NOTES TO FINANCIAL STATEMENTS

1.

Trust Organization and Provisions

The Permian Basin Royalty Trust (Trust) was established as of November 1, 1980. Bank of America, N.A. (Trustee) is Trustee for the Trust. The
net overriding royalties conveyed to the Trust include (1) a 75% net overriding royalty in Southland Royalty Companys fee mineral interest in the Waddell
Ranch in Crane County, Texas (the Waddell Ranch properties) and (2) a 95% net overriding royalty carved out of Southland Royalty Companys major
producing royalty properties in Texas (the Texas Royalty properties). The net overriding royalty for the Texas Royalty properties is subject to the provisions of
the lease agreements under which such royalties were created. The net overriding royalties above are collectively referred to as the Royalties.
On November 3, 1980, Units of Beneficial Interest (Units) in the Trust were distributed to the Trustee for the benefit of Southland Royalty
Companys shareholders of record as of November 3, 1980, who received one Unit in the Trust for each share of Southland Royalty Company common stock
held. The Units are traded on the New York Stock Exchange.
Burlington Resources Oil & Gas Company LP (BROG), a subsidiary of ConocoPhillips, is the interest owner for the Waddell Ranch properties and
Riverhill Energy Corporation (Riverhill Energy), formerly a wholly owned subsidiary of Riverhill Capital Corporation (Riverhill Capital) and formerly an
affiliate of Coastal Management Corporation (CMC), is the interest owner for the Texas Royalty properties. BROG currently conducts all field, technical and
accounting operations on behalf of BROG with regard to the Waddell Ranch properties. Riverhill Energy currently conducts the accounting operations for the
Texas Royalty properties.
In February 1997, BROG sold its interest in the Texas Royalty properties to Riverhill Energy.
The Trustee was advised that in the first quarter of 1998, Schlumberger Technology Corporation (STC) acquired all of the shares of stock of Riverhill
Capital. Prior to such acquisition by STC, CMC and Riverhill Energy were wholly owned subsidiaries of Riverhill Capital. The Trustee was further advised that in
connection with STCs acquisition of Riverhill Capital, the shareholders of Riverhill Capital acquired ownership of all of the shares of stock of Riverhill Energy.
Thus, the ownership in the Texas Royalty properties referenced above remained in Riverhill Energy, the stock ownership of which was acquired by the former
shareholders of Riverhill Capital.
In 2007 the Bank of America private wealth management group officially became known as U.S. Trust, Bank of America Private Wealth
Management. The legal entity that serves as Trustee of the Trust did not change.
The terms of the Trust Indenture provide, among other things, that:
the Trust shall not engage in any business or commercial activity of any kind or acquire any assets other than those initially conveyed to the Trust;
the Trustee may not sell all or any part of the Royalties unless approved by holders of 75% of all Units outstanding in which case the sale must be
for cash and the proceeds promptly distributed;
the Trustee may establish a cash reserve for the payment of any liability which is contingent or uncertain in amount;
the Trustee is authorized to borrow funds to pay liabilities of the Trust; and
the Trustee will make monthly cash distributions to Unit holders (see Note 3).
2.

Accounting Policies
The financial statements of the Trust are prepared on the following basis:
Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the interest owners. Royalty income
consists of the amounts received by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs,
development and drilling costs, applicable taxes, operating charges and other costs and deductions multiplied by 75% in the case of the Waddell
Ranch properties and 95% in the case of the Texas Royalty properties.
Trust expenses, consisting principally of routine general and administrative costs, recorded are based on liabilities paid and cash reserves established
out of cash received or borrowed funds for liabilities and contingencies.
Distributions to Unit holders are recorded when declared by the Trustee.
27

 Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust. If monthly costs exceed
revenues for any conveyance (excess costs), such excess costs cannot reduce royalty income from other conveyances, but is carried forward with
accrued interest to be recovered from future net proceeds of that conveyance.
The financial statements of the Trust differ from financial statements prepared in accordance with accounting principles generally accepted in the United
States of America (GAAP) because revenues are not accrued in the month of production and certain cash reserves may be established for contingencies
which would not be accrued in financial statements prepared in accordance with GAAP. Amortization of the Royalties calculated on a unit-of-production basis is
charged directly to trust corpus. This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the U.S.
Securities and Exchange Commission as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.
Use of Estimates
The preparation of financial statements in conformity with the basis of accounting described above requires management to make estimates and
assumptions that affect reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting periods. Actual results may differ from
such estimates.
Impairment
The Trustee routinely reviews its royalty interests in oil and 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 Trusts 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. There is no impairment of the assets as of December 31, 2012.
Contingencies
Contingencies related to the Underlying Properties 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.
Distributable Income Per Unit
Basic distributable income per Unit is computed by dividing distributable income by the weighted average of Units outstanding. Distributable income per
Unit assuming dilution is computed by dividing distributable income by the weighted average number of Units and equivalent Units outstanding. The Trust had
no equivalent Units outstanding for any period presented. Therefore, basic distributable income per Unit and distributable income per Unit assuming dilution are
the same.
New Accounting Pronouncements
There are no new accounting pronouncements that are expected to have a significant impact on the Trusts financial statements.
3.

