UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, ~~2010~~2011

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

Commission file number 1-12474

TORCH ENERGY ROYALTY TRUST

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization) 74-6411424 (I.R.S. Employer Identification No.)

Delaware

74-6411424

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

Rodney Square North ~~1100~~ ~~North Market Street Wilmington, Delaware 19890 (Address of Principal Executive Offices; Zip Code)~~

~~(Registrant’s~~1100 ~~Telephone~~North ~~number,~~Market ~~Including~~Street ~~Area Code) (302) 636-6016~~

Wilmington, Delaware 19890

(Address of Principal Executive Offices; Zip Code)

(302) 636-6016

(Registrant’s Telephone number, Including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:


Title of each class		Name of Each Exchange on Which Registered
Units of Beneficial Interest		New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer; as defined in Rule 405 of the Securities Act. Yes o ¨ No x þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or ~~Section~~ Section 15(d) of the Act. Yes o ¨ No x þ

Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(b) 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 o ¨ No x þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes o ¨ No ¨ o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K. x þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o¨ Accelerated filer o¨ Non-accelerated filer o¨ (Do not check if a smaller reporting company) Small reporting company þx

Indicated by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o ¨ No x þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter of 2013 was $8912,~~179,2228~~111.~~20.~~

At January 27, 2014, there were 8,600,000 Units of Beneficial Interest of the Trust outstanding.

Torch Energy Royalty Trust

Annual Report on Form 10-K ~~For~~ ~~the fiscal year ended December 31, 2010~~

For the fiscal year ended December 31, 2011

TABLE OF CONTENTS

	Page
				PageNumber
	Number
PART I
PART I
	Item 1.		Business		1
Item 1. Business		1
	Item 1A.		Risk Factors		7
Item 1A. Risk Factors		6
	Item 1B.		Unresolved Staff Comments		11
Item 1B. Unresolved Staff Comments		12
	Item 2.		Properties		11
Item 2. Properties		12
	Item 3.		Legal Proceedings		14
Item 3. Legal Proceedings		15
	Item 4.		Removed and Reserved		17
Item 4. Removed and Reserved		18
PART II
PART II
	Item 5.		Market for Registrant’s Units, Related Unitholder Matters and Registrant Purchases of Equity Securities		17
Item 5. Market for Registrant’s Units, Related Unitholder Matters and Registrant Purchases of Equity Securities		19
	Item 6.		Selected Financial Data		18
Item 6. Selected Financial Data		19
	Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
	Item 7a.		Quantitative and Qualitative Disclosures About Market Risk		24
Item 7a. Quantitative and Qualitative Disclosures About Market Risk		24
	Item 8.		Financial Statements and Supplementary Data		25
Item 8. Financial Statements and Supplementary Data		25
	Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		41
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		40
	Item 9A.		Controls and Procedures		41
Item 9A. Controls and Procedures		40
	Item 9B.		Other Information		43
Item 9B. Other Information		41
PART III
PART III
	Item 10.		Directors, Executive Officers and Corporate Governance		44
Item 10. Directors, Executive Officers and Corporate Governance		42
	Item 11.		Executive Compensation		44
Item 11. Executive Compensation		42
	Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Unitholders Matters		45
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholders Matters		42
	Item 13.		Certain Relationships and Related Transactions		45
Item 13. Certain Relationships and Related Transactions		43
	Item 14.		Principal Accountant Fees and Services		47
Item 14. Principal Accountant Fees and Services		45
PART IV
PART IV
	Item 15.		Exhibits, Financial Statement Schedules		48
Item 15. Exhibits, Financial Statement Schedules		46
	—		Signatures		50
— Signatures		48
EX-23.1
EX-23.2
EX-23.3
EX-31.1
EX-32.1

-i-

Torch Energy Royalty Trust

PART I

Item 1. Business.

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this document, including without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the financial position, estimated quantities and net present values of reserves of the Torch Energy Royalty Trust (“Trust”) and statements that include the words “believe”, “expects”, “anticipates”, “intends”, “estimates”, “projects”, “target”, “goal”, “plans”, “objectives”, “should” or similar expressions or variations are forward-looking statements. Torch Energy Advisors Incorporated (“Torch”) and the Trust can give no assurances that the assumptions upon which these statements are based will prove to be correct. Important factors that could cause actual results to differ materially from Torch’s expectations (“Cautionary Statements”) are disclosed under “Risk Factors” elsewhere in this document. All subsequent written and oral forward-looking statements attributable to the Trust or persons acting on its behalf are expressly qualified by the Cautionary Statements.

General

The Trust was formed effective October 1, 1993, pursuant to a trust agreement (“Trust Agreement”) among Wilmington Trust Company, not in its individual capacity but solely as trustee of the Trust (“Trustee”), Torch Royalty Company (“TRC”) and Velasco Gas Company, Ltd. (“Velasco”) as owners of certain oil and natural gas properties (“Underlying Properties”) and Torch Energy Advisors Incorporated (“Torch”) as grantor. TRC and Velasco created net profits interests (“Net Profits Interests”) which burden the Underlying Properties and conveyed such interests to Torch. The Trust was formed under the Delaware statutory trust act (formerly known as the Delaware business trust act). Torch conveyed the Net Profits Interests to the Trust in exchange for an aggregate of 8,600,000 units of beneficial interest (“Units”). Such Units were sold to the public through various underwriters in November 1993. ~~The~~During ~~current~~2011, the working interest owners of the Underlying Properties ~~are~~were TRC, Torch E&P Company, Samson Lone Star Limited Partnership and ~~Constellation~~ Constellation Energy Partners LLC (“Working Interest Owners”).

The sole purpose of the Trust is to hold the Net Profits Interests, to receive payments from the Working Interest Owners, and to make payments to Unitholders. The Trust does not conduct any business activity and has no officers, directors or employees. The Trust and Trustee rely on third party service providers to perform administrative services for the Trust. Torch provided accounting, bookkeeping, informational and other services to the Trust related to the Net Profits Interests pursuant to the Administrative Services Agreement effective October 1, 1993 and an ~~oral~~ oral arrangement after termination of the Administrative Services Agreement on January 29, 2008 through April 1, 2008. From November 7, 2008 through December 23, 2008, Torch provided certain accounting services in connection with the Trust’s preparation of its Form 10-K for the year ended December 31, 2007 pursuant to an agreement between the Trust and Torch dated November 7, 2008. To facilitate the winding down of the Trust, Torch currently provides certain accounting and other services for the Trust pursuant to an agreement with the Trust entered into on March 26, 2009. The initial term of the agreement expired on March 31, 2010. Onand ~~March 31~~was thereafter extended from year to year, ~~2010~~up to the period ending August 30, 2013. Torch ~~and~~currently provides the Trust via letter agreement the administrative services historically provided by Torch to the Trust through December 31, 2013 consistent with past practice and (ii) from ~~extended~~December 31, 2013 to April 30, 2014 shall provide services to the ~~expiration~~Trust ~~date~~in support of ~~the~~any ~~agreement~~tax bycorrespondence ~~one~~(tax booklet) and tax filings that might be necessary for the year toended ~~March~~December 31, ~~2012~~2013 orconsistent aswith ~~sooner~~past ~~terminated~~practice and byother ~~written~~related ~~notice~~services ~~from~~necessary ~~either~~to ~~party~~complete ~~within~~the 5wind ~~business~~down ~~days~~of ~~notice~~the Trust that are also consistent with past practice. Subsequently, the inability of the Trust to hire qualified services providers to assist in the wind down and liquidation of the Trust may have a material adverse effect on the operations of the Trust.

~~The~~1 Trust has no officers, directors or employees. The Trust and Trustee rely solely on receiving accurate information, reports and other representations from Torch and other service providers to the Trust. In executing and submitting this report on behalf of the Trust and with respect to Bruce L. Bisson in executing the certifications relating to this report, the Trustee and Bruce L. Bisson have relied upon the accuracy of such reports, information and representations.

1 Table of Contents

~~Table~~Torch ofEnergy ~~Contents~~Royalty Trust

The Trust has no officers, directors or employees. The Trust and Trustee rely solely on receiving accurate information, reports and other representations from Torch ~~Energy~~and ~~Royalty~~other service providers to the Trust. In executing and submitting this report on behalf of the Trust and with respect to David A. Vanaskey in executing the certifications relating to this report, the Trustee and David A. Vanaskey have relied upon the accuracy of such reports, information and representations.

In connection with the formation of the Trust, TRC and Velasco contracted to sell the oil and natural gas production from the Underlying Properties to Torch Energy Marketing Inc. (“TEMI”), a subsidiary of Torch, under a purchase contract (“Purchase Contract”) which expired upon termination of the Trust on January 29, 2008 (“Termination Date”). See Marketing Arrangements in this section for oil and natural gas pricing information pertaining to the Underlying Properties. The Working Interest Owners receive payments reflecting the proceeds of oil and natural gas sold and aggregate these payments, deduct applicable costs and make payments to the Trustee each quarter for the amounts due to the Trust under the Net Profits Interests. Prior to the termination of the Trust, Unitholders received quarterly cash distributions relating to oil and natural gas ~~produced~~ produced and sold from the Underlying Properties. Following the termination of the Trust, the Trustee established a non-interest bearing segregated cash reserve account (“Cash Reserve”) for payment by the Trust of certain actual, contingent and uncertain liabilities of the Trust. See ~~footnote~~ Note 4 of the Trust’s ~~audited~~accompanying financial statements for additional information concerning the Cash Reserve. Because no additional properties will be contributed to the Trust, the assets of the Trust deplete over time and a portion of each cash distribution made by the Trust is analogous to a return of capital.

The Underlying Properties constitute working interests in the Chalkley Field in Louisiana (“Chalkley Field”), the Robinson’s Bend Field in the Black Warrior Basin in Alabama (“Robinson’s Bend Field”), fields that produce from the Cotton Valley formations in Texas (“Cotton Valley Fields”) and fields that produce from the Austin Chalk formation in Texas (“Austin Chalk Fields”). The Underlying Properties represent interests in all productive formations from 100 feet below the deepest productive formation in each field to the surface when the Trust was formed. The Trust therefore has no interest in deeper productive formations. The Trust sold all of its Net Profits Interests attributable to the Underlying Properties in the Robinson’s Bend Field on December 13, 2011. See Note 5 of the Trust’s accompanying financial statements and Item 3. Legal Proceedings for additional information concerning the sale of the Robinson’s Bend Field Net Profit Interests. On August 30, 2013, the Trust simultaneously signed and closed a purchase and sale agreement by and among the Trust, TRC, Torch E&P Company, N.M.L. Inc., of Texas (formerly Torch Energy Services, Inc.), and Torch, pursuant to which the Trust and the Torch Energy Louisiana Royalty Trust sold certain net profits interests attributable to the underlying working interests in certain fields that produce from the Cotton Valley Fields, Austin Chalk Fields and Chalkley Field for a purchase price of $3,258,330. The Trust is the sole beneficiary of the Torch Energy Louisiana Royalty Trust which held the Net Profits Interests in the fields in Louisiana. The buying parties were the successful bidder in the public auction of the net profit interests attributable to underlying working interests in the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field. The purchase agreement contains customary representations, warranties and covenants. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of the effective date of the purchase agreement for those fields (May 1, 2013).

