty compared to the same periods in 2024. Royalty volume is calculated using a formula determined by revenue less expenses. Excess Production Costs contributed to the decrease in natural gas production volumes and negative volumes for the Royalty. The decrease in production volume was also affected by a natural decline in the producing properties, market conditions, and a decrease in demand. Natural gas production is also influenced by the line pressure of the natural gas gathering systems in the San Juan Basin.

Oil

Oil production volumes decreased for the Subject Interests by 1,168 Bbls (13.2%) for the three months ended June 30, 2025, as compared to the same period in 2024. Oil production volumes decreased for the Royalty by 955 Bbls (17.1%) for the three months ended June 30, 2025, as compared to the same period in 2024. For the six months ended June 30, 2025, oil production volume increased by 10,182 Bbls (174.9%) for the Subject Interests and 4,678 Bbls (148.0%) for the Royalty as compared to the same period in 2024. These changes generally resulted from changes in the demand for natural gas during the applicable time periods, natural gas inventory levels, availability of market conditions, and an increase in capital spending to generate production from new and existing wells.

Sales Prices

Natural Gas

The average realized natural gas price per Mcf increased for the three and six months ended June 30, 2025, as compared to the same periods in 2024. This increase was primarily due to a decrease in the El Paso Natural Gas Company, San Juan Basin Index pricing.

Oil

The average realized oil price per Bbl decreased for the three and six months ended June 30, 2025 as compared to the same periods in 2024. This decrease was primarily due to a decrease in the WTI benchmark oil price.

Marketing

There were no changes to the contracts pursuant to which Hilcorp sells production from the Subject Interests and for the gathering and processing of production during the three months ended June 30, 2025.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

For a discussion of significant accounting policies and estimates that impact the Trust’s financial statements, see Part I, Item 1. Unaudited Financial Statements, Note 3 Basis of Presentation in this Quarterly Report and Part II, Item 8. Financial Statements and Supplemental Data contained in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024.

Hilcorp Information

As a holder of a net overriding royalty interest, the Trust’s reporting of financial information is reliant upon Hilcorp to accurately and timely report information regarding Hilcorp and its affiliates; the Subject Interests, including the operations, acreage, well and completion count, working interests, production volumes, sales revenues, capital expenditures, operating expenses, reserves, drilling plans, drilling results and leasehold terms related to the Subject Interests, and factors and circumstances that have or may affect the foregoing. See Part I, Item 4. Controls and Procedures.

For information on the Trust’s exposure to market risk, please see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” contained in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

None.

Item 4. Controls and Procedures.

The Trust maintains a system of internal disclosure controls and procedures that is designed to ensure that the information required to be disclosed in the Trust’s filings under the Exchange Act is recorded, processed, summarized, and reported within the times specified in the SEC’s rules and forms. In its evaluation of its disclosure controls and procedures, the Trustee has relied, to the extent considered reasonable, on information provided by Hilcorp, the owner of the properties. Consequently, the Trust’s ability to timely and accurately disclose relevant information in its periodic reports is dependent upon Hilcorp’s timely delivery of accurate oil and gas revenue and production cost information and, therefore, the Royalty Income owed to the Trust.

The Conveyance that transferred the royalty to the Trust obligates Hilcorp to provide the Trust with certain financial and operational information, including information concerning calculations of Royalty Income owed to the Trust. Once the Trust receives the financial information from Hilcorp, the Trust engages independent public accountants, compliance auditors, attorneys, and petroleum engineers in order to assist the Trustee in evaluating the accuracy and completeness of the information required to be disclosed in the Trust’s periodic reports. These outside professionals advise the Trustee in its review and compilation of this information for inclusion in this Quarterly Report on Form 10-Q and the other periodic reports provided by the Trust to the SEC.

The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and the Trust’s third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments. The Trust’s auditing process has also included detailed analysis of Hilcorp’s pricing and rates charged. As previously disclosed in the Trust’s filings, these revenues and costs (along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by our professional consultants and outside counsel to help evaluate compliance with the underlying operative Trust agreements and evaluate potential remedies in the event there is suspected non-compliance.

The Trustee has evaluated the Trust’s internal disclosure controls and procedures as of June 30, 2025, and has concluded that such disclosure controls and procedures are effective, at the “reasonable assurance” level (as such term is used in Rule 13a-15(f) of the Exchange Act), to ensure that material information received from Hilcorp is gathered on a timely basis to be included in the Trust’s periodic reports and recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Additionally, during the three months ended June 30, 2025, there were no changes in the Trust’s internal control over financial reporting (as such term is used in Rule 13a-15(f) of the Exchange Act) that materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting. Because the Trust does not have, nor does the Indenture provide for, officers, a board of directors or an independent audit committee, the Trustee has reviewed neither the Trust’s disclosure controls and procedures nor the Trust’s internal control over financial reporting in concert with management, a board of directors or an independent audit committee.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes in the risk factors disclosed under Part I, Item 1A of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

The Trust does not have any directors or officers, and as a result, no such person adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, during the most recent fiscal quarter. Because the Trust does not have officers, directors, or employees, it has not adopted insider trading policies and procedures governing the purchase, sale, or other disposition of Trust securities by such persons.

Item 6. Exhibits.

* A copy of this exhibit is available to any Unit Holder (free of charge) upon written request to the Trustee, Argent Trust Company, 3838 Oak Lawn Avenue, Suite 1720, Dallas, Texas 75219.