Net Overriding Royalty Interests and Distribution to Unit Holders

The amounts to be distributed to Unit holders (Monthly Distribution Amounts) are determined on a monthly basis. The Monthly Distribution Amount is
an amount equal to the sum of cash received by the Trustee during a calendar month attributable to the Royalties, 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. To the extent the distribution amount is a negative number,
that 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 amounts received by owners of the interest burdened by the Royalties from the sale of production less
the sum of applicable taxes, accrued production costs, development and drilling costs, operating charges and other costs and deductions, multiplied by 75% in
the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.
The initial carrying value of the Royalties ($10,975,216) represented Southland Royalty Companys historical net book value at the date of the
transfer to the Trust. Accumulated amortization as of December 31, 2012 and 2011 was $10,149,267 and $10,083,640, respectively.
28

4.

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 Trusts 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 and not when distributed by the Trust. The Trust
has on file technical advice memoranda confirming the tax treatment described above.
Some Trust Units are held by middlemen, as such term is broadly defined in U.S. Treasury Regulations (and includes custodians, nominees, certain joint
owners, and brokers holding an interest for a customer in street name, collectively referred to herein as middlemen). Therefore, the Trustee considers the
Trust to be a non-mortgage widely held fixed investment trust (WHFIT) for U.S. federal income tax purposes. U.S. Trust, Bank of America Private Wealth
Management, EIN: 56-0906609, 901 Main Street, 17th Floor, Dallas, Texas 75202, telephone number (214) 209-2400, email address trustee@pbtpermianbasintrust.com, is the representative of the Trust that will provide tax information in accordance with applicable U.S. Treasury Regulations governing
the information reporting requirements of the Trust as a WHFIT. Tax information is also posted by the Trustee at www.pbt-permianbasintrust.com.
Notwithstanding the foregoing, the middlemen holding Trust Units on behalf of Unit holders, and not the Trustee of the Trust, are solely responsible for
complying with the information reporting requirements under the U.S. Treasury Regulations with respect to such Trust Units, including the issuance of IRS
Forms 1099 and certain written tax statements. Unit holders whose Trust Units are held by middlemen should consult with such middlemen regarding the
information that will be reported to them by the middlemen with respect to the Trust Units.
Because the Trust is a grantor trust for federal tax purposes, each Unit holder is taxed directly on his proportionate share of income, deductions and
credits of the Trust consistent with each such Unit holders taxable year and method of accounting and without regard to the taxable year or method of
accounting employed by the Trust. The income of the Trust consists primarily of a specified share of the proceeds from the sale of oil and gas produced from
the Underlying Properties. During 2012, the Trust also earned interest income on funds held for distribution and the cash reserve maintained for the payment
of contingent and future obligations of the Trust.
The deductions of the Trust consist of severance taxes and administrative expenses. In addition, each Unit holder is entitled to depletion deductions
because the Royalties constitute economic interests in oil and gas properties for federal income tax purposes. Each Unit holder is entitled to amortize the
cost of the Units through cost depletion over the life of the Royalties or, if greater, through percentage depletion equal to 15 percent of gross income. Unlike
cost depletion, percentage depletion is not limited to a Unit holders depletable tax basis in the Units. Rather, a Unit holder is entitled to a percentage
depletion deduction as long as the applicable Underlying Properties generate gross income. Percentage depletion is allowed on proven properties acquired after
October 11, 1990. For Units acquired after such date, Unit holders would normally compute both percentage depletion and cost depletion from each property
and claim the larger amount as a deduction on their income tax returns. The Trustee has estimated the cost depletion for January through December 2012,
and it appears that percentage depletion will exceed cost depletion for some of the Unit holders.
If a taxpayer disposes of any Section 1254 property (certain oil, gas, geothermal or other mineral property), and if the adjusted basis of such
property includes adjustments for deductions for depletion under Section 611 of the Internal Revenue Code (the Code), the taxpayer generally must
recapture the amount deducted for depletion as ordinary income (to the extent of gain realized on the disposition of the property). This depletion recapture
rule applies to any disposition of property that was placed in service by the taxpayer after December 31, 1986. Detailed rules set forth in Sections 1.1254-1
through 1.1254-6 of the U.S. Treasury Regulations govern dispositions of property after March 13, 1995. The Internal Revenue Service likely will take the
position that a Unit holder who purchases a Unit subsequent to December 31, 1986 must recapture depletion upon the disposition of that Unit.
Individuals may incur expenses in connection with the acquisition or maintenance of Trust Units. These expenses may be deductible as miscellaneous
itemized deductions only to the extent that such expenses exceed 2 percent of the individuals adjusted gross income.
The classification of the Trusts income for purposes of the passive loss rules may be important to a Unit holder. Royalty income generally is treated as
portfolio income and does not offset passive losses. Therefore, in general, it appears that Unit holders should not consider the taxable income from the Trust to
be passive income in determining net passive income or loss. Unit holders should consult their tax advisors for further information.
Unit holders of record will continue to receive an individualized tax information letter for each of the quarters ending March 31, June 30 and
September 30, 2013, and for the year ending December 31, 2013. Unit holders owning Units in nominee may obtain monthly tax information from the
Trustee upon request. See discussion above regarding certain reporting requirements imposed upon middlemen under U.S. Treasury Regulations because the
Trust is considered a WHIFT for federal income tax purposes.
29

