[10-Q] Sabine Royalty Trust Quarterly Earnings Report

Rhea-AI Filing Summary

Sabine Royalty Trust (SBR) 10-Q for quarter ended June 30, 2025. The Trust reports total assets of $7.96M at June 30, 2025, down from $9.25M at Dec 31, 2024, driven by lower cash and trust corpus.

Cash and short-term investments were $7.889M. Trust corpus totaled $7.208M versus $8.707M at Dec 31, 2024. Three months ended June 30, 2025 distributable income was $17.789M ($1.22/unit) versus $22.079M ($1.51/unit) in Q2 2024. Six-month distributable income was $35.935M ($2.46/unit) versus $42.000M ($2.88/unit) year-ago.

Royalty income for Q2 2025 was $18.584M (Q2 2024: $22.607M). Oil production and prices declined (oil volume Q2 2025: 155,573 bbls, avg price $68.17/bbl vs Q2 2024 220,438 bbls, $78.89/bbl); gas volumes fell and realized gas price rose (Q2 gas 3,046,325 Mcf, avg $3.26/Mcf vs Q2 2024 $1.99/Mcf). General and administrative expenses increased, driven by higher Trustee/Escrow/bonus fees. Trustee concluded disclosure controls are effective and no material change to risk factors was reported.

Positive

• Continued monthly distributions to unit holders with recent declared distributions of $0.345930 (July) and $0.744730 (August) per unit.
• Cash and short-term investments of $7.889M at June 30, 2025, providing near-term liquidity for distributions.
• Higher natural gas realized price in Q2 2025 (avg $3.26/Mcf) versus Q2 2024 ($1.99/Mcf), partially offsetting oil weakness.
• Disclosure controls deemed effective by the Trustee and no change to risk factors for the period.

Negative

• Distributable income declined YoY: Q2 2025 $17.789M vs Q2 2024 $22.079M (~18% decrease).
• Trust corpus and total assets decreased: corpus $7.208M (June 30, 2025) vs $8.707M (Dec 31, 2024); total assets $7.964M vs $9.250M.
• Significant reduction in oil production (Q2 2025 oil 155,573 bbls vs Q2 2024 220,438 bbls), and lower average oil prices reduced income.
• Higher Trustee/Escrow/bonus fees increased G&A expense (total fees Q2 2025 $640,001 vs Q2 2024 $436,577), pressuring distributable cash.

Insights

Financial Analyst

TL;DR: Distributable income and trust corpus declined materially YoY; distributions continue but investor yield and corpus erosion are concerns.

The quarter shows an ~19% drop in quarterly distributable income YoY and a reduction in trust corpus from $8.707M to $7.208M since year-end. Key drivers were lower oil production and lower oil realized prices partially offset by higher gas prices. Cash remains modestly strong at $7.889M, supporting ongoing monthly distributions. However, rising Trustee/Escrow/bonus fees increased G&A, reducing distributable cash. For investors the report is impactful because persistent production declines and fee pressure directly reduce distributable cash flows and corpus over time.

Oil & Gas Industry Specialist

TL;DR: Production decline is the principal operational issue; price mix aided gas income but not enough to offset oil weakness.

Production fell materially: oil volumes declined from 220,438 bbls to 155,573 bbls QoQ/YoY comparisons, reducing oil royalty receipts. Natural gas pricing improved (avg $3.26/Mcf), helping offset some lost oil revenue, but net royalty income still fell. The Trust remains passive with diversified operators including majors, which mitigates single-operator risk. No new material contingencies were disclosed. Impact is moderately impactful to distributions and reserve outlook given continued production trends.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to

Commission File Number: 1-8424

SABINE ROYALTY TRUST

(Exact name of registrant as specified in its charter)

Texas	75-6297143
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Argent Trust Company 3838 Oak Lawn Ave, Suite 1720 Dallas, Texas 75219-4518
(Address of principal executive offices) (Zip Code)

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

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

		Trading Symbol(s)		Name of each exchange on which registered
Title of each class
Units of Beneficial Interest		SBR		New York Stock Exchange

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):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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 8, 2025: 14,579,345

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TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION		3
	Item 1. Financial Statements	3
	Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	16
	Item 4. Controls and Procedures	16
PART II — OTHER INFORMATION		18
	Item 1. Legal Proceedings	18
	Item 1A. Risk Factors	18
	Item 5. Other Information	18
	Item 6. Exhibits	18
SIGNATURES		19
EX-31
EX-32

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SABINE ROYALTY TRUST

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

The condensed financial statements included herein have been prepared by Argent Trust Company, as Trustee (the “Trustee”) of Sabine Royalty Trust (the “Trust”), pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations, although the Trustee believes that the disclosures are adequate to make the information presented not misleading. The condensed financial statements of the Trust presented herein are unaudited. It is suggested that these condensed financial statements and notes thereto be read in conjunction with the financial statements and notes thereto included in the Trust’s latest annual report on Form 10-K. The December 31, 2024 condensed statement of assets, liabilities and trust corpus is derived from the audited statement of assets, liabilities and trust corpus as of that date. In the opinion of the Trustee, all adjustments necessary to present fairly the assets, liabilities and trust corpus of the Trust as of June 30, 2025, and the distributable income and the changes in trust corpus for the three and six months ended June 30, 2025 and 2024, have been included. The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year. Unless specified otherwise, all amounts included herein are presented in US dollars.