** Filed herewith.

*** Furnished herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 13, 2025

(The Trust has no directors or executive officers.)

PROMISSORY NOTE

(Revolving)

For value received, ARGENT TRUST COMPANY, TRUSTEE OF THE SAN JUAN BASIN ROYALTY TRUST, a grantor trust created under the laws of the State of Texas under that certain Amended and Restated Royalty Trust Indenture dated December 12, 2007, as amended by First Amendment to the Amended and Restated Trust Indenture dated February 15, 2024 (“Borrower”), promises to pay to the order of TEXASBANK, a Texas state bank (“Lender”), at 4521 S. Hulen Street, Suite 200, Fort Worth, Texas 76109, or at such other address as Lender shall from time to time specify in writing, the principal sum of TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) or so much thereof as from time to time may be advanced by Lender to Borrower under this Note, in legal and lawful money of the United States of America, with interest on the outstanding principal from the date advanced until paid at the rate set out below, and otherwise in strict accordance with the terms and provisions of this Promissory Note (Revolving) (this “Note”).

If Lender determines, in its sole discretion, that the Prime Rate is no longer quoted by The Wall Street Journal, is discontinued, is unreliable, or is otherwise temporarily, permanently or indefinitely unavailable, Lender may select a substitute rate plus an adjustment (which may be a positive or negative value or zero) that Lender determines, in Lender’s sole and absolute discretion, to be comparable to such prime rate, and the substituted rate and adjustment selected by Lender shall constitute the Prime Rate under this Note, effective immediately upon Lender’s selection, and Lender shall send written notice of same to Borrower.

This Note, the above described mortgage and deed of trust and all other documents evidencing, securing, governing, guaranteeing and/or pertaining to this Note, including but not limited to those documents described above, are collectively referred to as the “Loan Documents.” The holder of this Note is entitled to the benefits and security provided in the Loan Documents.

THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

IN WITNESS WHEREOF, this Note is hereby executed and delivered by the Borrower as of the date first written above.

Exhibit 10.2

Rio Arriba County, New Mexico

When Recorded, Return To:

MURPHY MAHON KEFFLER FARRIER, LLP

500 E. 4th Street, Suite 225

Fort Worth, Texas 76102

Attn: Monica Siebald

MORTGAGE—COLLATERAL REAL ESTATE MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION, AND FINANCING STATEMENT

FROM

ARGENT TRUST COMPANY,

TRUSTEE OF THE

SAN JUAN BASIN ROYALTY TRUST

(MORTGAGOR)

TO

TEXASBANK, a Texas state bank

(MORTGAGEE)

Effective as of May 21, 2025

THIS INSTRUMENT IS A MORTGAGE OF BOTH REAL AND PERSONAL PROPERTY AND IS, AMONG OTHER THINGS, A MORTGAGE OF CHATTELS, A SECURITY AGREEMENT, A FIXTURE FILING AND A FINANCING STATEMENT.

“THIS INSTRUMENT CONTAINS AFTER ACQUIRED PROPERTY PROVISIONS.”

For purposes of filing this Mortgage as a financing statement, the mailing address of Mortgagor is:

Argent Trust Company

3838 Oaklawn Avenue, Suite 1720

Dallas, Texas 75129;

the mailing address of Mortgagee is 4521 S. Hulen Street, Suite 200, Fort Worth, Texas 76109.

******************************

ATTENTION OF RECORDING OFFICER: This instrument is a mortgage of both real and personal property and is, among other things, a Security Agreement and Financing Statement under the Uniform Commercial Code. This instrument creates a Lien on rights in or relating to lands of Mortgagor which are described in Exhibit “A” hereto.

MORTGAGE—COLLATERAL REAL ESTATE MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF

PRODUCTION AND FINANCING STATEMENT

KNOW ALL MEN BY THESE PRESENTS that the undersigned ARGENT TRUST COMPANY, TRUSTEE OF THE SAN JUAN BASIN ROYALTY TRUST, a grantor trust created under the laws of the State of Texas and under that certain Amended and Restated Royalty Trust Indenture dated December 12, 2007, as amended by First Amendment to the Amended and Restated Trust Indenture dated February 15, 2024, (“Mortgagor”), whose address is 3838 Oaklawn Avenue, Suite 1720, Dallas, Texas 75129, do hereby agree as follows:

GRANT

To secure the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Indebtedness (as defined below), Mortgagor has granted, bargained, sold, warranted, conveyed, transferred, assigned and set over, and does hereby GRANT, BARGAIN, SELL, WARRANT, CONVEY, TRANSFER, ASSIGN and SET OVER, to TEXASBANK, a Texas state bank (the “Mortgagee”), whose address is 4521 S. Hulen Street, Suite 200, Fort Worth, Texas 76109, and does further grant to Mortgagee, its successors and assigns, a security interest in the following described property:

(a) Mineral, Royalty and Overriding Royalty Interests. All of Mortgagor’s right, title and interest (including, without limitation, mineral interests, net profits interests, royalty interests, overriding royalty interests, production payments and other rights in and to minerals and/or royalty), now owned or hereafter acquired, in and to all of the oil, gas and other minerals in and under the lands and/or leases described or referred to on Exhibit “A”, and all oil, gas and mineral interests in which Mortgagor now has or hereafter acquires an interest due to the pooling or unitization of the lands described or referred to on Exhibit “A” or portions of such lands or leases and any other interests in and to oil, gas and minerals in and to lands located in Rio Arriba County, New Mexico, event thought the description of such lands are not described or incorrectly described on Exhibit “A” (all of the above­ described oil, gas and mineral leases, interests and estates, including without limitation any unitized leases, are hereinafter collectively called the “Mineral Interests”);

