Business Hugoton Royalty Trust (the “Trust”) is an express trust created under the laws of Texas pursuant to the Hugoton Royalty Trust Indenture entered into on December 1, 1998, between XTO Energy Inc. (formerly known as Cross Timbers Oil Company and, hereafter, “XTO Energy”), as grantor, and NationsBank, N.A., as Trustee. The current trustee of the Trust is Argent Trust Company, a Tennessee chartered trust company (“Argent”). Effective April 10, 2023, Simmons Bank resigned as trustee, and Argent was appointed as the successor trustee. The defined term “Trustee” as used herein shall refer to Simmons Bank for periods from February 20, 2018, through April 9, 2023, and shall refer to Argent for periods on and after April 10, 2023. The principal office of the Trust is 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas 75219. (Telephone number 855-588-7839). The Trust’s internet website is www.hgt-hugoton.com. We make available free of charge, through our website, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports are accessible through our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Information on our website is not incorporated into this report. Effective December 1, 1998, XTO Energy conveyed to the Trust 80% net profits interests in certain predominantly natural gas producing working interest properties in Kansas, Oklahoma and Wyoming under three separate conveyances. In exchange for these net profits interest conveyances to the Trust, 40 million units of beneficial interest were issued to XTO Energy. In April and May 1999, XTO Energy sold a total of 17 million units in the Trust’s initial public offering. In 1999 and 2000, XTO Energy also sold 1.3 million Trust units to certain of its officers. The Trust did not receive the proceeds from these sales of Trust units. In May 2006, XTO Energy distributed all of its remaining 21.7 million Trust units as a dividend to its common stockholders. XTO Energy currently is not a unitholder of the Trust. Units were listed and traded on the New York Stock Exchange under the symbol “HGT” until August 27, 2018, when the Trust units were delisted from the NYSE and began to be quoted on the OTCQX, which is maintained by the OTC Market Group Inc., under the symbol “HGTXU.” The Trust transitioned from the OTCQX to the OTCQB on May 19, 2020. On June 25, 2010, XTO Energy became a wholly owned subsidiary of Exxon Mobil Corporation (“ExxonMobil”). On March 25, 2025, XTO Energy informed the Trustee that it entered into a definitive agreement to divest XTO Energy’s interest in the assets underlying the Trust to Mach Natural Resources LP and its affiliates (“Mach”). The transaction closed on April 30, 2025, and Mach assumed XTO Energy’s obligations under the Trust Indenture and operatorship of applicable properties. References to working interest owner before April 30, 2025, represent XTO Energy and those on or after April 30, 2025, represent Mach. The net profits interests entitle the Trust to receive 80% of the net proceeds from the sale of oil and gas from the underlying properties. Each month XTO Energy or Mach determines the amount of cash received from the sale of production and deducts property and production taxes, production expense, development costs and overhead. Net proceeds payable to the Trust depend upon production quantities, sales prices of oil and gas and costs to develop and produce oil and gas in the prior month. If monthly costs exceed revenues for any of the three conveyances (one for each of the states of Kansas, Oklahoma and Wyoming), such excess costs must be recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from other conveyances. For further information on excess costs, see Note 4 to Financial Statements under Item 8. Financial Statements and Supplementary Data. The Trust is not liable for any production costs or liabilities attributable to the underlying properties. If at any time the Trust receives net profits income in excess of the amount due, the Trust is not obligated to return such overpayment, but future net profits income payable to the Trust will be reduced until the overpayment, plus interest at the prime rate, is recovered. As a working interest owner, XTO Energy or Mach, as applicable, can generally decline participation in any operation and allow consenting parties to conduct such operations, as provided under the operating agreements. XTO Energy or Mach also can assign, sell, 2 Table of Contents or otherwise transfer its interest in the underlying properties, subject to the net profits interests, or can abandon an underlying property if it is incapable of producing in paying quantities, as determined by XTO Energy or Mach. To the extent allowed, XTO Energy or Mach, as applicable is responsible for marketing its production from the underlying properties under existing sales contracts, or new arrangements on the best terms reasonably obtainable in the circumstances. See “Pricing and Sales Information” under Item 2. Properties. Net profits income received by the Trust on or before the last business day of the month is related to net proceeds received by XTO Energy in the preceding month for periods prior to April 30, 2025, or Mach in the second preceding month for periods on or after April 30, 2025, and is generally attributable to oil and gas production two months prior. The amount to be distributed to unitholders each month by the Trustee is determined by: Adding - 1. net profits income received; 2. interest income and any other cash receipts; and 3. cash available as a result of reduction of cash reserves; then Subtracting - 1. liabilities paid; and 2. the reduction in cash available related to establishment of or increase in any cash reserve. The monthly distribution amount is distributed to unitholders of record within ten business days after the monthly record date. The monthly record date is generally the last business day of the month. The Trustee calculates the monthly distribution amount and announces the distribution per unit at least ten days prior to the monthly record date. The Trustee may establish cash reserves for contingencies. Cash held for such reserves, as well as for pending payment of the monthly distribution amount, may be invested in federal obligations or certificates of deposit of major banks. The Trustee’s function is to collect the net profits income from the net profits interests, to pay all Trust expenses, and to pay the monthly distribution amount to unitholders. The Trustee’s powers are specified by the terms of the Trust indenture. The Trust cannot engage in any business activity or acquire any assets other than the net profits interests and specific short-term cash investments. The Trust has no employees since all administrative functions are performed by the Trustee. The majority of previous net profits income received by the Trust has been attributable to natural gas. There has historically been a greater demand for gas during the winter months than the rest of the year. Otherwise, Trust income generally is not subject to seasonal factors, nor dependent upon patents, licenses, franchises or concessions. The Trust conducts no research activities. The oil and gas industry is highly competitive in all its phases. Operators of the properties in which the Trust holds interests encounter competition from other oil and gas companies and from individual producers and operators. Oil and natural gas are commodities, for which market prices are determined by external supply and demand factors. Current market conditions are not necessarily indicative of future conditions.