	Page
Condensed Statements of Assets, Liabilities, and Trust Corpus	4
Condensed Statements of Distributable Income (Unaudited)	5
Condensed Statements of Changes in Trust Corpus (Unaudited)	7

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SABINE ROYALTY TRUST

CONDENSED STATEMENTS OF ASSETS, LIABILITIES, AND TRUST CORPUS

						June 30,				December 31,
						2025				2024
		Note				(UNAUDITED)
Assets
Cash and short-term investments						$	7,889,388			$	9,169,742
Royalty interests in oil and gas properties (less accumulated amortization of $22,320,834 and $22,314,566 at June 30, 2025 and December 31, 2024)							74,351				80,619
Total Assets						$	7,963,739			$	9,250,361
Liabilities and Trust Corpus
Trust expenses payable			4			$	250,620			$	311,784
Other payables			4				505,365				231,645
Total liabilities							755,985				543,429
Contingencies			5
Trust corpus — 14,579,345 units of beneficial interest authorized and outstanding							7,207,754				8,706,932
Total Liabilities and Trust Corpus						$	7,963,739			$	9,250,361

The accompanying notes are an integral part of these condensed financial statements.

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SABINE ROYALTY TRUST

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

				Three Months Ended June 30,
		Notes		2025				2024
Royalty income				$	18,583,570			$	22,607,108
Interest income					119,730				175,353
Total					18,703,300				22,782,461
General and administrative expenses					(914,305	)			(703,464	)
Distributable income				$	17,788,995			$	22,078,997
Distributable income per unit (14,579,345 units outstanding)		1,3,5		$	1.22			$	1.51

The accompanying notes are an integral part of these condensed financial statements.

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SABINE ROYALTY TRUST

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

				Six Months Ended June 30,
		Notes		2025				2024
Royalty income				$	37,978,136			$	43,365,913
Interest income					226,690				327,279
Total					38,204,826				43,693,192
General and administrative expenses					(2,269,348	)			(1,692,768	)
Distributable income				$	35,935,478			$	42,000,424
Distributable income per unit (14,579,345 units outstanding)		1,3,5		$	2.46			$	2.88

The accompanying notes are an integral part of these condensed financial statements.

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SABINE ROYALTY TRUST CONDENSED

STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

						Three Months Ended June 30,
		Note				2025				2024
Trust corpus, beginning of period						$	9,514,016			$	9,987,642
Amortization of royalty interests							(2,732	)			(5,276	)
Distributable income							17,788,995				22,078,997
Distributions			3				(20,092,525	)			(24,360,190	)
Trust corpus, end of period						$	7,207,754			$	7,701,173
Distributions per unit (14,579,345 units outstanding)			3			$	1.38			$	1.67

The accompanying notes are an integral part of these condensed financial statements.

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SABINE ROYALTY TRUST CONDENSED

STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

						Six Months Ended June 30,
		Note				2025				2024
Trust corpus, beginning of period						$	8,706,932			$	8,558,906
Amortization of royalty interests							(6,269	)			(10,335	)
Distributable income							35,935,478				42,000,424
Distributions			3				(37,428,387	)			(42,847,822	)
Trust corpus, end of period						$	7,207,754			$	7,701,173
Distributions per unit (14,579,345 units outstanding)			3			$	2.57			$	2.94

The accompanying notes are an integral part of these condensed financial statements.

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NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. TRUST ORGANIZATION AND PROVISIONS

Sabine Royalty Trust (the “Trust”) was established by the Sabine Corporation Royalty Trust Agreement (the “Trust Agreement”), made and entered into effective as of December 31, 1982, to receive a distribution from Sabine Corporation (“Sabine”) of royalty and mineral interests, including landowner’s royalties, overriding royalty interests, minerals (other than executive rights, bonuses and delay rentals), production payments and any other similar, nonparticipator interests, in certain producing and proved undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas (the “Royalties”).

Certificates evidencing units of beneficial interest (the “Units”) in the Trust were mailed on December 31, 1982, to Sabine’s shareholders of record on December 23, 1982, on the basis of one Unit for each share of Sabine’s outstanding common stock.