(b) Hydrocarbons. All of Mortgagor’s right, title and interest, now owned or hereafter acquired, in and to all extracted and as-extracted oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined therefrom, and all other minerals (hereinafter referred to collectively as “Hydrocarbons”) in and under, and that may be produced and saved from, or allocated to, the Mineral Interests the lands covered thereby and/or extracted or severed therefrom, including Hydrocarbons produced from the wells described on Exhibit “A” attached hereto;

(c) Accounts, Payment Intangibles, General Intangibles, Books, Records. All of Mortgagor’s right, title and interest, now owned or hereafter acquired, in any and all (i) accounts, payment intangibles and general intangibles arising in connection with the sale or other disposition of the property described in (a) and (b) above, (ii) contract rights, payment intangibles and general intangibles arising from or in connection with the Mineral Interests and/or the lands described or Exhibit “A”, and (iii) books, records, files, computer software, documents and other information pertaining to the Mineral Interests and/or

the lands described or referred to on Exhibit “A”, together with all supporting obligations arising from or in connection with items (i), (ii) and (iii) above (the property described in this clause (c), the “Personal Property”); and

(d) Proceeds. All of the proceeds of the property described in (a) through (c) above whether presently existing or hereafter created or arising.

The Mortgagor’s interests in the Mineral Interests, Hydrocarbons and Personal Property and other properties described in (a) through (d) above, are all hereinafter sometimes collectively referred to as the “Mortgaged Properties.” Notwithstanding any provision in this Mortgage to the contrary, in no event is (a) any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation), which is located within an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 and (b) any interest held by Mortgagor in and to the surface of the lands underlying said Building or Manufactured (Mobile) Home, insofar and only insofar as such lands lie directly below said Building or Manufactured (Mobile) Home (such Buildings, Manufactured (Mobile) Homes and lands are collectively referred to herein as, the “Excluded Structures”), and none of the properties described in the preceding clauses (a) and (b) of this paragraph are encumbered by this Mortgage, provided that (i) the Mortgagor’s interests in all lands and Hydrocarbons situated under any Excluded Structure is included in the definition of Mortgaged Properties and is encumbered by this Mortgage and (ii) Mortgagor agrees not to permit to exist any Lien on any Excluded Structure. As used herein, “Flood Insurance Regulations” shall mean (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, (iv) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder; and the Biggert-Waters Flood Reform Act of 2012.

TO HAVE AND TO HOLD the Mortgaged Properties, together with all of the rights, hereditaments and appurtenances in anyway appertaining or belonging thereto, unto the Mortgagee, its successors and assigns, subject to the uses and purposes hereinafter set forth.

A. In the event of an assignment of all or part of the Secured Indebtedness, the Liens and other rights hereunder, to the extent applicable to the part of the Secured Indebtedness so assigned, may be transferred therewith.

B. Unless and until Mortgagee shall have, by an instrument recorded in the appropriate records of the county or counties where the Mortgaged Properties are situated, assigned all of its rights, titles and interests arising under this instrument, Mortgagee shall have the exclusive right to exercise any and all rights in favor of Mortgagee hereunder, including, without limitation, conducting any foreclosure sales hereunder and executing full or partial releases hereof, amendments or modifications hereto, or consents or waivers hereunder.

ARTICLE I

SECURED INDEBTEDNESS

Section 1.1. This Mortgage is given to secure the payment of the following covenants indebtedness, liabilities and obligations, to-wit:

(a) Any and all indebtedness and obligations of Mortgagor to Mortgagee arising pursuant to the terms of that certain Promissory Note of even date herewith executed by Mortgagee and payable to the order of Mortgagor in the stated principal amount of $2,000,000.00 (as may be amended, supplemented, restated or otherwise modified, the “Note”), including all legal expenses and other expenses incurred in preparation, execution and/or enforcement of and any of the Note;

(b) Any and all indebtedness and obligations of Mortgagor to Mortgagee arising pursuant to the terms of this Mortgage; and

(c) Any and all renewals and extensions of the indebtedness and obligations described in (a) and (b) above.

The words “Secured Indebtedness”, as used herein, shall mean all the indebtedness, obligations and liabilities described or referred to immediately above in sub-paragraphs (a) through (c), inclusive, of this Section 1.1.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1. Mortgagor represents, warrants and covenants to Mortgagee that, as of the date hereof:

(a) This Mortgage is the legal and binding obligation of Mortgagor, enforceable in accordance with its terms, except as limited by (i) bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights and (ii) general principles of equity;

(b) No event has occurred and is continuing which constitutes an Event of Default (hereinafter defined) or would, with the lapse of time or the giving of notice or both, constitute an Event of Default;

(c) No event known to Mortgagor has occurred which would adversely affect the anticipated future production of any producing wells located on the Mortgaged Properties which has not been previously disclosed by Mortgagor in writing and which would reasonably be expected to result in a Material Adverse Effect; and

(d) To Mortgagor’s knowledge, (x) all rentals, royalties and other amounts due and payable under the Mineral Interests have been duly paid (other than royalty payments and other amounts due which are suspended or delayed in the ordinary course of business) and (y) all obligations to be performed by Mortgagor under the Mineral Interests have been performed.

