VOC Energy Trust 10-Q Summary: Q1 2026
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. VOC Energy Trust is a Delaware statutory trust holding an 80% net profits interest in oil and natural gas properties operated by VOC Brazos Energy Partners, LP, primarily in Texas and Kansas. The Trust is a passive entity with no management control over operations. As of May 13, 2026, there were 17,000,000 Units of Beneficial Interest outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Income from Net Profits Interest | $1,586,124 | $1,898,820 |
| Distributable Income | $1,530,000 | $1,445,000 |
| Distribution per Unit | $0.090 | $0.085 |
| Cash and Cash Equivalents | $1,771,113 | $2,026,639 |
| Total Assets | $9,719,075 | $10,399,993 |
| General & Administrative Expenses | $311,650 | $412,521 |
| Oil Sales Volume (Bbl) | 108,032 | 109,158 |
| Avg. Oil Price (per Bbl) | $58.49 | $67.71 |
Material Changes vs. Prior Period
- Revenue Decline: Gross proceeds decreased 14.1% to $6.496 million, driven by a 13.6% drop in average oil prices and a 1.0% decrease in oil sales volumes. Natural gas prices increased 14.8%, but volumes fell 10.1%.
- Expense Reduction: Total costs decreased 13.0% to $4.513 million. Notably, production and property taxes dropped 49.2% due to lower commodity prices and volumes. Development expenses fell 24.8%.
- Distributable Income Increase: Despite lower income from the net profits interest (down 16.5%), distributable income increased 5.9% to $1.53 million. This was primarily due to a significant reduction in Trust general and administrative expenses ($100,871 decrease) and a lower Trustee holdback for expenses.
- Asset Base: Total assets decreased by approximately $681,000, reflecting the net impact of income, distributions, expenses, and amortization of the net profits interest.
Outlook, Risks, and Subsequent Events
- Subsequent Distribution: On April 20, 2026, the Trust announced a distribution of $0.095 per unit ($1,615,000 total) for the quarter ended March 31, 2026, payable on May 15, 2026.
- Liquidity: The Trust holds $1.77 million in cash, which includes a $1.175 million reserve for future liabilities. A $1.7 million letter of credit from VOC Brazos is in place to cover potential expense shortfalls. No borrowings occurred during the quarter.
- Termination Conditions: The Trust will terminate on the later of December 31, 2030, or when 10.6 million barrels of oil equivalent (MMBoe) have been produced. As of March 31, 2026, 9.8 MMBoe have been produced (7.8 MMBoe attributable to the Trust).
- Risks: The Trust has no control over operations or development. Income is entirely dependent on VOC Brazos's production volumes and commodity prices. The filing notes no material changes to risk factors from the previous 10-K.
Investor Verification Checklist
- Verify the accuracy of the 13.6% decline in average oil prices and its impact on future cash flows.
- Confirm the status of the $1.175 million cash reserve and the $1.7 million letter of credit.
- Review the cumulative production of 9.8 MMBoe against the 10.6 MMBoe termination threshold to assess remaining trust life.
- Monitor the trend in development expenses, which decreased significantly in Q1 2026, to ensure future capital needs are met.
- Validate the subsequent distribution of $0.095 per unit announced in April 2026.