~~Separate~~In ~~conveyances~~2011, ~~(“Conveyances”)~~Net ~~were~~Proceeds ~~used~~paid to ~~transfer~~ the ~~Net~~Trust ~~Profits~~were ~~Interests~~reduced inby ~~each state~~$0. ~~Net~~4 ~~proceeds~~million ~~(“Net Proceeds”), generally defined~~ as ~~gross~~a ~~revenues~~result ~~received~~of ~~from~~TRC ~~the~~recouping ~~sale~~overpayments ~~of production~~made ~~attributable~~ to the ~~Underlying~~Trust ~~Properties~~in ~~during~~1994 ~~any period less property, production, severance~~ and ~~similar taxes, and development, operating, and certain other costs (excluding~~1995 ~~operating~~pertaining ~~and~~to ~~development costs from~~ the ~~Robinson’s~~Chalkley ~~Bend~~ Field ~~prior~~(“Chalkley toGas ~~January 1,~~Volume ~~2003~~Adjustment”)~~, are calculated separately for each Conveyance~~. ~~If,~~In ~~during any period~~2010, ~~costs and expenses deducted in calculating~~ Net Proceeds ~~exceed~~paid ~~gross~~to ~~proceeds under a Conveyance, neither~~ the Trust ~~nor Unitholders~~with ~~are~~respect ~~liable~~ to ~~pay~~net ~~such~~profits ~~excess~~income ~~directly,~~generated ~~but~~in the ~~Trust~~Austin ~~will~~Chalk ~~receive~~Fields nowere ~~payments~~reduced ~~for distribution~~by to$826,000 ~~Unitholders~~(including ~~with~~interest ~~respect~~expense ~~to such Conveyance until future gross proceeds exceed~~of ~~future~~$70,000) ~~costs~~to ~~and~~recoup ~~expenses~~overpayments ~~plus~~to the ~~cumulative~~Trust ~~excess~~by ofTRC ~~such~~during ~~costs~~the ~~and~~five ~~expenses~~year ~~not~~period ~~previously recouped~~ended byDecember 31, ~~the~~2009 ~~Working~~(“Austin ~~Interest~~Chalk ~~Owners~~Gas ~~plus~~Volume ~~interest thereon~~Adjustment”). ~~The~~See ~~complete~~Item 2. ~~definitions of Net Proceeds are set forth in the Conveyances~~Properties.

~~The Trust received the affirmative vote of the Unitholders of more than 66~~ 2~~/3%~~ of the outstanding Units to terminate the Trust at the meeting of Unitholders held on January 29, 2008. Upon termination of the Trust, among other things, the Trustee is required to sell the Net Profits Interests. Specifically, pursuant to Section 9.03(e) of the Trust Agreement if the property of the Trust Estate (as defined in the Trust Agreement) has not been sold prior to the end of one calendar year following the termination date, the Trustee, thereafter, must cause such assets to be sold at public auction. As the Trust was terminated by a vote of the Unitholders on January 29, 2008 (the “Termination Date”), the Trustee anticipates it will continue to consult with the Trust’s and Trustee’s financial and legal advisors in preparing the sales process and obtaining the necessary information required for disclosure regarding the Units to carry out the sale requirement under Section 9.03(e). No assurances can be given that the Trustee will be able to sell the Net Profits Interests, or the price that will be used to calculate the Net Profits Interests to be distributed to Unitholders following such a sale. Such distributions could be below the market value of the Units. The Trust can give no assurances of the effect of the results of the affirmative vote to terminate the Trust by the Unitholders on the continued listing of the Units on the New York Stock Exchange (“NYSE”) or any other national quotation system.

AsTable previously disclosed by the Trust in certain of its filings with the Securities and Exchange Commission (“SEC”), the Trust and certain working interest owners (TRC, Torch E&P Company and Constellation Contents

2 Torch Energy Royalty Trust

~~Table~~Separate conveyances (“Conveyances”) were used to transfer the Net Profits Interests in each state. Net proceeds (“Net Proceeds”), generally defined as gross revenues received from the sale of ~~Contents~~production attributable to the Underlying Properties during any period less property, production, severance and similar taxes, and development, operating, and certain other costs (excluding operating and development costs from the Robinson’s Bend Field prior to January 1, 2003), are calculated separately for each Conveyance. If, during any period, costs and expenses deducted in calculating Net Proceeds exceed gross proceeds under a Conveyance, neither the Trust nor Unitholders are liable to pay such excess directly, but the Trust will receive no payments for distribution to Unitholders with respect to such Conveyance until future gross proceeds exceed future costs and expenses plus the cumulative excess of such costs and expenses not previously recouped by the Working Interest Owners plus interest thereon. The complete definitions of Net Proceeds are set forth in the Conveyances.

~~Torch~~On ~~Energy~~January 24, ~~Royalty~~2013, the Trust received notice from NYSE Regulation, Inc. (“NYSE Regulation”) informing the Trust that NYSE Regulation has determined to commence proceedings to delist the Trust’s units from the New York Stock Exchange (“NYSE”), with trading of the units to be suspended prior to the opening of NYSE trading on January 30, 2013. NYSE Regulation informed the Trust that the delisting determination was based on the Trust’s delay in filing its Annual Report for the year ended December 31, 2011 on Form 10-K and subsequent Quarterly Reports for the fiscal quarters ending in 2012 with the Securities and Exchange Commission. The Trust had previously utilized the six-month cure period under Section 802.01C of the NYSE Listed Company Manual and a subsequent three-month extension of the filing date for the Annual Report to January 16, 2013 from NYSE Regulation, the Trust was unable to file the Annual Report by this extended deadline. NYSE Regulation declined the Trust’s request for further extension under Section 802.01C of the NYSE Listed Company Manual of the filing deadline. NYSE Regulation also noted that the average closing price of the Trust’s units had previously fallen below the NYSE’s continued listing minimum share price standard (Section 802.01E of the NYSE Listed Company Manual) of $1.00 over a consecutive 30 trading day period. Trading of the Units was suspended prior to the opening of NYSE trading on Wednesday, January 30, 2013. The Trust commenced trading on the Pink Sheets on that same day, under the symbol “TRRU”.

~~Energy~~Termination ~~Partners LLC)~~ of the ~~Underlying Properties were involved in an arbitration proceeding relating to the proper calculation of the quarterly Net Profits Interests payments owed to the~~ Trust ~~following~~and ~~the~~Liquidation ~~termination~~ of the Trust.’s The working interest owners contended that the pricing mechanism contained in the terminated Purchase Contract (including the sharing price and minimum price mechanism) should continue to be utilized to calculate the quarterly Net Profits Interests payments. In the arbitration proceeding, the Trustee, not in its individual capacity but solely as Trustee of the Trust, contended that the sharing price mechanism of the Purchase Contract (which determined the calculation of the Net Profits Interests prior to the termination of the Oil and Gas Purchase Contract) did not survive the termination of the Purchase Contract or the termination of the Trust. On April 11, 2008, Trust Venture Company, LLC, which owns the majority of Units in the Trust, submitted an unopposed request to intervene in the arbitration and became a party to the arbitration. Trust Venture Company, LLC agreed with the Trustee, and took the position in the arbitration, that the sharing price mechanism of the Purchase Contract did not survive the termination of the Purchase Contract or the termination of the Trust.

The ~~hearing~~Trust onreceived the ~~merits~~affirmative invote of the ~~arbitration~~Unitholders ~~commenced~~of onmore ~~June 16,~~than ~~2008~~66 ~~and~~2/3% ~~was~~of ~~completed~~the onoutstanding ~~June 20,~~Units ~~2008.~~to Onterminate ~~July 18,~~the ~~2008,~~Trust ~~alternative~~at ~~dispute~~the meeting ~~resolution~~of ~~provider~~Unitholders ~~JAMS,~~held ~~through~~on ~~a panel of three arbitrators (“Arbitrators”)~~January 29, ~~released~~2008 ~~an award notice to all parties~~ (the “~~Award~~Termination ~~Notice~~Date”). InUpon ~~the Award~~termination ~~Notice,~~of the ~~Arbitrators~~Trust, ~~found~~among ~~that~~other ~~the~~things, ~~Conveyances are not ambiguous and~~ the ~~pricing mechanism~~Trustee ~~of the Purchase Contract~~ is ~~incorporated~~required byto ~~reference~~sell ~~into~~ the ~~Conveyances notwithstanding~~Net ~~termination~~Profits ~~of the Purchase Contract~~Interests. ~~The~~Specifically, ~~Arbitrators~~pursuant ~~therefore~~to ~~concluded that the pricing mechanism~~ Section 9.03(~~including the sharing price and minimum price mechanism~~e) ~~continues to burden the~~of ~~Net~~the ~~Profits~~Trust ~~Interests~~Agreement ~~and~~if ~~will do so for~~ the ~~life~~property of the ~~Conveyances.~~Trust ~~The~~Estate ~~Arbitrators~~(as ~~also~~defined ~~denied each~~in ~~party’s~~the ~~request~~Trust ~~for~~Agreement) ~~fees~~has ~~and~~not ~~costs;~~been ~~each~~sold ~~party~~prior ~~was required~~ to ~~bear~~the ~~its~~end ~~own~~of ~~fees~~one ~~and~~calendar ~~costs related~~year tofollowing the ~~arbitration.~~termination ~~The~~date, ~~Trust~~the ~~and~~ Trustee, ~~incurred expenses as a result of the arbitration and expect to continue to incur expenses~~thereafter, ~~including~~must ~~but~~cause ~~not~~such ~~limited~~assets to ~~legal~~be ~~fees,~~sold asat ~~a result of~~public ~~the winding down of the Trust~~auction. ~~See also Item 3. Legal Proceedings for subsequent event information concerning the arbitration and Award Notice.~~

~~The~~On August 4, 2011, the Trust ~~received~~entered into a ~~letter~~material ~~from~~definitive ~~the~~agreement ~~NYSE~~for onadvisory ~~April~~and marketing services with an effective date of August 181, 2011 ~~informing~~with respect to the ~~Trust~~sale ~~that,~~of asthe aNet ~~result of~~Profits ~~its~~Interests ~~failure~~pursuant to ~~timely~~an ~~file~~agreement ~~its~~with ~~Annual~~PLS, ~~Report~~Inc., ona ~~Form~~Texas ~~10-K~~corporation. ~~for~~The ~~the~~Trust ~~fiscal~~notified ~~year~~Robinson’s ~~ended~~Bend ~~December 31~~Production II, ~~2010~~ ~~(the~~LLC. (“~~2010~~RBP ~~Annual Report~~II”), ~~with~~a ~~the~~Delaware ~~SEC,~~limited ~~the~~liability company ~~Trust~~and ~~was~~a ~~subject~~subsidiary toof ~~certain~~Constellation ~~procedures~~Energy ~~as specified~~Partners inLLC, ~~Section~~on November ~~802.01E~~3, ~~“SEC~~2011 ~~Annual~~that ~~Report~~it ~~Timely~~was ~~Filing~~the ~~Criteria,”~~successful bidder in the public auction of the ~~NYSE’s~~sale ~~Listed Company~~of ~~Manual~~the ~~(“Section 802.01E”)~~Net ~~and~~Profits ~~further,~~Interests ~~regardless~~attributable ofto the ~~procedures~~Robinson’s ~~specified~~Bend inField. ~~Section~~On ~~802.01E~~December 13, 2011, the ~~NYSE~~Trust ~~could~~entered ~~commence~~into ~~delisting~~a ~~procedures~~purchase atand ~~any~~sale ~~time~~agreement ~~during~~by ~~any~~and ~~period~~between ~~that~~RBP ~~is available~~II pursuant to ~~complete~~which the ~~filing~~Trust agreed to sell, and RBP II agreed to purchase, all of the ~~2010~~Trust’s ~~Annual~~Net ~~Report~~Profits Interests attributable to the Underlying Properties in the Robinson’s Bend Field for a purchase price of $1,000,000. ifThe ~~circumstances~~sale ~~warrant~~signed and closed simultaneously on December 13, 2011.

As3 the Trust had been unable to obtain complete and accurate information regarding reserve information and the financial statements of the Trust required to be included in the 2010 Annual Report, the Trust remained unable to timely file its 2010 Annual Report. Failure of the Trust to make progress in its efforts to complete and file its SEC reports or failing to meet the minimum listing criteria could result in a suspension of the Trust’s listing and trading privileges.