ARTICLE III

COVENANTS

Section 3.1. On behalf of Mortgagor and its successors and assigns, Mortgagor further covenants and hereby agrees as follows:

(a) That by agreement with the maker or makers of any instrument evidencing any indebtedness at any time secured hereby, Mortgagee, without notice to or consent of Mortgagor, may from time to time extend the time of payment of the whole or any part of such indebtedness, or may accept from said maker or makers one or more new instruments in the same or different form, in renewal of or by way of substitution for any instrument of indebtedness, without in any manner impairing or affecting the Liens of this Mortgage, or any of Mortgagee’s rights hereunder;

(b) To do all things reasonably necessary or proper to defend title to the Mortgaged Properties.

(c) To pay promptly Mortgagor’s share of all costs and expenses incurred under any joint operating agreement affecting the Mortgaged Properties, or any portion thereof, to furnish Mortgagee, as and when requested, full information as to the status of any joint account maintained with others under any such operating agreement, and not to take any action to incur any lien thereunder;

(d) At any time and from time to time, upon reasonable written request by Mortgagee and at Mortgagor’s expense, forthwith to execute and deliver to Mortgagee and to record, file or register, any and all additional instruments or further assurances as may be necessary or proper, in Mortgagee’s opinion, to effect the intent of these presents, in each case, as required by, or pursuant to, the Note;

(e) To protect, warrant and defend title to the Mortgaged Properties unto Mortgagee, it successors and permitted assigns, at Mortgagor’s expense against all persons whomsoever lawfully having or claiming an interest therein or a security interest or lien thereon;

(f) All covenants of Mortgagor contained in the Note are hereby ratified, adopted and confirmed by Mortgagor, as if set forth herein in their entirety and as they pertain to Mortgagor and the Mortgaged Properties; and

(g) All covenants and agreements herein contained shall constitute covenants running with the land.

Section 3.2. Any and all covenants contained in this instrument may from time to time, by instrument in writing signed by Mortgagee and delivered to Mortgagor, be waived to such extent and in such manner as Mortgagee may consider appropriate; but no such waiver shall at any time affect or impair Mortgagee’s Liens hereunder, except to the extent so specifically stated in such written instrument.

ARTICLE IV

DEFAULTS AND REMEDIES

Section 4.1. The term “Event of Default”, as used herein, shall mean the occurrence and continuation of any “Event of Default” specified in the Note.

Section 4.2. Upon the occurrence and during the continuance of an Event of Default beyond any applicable grace period:

(a) If an Event of Default has occurred and is continuing, Mortgagee shall have the right and option to proceed, with foreclosure and to sell, to the extent permitted by law, all or any portion of the Mortgaged Properties at one or more sales, as an entirety or in parcels, at such place or places in otherwise such manner and upon such notice as may be required by law, or, in the absence of any such requirement, as Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers. Where the Mortgaged Properties are situated in more than one jurisdiction, notice as above provided shall be posted and filed in all such jurisdictions (if such notices are required by law), and all such Mortgaged Properties may be sold in any such jurisdiction and any such notice shall designate the jurisdiction where such Mortgaged Properties are to be sold.

(b) Nothing contained in this Section 4.2 shall be construed so as to limit in any way Mortgagee’s rights to sell the Mortgaged Properties, or any portion thereof, by private sale if, and to the extent that, such private sale is permitted under the laws of the applicable jurisdiction or by public or private sale after entry of a judgment by any court of competent jurisdiction so ordering. At any such sale: (i) whether made under the power herein contained or any other legal enactment, or by virtue of any judicial proceedings or any other legal right, remedy or recourse, it shall not be necessary for Mortgagee to have physically present, or to have constructive, possession of the Mortgaged Properties (Mortgagor hereby covenanting and agreeing to deliver to Mortgagee any portion of the Mortgaged Properties not actually or constructively possessed by Mortgagee immediately upon demand by Mortgagee) and the title to and right of possession of any such property shall pass to the purchaser thereof as completely as if the same had been actually present and delivered to purchaser at such sale, (ii) each instrument of conveyance executed by Mortgagee shall contain a special warranty of title (but in no event broader than the warranty of title received by Mortgagor as to such property), binding upon Mortgagor and its successors and assigns, (iii) each and every recital contained in any instrument of conveyance made by Mortgagee shall conclusively establish the truth and accuracy of the matters recited therein, including nonpayment of the Secured Indebtedness, advertisement and conduct of such sale in the manner provided herein and otherwise by law and appointment of any successor Mortgagee hereunder, (iv) any and all prerequisites to the validity thereof shall be conclusively presumed to have been performed, (v) the receipt of Mortgagee or of such other party or officer making the sale shall be a sufficient discharge to the purchaser or purchasers for its purchase money and no such purchaser or purchasers, or its assigns or personal representatives, shall thereafter be obligated to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or nonapplication thereof, and (vi) to the fullest extent permitted by law, Mortgagor shall be completely and irrevocably divested of all of its right, title, interest, claim and demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a perpetual bar both at law and in equity against Mortgagor, and against any and all other persons claiming or to claim the property sold or any part thereof, by, through or under Mortgagor.

(c) Mortgagor hereby irrevocably appoints Mortgagee to be the attorney-in-fact of Mortgagor and in the name and on behalf of Mortgagor, to execute and deliver any deeds, transfers, conveyances, assignments, assurances and notices which Mortgagor ought to execute and deliver and do and perform any and all such acts and things which Mortgagor ought to do and perform under the covenants herein contained and generally, to use the name of Mortgagor in the exercise of all or any of the powers hereby conferred on Mortgagee; provided that, notwithstanding anything to the contrary, the power of attorney conferred by this Section 4.2(c) may only be exercised while an Event of Default has occurred and is continuing.