In May 1988, Sabine was acquired by Pacific Enterprises. Through a series of mergers, Sabine was merged into Pacific Enterprises Oil Company (USA) (“Pacific (USA)”), which in turn was merged and consolidated into Sempra Energy, effective January 1, 1993. As of August 1, 2006, Sempra Energy sold its various interests and rights to Providence Energy Corporation (“Providence”). Providence in turn transferred its interests and rights to RJ Holdings, Inc. (“RJ Holdings”) as of June 1, 2021. These transactions had no effect on the Units. RJ Holdings, as successor to Sabine, has assumed by operation of law all of Sabine’s rights and obligations with respect to the Trust. References herein to RJ Holdings shall be deemed to include Sabine where appropriate.

In connection with the transfer of the Royalties to the Trust upon its formation, Sabine had reserved to itself all executive rights, including rights to execute leases and to receive bonuses and delay rentals. Through a series of mergers, Sabine was merged into Pacific (USA), which in turn was merged and consolidated into Sempra Energy, effective January 1, 1993. In January 1993, Pacific (USA) completed the sale of substantially all of Pacific (USA)’s producing oil and gas assets to Hunt Oil Company. The sale did not include executive rights relating to the Royalty properties, and ownership of such rights by Pacific (USA) (now PEC Minerals LP (“PEC”)) was not affected by the sale. The Trustee currently reviews all leases executed on the Trust’s behalf.

The wells on the properties conveyed to the Trust are operated by many companies including large, established companies such as BP Amoco, Chevron, ConocoPhillips and ExxonMobil. The Trustee believes these operators utilize the recovery methods best suited for the particular formations on which the properties are located.

Argent Trust Company acts as trustee of the Trust. The terms of the Trust Agreement provide, among other things, that:

•The Trust shall not engage in any business or commercial activity of any kind or acquire assets other than those initially transferred to the Trust.

•The Trustee may not sell all or any part of its assets unless approved by the holders of a majority of the outstanding Units in which case the sale must be for cash and the proceeds, after satisfying all existing liabilities, promptly distributed to Unit holders.

•The Trustee may establish a cash reserve for the payment of any liability that is contingent or uncertain in amount or that otherwise is not currently due or payable.

•The Trustee will use reasonable efforts to cause the Trust and the Unit holders to recognize income and expenses on monthly record dates.

•The Trustee is authorized to borrow funds to pay liabilities of the Trust provided that such borrowings are repaid in full before any further distributions are made to Unit holders.

•The Trustee will make monthly cash distributions to Unit holders of record on the monthly record date (see Note 3).

On November 4, 2021, Simmons Bank, as trustee, announced that it had entered into an agreement with Argent Trust Company, a Tennessee chartered trust company (“Argent”), pursuant to which Simmons Bank would be resigning as trustee of the Trust and would nominate Argent as successor trustee of the Trust. Simmons Bank’s resignation as trustee, and Argent’s appointment as successor trustee, became effective December 30, 2022.

The defined term “Trustee” as used herein shall refer to Southwest Bank for periods from May 30, 2014 through February 19, 2018, shall refer to Simmons Bank for periods on and after February 20, 2018 through December 29, 2022, and shall refer to Argent for periods on and after December 30, 2022.

Because of the passive nature of the Trust and the restrictions and limitations on the powers and activities of the Trustee contained in the Trust Agreement, the Trustee does not consider any of the officers and employees of the Trustee to be “officers” or “executive officers” of the Trust as such terms are defined under applicable rules and regulations adopted under the Securities Exchange Act of 1934.

The proceeds of production from the Royalties are receivable from hundreds of separate payors. In order to facilitate creation of the Trust and to avoid the administrative expense and inconvenience of daily reporting to Unit holders, the conveyances by Sabine of the Royalties located in five of

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the six states provided for the execution of an escrow agreement by Sabine and the initial trustee of the Trust, in its capacities as trustee of the Trust and as escrow agent. The conveyances by Sabine of the Royalties located in Louisiana provided for the execution of a substantially identical escrow agreement by Sabine and a Louisiana bank in the capacities of escrow agent and of trustee under the name of Sabine Louisiana Royalty Trust. Sabine Louisiana Royalty Trust, the sole beneficiary of which is the Trust, was established in order to avoid uncertainty under Louisiana law as to the legality of the Trustee’s holding record title to the Royalties located in Louisiana. The Trust now only has one escrow agent, which is the Trustee, and a single escrow agreement.