MarketingTable Arrangementsof and Price Sharing Contents

InTorch ~~connection~~Energy ~~with~~Royalty ~~the formation of the~~ Trust, TRC, Velasco and TEMI entered into the Purchase Contract which expired upon termination of the Trust. Pursuant to the Purchase Contract, TEMI was obligated to purchase all net production attributable to the Underlying Properties for an index price for oil and natural gas (“Index Price”), less certain gathering, treating and transportation charges, which were calculated monthly. The Index Price equals 97% of the weighted average spot market prices of oil and natural gas (“Average Market Prices”) at the four locations where TEMI sold production.

~~The~~On ~~Purchase~~August 30, ~~Contract~~2013, the Trust also ~~provided~~simultaneously ~~that~~signed ~~TEMI~~and ~~pay~~closed a ~~minimum~~purchase ~~price~~and sale agreement by and among the Trust, TRC, Torch E&P Company, N.M.L. Inc., of Texas (~~“Minimum~~formerly ~~Price”)~~Torch ~~for~~Energy ~~natural~~Services, ~~gas production~~Inc.), and Torch, pursuant to which isthe ~~adjusted~~Trust ~~annually~~and ~~for~~the ~~inflation.~~Torch ~~When~~Energy ~~TEMI~~Louisiana ~~paid~~Royalty Trust sold certain net profits interests attributable to the underlying working interests in certain fields that produce from the Cotton Valley Fields, Austin Chalk Fields and Chalkley Field for a purchase price ~~based~~of on$3,258,330. The buying parties were the successful bidder in the public auction of the net profit interests attributable to underlying working interests in the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of the effective date of the purchase agreement for those fields (May 1, 2013).

On December 4, 2013, the Trust filed a Current Report on Form 8-K (the “Initial Report”) to report the announcement of a quarterly distribution. The Trust filed Amendment No. 1 to the Initial Report on Form 8-K/A on December 5, 2013, which amended and restated the Initial Report in its entirety, and which was filed solely for the purpose of clarifying the per unit reference of the distribution. On December 13, 2013, the Trust filed Amendment No. 2 on Form 8-K/A which amends and restates the Initial Report and Amendment No. 1 in its entirety and revised the distribution amount down due to additional expenses forecasted in the wind down and liquidation of the Trust. On December 13, 2013, the Trust announced the distribution to the unitholders of $3,031,349 or $.35 per unit, payable on December 30, 2013 to unitholders of record on December 23, 2013. Immediately following the distribution the Cash Reserve was approximately $510,000. To the extent that any of the Cash Reserve remains after the payment of all of the Trust’s expenses, the Trustee may make one or more additional cash distributions to the unitholders of record; however, no assurance can be made that any such distributions will occur.

~~Table~~The Trustee anticipates it will continue to consult with the Trust’s and Trustee’s financial and legal advisors in the wind down of the ~~Contents~~Trust.

~~Torch~~Legal ~~Energy~~Proceedings ~~Royalty Trust~~

~~Minimum~~As ~~Price~~previously disclosed itby ~~received~~the ~~price~~Trust ~~credits~~in certain of its filings with the Securities and Exchange Commission (“~~Price Credits~~SEC”), ~~equal~~the toTrust ~~the~~and ~~difference~~certain ~~between~~working interest owners (TRC, Torch E&P Company and Constellation Energy Partners LLC) of the Underlying ~~Index~~Properties ~~Price~~were ~~and~~involved in an arbitration proceeding relating to the ~~Minimum~~proper ~~Price~~calculation ~~that~~of itthe ~~was~~quarterly ~~entitled~~Net Profits Interests payments owed to ~~deduct~~the inTrust ~~determining~~following the ~~purchase~~termination ~~price~~of the Trust. The working interest owners contended that the pricing ~~when~~mechanism contained in the ~~Index~~terminated ~~Price~~Purchase ~~for~~Contract ~~natural~~(including ~~gas~~the ~~exceeded~~sharing price and minimum price mechanism) should continue to be utilized to calculate the ~~Minimum~~quarterly ~~Price~~Net Profits Interests payments. In ~~addition,~~the ifarbitration proceeding, the ~~Index Price~~Trustee, ~~for~~not ~~natural~~in ~~gas~~its ~~exceeded~~individual capacity but solely as Trustee of the Trust, contended that the sharing price, mechanism of the Purchase Contract (which isdetermined ~~adjusted~~the ~~annually~~calculation ~~for~~of ~~inflation~~the ~~(“Sharing Price”),~~Net ~~TEMI~~Profits ~~was~~Interests ~~entitled~~prior to ~~deduct~~the ~~50%~~termination of ~~such~~the ~~excess~~Oil ~~(“Price~~and ~~Differential”~~Gas Purchase Contract) indid ~~determining~~not survive the ~~purchase~~ ~~price.~~termination ~~TEMI~~of ~~had~~the anPurchase ~~annual~~Contract ~~option~~or tothe ~~discontinue~~termination of the ~~Minimum~~Trust. ~~Price~~On ~~commitment.~~April 11, ~~However~~2008, ~~if TEMI~~Trust ~~discontinued~~Venture ~~the~~Company, ~~Minimum~~LLC, ~~Price~~which ~~commitment,~~owns itthe ~~would~~majority noof ~~longer~~Units bein ~~entitled~~the toTrust, ~~deduct~~submitted ~~the~~an ~~Price~~unopposed request to ~~Differential~~intervene in ~~calculating~~ the ~~purchase~~arbitration ~~price~~ and ~~would~~became ~~have~~a ~~forfeited~~party ~~all~~to ~~accrued~~the ~~Price Credits~~arbitration. ~~TEMI~~ ~~had~~Trust noVenture ~~outstanding~~Company, ~~Price~~LLC ~~Credits~~agreed onwith the ~~Termination~~Trustee, ~~Date~~ and ~~had~~took ~~not~~the ~~exercised~~position ~~its~~in ~~option~~the ~~to discontinue~~arbitration, that the ~~Minimum~~sharing ~~Price~~price ~~Commitment~~mechanism ~~prior~~of tothe Purchase Contract did not survive the termination of the Purchase Contract’s ~~expiration~~or ~~date~~the termination of the Trust.

~~Upon~~The hearing on the ~~Trust’s~~merits ~~termination,~~in the ~~Working~~arbitration ~~Interest~~commenced ~~Owners~~on ~~utilized~~June 16, 2008 and was completed on June 20, 2008. On July 18, 2008, alternative dispute resolution provider JAMS, through a panel of three arbitrators (“Arbitrators”), released an award notice to all parties (the ~~same~~“Award ~~pricing~~Notice”). ~~mechanisms~~In the ~~(including~~Award Notice, the ~~Sharing~~Arbitrators ~~Price~~found ~~and~~that ~~Minimum~~the ~~Price~~Conveyances ~~commitment~~are ~~mechanisms)~~not asambiguous and the ~~expired~~pricing mechanism of the Purchase Contract inis ~~calculating~~incorporated ~~Net~~by ~~Proceeds~~reference ~~due~~into tothe Conveyances notwithstanding termination of the ~~Trust~~Purchase Contract. The ~~Minimum~~Arbitrators therefore ~~Price~~concluded ~~was~~that ~~$1.97,~~the ~~$1.95~~pricing mechanism (including the sharing price and ~~$1.87~~ ~~per~~minimum ~~MMBtu~~price ~~for~~mechanism) ~~2010,~~continues ~~2009~~to burden the Net Profits Interests and ~~2008,~~will ~~respectively.~~do ~~The~~so ~~Sharing~~for ~~Price~~the ~~was~~life ~~$2.43,~~of $2the Conveyances.40 ~~and~~The Arbitrators also denied each party’s ~~$2.30~~request for ~~2010,~~fees ~~2009~~and costs; each party was required to bear its own fees and ~~2008,~~costs ~~respectively.~~related ~~Following~~to the arbitration. The Trust’s ~~termination,~~and ~~the~~Trustee ~~Working Interest~~incurred ~~Owners~~expenses ~~also~~as ~~have~~a result of the ~~same~~arbitration ~~annual~~and ~~option~~expect to ~~discontinue~~continue ~~the~~to ~~Minimum~~incur ~~Price~~expenses, ~~commitment.~~including Asbut not limited ofto ~~December 31,~~legal ~~2010~~fees, ~~the~~as ~~Working~~a ~~Interest~~result ~~Owners~~of ~~had~~the nowinding ~~outstanding~~down ~~Price~~of ~~Credits~~the ~~and~~Trust. ~~had~~See ~~not exercised~~Item 3. ~~its~~Legal ~~right~~Proceedings tofor ~~discontinue~~subsequent event information concerning the ~~Minimum~~arbitration ~~Price~~and ~~commitment~~Award Notice.

~~Gas~~4 production is purchased at the wellhead. Therefore, Net Proceeds do not include any amounts received in connection with extracting natural gas liquids from such production at natural gas processing or treating facilities.

Gathering,Table Treatingof and Transportation Arrangements Contents

~~The~~Torch ~~Purchase~~Energy ~~Contract,~~Royalty ~~which expired upon the~~ Trust’s termination, entitled TEMI to deduct certain natural gas gathering, treating and transportation fees in calculating the purchase price for natural gas in the Robinson’s Bend, Austin Chalk and Cotton Valley Fields. The amounts that were deducted in calculating the purchase price for such natural gas were set forth in the Purchase Contract and were not affected by the actual costs incurred by TEMI to gather, treat and transport natural gas. Upon the Trust’s termination, the Working Interest Owners were entitled to deduct the same natural gas gathering, treating and transportation fees that had previously been deducted by TEMI pursuant to the Purchase Contract in calculating Net Proceeds due to the Trust.

~~For~~Marketing ~~the~~Arrangements ~~Robinson’s Bend Field, a gathering, treating~~ and ~~transportation~~Price ~~fee~~Sharing of $0.260 per MMBtu, adjusted annually for inflation ($0.331, $0.327 and $0.314 per MMBtu for 2010, 2009, and 2008, respectively), plus fuel usage equal to 5% of revenues is deducted in computing Net Proceeds due to the Trust. Additionally, a gathering fee of $0.05 per MMBtu is deducted in calculating the purchase price for production from 73 of the 426 wells in the Robinson’s Bend Field. In computing Net Proceeds due to the Trust for the Austin Chalk Fields, $0.38 per MMBtu plus 17% of revenues are deducted as a fee to gather, treat and transport natural gas production. The purchase price for natural gas for production attributable to certain wells in the Cotton Valley Fields is reduced by a transportation fee of $0.045 per MMBtu.

~~During~~In ~~the~~connection ~~years~~with ~~ended~~the ~~December 31,~~formation ~~2010,~~of ~~2009~~the ~~and 2008~~Trust, ~~gathering~~TRC, ~~treating~~Velasco and ~~transportation fees~~TEMI ~~deducted~~entered ~~from~~into the ~~Net~~Purchase ~~Proceeds~~Contract ~~calculations~~which ~~pertaining~~expired toupon ~~production~~termination ~~during~~of the ~~twelve~~Trust. ~~months~~Pursuant ~~ended~~to ~~September 30,~~the ~~2010~~Purchase Contract, ~~2009~~TEMI ~~and~~was ~~2008~~obligated into ~~the~~purchase ~~Robinson’s~~all ~~Bend,~~net ~~Austin~~production ~~Chalk~~attributable ~~and~~to ~~Cotton~~the ~~Valley Fields,~~Underlying ~~totaled~~Properties ~~$1.0 million,~~for ~~$1.0 million~~an ~~and~~index ~~$1.4 million~~price for ~~2010,~~oil ~~2009~~ and ~~2008,~~natural ~~respectively. No~~gas ~~amounts~~(“Index ~~for~~Price”), less certain gathering, treating orand transportation ~~are~~charges, which ~~deducted~~were incalculated ~~calculating~~monthly. The Index Price equals 97% of the ~~purchase~~weighted ~~price from~~average spot market prices of oil and natural gas (“Average Market Prices”) at the ~~Chalkley~~four ~~Field~~locations where TEMI sold production.