(d) On or at any time after the filing of judicial proceedings to protect or enforce the rights of Mortgagee hereunder, Mortgagee, as a matter of right and without regard to the sufficiency of the security, and without any showing of insolvency, fraud or mismanagement on the part of Mortgagor, shall be entitled, upon ten (10) days prior written notice to Mortgagor, to the appointment of a receiver or receivers of all or any portion of the Mortgaged Properties, and of the income, rents, issues and profits thereof.

(e) Mortgagor may, upon providing at least ten (10) days prior written notice to Mortgagee, elect to obtain such title documentation deemed necessary by Mortgagee or its attorneys in lieu of Mortgagee obtaining such documentation.

Section 4.3. Upon the occurrence and during the continuance of an Event of Default, with respect to any portion of the Mortgaged Properties which constitute Personal Property subject to a security interest herein granted under the provisions of the Uniform Commercial Code, the Mortgagee may sell such property in the manner above provided for real property, either together with or separately from any real property so sold, or the Mortgagee may proceed in any other manner authorized by the Uniform Commercial Code or other applicable law. In no event shall it be necessary to have present or to exhibit at any such sale any of the Personal Property subject to the Lien hereof. All rights herein granted are cumulative, and the exercise of the power of sale with respect to any portion of the Mortgaged Properties at one time and place shall not preclude the exercise of such power with respect to other of the Mortgaged Properties in any manner and at any time or place authorized hereby.

Section 4.4. Mortgagee is authorized to receive the proceeds of said sale or sales made pursuant to Section 4.2 and apply the same as follows: First, to the payment of all necessary costs and expenses incident to such sale or sales; second, to the payment of the Secured Indebtedness in the manner set forth in the Note; third, the balance, if any, remaining after the full and final payment of the Secured Indebtedness, to Mortgagor or its assigns or as otherwise required by law.

Section 4.5. It is agreed that in any deed or deeds, certificate or certificates, bill of sale or bills of sale, or assignment or assignments given by or on behalf of the Mortgagee or in connection with any sale or sales made pursuant to Section 4.2 or as otherwise provided herein, any and all statements of fact or other recitals therein made as to the identity of the holder of the Secured Indebtedness or as to the occurrence or existence of any Event of Default, or as to the acceleration of the maturity of the Secured Indebtedness or as to the request to sell, notice of sale, time, place, terms, and manner of sale, and receipt, distribution and application of the money realized therefrom, and, without being limited by the foregoing, as to any act or thing having been duly done by the holder of the Secured Indebtedness, shall be taken by all courts of law and equity as prima facie evidence that the said statements or recitals state facts and are without further question to be so accepted, and Mortgagor does hereby ratify and confirm any and all acts that the Mortgagee may lawfully do in the premises by virtue hereof.

Section 4.6. In case the Lien hereof shall be foreclosed by power of sale or by judicial action, the purchaser at any such sale shall receive, as an incident to his ownership, immediate possession of the property purchased, and Mortgagor agrees, for Mortgagor and for all persons claiming under Mortgagor, that if Mortgagor or any such person shall hold possession of said property, or any part thereof, subsequent to foreclosure, Mortgagor or the parties so holding possession shall be considered as tenants at sufferance of the purchaser at foreclosure sale, and anyone occupying the property after demand for possession thereof shall be subject to eviction and removal to the fullest extent allowed under applicable law.

Section 4.7. To the extent and under such circumstances as are permitted by applicable law, the Mortgagee may be the purchaser of the Mortgaged Properties, or of any part thereof, at any sale thereof, whether such sale be under the power of sale hereinabove vested in the Mortgagee, or upon any other foreclosure of the Lien hereof or otherwise.

Section 4.8. The rights and remedies hereinabove expressly conferred are cumulative of all other rights and remedies herein, or by law or in equity provided, and shall not be deemed to deprive the Mortgagee of any such other legal or equitable rights or remedies, by judicial proceedings or otherwise, appropriate to enforce the conditions, covenants and terms of this Mortgage and of said notes, and the employment of any remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent employment of any other appropriate remedy or remedies.

Section 4.9. If Mortgagor should fail, refuse or be unable to pay any sum of money herein covenanted to be paid by Mortgagor, or fail, refuse or be unable to keep or perform any additional covenant or covenants whatsoever contained in this instrument, (in each of the preceding, subject to any applicable grace periods) Mortgagee may, but shall not be obligated to, pay said sums of money, or perform or attempt to perform any such covenant, and such payment so made or expense reasonably incurred in the performance or attempted performance of any such covenant shall be, and is hereby declared by Mortgagor to be, a part of the Secured Indebtedness, and Mortgagor promises upon demand, to pay to Mortgagee, at the office of Mortgagee in Tarrant County, Texas, all sums so advanced or paid by Mortgagee, with interest at the default rate set forth in the Note from the date paid or incurred by Mortgagee. No such payment by Mortgagee shall in any way be considered or constitute a waiver of any such default or of Mortgagee’s right to declare the Secured Indebtedness at once due and payable. In addition to the Lien hereof, Mortgagee shall be subrogated to all rights and Liens securing the payment of any debt, claim, tax or assessment for the payment of which it shall have made such advance.