Pursuant to the terms of the escrow agreement and the conveyances of the properties by Sabine, the proceeds of production from the Royalties for each calendar month, and interest thereon, are collected by the Trustee, as escrow agent, and are paid to and received by the Trust only on the next monthly record date. The Trustee, as escrow agent, has agreed to endeavor to assure that it incurs and pays expenses and fees for each calendar month only on the next monthly record date. The Trust Agreement also provides that the Trustee is to endeavor to assure that income of the Trust will be accrued and received and expenses of the Trust will be incurred and paid only on each monthly record date. Assuming that the escrow agreement is recognized for federal income tax purposes and that the Trustee is able to control the timing of income and expenses, as stated above, cash and accrual basis Unit holders should be treated as realizing income only on each monthly record date. The Trustee is treating the escrow agreement as effective for federal income tax purposes. However, for financial reporting purposes, royalty and interest income are recorded in the calendar month in which the amounts are received by either the escrow agent or the Trust.

Distributable income as determined for financial reporting purposes for a given quarter will not usually equal the sum of distributions made during that quarter. Distributable income for a given quarter will approximate the sum of the distributions made during the last two months of such quarter and the first month of the next quarter.

2. ACCOUNTING POLICIES

Basis of Accounting

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

•Royalty income, net of severance and ad valorem taxes, and interest income are recognized in the month in which amounts are received by the Trust, pending verification of ownership and title.

•Trust expenses, consisting principally of routine general and administrative costs, include payments made during the accounting period. Expenses are accrued to the extent of amounts that become payable on the next monthly record date following the end of an accounting period. Reserves for liabilities that are contingent or uncertain in amount may also be established if considered necessary.

•Royalties that are producing properties are amortized using the unit-of-production method. This amortization is shown as a reduction of Trust corpus.

•Distributions to Unit holders are recognized when declared by the Trustee (see Note 3).

The condensed financial statements of the Trust differ from financial statements prepared in conformity with accounting principles generally accepted in the United States of America because of the following:

•Royalty income is recognized in the month received, pending verification of ownership and title, rather than in the month of production.

•Expenses other than those expected to be paid on the following monthly record date are not accrued.

•Amortization of the Royalties is shown as a reduction to Trust corpus and not as a charge to operating results.

•Reserves may be established for contingencies that would not be recorded under accounting principles generally accepted in the United States of America.

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. The Trustee believes such information includes all the disclosures necessary to make the information presented not misleading. The information furnished reflects all adjustments which are, in the opinion of the Trustee, necessary for a fair presentation of the results for the interim periods presented. The financial information should be read in conjunction with the financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024. The Trust considers all highly liquid investments with a maturity of three months or less to be cash equivalents. Royalty interests in oil and gas properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If circumstances require the royalty interests in oil and gas properties to be tested for possible impairment, the Trust first compares undiscounted cash flows expected to be generated by the royalty interests in oil and gas properties to its carrying value. If the carrying value of the royalty interests in oil and gas properties is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the

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carrying value exceeds its fair value. The fair value of the royalty interests in oil and gas properties is measured using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount.

Use of Estimates

The preparation of condensed financial statements in conformity with the basis of accounting described above requires the Trustee to make estimates and assumptions that affect reported amounts of certain assets, liabilities, income and expenses as of and for the reporting periods. Actual results may differ from such estimates.

Distributable Income per Unit

Basic distributable income per Unit is computed by dividing distributable income by the weighted average number 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 pronouncements that are expected to have a significant impact on the Trust’s financial statements.

Federal Tax Considerations

The Internal Revenue Service (the “Service”) has ruled that the Trust is classified as a grantor trust for federal income tax purposes and therefore is not subject to federal income tax at the trust level. The Unit holders are considered, for federal income tax purposes, to own the Trust’s income and principal as though no trust were in existence. Accordingly, no provision for federal income tax expense has been made in these financial statements. The income of the Trust will be deemed to have been received or accrued by each Unit holder at the time such income is received or accrued by the Trust (on the applicable monthly record date) if the escrow arrangement discussed in Note 1 to these financial statements is respected by the Service. If the escrow arrangement is not respected for federal income tax purposes, Unit holders would be deemed to receive or accrue income from production from the royalty properties (and interest income) on a daily basis, in accordance with their method of accounting, when the proceeds from production and interest thereon were received or accrued by the escrow agent. The Trustee is treating the escrow arrangement as effective for federal income tax purposes and furnishes tax information to Unit holders on that basis.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes significant federal income tax provisions, such as the permanent extension of the income tax rates set by the Tax Cuts and Jobs Act, the continued suspension of miscellaneous itemized deductions and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Each Unit holder should consult their own tax advisor regarding the potential tax consequences of the OBBBA and its impact on such person’s ownership of Trust Units.

State Tax Considerations

The Trust holds properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. Unit holders should consult the Trust’s latest annual report on Form 10-K for a summary of tax matters.

Florida does not impose an individual income tax. Florida imposes an income tax on resident and nonresident corporations (except for S corporations not subject to the built-in-gains tax or passive investment income tax), which will apply to royalty income allocable to a corporate Unit holder from properties located within Florida.