4The Purchase Contract also provided that TEMI pay a minimum price (“Minimum Price”) for natural gas production, which is adjusted annually for inflation. When TEMI paid a purchase price based on the Minimum Price it received price credits (“Price Credits”), equal to the difference between the Index Price and the Minimum Price that it was entitled to deduct in determining the purchase price when the Index Price for natural gas exceeded the Minimum Price. In addition, if the Index Price for natural gas exceeded the sharing price, which is adjusted annually for inflation (“Sharing Price”), TEMI was entitled to deduct 50% of such excess (“Price Differential”) in determining the purchase price. TEMI had an annual option to discontinue the Minimum Price commitment. However, if TEMI discontinued the Minimum Price commitment, it would no longer be entitled to deduct the Price Differential in calculating the purchase price and would have forfeited all accrued Price Credits. TEMI had no outstanding Price Credits on the Termination Date and had not exercised its option to discontinue the Minimum Price Commitment prior to the Purchase Contract’s expiration date.

~~Table~~Upon the Trust’s termination, the Working Interest Owners utilized the same pricing mechanisms (including the Sharing Price and Minimum Price commitment mechanisms) as the expired Purchase Contract in calculating Net Proceeds due to the Trust. The Minimum Price was $1.99, $1.97 and $1.95 per MMBtu for 2011, 2010 and 2009, respectively. The Sharing Price was $2.46, $2.43 and $2.40 for 2011, 2010 and 2009, respectively. Following the Trust’s termination, the Working Interest Owners also have the same annual option to discontinue the Minimum Price commitment. As of December 31, ~~Contents~~2011, the Working Interest Owners had no outstanding Price Credits and had not exercised its right to discontinue the Minimum Price commitment.

~~Torch~~Gas ~~Energy~~production ~~Royalty~~is ~~Trust~~purchased at the wellhead. Therefore, Net Proceeds do not include any amounts received in connection with extracting natural gas liquids from such production at natural gas processing or treating facilities.

~~Net~~Gathering, ~~Profits~~Treating ~~Interests~~ and Transportation Arrangements

The ~~Net~~Purchase ~~Profits~~Contract, ~~Interests~~which ~~entitle~~expired upon the Trust’s totermination, ~~receive~~entitled ~~95%~~TEMI ~~of the Net Proceeds attributable~~ to ~~oil and~~deduct certain natural gas ~~produced~~gathering, treating and ~~sold~~transportation ~~from~~fees in ~~wells~~calculating ~~(other than infill wells) on~~ the ~~Underlying Properties.~~purchase Inprice ~~calculating~~for ~~Net~~natural ~~Proceeds~~gas ~~from~~in the Robinson’s Bend ~~Field~~, ~~operating~~Austin Chalk and ~~development costs~~Cotton ~~incurred~~Valley ~~prior~~Fields. toThe ~~January 1,~~amounts ~~2003~~that were ~~not~~ deducted. Inin ~~addition,~~calculating the ~~amounts~~purchase ~~paid~~price tofor ~~the Trust~~such ~~from~~natural ~~the~~gas ~~Robinson’s~~were ~~Bend~~set ~~Field~~forth ~~during~~in ~~any~~the ~~calendar~~Purchase ~~quarter~~Contract ~~are subject to a volume limitation~~and ~~(“Volume~~were ~~Limitation”)~~not ~~equal~~affected toby the ~~gross~~actual ~~proceeds~~costs ~~from~~incurred ~~the~~by ~~sale~~TEMI ofto ~~912.5 MMcf of natural gas~~gather, ~~less property,~~treat ~~production, severance~~ and ~~related~~transport ~~taxes~~natural gas. ~~The~~Upon ~~Robinson~~the Trust’s ~~Bend~~termination, ~~Field~~the ~~production attributable~~Working toInterest ~~the~~Owners ~~Trust~~were ~~did~~entitled ~~not~~to ~~meet~~deduct the ~~Volume~~same ~~Limitation~~natural ~~during~~gas ~~the~~gathering, ~~years~~treating ~~ended~~and ~~December 31,~~transportation ~~2010,~~fees ~~2009~~that ~~and~~had ~~2008~~previously ~~and~~been isdeducted ~~not~~by ~~expected~~TEMI pursuant to dothe soPurchase Contract in calculating Net Proceeds due to the ~~future~~Trust.

~~The~~5 Net Profits Interests also entitle the Trust to 20% of the Net Proceeds of wells drilled on the Underlying Properties since the Trust’s establishment into formations in which the Trust has an interest, other than wells drilled to replace damaged or destroyed wells (“Infill Wells”). Infill Wells Net Proceeds (“Infill Well Net Proceeds”) represent the aggregate gross revenues received from Infill Wells less the aggregate amount of the following Infill Well costs: i) property, production, severance and similar taxes; ii) development costs; iii) operating costs; and iv) interest on the recovered portion, if any, of the foregoing costs computed at a rate of interest announced publicly by Citibank, N.A. in New York as its base rate.

AvailabilityTable of Reports Contents

~~The~~Torch ~~Trust’s~~Energy ~~principal~~Royalty ~~offices are located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890. The telephone number is (302) 636-6016. The~~ Trust files quarterly and annual reports and other information with the SEC. You may read and copy any document that we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC’s website at http://www.sec.gov and on our website, http://www.torchroyalty.com, which features all of our current SEC filings free of charge as soon as reasonably practicable after they are filed with the SEC. Our SEC filings are also available at the office of the NYSE. For further information on obtaining copies of our public filings from the NYSE, visit the NYSE website at http://www.nyse.com. Information contained on the Trust’s website or any other website referenced herein is not incorporated by reference into this report and does not constitute a part of this report.

~~Widely~~For ~~Held~~the ~~Fixed~~Robinson’s ~~Investment~~Bend Field, a gathering, treating and transportation fee of $0.260 per MMBtu, adjusted annually for inflation ($0.335, $0.331 and $0.327 per MMBtu for 2011, 2010, and 2009, respectively), plus fuel usage equal to 5% of revenues is deducted in computing Net Proceeds due to the Trust. ~~Reporting~~Additionally, ~~Information~~a gathering fee of $0.05 per MMBtu is deducted in calculating the purchase price for production from 73 of the 426 wells in the Robinson’s Bend Field. In computing Net Proceeds due to the Trust for the Austin Chalk Fields, $0.38 per MMBtu plus 17% of revenues are deducted as a fee to gather, treat and transport natural gas production. The purchase price for natural gas for production attributable to certain wells in the Cotton Valley Fields is reduced by a transportation fee of $0.045 per MMBtu.

~~Some~~During ~~Trust~~the ~~Units~~years ~~are~~ended ~~held~~December 31, ~~by middlemen~~2011, as2010 ~~such term is broadly defined in U.S. Treasury Regulations (~~and ~~includes custodians~~2009, ~~nominees~~gathering, ~~certain~~treating ~~joint owners,~~ and ~~brokers~~transportation ~~holding~~fees ~~an interest~~deducted ~~for~~from athe ~~custodian~~Net inProceeds ~~street~~calculations pertaining ~~name, collectively referred~~ to ~~herein~~production asduring ~~“middlemen”). Therefore,~~ the ~~Trustee~~twelve ~~considers~~months ~~the~~ended ~~Trust~~September 30, to2011, be2010 aand ~~non-mortgage~~2009 ~~widely~~in ~~held~~the ~~fixed~~Robinson’s ~~investment~~Bend, ~~trust (“WHFIT”)~~Austin ~~for~~Chalk ~~U.S.~~and ~~federal~~Cotton ~~income~~Valley ~~tax purposes. Wilmington Trust Company~~Fields, ~~not~~totaled in$0.9 ~~its~~million ~~individual capacity but solely as the Trustee~~ for the ~~Trust,~~year ~~Rodney~~ended ~~Square North, 1100 North Market Street, Wilmington, Delaware 19890, telephone number (302)~~December ~~636-6016~~31, is2011 ~~the~~and ~~representative of the Trust that will provide tax information in accordance with applicable U~~$1.S.0 ~~Treasury~~million ~~Regulations governing~~for ~~the~~each ~~information reporting requirements~~ of the ~~Trust~~years asended ~~a WHFIT. Tax information is also posted the Trust’s website at http://www.torchroyalty.com. Notwithstanding the foregoing~~December 31, ~~the~~2010 ~~middlemen holding Trust Units on behalf of Unitholders,~~ and ~~not~~2009. ~~the~~No ~~Trustee~~amounts offor ~~the Trust~~gathering, ~~are~~treating ~~solely responsible~~or ~~for~~transportation ~~complying with the information reporting requirements under the U.S. Treasury Regulations with respect to such Trust Units. Unitholders whose Trust Units~~ are ~~held~~deducted byin ~~middlemen should~~calculating ~~consult with such middlemen regarding~~ the ~~information~~purchase ~~that~~price ~~will~~from ~~be reported to them by~~ the ~~middlemen~~ ~~with~~Chalkley ~~respect to the Trust Units~~Field. ~~Each unitholder should consult his or her tax advisor for compliance matters.~~

5 Net Profits Interests

~~Table~~The Net Profits Interests entitle the Trust to receive 95% of ~~Contents~~the Net Proceeds attributable to oil and natural gas produced and sold from wells (other than infill wells) on the Underlying Properties. All of the Net Profits Interests have been sold as of August 2013 and the Trust is winding down its operations. In calculating Net Proceeds from the Robinson’s Bend Field, operating and development costs incurred prior to January 1, 2003 were not deducted. In addition, the amounts paid to the Trust from the Robinson’s Bend Field during any calendar quarter are subject to a volume limitation (“Volume Limitation”) equal to the gross proceeds from the sale of 912.5 MMcf of natural gas, less property, production, severance and related taxes. The Robinson’s Bend Field production attributable to the Trust did not meet the Volume Limitation during the years ended December 31, 2011, 2010 and 2009. On December 13, 2011, the Trust sold all of its Net Profits Interests attributable to the Underlying Properties in the Robinson’s Bend Field to RBP II. See Note 5 of the accompanying financial statements and Item 3. Legal Proceedings for additional information.

~~Torch~~The ~~Energy~~Net ~~Royalty~~Profits Interests also entitle the Trust to 20% of the Net Proceeds of wells drilled on the Underlying Properties since the Trust’s establishment into formations in which the Trust has an interest, other than wells drilled to replace damaged or destroyed wells (“Infill Wells”). Infill Wells Net Proceeds (“Infill Well Net Proceeds”) represent the aggregate gross revenues received from Infill Wells less the aggregate amount of the following Infill Well costs: i) property, production, severance and similar taxes; ii) development costs; iii) operating costs; and iv) interest on the recovered portion, if any, of the foregoing costs computed at a rate of interest announced publicly by Citibank, N.A. in New York as its base rate.