ARTICLE V

ASSIGNMENT OF PRODUCTION

Section 5.1. In order further to secure the payment of the Secured Indebtedness, Mortgagor does hereby TRANSFER, ASSIGN and CONVEY unto and in favor of Mortgagee all of the interest of the Mortgagor in the Hydrocarbons, in and under, or which may be produced from, the Mortgaged Properties, or allocated thereto pursuant to pooling or unitization of the Leases or otherwise, together with all proceeds derived on and after the date of the execution of this Mortgage from the sale of such Hydrocarbons. Notwithstanding the foregoing, the Mortgagee hereby grants to the Mortgagor a license to sell, receive and receipt for proceeds from the sale of Hydrocarbons, subject to Section 5.2.

Section 5.2. The foregoing assignment is made upon, and subject to, the following terms and conditions:

(a) Mortgagee shall have the right, exercisable at any time after the occurrence and during the continuance of an Event of Default, at its sole option, to give written or telegraphic notice to all of the parties producing, purchasing, taking, possessing or receiving any Hydrocarbons produced or to be produced from or allocated to the Mortgaged Properties, or having in their possession any such Hydrocarbons belonging to Mortgagor or such proceeds for which they or others are accountable to Mortgagee by virtue of the provisions hereof, to hold and dispose of such Hydrocarbons for the account of Mortgagee and to make payment of such proceeds directly to Mortgagee at its principal office, and Mortgagee shall receive, collect and retain, as part of the Mortgaged Properties, all such Hydrocarbons, for the benefit and further security of the Secured Indebtedness during the continuation of an Event of Default.

(b) All parties producing, purchasing, taking, possessing, processing or receiving any such Hydrocarbons, or having in their possession any such Hydrocarbons or such proceeds for which they or others are accountable to Mortgagee by virtue of the provisions hereof, are authorized and directed by Mortgagor, upon receipt of notice by Mortgagee given pursuant to the above Section 5.2(a) to treat and regard Mortgagee as the assignee and transferee of Mortgagor and entitled in its place and stead to receive such Hydrocarbons and proceeds; and such parties and each of them shall be fully protected in so treating and regarding Mortgagee and shall be under no obligation to see to the application by Mortgagee of any such proceeds received by it. Without in any way limiting the effectiveness of the authorization and direction in the next preceding sentence, if Mortgagor shall receive any such proceeds which under this Section 5.2(b) are receivable by Mortgagee, Mortgagor will hold the same in trust and will remit such proceeds, or cause such proceeds to be remitted, immediately, to Mortgagee.

(c) Without limiting the foregoing provisions of this Article V, Mortgagor stipulates that this Article V is intended to grant to Mortgagee a security interest in Mortgagor’s interest in the Hydrocarbons to be extracted from or attributable to the Mortgaged Properties, and in and to the proceeds resulting from the sale thereof at the wellhead.

Section 5.3. To the extent Mortgagor has control over any Hydrocarbons, Mortgagor covenants and agrees and undertakes hereby, after Mortgagee shall have so requested during the continuance of an Event of Default, to use commercially reasonable efforts cause all pipeline companies or other purchasers of the Hydrocarbons produced from the Mortgaged Properties to pay promptly to Mortgagee at its principal office, Mortgagor’s interest in the proceeds derived from the sale thereof, in accordance with the terms of this assignment, and forthwith to execute, acknowledge and deliver to said pipeline companies and other purchasers such further and proper division orders, transfer orders, certificates and other documents as may be necessary or proper to effect the intent of these presents; and Mortgagee shall not be required at any time, as a condition to its right to obtain the proceeds of such Hydrocarbons, to warrant its title thereto or to make any guaranty whatsoever. In addition, and without limitation, Mortgagor covenants and agrees, and undertakes hereby, after Mortgagee shall have so requested during the continuance of an Event of Default, to provide to Mortgagee the name and address of every pipeline company or other purchaser of the oil, gas and other minerals produced from the Mortgaged Properties when determined and known to Mortgagor, together with a copy of the applicable sales contracts (subject to any applicable confidentiality obligations). All expenses incurred by Mortgagee in the collection of said proceeds shall be repaid promptly by Mortgagor; and prior to such repayment, such expenses shall be a part of the Secured Indebtedness. Notwithstanding anything to the contrary in this Section 5.3, the rights granted to Mortgagee and the covenants and agreements of Mortgagor set forth herein shall only be effective and exercisable at any time after the occurrence and during the continuation of an Event of Default.

Section 5.4. Without limitation upon any of the foregoing, Mortgagor hereby designates and appoints Mortgagee as Mortgagor’s true and lawful agent and attorney-in-fact (with full power of substitution, either generally or for such periods or purposes as Mortgagee may from time to time prescribe), with full power and authority, for and on behalf of and in the name of Mortgagor, to execute, acknowledge and deliver all such division orders, transfer orders, certificates and other documents of every nature, with such provisions as may from time to time, in the opinion of Mortgagee, be necessary or proper to effect the intent and purpose of this Article V; and Mortgagor shall be bound thereby as fully and effectively as if Mortgagor had personally executed, acknowledged and delivered any of the foregoing certificates or documents. The powers and authorities herein conferred on Mortgagee may be exercised by Mortgagee through any person who, at the time of exercise, is the president or a vice president of Mortgagee, or who holds a similar position with Mortgagee’s authorized representative. The power of attorney conferred by this Section 5.4 is granted for valuable consideration and coupled with an interest and is irrevocable so long as the Secured Indebtedness, or any portion thereof, shall remain unpaid but notwithstanding anything to the contrary in this Section 5.4, may only be exercised while an Event of Default has occurred and is continuing. All persons dealing with Mortgagee, or any substitute, shall be fully protected in treating the powers and authorities conferred herein as continuing in full force and effect until advised by Mortgagee that the Secured Indebtedness is fully and finally paid which Mortgagee agrees to do immediately upon full and final payment of the Secured Indebtedness. Notwithstanding anything to the contrary in this Section 5.4, the rights granted to Mortgagee herein shall only be exercisable at any time after the occurrence and during the continuation of an Event of Default.