Under current law, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 39.6%, and the highest marginal
U.S. federal income tax rate applicable to long-term capital gains (generally, gains from the sale or exchange of certain investment assets held for more than
one year) and qualified dividends of individuals is 20%. Such marginal tax rates may be effectively increased by up to 1.2% due to the phaseout of personal
exemptions and the limitations on itemized deductions. The highest marginal U.S. federal income tax rate applicable to corporations is 35%, and such rate
applies to both ordinary income and capital gains.
Section 1411 of the Code imposes a 3.8% Medicare tax on certain investment income earned by individuals, estates, and trusts for taxable years
beginning after December 31, 2012. For these purposes, investment income generally will include a Unit holders allocable share of the Trusts interest and
royalty income plus the gain recognized from a sale of Trust Units. In the case of an individual, the tax is imposed on the lesser of (i) the individuals net
investment income from all investments, or (ii) the amount by which the individuals modified adjusted gross income exceeds specified threshold levels
depending on such individuals federal income tax filing status. In the case of an estate or trust, the tax is imposed on the lesser of (i) undistributed net
investment income, or (ii) the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust
begins.
The Tax consequences to a Unit holder of the ownership and sale of Units will depend in part on the Unit holders tax circumstances. Unit holders should
consult their tax advisors about the federal tax consequences relating to owning the Units in the Trust.
5.

Proved Oil and Gas Reserves (Unaudited)

Reserve Quantities

Information regarding estimates of the proved oil and gas reserves attributable to the Trust are based on reports prepared by Cawley, Gillespie &
Associates, Inc., independent petroleum engineering consultants. Estimates were prepared in accordance with the guidelines established by the FASB and the
Securities and Exchange Commission. Certain information required by this guidance is not presented because that information is not applicable to the Trust due
to its passive nature.
Oil and gas reserve quantities (all located in the United States) are estimates based on information available at the time of their preparation. Such
estimates are subject to change as additional information becomes available. Reserves actually recovered, and the timing of the production of those reserves,
may differ substantially from original estimates. The following schedule presents changes in the Trusts total proved reserves (in thousands):
Total
Oil
(Bbls)

Gas
(Mcf)

January 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extensions, discoveries, and other additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions of previous estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,495
121
1,211
(649)

18,402
236
6,736
(2,914)

December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extensions, discoveries, and other additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions of previous estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,178
213
412
(601)

22,460
1,956
(846)
(2,352)

December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extensions, discoveries, and other additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions of previous estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,202
294
432
(499)

21,218
1,424
(2,842)
(1,524)

December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,429

18,276

30

Estimated quantities of proved developed reserves of oil and gas as of the dates indicated were as follows (in thousands):

Proved Developed Reserves:

January 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Oil
(Barrels)

Gas
(Mcf)

5,429
6,160
6,202
6,429

18,220
22,422
21,218
18,276

Disclosure of a Standardized Measure of Discounted Future Net Cash Flows

The following is a summary of a standardized measure (in thousands) of discounted future net cash flows related to the Trusts total proved oil and gas
reserve quantities. Information presented is based upon valuation of proved reserves by using discounted cash flows based upon average oil and gas prices
($94.71 per bbl and $2.75 per Mcf, respectively) during the 12-month period prior to the fiscal year-end, determined as an unweighted arithmetic average of
the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon
future conditions and severance and ad valorem taxes, if any, and economic conditions, discounted at the required rate of 10 percent. As the Trust is not
subject to taxation at the trust level, no provision for income taxes has been made in the following disclosure. Trust prices may differ from posted NYMEX
prices due to differences in product quality and property location. The impact of changes in current prices on reserves could vary significantly from year to year.
Accordingly, the information presented below should not be viewed as an estimate of the fair market value of the Trusts oil and gas properties nor should it be
viewed as indicative of any trends.
December 31,

2012

2011

2010

Future net cash inflows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discount of future net cash flows @ 10% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 662,533
(308,473)

$ 706,165
(325,804)

$ 597,873
(273,547)

Standardized measure of discounted future net cash inflows . . . . . . . . . . . . . . . . . . . . .