~~Item 1A.~~Availability ~~Risk~~of ~~Factors.~~ Reports

~~You~~The ~~should~~Trust’s ~~carefully~~principal ~~consider~~offices ~~the~~are ~~following~~located ~~risk~~at ~~factors~~Rodney inSquare ~~addition~~North, to1100 ~~the~~North ~~other~~Market ~~information included~~Street, inWilmington, ~~this~~Delaware ~~report~~19890. The ~~risks~~telephone ~~set~~number ~~forth~~is (302) 636-6016. ~~below~~The ~~are~~Trust infiles ~~addition~~quarterly toand ~~risks~~annual ~~that~~reports ~~apply~~and toother ~~most businesses.~~information ~~The~~with ~~Trustee is in~~ the ~~process~~SEC. ofYou ~~winding~~may ~~down~~read and ~~liquidating~~copy ~~the~~any ~~Trust~~document ~~after the~~that ~~affirmative~~we ~~vote~~file ofat the ~~requisite~~SEC’s ~~number~~Public ofReference ~~Unitholders.~~Room ~~See~~at ~~Trust~~100 ~~Termination~~F ~~below in~~Street, ~~this item~~N.E., ~~The~~Washington, ~~other~~D.C. ~~Risk~~20549. ~~Factors~~Please ~~set~~call the ~~forth~~SEC ~~below~~at ~~should~~1-800-SEC-0330 befor ~~considered~~further ininformation ~~light~~on of the ~~wind~~public ~~up and~~reference ~~liquidation of the Trust~~rooms. IfOur ~~any~~SEC offilings ~~these~~are ~~risks~~also oravailable ~~uncertainties~~to ~~actually~~the ~~occurs,~~public from the ~~Trust~~SEC’s ~~financial~~ ~~condition~~website ~~and~~at ~~results~~http://www.sec.gov ~~of operations~~ and ~~the~~on ~~future~~our ~~and~~website, ~~current~~http://www.torchroyalty.com, ~~value~~which features all of ~~the~~our ~~Net~~current ~~Profits Interests~~SEC ~~could~~filings befree ~~materially~~of ~~adversely~~charge ~~affected.~~as ~~Additional~~soon ~~risks~~as ~~not~~reasonably ~~presently~~practicable ~~known~~after tothey ~~the Trust~~are orfiled ~~which~~with the ~~Trust~~SEC. ~~considers~~Information ~~immaterial~~contained ~~based~~ on ~~information~~the ~~currently~~Trust’s ~~available~~website toor itany ~~may also~~other ~~materially~~website ~~adversely~~referenced ~~affect~~herein ~~the~~is ~~Trust.~~not ~~Because~~incorporated ofby ~~these~~reference ~~factors,~~into ~~past~~this ~~financial performance~~report ~~should~~and does not beconstitute ~~considered~~a anpart ~~indication~~ of ~~future~~this ~~performance~~report.

~~Trust~~6 ~~Termination~~

TheTable Trust received the affirmative vote of the Unitholders of more than 66 2/3% of the outstanding Units to terminate the Trust at the meeting of Unitholders held on January 29, 2008. Upon termination of the Trust, among other things, the Trustee is required to sell the Net Profits Interests. No assurances can be given that the Trustee will be able to sell the Net Profits Interests, or that the ultimate proceeds that will be distributed to Unitholders following such a sale will be equivalent to the market value of such interests or the market value of the Units. Such distributions could be below the market value of the Units. The Trust and Trustee cannot anticipate the results that such termination of the Trust will have on its ability to sell the Net Profits Interests. Contents

~~Specifically,~~Torch ~~pursuant~~Energy toRoyalty ~~Section 9.03(e) of the~~ Trust Agreement, if the property of the Trust Estate (as defined in the Trust Agreement) has not been sold prior to the end of one calendar year following the termination date (prior to January 29, 2009), the Trustee must then cause such assets to be sold at public auction. As the Trust was terminated by a vote of the Unitholders on January 29, 2008, the Trustee anticipates it will continue to consult with the Trust’s and Trustee’s financial and legal advisors in preparing the sales process and obtaining the necessary information required for disclosure regarding the Units to carry out the sale requirement under Section 9.03(e). There can be no assurance at this time of the specific timetable in which the Trust and Trustee would be able to obtain all the information advisable and necessary concerning the Net Profits Interests in order to prepare and finalize the sales process.

~~The~~Widely ~~Trust’s~~Held ~~continuing~~Fixed ~~failure~~Investment ~~to timely file certain periodic reports with the SEC during the wind up and liquidation of the~~ Trust ~~may~~Reporting ~~pose~~Information significant risks to the Trust’s business, which could materially and adversely affect the Trust financial condition and results of operation and the current and/or future value of the Net Profits Interests.

~~The~~Some ~~public~~Trust ~~trading~~Units ~~price~~are ~~for~~held ~~the~~by ~~Units~~middlemen, ~~tends~~as tosuch beterm ~~tied~~is tobroadly ~~the~~defined ~~recent~~in U.S. Treasury Regulations (and ~~expected~~includes ~~levels~~custodians, ofnominees, ~~cash distribution~~certain onjoint ~~the~~owners, and ~~Units.~~brokers ~~The~~holding ~~amounts~~an ~~available~~interest for ~~distribution~~a bycustodian ~~the~~in ~~Trust~~street ~~vary~~name, incollectively ~~response~~referred to ~~numerous~~ ~~factors~~herein ~~outside~~as “middlemen”). Therefore, the ~~control~~Trustee ofconsiders the Trust, ~~including~~to ~~prevailing~~be ~~prices~~a ~~for~~non-mortgage ~~natural~~widely ~~gas produced~~held ~~from~~fixed ~~the~~investment ~~Trust’s~~trust ~~Net~~(“WHFIT”) ~~Profits Interests~~for U.S. ~~The~~federal ~~market~~income ~~price~~tax ispurposes. Wilmington Trust Company, not ~~necessarily~~in ~~indicative~~its of individual capacity but solely as the ~~value~~Trustee ~~that~~for the Trust, ~~would~~Rodney ~~realize~~Square ifNorth, it1100 ~~sold~~North ~~those~~Market ~~Net~~Street, ~~Profits~~Wilmington, ~~Interests~~Delaware to19890, atelephone ~~third~~number ~~party~~(302) 636-6016, is ~~buyer.~~the Inrepresentative ~~addition,~~of ~~such~~the ~~market~~Trust ~~price~~that iswill ~~not~~provide ~~necessarily~~tax ~~reflective~~information ofin ~~the~~accordance ~~fact~~with ~~that~~applicable ~~since~~U.S. Treasury Regulations governing the ~~assets~~ information reporting requirements of the Trust ~~are~~as ~~depleting assets,~~ a ~~portion~~WHFIT. ofTax ~~each~~information ~~cash~~is ~~distribution~~also ~~paid~~posted on the ~~units~~Trust’s ~~should~~website beat ~~considered~~http://www.torchroyalty.com. byNotwithstanding ~~investors~~the asforegoing, athe ~~return~~middlemen holding Trust Units on behalf of ~~capital~~Unitholders, ~~with~~and not the ~~remainder~~Trustee ~~being~~of ~~considered~~the asTrust, aare solely responsible for complying with the information reporting requirements ~~return~~under onthe ~~investment~~U.S. ~~There~~Treasury isRegulations nowith ~~guarantee~~respect ~~that~~to ~~distributions~~such ~~made~~Trust toUnits. aUnitholders ~~Unitholder~~whose ~~over~~Trust ~~the~~Units ~~life of~~are ~~these~~held ~~depleting~~by ~~assets~~middlemen orshould ~~distributions~~consult ~~following~~with asuch ~~sale~~middlemen ofregarding the ~~Net~~information ~~Profits~~that ~~Interests~~ will ~~equal or~~be ~~exceed~~reported to them by the ~~purchase~~middlemen ~~price~~with ~~paid~~respect byto the Trust ~~Unitholder~~Units. Each unitholder should consult his, her or its tax advisor for compliance matters.

~~The~~Item ~~Trust~~1A. ~~can~~Risk give no assurances of the effect of the results of the affirmative vote to terminate the Trust by the Unitholders on the continued listing of the Units on the NYSE or any other national quotation systemFactors.

6You should carefully consider the following risk factors in addition to the other information included in this report. The risks set forth below are in addition to risks that apply to most businesses. All of the Net Profits Interests have been sold as of August 2013 and the Trustee is in the process of winding down and liquidating the Trust after the affirmative vote of the requisite number of Unitholders. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of the effective date of the purchase agreement for those fields (May 1, 2013 ). All of the Risk Factors set forth below are qualified in this regard. See Trust Termination below in this item for further information. The other Risk Factors set forth below should be considered in light of the wind up and liquidation of the Trust. If any of these risks or uncertainties actually occurs, the Trust’s financial condition and results of operations and the future and current value of the Net Profits Interests could be materially adversely affected. Additional risks not presently known to the Trust or which the Trust considers immaterial based on information currently available to it may also materially adversely affect the Trust. Because of these factors, past financial performance should not be considered an indication of future performance.

~~Table~~Trust ofTermination ~~Contents~~and Liquidation

~~Torch~~The ~~Energy~~Trust ~~Royalty~~received the affirmative vote of the Unitholders of more than 66 2/3% of the outstanding Units to terminate the Trust at the meeting of Unitholders held on January 29, 2008. Upon termination of the Trust, among other things, the Trustee is required to sell the Net Profits Interests. Specifically, pursuant to Section 9.03(e) of the Trust Agreement if the property of the Trust Estate (as defined in the Trust Agreement) has not been sold prior to the end of one calendar year following the termination date, the Trustee, thereafter, must cause such assets to be sold at public auction. On August 4, 2011 the Trust entered into a material definitive agreement for advisory and marketing services with an effective date of August 1, 2011 with respect to the sale of the Net Profits Interests pursuant to an agreement with PLS, Inc., a Texas corporation.

~~Failure~~The ofTrust ~~the~~notified ~~Trust~~RBP toII ~~make~~on ~~progress~~November 3, in2011 ~~its~~that ~~efforts~~it towas ~~complete~~the ~~and~~successful ~~file~~bidder ~~its~~in ~~SEC~~the ~~reports~~public ~~or failing~~auction toof ~~meet~~the sale of the ~~minimum~~Net ~~listing~~Profits ~~criteria~~Interests attributable ofto the ~~NYSE~~Robinson’s ~~could~~Bend ~~result~~Field. inOn aDecember 13, ~~suspension~~2011, of the Trust’s ~~listing~~entered into a purchase and ~~trading~~sale ~~privileges.~~agreement Ifby ~~the~~and ~~NYSE~~between ~~does~~RBP ~~not~~II ~~grant~~pursuant to which the Trust ~~extensions~~agreed to ~~file its~~sell, ~~periodic~~and ~~reports~~RBP ~~with~~II ~~the~~agreed ~~NYSE~~to purchase, itall ~~has~~of the ~~right~~Trust’s Net toProfits ~~begin~~Interests ~~proceedings~~attributable to ~~delist~~ the ~~units.~~Underlying ~~A delisting~~Properties ofin the ~~Trust~~Robinson’s ~~units~~Bend ~~may~~Field ~~have~~for a ~~material~~purchase ~~adverse~~price ~~effect~~of ~~on the Trust~~$1,000,000. ~~among~~The ~~other~~sale ~~things reducing~~signed ~~the liquidity~~ and ~~market~~closed ~~price~~simultaneously ofon ~~the~~December 13, ~~units~~2011.