Louisiana, Mississippi, New Mexico and Oklahoma each impose an income tax applicable to both resident and nonresident individuals and/or corporations (subject to certain exceptions for S corporations and limited liability companies, depending on their treatment for federal tax purposes), which will apply to royalty income allocable to a Unit holder from properties located within these states. New Mexico and Oklahoma impose a withholding tax on payments to nonresidents of oil and gas proceeds derived from royalty interests. To reduce the administrative burden imposed by these rules, the Trustee has opted to allow the payors of oil and gas proceeds to withhold on royalty payments made to the Trust. The Trust files New Mexico tax returns, obtains a refund, and distributes that refund to Unit holders. Unit holders who transfer their Units before the New Mexico tax refunds are received by the Trust or after the refunds are received but before the next monthly record date will not receive any portion of the refund. As a result, such Unit holders may effectively incur a double tax — first, through the reduced distribution received from the Trust (as withholding at the Trust level reduces the amount of cash available for distribution) and second, by the tax payment made directly to New Mexico taxing authorities with the filing of their New Mexico income tax returns. With respect to Oklahoma, the Trust has historically claimed and received refunds for withholding tax and distributed these refunds to Unit holders. However, beginning in 2018, the Trust’s refund claims have been denied, and the Trust may not qualify for an exemption from withholding in Oklahoma. The Trustee is actively working with the Oklahoma Tax Commission to resolve the issue. Unless the Trust is eligible to obtain an exemption from Oklahoma withholding tax or obtain a refund of Oklahoma withholding tax, Unit holders subject to Oklahoma income tax would be required to file an Oklahoma tax return in order to claim a refund or credit (to the extent available to the Unit holder) for Oklahoma withholding tax attributable to such Unit holder’s Units. A Unit holder’s entitlement to a refund or credit will be dependent upon the relevant facts and circumstances of such Unit holder.

Texas does not impose an individual income tax. Texas imposes a franchise tax at a rate of 0.75% on gross revenues less certain deductions, as specifically set forth in the Texas franchise tax statutes. Entities subject to the Texas franchise tax generally include trusts and most other types of

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entities that provide limited liability protection, unless otherwise exempt. Trusts that receive at least 90% of their federal gross income from certain 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 a taxable entity under the Texas franchise tax generally will 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 advisor regarding the possible state tax implications of owning Trust Units.

3. DISTRIBUTION TO UNIT HOLDERS

The amount to be distributed to Unit holders (“Monthly Income Amount”) is determined on a monthly basis. The Monthly Income Amount is an amount equal to the sum of cash received by the Trust during a monthly period (the period commencing on the day after a monthly record date and continuing through and including the next succeeding monthly record date) 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. Due to the fact that oil and natural gas prices have been unusually volatile in recent history, the Trustee maintains an expense reserve. The expense reserve was established to allow the Trustee to pay general and administrative expenses even if there were not sufficient funds generated from monthly royalty income to pay such expenses. Unit holders of record as of the monthly record date (the 15th day of each calendar month except in limited circumstances) are entitled to have distributed to them the calculated Monthly Income Amount for such month on or before 10 business days after the monthly record date. The Monthly Income Amount per Unit is declared by the Trust no later than 10 days prior to the monthly record date.

The cash received by the Trust from purchasers of the Trust’s oil and gas production consists of gross sales of production less applicable severance taxes and ad valorem taxes.

4. PAYABLES

Payables consist primarily of royalty receipts suspended pending verification of ownership interest or title, as well as amounts the Trustee has reserved for payments of other expenses.

The Trustee believes that these payables represent an ordinary operating condition of the Trust and that such payables will be paid or released in the normal course of business with the exception of amounts reserved for payment of expenses.

5. CONTINGENCIES

Contingencies related to the royalty 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. The Trustee is not aware of any such items as of June 30, 2025.

6. TRUSTEE FEES

		Three Months ended June 30,								Six Months Ended June 30,
		2025				2024				2025				2024
Trustee Fee		$	136,932			$	109,145			$	279,884			$	211,260
Escrow Agent Fee			410,798				327,432				839,653				633,774
Trustee Bonus Fee (1)			92,271				—				184,542				—
Total Fees		$	640,001			$	436,577			$	1,304,079			$	845,034

(1) This bonus is limited to the sum of “...(a) 100% of Cost Savings to the extent that they represent 10% or less of the Estimated Annual Administrative Costs for any accounting year and (b) 50% of Cost Savings to the extent that they represent more than 10% of the Estimated Annual Administrative Cost for any accounting year.” In 2024, the sum of the cost savings calculated in accordance with the preceding sentence was approximately $258,000, which resulted in a bonus to the Trustee of approximately $369,000. This bonus will be taken each month in the amount of approximately $31,000, from February 2025 until January 2026.