Section 5.5. Mortgagee shall never be under any obligation to enforce the collection of the funds assigned to it hereunder, nor shall it ever be liable for failure to exercise diligence in the collection of such funds, but it shall only be accountable for the sums that it shall actually receive.

Section 5.6. The proceeds accruing to the Mortgaged Properties, received by Mortgagee shall be applied by it when so received toward payment of the Secured Indebtedness, in accordance with the Note.

Section 5.7. Notwithstanding such provision for application of proceeds, it is agreed that Mortgagee shall have the right at its election during the continuance of an Event of Default to apply any portion or all of said proceeds to the payment of any of the taxes levied and assessed against the Mortgaged Properties, insurance premiums, Liens, bills for labor and material furnished for use upon the Mortgaged Properties, costs, and expenses, including reasonable and documented out-of-pocket attorney fees incurred by Mortgagee in the defense of any action affecting the title to the Mortgaged Properties, or the production therefrom, or any judgment rendered against Mortgagee upon any claim arising out of the receipt, or application in accordance herewith, of any such proceeds in the event Mortgagor should fail to make such payments, or any of them, promptly after demand made by Mortgagee upon Mortgagor so to do. Mortgagee shall have the right, at its election, to release or deliver to Mortgagor all or any portion of such proceeds, received by it, to the end that Mortgagor may receive funds with which to pay for the operating, equipping and developing of the Mortgaged Properties, or any well or wells thereon. No funds so released or paid to Mortgagor shall, in any event, be considered to have been applied upon the Secured Indebtedness.

ARTICLE VI

SECURITY AGREEMENT AND FINANCING STATEMENT

Section 6.1. With respect to all Mineral Interests, Hydrocarbons and Personal Property constituting a part of the Mortgaged Properties, this Mortgage shall also be a security agreement and financing statement, and for a valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, and for the purpose of further securing payment and performance of the Secured Indebtedness, Mortgagor hereby grants to Mortgagee a security interest in all such Mineral Interests, Hydrocarbons, and Personal Property.

THE ABOVE GOODS WHICH ARE TO BECOME FIXTURES WILL BE LOCATED ON THE REAL ESTATE IDENTIFIED ON EXHIBIT A HERETO. THE ABOVE MINERAL INTERESTS OR THE LIKE (INCLUDING OIL AND GAS) OR PERSONAL PROPERTY WILL BE FINANCED AT THE WELLHEAD(S) OR MINEHEAD(S) OF THE WELL(S) OR MINE(S) LOCATED ON THE REAL ESTATE IDENTIFIED ON EXHIBIT A HERETO.

Mortgagor hereby authorizes Mortgagee to file a financing statement describing the Mineral Interests, Hydrocarbons, and Personal Property and other collateral described herein.

Section 6.2. This instrument may be presented to a filing officer under the Uniform Commercial Code to be filed as a nonstandard financing statement covering all Personal Property of any kind or character defined in and subject to the provisions of the Uniform Commercial Code, including Mineral Interests and Hydrocarbons to the extent the foregoing constitute Personal Property. WHETHER OR NOT THIS INSTRUMENT IS SEPARATELY PRESENTED AS A FINANCING STATEMENT, THIS INSTRUMENT SHALL CONSTITUTE A FINANCING STATEMENT WHEN FILED OF RECORD IN THE REAL ESTATE RECORDS.

Section 6.3. This Mortgage shall be effective as a financing statement filed as a fixture filing with respect to all goods that are or are to become fixtures included within the Mortgaged Property and is to be filed or filed for record in the real estate records of each jurisdiction where any part of the Mortgaged Property (including said fixtures) are situated. This Mortgage shall also be effective as a financing statement covering as-extracted collateral (including, without limitation, all Hydrocarbons and all other substances of value which may be extracted from the ground) and accounts financed at the wellhead or minehead of wells or mines located on the Mineral Interests and is to be filed for record in the real estate records of each jurisdiction where any part of the Mortgaged Property is situated. The Mortgagor hereby authorizes the Mortgagee to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Mortgaged Property as necessary to perfect the security interests of Mortgagee under this Mortgage without the signature of the Mortgagor at any time after the execution of this Mortgage, and hereby ratifies any thereof filed prior to the execution of this Mortgage. The Mortgagor shall pay all costs of filing such instruments in accordance with the Note. The following information is provided:

ARTICLE VII

MISCELLANEOUS

Section 7.1. Upon the full and final payment of the Secured Indebtedness and the termination of all of Mortgagee’s commitments to Mortgagor under the Note, the lien and security interest of this Mortgage shall be extinguished and be of no further force and effect; and the Mortgaged Properties shall become wholly free and clear hereof and all of the property as assigned hereby shall be automatically reassigned to Mortgagor without any further act being required; and Mortgagee shall promptly deliver to Mortgagor such instruments evidencing the Secured Indebtedness, marked “PAID”, and execute and deliver to Mortgagor and others a release of this instrument and such other instruments of satisfaction as may be appropriate.