IfOn ~~natural~~August 30, ~~gas~~2013, the Trust simultaneously signed and ~~oil~~closed ~~prices~~a ~~decline~~purchase ~~significantly,~~and sale agreement by and among the Trust’s, ~~cash~~TRC, ~~flow~~Torch ~~from~~E&P ~~operations~~Company, ~~will~~N.M.L. ~~likely~~Inc., ~~decline~~of ~~and~~Texas ~~the~~(formerly ~~Trust~~Torch ~~may~~Energy ~~have~~Services, Inc.), and Torch, pursuant to ~~lower~~which the ~~cash~~Trust ~~distributions~~and orthe ~~may~~Torch ~~not~~Energy beLouisiana ~~able~~Royalty toTrust ~~pay distributions~~sold atcertain ~~all~~net ~~during~~profits interests attributable to the ~~wind~~underlying upworking ~~and~~interests ~~liquidation~~in ofcertain ~~the~~fields ~~Trust.~~that produce from the Cotton Valley

~~The~~7 Trust’s cash distributions, operating results and the value of the Net Profits Interests are substantially dependent on prices of natural gas and, to a lesser extent, oil. Prices for oil and natural gas are volatile and are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and a variety of additional factors beyond the control of the Trust and/or Torch. These factors include:

•Table The domestic and foreign supply of and demand for oil and natural gas; • The price and quantity of foreign imports of oil and natural gas; • The level of consumer product demand; • Weather conditions, including but not limited to, hurricanes in the Gulf of Mexico, can adversely impact cash distributions received by the Trust. If the wells drilled on the Underlying Properties and related infrastructure were to be damaged by adverse weather conditions, cash flows distributed to Unitholders could be delayed during the period in which damage to such assets were repaired. Additionally, costs associated with such repairs not covered by insurance would reduce cash distributions received by the Trust; • Overall domestic and global economic conditions; • Political and economic conditions and events in foreign oil and natural gas producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, conditions in South America and Russia, and acts of terrorism or sabotage; • The ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; • Technological advances affecting energy consumption; • Domestic and foreign governmental regulations and taxation; • The impact of energy conservation efforts; • The capacity of natural gas pipelines and other transportation facilities to the Trust’s production; and • The price and availability of alternative fuels.Contents

~~Any~~Torch ~~substantial~~Energy ~~and~~Royalty ~~extended decline in the price of natural gas and oil would have an adverse effect on the~~ Trust’s ~~revenues, cash distributions and current and/or future value of the Net Profits Interests.~~

~~Trust~~ Fields, ~~expenses~~Austin ~~may~~Chalk ~~have~~Fields anand ~~adverse~~Chalkley ~~impact~~Field onfor a purchase price of $3,258,330. The buying parties were the ~~distributions~~successful tobidder ~~Unitholders~~in ~~during~~the public auction of the ~~wind~~net upprofit interests attributable to ~~and~~underlying ~~liquidation~~working ofinterests in the ~~Trust~~Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field.

~~Trust~~All ~~expenses,~~of ~~Sarbanes-Oxley~~the ~~compliance~~Net Profits Interests have been sold as of August 2013 and ~~legal~~the ~~fees~~Trustee ~~during~~is in the ~~wind~~process of winding down and ~~liquidation~~liquidating of the Trust ~~may~~after ~~have~~the anaffirmative ~~adverse~~vote ~~effect~~of on the ~~ability~~requisite number of ~~the~~Unitholders. The Trust tono ~~pay~~longer ~~quarterly~~receives ~~distributions~~any ~~to the~~proceeds ~~Unitholders.~~from ~~The~~the ~~Trustee~~Net ~~has~~Profits ~~set~~Interests upfor athe ~~cash~~Cotton Valley ~~reserve~~Fields, ~~account~~Austin ~~pursuant~~Chalk toFields and the ~~Trust~~Chalkley ~~Agreement~~Field ~~in order~~as toof ~~provide~~the effective date of the ~~funds~~purchase ~~necessary~~agreement for anthose ~~orderly~~fields ~~wind~~(May up1, 2013). The Trustee anticipates it will continue to consult with the Trust’s and ~~liquidation~~Trustee’s financial and legal advisors in the wind down of the Trust.

The ~~estimated~~Trust’s ~~reserve~~continuing ~~quantities~~failure into ~~this~~timely ~~report~~file ~~are~~certain ~~based~~periodic onreports ~~many~~with ~~assumptions~~the ~~that~~SEC ~~may~~during ~~prove~~the ~~to be~~wind ~~inaccurate.~~down ~~Any~~and ~~material~~liquidation ~~inaccuracies~~of inthe ~~these~~Trust ~~reserve~~may ~~estimates~~pose orsignificant ~~underlying~~risks ~~assumptions~~to ~~will materially~~the ~~affect~~Trust’s ~~the~~business, ~~quantities~~which ~~and~~could ~~present~~materially ~~value~~and ofadversely affect the Trust’s ~~reserves~~financial condition.

7The public trading price for the Units tends to be tied to the recent and expected levels of cash distribution on the Units. The amounts available for distribution by the Trust vary in response to numerous factors outside the control of the Trust, including prevailing prices for natural gas produced from the Trust’s Net Profits Interests. There is no guarantee that distributions made to a Unitholder over the life of these depleting assets or distributions following a sale of the Net Profits Interests will equal or exceed the purchase price paid by the Unitholder.

~~Table~~All of ~~Contents~~the Net Profits Interests have been sold as of August 2013 and the Trustee is in the process of winding down and liquidating the Trust after the affirmative vote of the requisite number of Unitholders. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of the effective date of the purchase agreement for those fields (May 1, 2013).

~~Torch~~The ~~Energy~~Trust ~~Royalty~~may ~~Trust~~have to lower the cash distributions or may not be able to pay distributions at all during the wind down and liquidation of the Trust.

~~Estimates~~All of ~~economically~~the ~~recoverable~~Net ~~natural~~Profits ~~gas~~Interests ~~and~~have ~~oil~~been ~~reserves~~sold ~~and~~as of ~~future~~August ~~net~~2013 ~~cash flows are based upon a number of variable factors~~ and ~~assumptions,~~the ~~all~~Trustee ofis ~~which are to some degree speculative and may vary considerably from actual results. Prices for oil and natural gas are volatile and are subject to large fluctuations~~ in ~~response to relatively minor changes in~~ the ~~supply~~ ofprocess ~~and demand for oil and natural gas, market uncertainty and a variety~~ of ~~additional~~ ~~factors~~winding ~~beyond~~down ~~the~~and ~~control~~liquidating of the Trust ~~and/or~~after ~~Torch. Therefore, actual production, revenues, taxes and development and operation expenditures may not occur as estimated. As disclosed by~~ the ~~Trust~~ inaffirmative ~~its~~vote ~~Annual Reports on Form 10-K for each~~ of the ~~three~~requisite ~~years~~number ended December 31, 2007, 2008 and 2009 and in this Annual Report, on December 30, 2008, Trust Venture Company, LLC filed and subsequently served a derivative lawsuit against Constellation Energy Partners LLC in Alabama state court alleging counts, in accordance with, inter alia, Section 3816 of ~~the~~Unitholders. ~~Delaware~~The ~~Statutory~~ Trust ~~Act,~~ ~~codified~~no atlonger 12receives ~~Del. C. 3816(a), to (i) recover~~ any ~~overcharges~~proceeds tofrom the ~~Trust~~Net byProfits ~~Constellation Energy~~Interests ~~Partners~~for ~~LLC~~the ~~related~~Cotton toValley ~~administrative costs~~Fields, ~~water~~Austin ~~gathering,~~Chalk ~~treating~~Fields and ~~disposal costs and severance taxes and (ii) require Constellation Energy Partners LLC to provide an accounting of its revenues and expenses as required under~~ the ~~Conveyance filed of record in Tuscaloosa County,~~Chalkley ~~Alabama.~~Field ~~See Item 3. Legal Proceedings. There can be no assurance~~ as ~~to the outcome or result~~ of ~~this derivative lawsuit or~~ the ~~effect~~effective ofdate ~~the derivative lawsuit may have on the calculation~~ of the ~~reserve~~purchase ~~reports~~agreement ~~and~~for ~~the~~those ~~estimated~~fields ~~reserve~~(May ~~quantities~~1, 2013).

~~Future results of the~~ Trust ~~will~~expenses ~~depend~~may ~~upon~~have ~~the~~an ~~ability~~adverse ofimpact ~~the~~on ~~owners of~~ the ~~Underlying Properties~~ todistributions ~~develop, produce and sell their oil and natural gas reserves and the corresponding proceeds from such sales which may vary widely. The reserve data included herein are estimates only and are subject~~ to ~~many~~Unitholders ~~uncertainties.~~during ~~Actual quantities of oil and natural gas may differ considerably from~~ the ~~amounts~~wind ~~set~~down ~~forth herein. In addition, different reserve engineers may make different estimates of reserve quantities~~ and ~~cash~~liquidation ~~flows based upon the same available data. The present value, discounted at 10%,~~ of ~~future net cash flows from proved reserves attributable to~~ the ~~Net Profits Interests does not represent the fair market value of the proved reserves, or the price at which the Net Profits Interests could be sold~~Trust. A determination of fair market value would involve consideration of many factors in addition to the present value, discounted at 10%. An impairment loss is recognized when the net carrying value of the Net Profits Interests exceeds its fair market value. No impairment loss was recognized during the years ended December 31, 2010, 2009 and 2008.

AsTrust ~~more~~expenses, ~~Infill~~Sarbanes-Oxley ~~Wells~~compliance ~~are~~and ~~drilled,~~legal ~~they~~fees ~~could~~during ~~cause~~the wind down and liquidation of the Trust may have an adverse effect on the ability of the Trust to pay quarterly distributions to the Unitholders. The Trustee has set up a ~~reduction~~cash inreserve ~~amounts~~account ~~payable~~pursuant to the Trust orAgreement ~~a purchaser~~in oforder to provide the funds ~~Net~~necessary ~~Profits~~for ~~Interests~~an orderly wind down and liquidation of the Trust.

The ~~Net~~estimated ~~Profits~~reserve ~~Interests~~quantities ~~include a 20 percent net profit interest~~ in ~~Infill~~this ~~Wells.~~report ~~Infill~~are ~~Wells may~~based ~~recover~~on amany ~~portion of the reserves~~ assumptions that ~~would~~may ~~otherwise~~prove to be ~~produced from wells burdened by the Trust’s Net Profits Interests~~inaccurate. ~~Since~~Any ~~the~~material ~~Trust~~inaccuracies isin ~~entitled~~these toreserve ~~receive~~estimates ~~95 percent~~or ofunderlying ~~the~~assumptions ~~Net Proceeds~~will ~~from~~materially ~~production~~affect ~~burdened by its Net Profits Interests but only 20 percent of~~ the ~~net profits~~quantities ~~interest~~and ~~from~~present ~~Infill~~value ~~Wells, the drilling~~ of ~~Infill Wells may reduce payments to~~ the Trust~~, and~~’s ~~ultimately distributions to Trust Unitholders~~reserves.

~~The~~8 Trust’s business is subject to operational risks that may not be fully insured, which, if they were to occur, could adversely affect the Trust’s financial condition or results of operations and, as a result, the Trust’s ability to pay distributions to Unitholders.

CashTable payments to the Trust are derived from the production and sale of natural gas and oil, which operations are subject to risk inherent in such activities, such as blowouts, cratering, explosions, damage to equipment caused by weather conditions, facility or equipment malfunctions, uncontrollable flows of oil, natural gas or well fluids, fires, pollution and other environmental risks. These risks could result in substantial losses which are deducted in calculating the Net Proceeds paid to the Trust due to injury and loss of life, severe damage to and destruction of property and equipment, pollution and other environmental damage and suspension of operations. Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance Contents

8 Torch Energy Royalty Trust

~~Table~~Estimates of ~~Contents~~economically recoverable natural gas and oil reserves and of future net cash flows are based upon a number of variable factors and assumptions, all of which are to some degree speculative and may vary considerably from actual results. Prices for oil and natural gas are volatile and are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and a variety of additional factors beyond the control of the Trust and/or Torch. Therefore, actual production, revenues, taxes and development and operation expenditures may not occur as estimated.

~~Torch~~Future ~~Energy~~results ~~Royalty~~of the Trust will depend upon the ability of the owners of the Underlying Properties to develop, produce and sell their oil and natural gas reserves and the corresponding proceeds from such sales which may vary widely. The reserve data included herein are estimates only and are subject to many uncertainties. Actual quantities of oil and natural gas may differ considerably from the amounts set forth herein. In addition, different reserve engineers may make different estimates of reserve quantities and cash flows based upon the same available data. The present value, discounted at 10%, of future net cash flows from proved reserves attributable to the Net Profits Interests does not represent the fair market value of the proved reserves, or the price at which the Net Profits Interests could be sold. A determination of fair market value would involve consideration of many factors in addition to the present value, discounted at 10%. An impairment loss is recognized when the net carrying value of the Net Profits Interests exceeds its fair market value. During the year ended December 31, 2011, an impairment loss of $6.8 million was recognized. No impairment loss was recognized during the years ended December 31, 2010 and 2009.