$ 354,060

$ 380,361

$ 324,326

The change in the standardized measure of discounted future net cash flows for the years ended December 31, 2012, 2011 and 2010 is as follows
(in thousands):
2012

Total
2011

2010

January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extensions, discoveries, and other additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions of previous estimates and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$380,361
11,054
38,036
(20,260)
(55,131)

$324,326
16,878
32,432
71,307
(64,582)

$211,207
5,230
21,121
152,033
(65,265)

December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$354,060

$380,361

$324,326

Subsequent to year end, the price of both oil and gas continued to fluctuate, giving rise to a correlating adjustment of the respective standardized
measure of discounted future net cash flows. As of February 15, 2013, NYMEX posted oil prices were approximately $95.99 per barrel, which compared to
the posted price of $94.71 per barrel, used to calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a larger
standardized measure of discounted future net cash flows for oil. As of February 15, 2013, NYMEX posted gas prices were $3.16 per million British thermal
units. The use of such price, as compared to the posted price of $2.75 per million British thermal units, used to calculate the future net revenue of the Trusts
proved developed reserves would result in a larger standardized measure of discounted future net cash flows for gas.

31

6.

Quarterly Schedule of Distributable Income (Unaudited)

The following is a summary of the unaudited quarterly schedule of distributable income for the two years ended December 31, 2012 (in thousands,
except per Unit amounts):

7.

2012

Royalty
Income

Distributable
Income

Distributable
Income and
Distribution
Per Unit

First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,422
16,142
9,121
9,446

$20,096
15,657
8,953
9,275

$ .431172
.335929
.192095
.199002

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$55,131

$53,983

$1.158198

2011

Royalty
Income

Distributable
Income

Distributable
Income and
Distribution
Per Unit

First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,798
18,399
14,879
14,507

$16,459
17,895
14,729
14,326

$ .353128
.383959
.316031
.307330

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$64,583

$63,409

$1.360448

State Tax Considerations

All revenues from the Trust are from sources within Texas, which has no individual income tax. Texas imposes a franchise tax at a rate of 1% on gross
revenues less certain deductions, as specifically set forth in the Texas franchise tax statutes. Entities subject to tax generally include trusts and most other types
of entities that provide limited liability protection, unless otherwise exempt. Trusts that receive at least 90% of their federal gross income from designated
passive sources, including royalties from mineral properties and other non-operated mineral interest income, and do not receive more than 10% of their income
from operating an active trade or business, generally are exempt from the Texas franchise tax as passive entities. The Trust has been and expects to
continue to be exempt from Texas franchise tax as a passive entity. Because the Trust should be exempt from Texas franchise tax at the Trust level as a
passive entity, each Unit holder that is considered a taxable entity under the Texas franchise tax will generally be required to include its portion of Trust
revenues in its own Texas franchise tax computation. This revenue is sourced to Texas under provisions of the Texas Administrative Code providing that such
income is sourced according to the principal place of business of the Trust, which is Texas.
Unit holders should consult their tax advisors regarding Trust tax compliance matters.
8.

Commitments and Contingencies

Contingencies related to the Underlying Properties 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.
On May 2, 2011, ConocoPhillips, as the parent company of BROG, the operator of the Waddell Ranch properties, notified the Trustee that as a result of
inaccuracies in ConocoPhillips accounting and record keeping relating to the Trusts interest in proceeds from the gas plant production since January 2007,
ConocoPhillips overpaid the Trust approximately $5.9 million initially. ConocoPhillips withheld $4,068,067 (all of the Waddell Ranch portion of the
September, 2011 proceeds) and $474,480 from the proceeds for October, 2011, which ConocoPhillips then informed the Trustee completes the recoupment.
ConocoPhillips indicated that these two recoupments will satisfy the initial claim of $5.9 million. Beginning with the October 2012 distribution, the previous
deducted proceeds to the Trust of $480,827 as of December 31, 2012 relating to the gas plant production have been reimbursed to the Trust but adjusted
through the corrected gas payments and production to reflect ConocoPhillips calculation of the corrected interest. The Trustee is continuing to evaluate the
matter.
32

9.

Subsequent Events
Subsequent to December 31, 2012, the Trust declared the following distributions:
Monthly Record Date

January 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

February 28, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*****

33

Payment Date

Distribution
per Unit

February 14, 2013

March 14, 2013

$.049757
$.035963