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7. SUBSEQUENT EVENTS

Subsequent events are evaluated through the issuance of the financial statements. Subsequent to June 30, 2025, the Trust declared the following distributions:

Notification Date		Monthly Record Date		Payment Date		Distribution per Unit
July 3, 2025		July 15, 2025		July 29, 2025		$	0.345930
August 5, 2025		August 15, 2025		August 29, 2025		$	0.744730

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Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources

Liquidity and Capital Resources

The Trust makes monthly distributions to the holders of Units of the excess of the preceding month’s royalty income received over expenses incurred. Upon receipt, royalty income is invested in short-term investments until its subsequent distribution. In accordance with the Trust Agreement, the Trust’s only long-term assets consist of royalty interests in producing and proved undeveloped oil and gas properties. Although the Trust is permitted to borrow funds if necessary to continue its operations, borrowings are not anticipated in the foreseeable future. Accordingly, the Trust is dependent on receipt of royalty income to generate excess cash flows utilized in making distributions. These cash flows are largely dependent on such factors as oil and gas prices and production volumes, which are influenced by many factors beyond the control of the Trust. The Trust does not undertake capital projects or make capital expenditures, and is not liable for any production costs or liabilities attributable to the Royalty Properties.

Commodity Prices

The Trust’s income and monthly distributions are heavily influenced by commodity prices. Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market uncertainty and (iii) a variety of additional factors that are beyond the Trustee’s control. The price of oil and natural gas showed weakness in early 2024, unable to gain much strength through the fourth quarter, due mainly to higher inflation, the uncertainty brought about by the November U.S. presidential election, and warmer weather in the fall and early winter in 2024. The price of oil rose in early 2025 and then fell through the remainder of the first quarter of 2025 primarily due to weak demand, increasing supply, and tariffs and trade tensions between the U.S. and China. In early May 2025 prices dropped sharply, to a nearly two-year low. The decline was driven by a combination of weak demand and rising supply concerns after a surge in global inventories. As concerns over a trade war and energy tariffs subsided, prices were able to rally throughout the rest of May and June 2025. The natural gas markets faced heightened volatility, driven by a milder-than-expected winter in late 2024 in major consuming regions like the US and Europe leading to weaker heating demand. Natural gas prices rose in the first quarter of 2025 amid tight conditions and rising demand. Colder-than-normal weather in January and February 2025 led to increased natural gas consumption and large natural gas withdrawals from inventories, which contributed to higher prices in the first quarter 2025. Geopolitical tensions, particularly instability in the Middle East affecting shipping routes, added upward pressure through May and June 2025, pushing prices back above US $4.00 by mid-June 2025. Factors which may affect commodity prices are discussed below and under “Item 1A—Risk Factors” in the Trust’s Form 10-K for the year ended December 31, 2024. Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

•political conditions in major oil producing regions, especially in the Middle East and Eastern Europe;

•worldwide economic and geopolitical conditions;

•weather conditions;

•trade barriers and tariffs;

•public health concerns, such as COVID-19;

•the supply and price of domestic and foreign crude oil or natural gas;

•the level of consumer demand;

•the price and availability of alternative fuels;

•the proximity to, and capacity of, transportation facilities;

•the effect of worldwide energy conservation measures and governmental policies and regulatory incentives for investment in non-fossil fuel energy sources; and

•the nature and extent of governmental regulation and taxation.

Although we cannot predict the occurrence of events that may affect future commodity prices or the degree to which these prices will be affected, gas royalty income for a given period generally relates to production three months prior to the period and crude oil royalty income for a given period generally relates to production two months prior to the period and will generally approximate current market prices in the geographic region of the production at the time of production. When crude oil and natural gas prices decline, the Trust is affected in two ways. First, distributable income from the Royalty properties is reduced. Second, exploration and development activity by operators on the Royalty properties may decline as some projects may become uneconomic and are either delayed or eliminated. It is impossible to predict future crude oil and natural gas price movements, and this reduces the predictability of future cash distributions to Unit holders.

Results of Operations

Distributable income consists of royalty income plus interest income plus any decrease in cash reserves established by the Trustee less general and administrative expenses of the Trust less any increase in cash reserves established by the Trustee. Distributable income for the three months ended June 30, 2025, was $17,788,995, or $1.22 per unit. Royalty income for the three months ended June 30, 2025, amounted to $18,583,570 while interest income was $119,730. General and administrative expenses totaled $914,305 for the three months ended June 30, 2025.

Distributions during the period were $0.503880, $0.447780, and $0.426490 per Unit payable to Unit holders of record on April 15, May 15, and June 16, 2025, respectively.

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Royalty income for the quarter ended June 30, 2025, decreased approximately $4,024,000 or 18%, compared with the second quarter of 2024. This decrease was primarily the result of a decrease in both oil and natural gas production ($7.1 million) and a decrease in oil prices ($2.4 million), offset by an increase in natural gas prices ($4.9 million) and decreased production taxes, operating expenses, and ad valorem taxes ($0.5 million).