~~could~~If ~~have~~it ais ~~material~~determined ~~adverse~~that ~~impact on~~ the Trust’s ~~business~~is ~~activities,~~subject ~~financial condition, results of operations and ability~~ to ~~pay~~the ~~distributions~~Texas tomargin ~~Unitholders.~~tax, ~~The failure of an operator of~~ the ~~Underlying~~Trustee ~~Properties~~may have to ~~conduct~~withhold ~~its~~a ~~operations~~disproportionate oramount ~~discharge~~from ~~its~~future ~~obligations in a proper~~distributions ~~manner~~to ~~could~~pay ~~have an adverse effect on~~ the ~~Net~~tax ~~Proceeds payable to the Trust~~liability.

The ~~Trust~~Trustee ~~may~~does benot ~~unable~~intend to ~~compete~~pay ~~effectively~~any ~~with~~amounts ~~larger~~for ~~companies,~~the ~~which~~Texas ~~may~~margin ~~adversely~~tax ~~affect~~for tax periods subsequent to January 1, 2008, based on the assumption that the Trust’s ~~ability~~is toexempt ~~generate~~from ~~sufficient~~tax ~~revenue~~as a passive entity; however, there is currently no clear statutory authority that the Trust meets requirements for the margin tax exemption as a passive entity. The effective date of the legislation was January 1, 2008, but the tax was generally imposed on revenues generated in 2007 and ~~its~~thereafter ~~ability~~(earlier for certain fiscal year taxpayers). If it is subsequently determined that the Trust is not exempt from the margin tax, the Trust would be required to ~~pay~~deduct and withhold from future distributions ~~to Unitholders~~the ~~prior~~amounts necessary to pay the ~~windup~~margin ~~and~~tax ~~liquidation~~for each of the four years ending December 31, 2008, 2009, 2010 and 2011, including the tax liability accruing on income distributed after December 2006 attributable to Trust revenues during the five years ended December 31, 2011 from which no tax was withheld. For more information about the Texas margin tax, see Note 3 to the Trust’s accompanying financial statements.

~~The~~Federal ~~Trust’s~~Regulation distributions are dependent on natural gas production and prices and, to a lesser extent, oil production and prices from the Underlying Properties. The natural gas industry is highly competitive in all of its phases. In marketing production from the Underlying Properties, major natural gas companies, independent natural gas concerns, and individual producers and operators may provide competition. Many of these competitors have greater financial and other resources than the companies marketing the production of the Trust. Competition may also be presented by alternative fuel sources, including heating oil and other fossil fuels. In addition, the Trust and Trustee do not independently monitor the Working Interest Owners financial viability on an ongoing basis which may have an effect on the Trust and its ability to pay distributions to the Unitholders.

The Underlying ~~Trust’s~~Properties ~~operations~~ are subject to ~~regulations~~the ~~which~~jurisdiction ~~may~~of ~~limit~~FERC with respect to various aspects of natural gas operations including the ~~Trust’s~~marketing and production of natural gas. orThe Natural Gas Act and the Natural Gas Policy Act (collectively, the “Acts”) mandate Federal regulation of interstate transportation of natural gas. The Natural Gas Wellhead Decontrol Act of 1989 terminated wellhead price ~~that~~controls on all domestic natural gas on January 1, 1993. Numerous questions have been raised concerning the ~~Trust~~interpretation ~~receives~~and ~~for~~implementation of several significant provisions of the Acts and of the regulations and policies promulgated by FERC there under. A number of lawsuits and administrative proceedings have been instituted which challenge the validity of regulations implementing the Acts. In addition, FERC currently has under consideration various policies and proposals that may affect the marketing of natural gas under new and existing contracts. Accordingly, the Trust and Trustee is unable to predict the impact of any such government regulation.

~~The~~In ~~production~~the past, ~~transportation~~Congress ~~and~~has ~~sale~~been very active in the area of natural gas ~~from~~regulation. ~~the~~Legislation ~~Underlying~~enacted ~~Properties~~in ~~are~~repeals ~~subject to~~incremental ~~Federal~~pricing requirements and ~~state~~natural ~~governmental~~gas ~~regulation,~~use ~~including~~restraints ~~regulation~~previously ofapplicable. ~~tariffs~~At ~~charged~~the bypresent ~~pipelines~~time, ~~taxes,~~ ~~the~~it ~~prevention~~is ofimpossible ~~waste,~~to ~~the~~predict ~~conservation~~what ofproposals, ~~natural~~if ~~gas~~any, ~~pollution~~might ~~controls~~actually ~~and~~be ~~various~~enacted by Congress or ~~other~~the ~~matters.~~various ~~The~~state ~~United~~legislatures ~~States~~and ~~has~~what ~~governmental~~effect, ~~power~~if toany, ~~impose~~such ~~pollution~~proposals ~~control~~might ~~measures~~have on the Underlying Properties and the Trust.

If9 ~~it is determined that the Trust is subject to the Texas margin tax, the Trustee may have to withhold a disproportionate amount from future distributions to pay the tax liability.~~

TheTable Trustee does not intend to pay any amounts for the Texas margin tax for tax years 2008, 2009 and 2010, based on the assumption that the Trust is exempt from tax as a passive entity; however, there is currently no clear statutory authority that the Trust meets requirements for the margin tax exemption as a passive entity. The effective date of the legislation was January 1, 2008, but the tax was generally imposed on revenues generated in 2007 and thereafter (earlier for certain fiscal year taxpayers). If it is subsequently determined that the Trust is not exempt from the margin tax, the Trust would be required to deduct and withhold from future distributions the amounts necessary to pay the margin tax for the years ended December 31, 2008, 2009 and 2010, including the tax liability accruing on income distributed after December 2006 attributable to Trust revenues during the four years ended December 31, 2010 from which no tax was withheld. For more information about the Texas margin tax, see Note 3 to the Trust’s financial statements. Contents

~~Federal~~Torch ~~Regulation~~ Energy Royalty Trust

~~The~~State ~~Underlying~~Regulation Properties are subject to the jurisdiction of FERC with respect to various aspects of natural gas operations including the marketing and production of natural gas. The Natural Gas Act and the Natural Gas Policy Act (collectively, the “Acts”) mandate Federal regulation of interstate transportation of natural gas. The Natural Gas Wellhead Decontrol Act of 1989 terminated wellhead price controls on all domestic natural gas on January 1, 1993. Numerous questions have been raised concerning the interpretation and implementation of several significant provisions of the Acts and of the regulations and policies promulgated by FERC there under. A number of lawsuits and administrative proceedings have been instituted which challenge the validity of regulations implementing the Acts. In addition, FERC currently has under

9Many state jurisdictions have at times imposed limitations on the production of natural gas by restricting the rate of flow for natural gas wells below their actual capacity to produce and by imposing acreage limitations for the drilling of a well. States may also impose additional regulations of these matters. Most states regulate the production of natural gas, including requirements for obtaining drilling permits, the method of developing new fields, provisions for the unitization or pooling of natural gas properties, the spacing, operation, plugging and abandonment of wells and the prevention of waste of natural gas resources. The rate of production may be regulated and the maximum daily production allowable from natural gas wells may be established on a market demand or conservation basis or both.

~~Table~~The market price for the Trust’s Units may not reflect the value of ~~Contents~~the Net Profits Interests held by the Trust.

~~Torch~~The ~~Energy~~public ~~Royalty~~trading price for the Trust Units tends to be tied to the recent and expected levels of cash distributions on the Trust Units. The amounts available for distribution by the Trust vary in response to numerous factors outside the control of the Trust, including prevailing prices for oil and natural gas produced from the Underlying Properties. The market price of the Trust Units is not necessarily indicative of the value that the Trust would realize if the Net Profits Interests were sold to a third party buyer. In addition, such market price is not necessarily reflective of the fact that, since the assets of the Trust are depleting assets, a portion of each cash distribution paid on the Trust Units should be considered by investors as a return of capital, with the remainder being considered as a return on investment. There is no guarantee that distributions made to a Unitholder over the life of these depleting assets or distributions following the sales of the Net Profits Interests will equal or exceed the purchase price paid by the Unitholder.

~~consideration~~Financial ~~various~~information ~~policies~~of ~~and proposals that may affect~~ the ~~marketing~~Trust ~~of natural gas under new and existing contracts. Accordingly, Torch~~ is ~~unable~~not toprepared ~~predict~~in ~~the~~accordance ~~impact~~with ~~of any such government regulation~~GAAP.

InThe financial statements of the ~~past,~~Trust ~~Congress~~are ~~has~~prepared ~~been~~on ~~very~~a ~~active~~modified incash ~~the~~basis ~~area~~of accounting, which is a comprehensive basis of ~~natural~~accounting ~~gas~~other ~~regulation.~~than ~~Legislation~~accounting ~~enacted~~principles generally accepted in ~~repeals~~the ~~incremental~~U.S., ~~pricing~~or ~~requirements~~GAAP. ~~and~~Although ~~natural~~this ~~gas~~basis ~~use~~of ~~restraints~~accounting ~~previously applicable.~~is Atpermitted for royalty trusts by the ~~present~~Securities ~~time~~and Exchange Commission, itthe isfinancial ~~impossible~~statements toof ~~predict~~the ~~what~~Trust ~~proposals,~~differ iffrom ~~any,~~GAAP ~~might~~financial statements because net ~~actually~~profits beincome ~~enacted~~is bynot ~~Congress~~accrued orin the ~~various~~month ~~state~~of ~~legislatures~~production, expenses are not recognized when incurred and ~~what~~cash ~~effect,~~reserves ifmay ~~any,~~be ~~such proposals~~established ~~might~~for ~~have~~certain oncontingencies ~~the~~that ~~Underlying~~would ~~Properties~~not ~~and~~be ~~the~~recorded ~~Trust~~in GAAP financial statements.

~~State~~The ~~Regulation~~ Trust is dependent on certain service providers to provide various services, including wind-down services, to the Trust.

~~Many~~The ~~state~~Trust ~~jurisdictions~~and ~~have~~Trustee atrely ~~times imposed limitations~~ on ~~the~~third ~~production~~party ofservice ~~natural~~providers ~~gas~~to ~~by restricting~~perform ~~the~~administrative ~~rate~~services, ofSarbanes-Oxley ~~flow~~compliance ~~for~~services ~~natural gas wells below their actual capacity to produce~~ and ~~by imposing~~other ~~acreage~~services ~~limitations~~ for the ~~drilling of a well. States may also impose additional~~ ~~regulations of these matters~~Trust. ~~Most~~Torch ~~states~~provided ~~regulate~~accounting, ~~the production of natural gas~~bookkeeping, ~~including requirements~~informational ~~for~~and ~~obtaining~~other ~~drilling~~services ~~permits,~~to the ~~method~~Trust ofrelated ~~developing~~to ~~new fields, provisions for~~ the ~~unitization~~Net orProfits ~~pooling~~Interests ofpursuant ~~natural~~to ~~gas properties,~~ the ~~spacing,~~Administrative ~~operation,~~Services ~~plugging~~Agreement ~~and abandonment~~effective ofOctober 1, ~~wells~~1993 and ~~the~~an ~~prevention~~oral ofarrangement ~~waste~~after termination of ~~natural gas resources. The rate of production may be regulated and~~ the ~~maximum~~Administrative ~~daily~~Services ~~production~~Agreement ~~allowable from natural gas wells may be established~~ on aJanuary 29, ~~market~~2008 ~~demand~~through orApril 1, ~~conservation basis or both~~2008.