Section 7.2. The rights, titles, interests, Liens and powers hereunder are cumulative of each other and of all other rights, titles, interests, Liens and powers which may now or hereafter exist to secure the payment of the Secured Indebtedness to Mortgagee, or any part thereof. The security herein and hereby provided shall not affect or be affected by any other or further security heretofore or hereafter taken for the indebtedness of Mortgagor to Mortgagee, or any part thereof. Mortgagor, for Mortgagor and Mortgagor’s successors, and for any and all persons ever claiming any interest in the Mortgaged Properties, hereby waives all rights of marshaling in event of foreclosure of the Lien hereby created. No failure to exercise and no delay in exercising on the part of Mortgagee any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. Mortgagee shall, at all times, have the right to release any part of the property now or hereafter subject to the Lien hereof or any part of the proceeds of production or other income herein or hereafter assigned or pledged or any other security it now has or may hereafter have securing the Secured Indebtedness, without releasing any other part of said property, proceeds or income, and without affecting the Lien hereof as to the part or parts of the Mortgaged Property not so released, or the right to receive future proceeds and income.

Section 7.3. No provision herein or in any promissory note, instrument, or any other Loan Document executed by Mortgagor evidencing the Secured Indebtedness shall require the payment or permit the collection of interest in excess of the highest non-usurious rate permitted by applicable law. If any excess of interest in such respect is provided for herein or in any such promissory note, instrument, or any other Loan Document, the provisions of this paragraph shall govern, and Mortgagor shall not be obligated to pay the amount of such interest to the extent that it is in excess of the amount permitted by law. The intention of the parties being to conform strictly to the usury laws now in force, all promissory notes, instruments and other Loan Documents executed by Mortgagor evidencing the Secured Indebtedness shall be held subject to reduction to the amount allowed under said usury laws as now or hereafter construed by the courts having jurisdiction.

Section 7.4. For all purposes of this instrument, the post office or mailing addresses of Mortgagor and Mortgagee shall be as set forth in the preamble hereof.

Section 7.5. These presents shall be binding upon Mortgagor and Mortgagor’s successors, and shall inure to the benefit of Mortgagee, and Mortgagee’s successors and assigns, and shall be covenants running with the land. Neither this Mortgage nor any provision hereof may be waived, amended or modified unless in writing signed by Mortgagee and Mortgagor.

Section 7.6. In the event that any one or more of the provisions contained in this instrument shall be invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

Section 7.7. This instrument shall be governed by and construed in accordance with the laws of the State of New Mexico.

Section 7.8. The effective date of the assignment contained in Article V is the date of execution of this Mortgage at 7:00 o’clock a.m.

Section 7.9. The obligation secured by this Mortgage (exclusive of interest and the cost, expenses and all other obligations of Mortgagor to Mortgagee which are not required to be stated as part of the total principal amount of indebtedness secured) shall not exceed at any one time the total principal indebtedness of $4,000,000, which shall also be deemed the face amount of the Mortgage.

Section 7.10. By executing this Mortgage, Argent Trust Company is not acting in its individual capacity, but solely as Trustee of the San Juan Basin Royalty Trust.

Section 7.11. NOTICE: THIS DOCUMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

ARTICLE VIII

STATE SPECIFIC PROVISIONS

Section 8.1. The following special provisions apply to that portion of the mortgaged properties located in the State of New Mexico:

[REMAINDER OF PAGE INTENTIONALLY BLANK, SIGNATURE PAGE TO FOLLOW]

EXECUTED as of the 21st day of May, 2025.

The foregoing instrument was acknowledged before me this 20 day of May, 2025 by Nancy Willis, Director of Royalty Trust Services of Argent Trust Company, Trustee of the San Juan Basin Royalty Trust, in such capacity as Trustee.

Mortgagor’s Signature Page to Deed of Trust (Rio Arriba County, New Mexico)

Introduction to Exhibit “A” to

Mortgage, Security Agreement,

Assignment of Production and Financing Statement

This instrument covers all of Mortgagor’s interest now owned or hereafter acquired in the oil and gas (or oil, gas, and mineral) leases, land, unit declarations, and pooling orders described in Exhibit “A” (or described in the instruments referred to in Exhibit “A”), together with all amendments or ratifications affecting any of those leases, unit declarations, or pooling orders.

Reference herein to book and page, liber and page, file numbers, film code numbers, or other recording information refer to the recording location of each respective lease in the county where the land covered by the lease is located. Any reference herein to oil or gas wells or land covered is for warranty of interest, administrative convenience, and identification and is not intended to limit or restrict the rights, titles, interests, or properties covered by this instrument.

This instrument may be executed in counterparts. To facilitate recordation, the exhibits which describe properties in counties other than the county in which the counterpart is to be recorded may have been omitted. A complete copy of this instrument may be found at Mortgagee’s offices.

In some instances, the “Land Covered” column includes abbreviations indicating the township and range of the county in which the interests are located. For example: “T-27-N, R-10-W” is Township 27 North, Range 10 West. The following abbreviations, and various combinations of the abbreviations, may appear before or after the section number to designate a portion of a section:

If two or more of the above abbreviations appear in sequence, the first abbreviation is that specified portion of the next abbreviation. For example: “SW/4 SW/4 SE/4” is the Southwest Quarter of the Southwest Quarter of the Southeast Quarter of the particular section described.

The abbreviations “WI,” “NRI,” “ORRI,” “BPO,” and “APO” are defined as follows:

Exhibit “A”

Rio Arriba County