Compared to the preceding quarter ended March 31, 2025, royalty income decreased approximately $811,000, or 4%, due mainly to decreased oil and natural gas production ($6.6 million) and the absence of miscellaneous receipts recognized in the prior quarter ($0.7 million), partially offset by higher oil and natural gas prices ($6.1 million), and lower production taxes, operating expenses, and ad valorem taxes ($0.4 million).

Royalty income for the six months ended June 30, 2025, decreased approximately $5,388,000, or 12%, compared to the same period in 2024. This decrease was due mainly to lower oil and natural gas production ($4.0 million) and a decrease in oil prices ($6.5 million). These were partially offset by higher natural gas prices ($3.7 million), a one-time miscellaneous receipts distribution recognized in the first quarter of 2025 ($0.7 million), and lower production taxes, ad valorem taxes, and operating expenses ($0.7 million).

The following tables illustrate average prices received for the periods discussed above and the related oil and gas production volume:

						Quarter Ended
		June 30,				June 30,				March 31,
		2025				2024				2025
Production
Oil (Bbls)			155,573				220,438				211,707
Gas (Mcfs)			3,046,325				3,869,375				3,883,612
Average Realized Price
Oil (per Bbl)		$	68.17			$	78.89			$	59.17
Gas (per Mcf)		$	3.26			$	1.99			$	2.19

		Six Months Ended
		June 30, 2025				June 30, 2024
Production
Oil (Bbls)			367,280				394,440
Gas (Mcfs)			6,929,937				7,804,325
Average Realized Price
Oil (Bbls)		$	62.98			$	79.47
Gas (Mcfs)		$	2.66			$	2.18

Oil royalty income for the three months ended June 30, 2025, related primarily to production for February through April 2025. The average price of oil as reported by NYMEX for that time period was $67.65 per barrel. The average price of oil was $68.12 per barrel for January through June 2025. Gas royalty income received for the three months ended June 30, 2025, related primarily to production for January through March 2025. The average price of gas reported by Henry Hub for the same time period was $3.73 per Mcf. The average price of gas for Henry Hub was $3.30 per Mcf for January through June 2025. As of July 30, 2025, the average price of gas for Henry Hub was $2.81 per Mcf and the average price of oil reported by NYMEX was $67.81 per barrel. It is difficult to estimate future prices of oil and gas, and any assumptions concerning future prices may prove to be incorrect.

Interest income for the quarter ended June 30, 2025, decreased $55,623 compared with the second quarter of 2024. Compared to the preceding quarter ended March 31, 2025, interest income increased $12,770. Interest income for the six months ended June 30, 2025 decreased approximately $100,589 compared to the same period in 2024. Changes in interest income are the result of changes in interest rates and funds available for investment.

General and administrative expenses for the quarter ended June 30, 2025 increased approximately $210,800 compared to the same quarter of 2024 due primarily to an increase in Escrow Agent/Trustee/Bonus fees of approximately $203,400, and professional services of $37,000. These were offset by a decrease in printing expenses of $29,600.

Compared to the previous quarter ended March 31, 2025, general and administrative expenses decreased approximately $440,700 primarily due to a decrease in Escrow Agent Fees of approximately $18,000, and decreases related to timing of payment of legal and professional services of approximately $343,000, unitholder services of approximately $82,000, and ad valorem service fee of approximately $3,600. These were slightly offset by an increase in other expenses of approximately $5,900.

General and administrative expenses increased approximately $576,600 for the six months ended June 30, 2025, compared to the same time period in 2024 due primarily to increases in Escrow Agent/Trustee/Bonus fees of approximately $459,000, professional services of approximately $116,000 and tax reporting services of approximately $5,800. These were slightly offset by a decrease in other expenses of approximately $4,200.

The condensed financial statements of the Trust differ from financial statements prepared in conformity with accounting principles generally accepted in the United States of America because of the following:

•Royalty income is recognized in the month received, pending verification of ownership and title, rather than in the month of production.

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•Expenses other than those expected to be paid on the following monthly record date are not accrued.

•Amortization of the Royalties is shown as a reduction to Trust corpus and not as a charge to operating results.

•Reserves may be established for contingencies that would not be recorded under accounting principles generally accepted in the United States of America.

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.

Critical Accounting Policies and Estimates

A disclosure of critical accounting policies and the more significant judgments and estimates used in the preparation of the Trust’s financial statements is included in Item 7 of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to the critical accounting policies during the three months ended June 30, 2025.

Distributable Income per Unit

Basic distributable income per Unit is computed by dividing distributable income by the weighted average number 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 pronouncements that are expected to have a significant impact on the Trust’s financial statements.

Forward Looking Statements

This Report includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbor created thereby. All statements other than statements of historical fact included in this Report are forward-looking statements. Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove correct. There are many factors, none of which are within the Trustee’s control, that may cause such expectations not to be realized, including, among other things, factors identified in the Trust’s most recent Annual Report on Form 10-K affecting oil and gas prices and the recoverability of reserves, general economic conditions, actions and policies of petroleum-producing nations and other changes in the domestic and international energy markets.

The Trust has an Internet website and has made available its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act at http://www.sbr-sabine.com as soon as reasonably practicable after such information is electronically filed with or furnished to the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Trust invests in no derivative financial instruments and has no foreign operations or long-term debt instruments. Other than the Trust’s ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in borrowing transactions. The amount of any such borrowings is unlikely to be material to the Trust. The Trust periodically holds short-term investments acquired with funds held by the Trust pending distribution to Unit holders and funds held in reserve for the payment of Trust expenses and liabilities. Because of the short-term nature of these borrowings and investments and certain limitations upon the types of such investments which may be held by the Trust, the Trustee believes that the Trust is not subject to any material interest rate risk.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, the Trustee carried out an evaluation of the effectiveness of the design and operation of the Trust’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Trustee concluded that the Trust’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934 and are effective in ensuring that information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Trustee to allow timely decisions regarding required disclosure. There has not been any change in the Trust’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.

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On May 14, 2013, the Committee of Sponsoring Organizations of the Treadway Commission issued an updated version of its Internal Control – Integrated Framework (the “2013 Framework”). Originally, issued in 1992, the framework helps organizations design, implement and evaluate the effectiveness of internal control concepts and simplify their use and application. The Trustee has transitioned fully to the Internal Control — Integrated Framework 2013 and is utilizing this framework in its evaluation of the Trust’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

Not applicable.

Item 1A. Risk Factors.

Risk factors relating to the Trust are contained in Item 1A of the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. No material change to such risk factors has occurred during the three and six months ended June 30, 2025. Items 2-4 not applicable.

Item 5. Other Information.

(c) The Trust does not have any directors or officers, and as a result, no such persons adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement, as defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

Exhibit Number and Description

4(a)*	Sabine Corporation Amended and Restated Royalty Trust Agreement effective as of May 22, 2014
(b)**	Amendment No. 1 to the Amended and Restated Royalty Trust Agreement of Sabine Royalty Trust, dated May 2, 2022
(c)***	Sabine Corporation Louisiana Royalty Trust Agreement effective as of December 31, 1982, by and between Sabine Corporation and Hibernia National Bank in New Orleans, as trustee, and joined by InterFirst Bank Dallas, N.A., as trustee. (P)
31	Trustee Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 99	Trustee Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Item 1A, and 7 to the Annual Report on Form 10-K for Sabine Royalty Trust filed with the Securities and Exchange Commission on February, 27, 2025 (incorporated herein by reference).

* Exhibit 4(a) is incorporated herein by reference to Exhibit 4(a) of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,

2014.

** Exhibit 4(b) is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed May 6, 2022.

*** Exhibit 4(c) is incorporated herein by reference to Exhibit 4(b) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1993.

(P) Paper exhibits.

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SIGNATURES

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.

SABINE ROYALTY TRUST
By:		Argent Trust Company, Trustee
By:		/s/ Nancy Willis
		Nancy Willis
		Director of Royalty Trust Services

Date: August 8, 2025

(The Trust has no directors or executive officers.)

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FAQ

What were Sabine Royalty Trust (SBR) distributable income and per-unit amounts for Q2 2025?

For the three months ended June 30, 2025 distributable income was $17,788,995, or $1.22 per unit (14,579,345 units outstanding).

How did royalty income in Q2 2025 compare to Q2 2024 for SBR?

Royalty income for Q2 2025 was $18,583,570 versus $22,607,108 in Q2 2024, a decrease of approximately $4.024M (~18%).

What production volumes and realized prices did SBR report for Q2 2025?

Q2 2025 production: 155,573 barrels of oil and 3,046,325 Mcf of gas. Average realized prices: $68.17 per barrel (oil) and $3.26 per Mcf (gas).

What is Sabine Royalty Trust's cash position and total assets at June 30, 2025?

Cash and short-term investments were $7,889,388 and total assets were $7,963,739 as of June 30, 2025.

Have SBR's risk factors or control assessments changed in this filing?

The Trustee reported no material change to the Trust's risk factors during the three and six months ended June 30, 2025 and concluded disclosure controls are effective.

Did Trustee or escrow fees change materially in Q2 2025?

Yes. Total Trustee/Escrow/bonus fees for Q2 2025 were $640,001 compared with $436,577 in Q2 2024, increasing G&A expense.