~~Because~~On November 7, 2008, the Trust ~~handles oil~~ and ~~natural~~Torch entered ~~gas~~an ~~petroleum~~agreement ~~products,~~whereby ~~the~~Torch ~~Trust~~provided ~~may~~certain ~~incur~~accounting ~~significant costs~~services ~~and~~in ~~liabilities~~connection inwith the ~~future~~preparation ~~resulting~~of ~~from~~the aTrust’s ~~failure~~Form to10-K ~~comply~~for ~~with~~the ~~new~~year orended ~~existing environmental~~December 31, ~~regulations~~2007. orSuch anservice ~~accidental~~agreement ~~release~~expired ofDecember 23, ~~hazardous substances in the environment~~2008.

~~Activities~~To onfacilitate the ~~Underlying~~winding ~~Properties~~down ~~are subject to existing Federal, state and local laws, rules and regulations relating to the protection~~ of ~~public health and welfare, safety and~~ the ~~environment,~~ ~~including~~Trust, ~~without~~Torch ~~limitation,~~currently ~~laws~~provides ~~regulating~~certain ~~the~~accounting ~~release of materials into the environment~~ and ~~laws~~other ~~protecting~~services ~~areas~~for ~~of particular environmental concern. It is anticipated that, absent~~ the ~~occurrence of an unanticipated event, compliance with these laws will not have a material adverse effect upon the~~ Trust orpursuant ~~Unitholders. Torch has informed the Trust that it cannot predict what effect future regulation or legislation, enforcement policies there under, and claims for damages~~ to ~~property,~~an ~~employees,~~agreement ~~other~~with ~~persons and~~ the ~~environment resulting from operations on~~ ~~the~~Trust ~~Underlying~~entered ~~Properties~~into ~~could have~~ on ~~the~~March 26, ~~Trust or Unitholders~~2009. ~~However,~~The ~~pursuant~~initial toterm ~~the terms~~ of the ~~Conveyances,~~agreement ~~any~~expired ~~costs~~on ~~or expenses incurred by the Working Interest Owners in connection with environmental liabilities~~March 31, to2010 ~~the~~and ~~extent~~was ~~arising~~thereafter ~~out~~extended offrom oryear ~~relating~~ to ~~activities occurring on~~year, orup into ~~connection with, or conditions existing on or under,~~ the ~~Underlying~~period ~~Properties~~ending ~~before October~~August 130, ~~1993,~~2013. ~~will~~Torch becurrently ~~borne~~provides by the ~~Working Interest Owners and not the~~ Trust ~~and~~via ~~will not be~~letter ~~deducted~~agreement inthe ~~calculating~~administrative ~~Net~~services ~~Proceeds and will, therefore, not reduce amounts payable to the Trust.~~

~~Net~~10 ~~Proceeds Attributable to the Robinson’s Bend Field have declined significantly.~~

PriorTable to December 31, 2002, lease operating expenses were not deducted in calculating the Net Proceeds payable to the Trust from the Robinson’s Bend Field. In accordance with the provisions of the Net Profits Interest conveyance covering the Robinson’s Bend Field, commencing with the second quarter 2003 distribution (pertaining to the quarter ended March 31, 2003 production) lease operating expenses and capital expenditures have been deducted in calculating Net Proceeds. The Trust receives no payments for distributions to Unitholders with respect to the Robinson’s Bend Field when proceeds do not exceed the sum of costs and expenses and the cumulative excess of such costs and expenses including interest (“Robinson’s Bend Field Cumulative Deficit”). The Trust received no payments with respect to the Robinson’s Bend Field during the each of the three years ended December 31, 2008, 2009 and 2010. The Circuit Court of Tuscaloosa County, Alabama in the matter captioned Trust Venture Company, LLC v. Constellation Energy Partners LLC (CV-2008-900751) approved in all respects the settlement as memorialized in the proposed Settlement and Release Agreement and ordered that the matter be dismissed, with prejudice, costs taxed as paid. In the Order and Final Judgment entered by the Court dated as of April 13, 2011, the Circuit Court Contents

10 Torch Energy Royalty Trust

~~Table~~ historically provided by Torch to the Trust through December 31, 2013 consistent with past practice and (ii) from December 31, 2013 to April 30, 2014 shall provide services to the Trust in support of ~~Contents~~any tax correspondence (tax booklet) and tax filings that might be necessary for the year ended December 31, 2013 consistent with past practice and other related services necessary to complete the wind down of the Trust that are also consistent with past practice. Subsequently, the inability of the Trust to hire qualified services providers to assist in the wind down and liquidation of the Trust may have a material adverse effect on the operations of the Trust.

~~Torch~~Unitholders ~~Energy~~have ~~Royalty~~limited ~~Trust~~ voting rights.

~~acknowledged~~Voting rights ~~receiving~~as ~~the~~a ~~report~~Unitholder ~~from~~are ~~counsel~~more ~~for~~limited ~~the~~than ~~trustee~~those of ~~the~~stockholders ~~Trust~~of ~~that~~most public corporations. For example, there is no ~~objections~~requirement ~~to the~~for ~~proposed~~annual ~~settlement~~meetings inof ~~this~~Unitholders ~~matter~~or ~~had~~an ~~been~~annual ~~received,~~or ~~and~~other ~~the~~periodic ~~Court~~re-election ~~confirmed~~of ~~after~~the ~~review~~Trustee. ~~that~~Unlike corporations ~~the~~which ~~Settlement~~are ~~and~~generally ~~Release~~governed ~~Agreement~~by isboards ~~fair,~~of ~~reasonable~~directors ~~and~~elected ~~adequate.~~by ~~The~~their ~~proposed~~equity ~~Settlement~~holders, ~~and Release~~the ~~Agreement~~Trust ~~shall~~is ~~become~~administered ~~effective~~by ona ~~the~~corporate ~~date~~trustee onin ~~which~~accordance with the ~~Order~~Trust Agreement and ~~Final~~other ~~Judgment~~organizational ~~becomes final~~documents. ~~and~~The ~~unappealable,~~Trustee ~~which~~has ~~absent~~extremely ~~appeal,~~limited discretion isin ~~anticipated~~its toadministration beof ~~June 13,~~the ~~2011.~~Trust ~~See~~as ~~Item 3.~~set ~~Legal~~forth ~~Proceedings~~in the Trust’s Trust Agreement.

~~The~~Item ~~Robinson’s Bend Field Cumulative Deficit at December 31, 2010 (pertaining to production as of September 30, 2010 and excluding Infill Wells) was approximately $6~~1B.~~1 million.~~ ~~Neither~~Unresolved ~~the~~Staff ~~Trust nor Unitholders are liable to pay such deficit~~Comments. ~~However, the Trust will receive no payments with respect to the Robinson’s Bend Field until future proceeds exceed the Robinson’s Bend Cumulative Deficit.~~

The ~~market price for the~~ Trust’s ~~Units~~does ~~may~~ not ~~reflect~~currently ~~the~~have ~~value~~any ofunresolved ~~the~~Securities ~~Net~~and ~~Profits~~Exchange ~~Interests~~Commission ~~held by~~staff ~~the Trust~~comments.

~~The~~Item ~~public trading price for the Trust Units tends to be tied to the recent and expected levels of cash distributions on the Trust Units~~2. The amounts available for distribution by the Trust vary in response to numerous factors outside the control of the Trust, including prevailing prices for oil and natural gas produced from the Underlying Properties. The market price of the Trust Units is not necessarily indicative of the value that the Trust would realize if the Net Profits Interests were sold to a third party buyer. In addition, such market price is not necessarily reflective of the fact that, since the assets of the Trust are depleting assets, a portion of each cash distribution paid on the Trust Units should be considered by investors as a return of capital, with the remainder being considered as a return on investment. There is no guarantee that distributions made to a Unitholder over the life of these depleting assets or distributions following a sale of the Net Profits Interests will equal or exceed the purchase price paid by the Unitholder.

~~Financial~~Description ~~information~~ of the ~~Trust~~Underlying isProperties ~~not prepared in accordance with GAAP.~~

Chalkley Field. The ~~financial~~Underlying ~~statements~~Properties ofin the ~~Trust~~Chalkley ~~are~~Field, ~~prepared~~located onin aCameron ~~modified~~Parish, ~~cash~~Louisiana, ~~basis~~include ofan ~~accounting,~~average ~~which~~16.2% ~~is a~~working ~~comprehensive~~interest ~~basis~~(12.1% ofnet ~~accounting~~revenue ~~other~~interest) ~~than~~in ~~accounting~~five ~~principles~~unitized ~~generally~~wells ~~accepted~~(excluding inInfill Wells) producing from the Miogyp ~~U.S.,~~“B” ~~or GAAP~~reservoir. ~~Although~~As ~~this~~of ~~basis~~December 31, of2011, ~~accounting~~one isInfill ~~permitted~~Well ~~for~~has ~~royalty~~been ~~trusts~~drilled byon the ~~Securities and~~Underlying ~~Exchange~~Properties ~~Commission,~~in the ~~financial~~Chalkley ~~statements~~Field. ofThe ~~the~~average ~~Trust~~working ~~differ~~interest ~~from~~and ~~GAAP~~net ~~financial statements~~revenue ~~because~~interest (net ~~profits~~to ~~income~~the isTrust’s ~~not~~20% ~~accrued~~interest) infor the ~~month~~Chalkley Infill ofWell ~~production,~~is ~~expenses~~approximately ~~are~~3.2% ~~not recognized~~and ~~when~~2.4%. ~~incurred~~These ~~and~~wells ~~cash~~produce ~~reserves~~from ~~may~~a bedepth ~~established~~in ~~for~~excess ~~certain~~of ~~contingencies~~14,000 ~~that~~feet. ~~would not~~A besubsidiary ~~recorded~~of inExxonMobil ~~GAAP~~Corporation ~~financial~~operates ~~statements~~the wells.

~~The~~Robinson’s Bend Field. On December 13, 2011, the Trust issold ~~dependent~~all onof ~~certain~~its ~~service~~Net ~~providers~~Profits Interests attributable to ~~provide~~the ~~various~~Underlying ~~services~~Properties in the Robinson’s Bend Field. See Note 5 of the accompanying financial statements and Item 3. Legal Proceedings for additional information. Prior to such sale, the Underlying Properties in the Robinson’s Bend Field included an average 40.2% working interest (30.5% net revenue interest) in 392 wells (excluding Infill Wells) in the Robinson’s Bend Field in the Black Warrior Basin of Alabama and 34 Infill Wells. The average working interest and net revenue interest of the Robinson’s Bend Infill Wells (net to the Trust’s 20% interest) was approximately 6.8% and 5.2%, respectively. All of the wells in the Robinson’s Bend Field are operated by a third party, RBP II, a subsidiary of Constellation Energy Partners LLC.

Cotton Valley Fields. The ~~Trust~~Underlying ~~and~~Properties ~~Trustee~~include ~~rely~~an onaverage ~~third~~52.7% ~~party~~working ~~service~~interest ~~providers~~(40.4% tonet ~~perform~~revenue ~~administrative~~interest) ~~services,~~in 41 wells ~~Sarbanes-Oxley~~(excluding ~~compliance~~Infill ~~services~~Wells) ~~and~~in ~~other~~four ~~services~~fields ~~for~~that produce from the ~~Trust~~Upper and Lower Cotton Valley formations in Texas. ~~Torch~~As ~~provided~~of ~~accounting~~December 31, ~~bookkeeping~~ 2011, ~~informational~~32 ~~and~~Infill ~~other~~Wells ~~services~~have tobeen drilled on the ~~Trust~~Underlying ~~related~~Properties toin the ~~Net~~Cotton ~~Profits~~Valley ~~Interests~~Fields. The average ~~pursuant~~working interest and net revenue interest of the Cotton Valley Fields Infill Wells (net to the ~~Administrative~~Trust’s ~~Services~~20% ~~Agreement~~interest) ~~effective~~is ~~October 1,~~approximately ~~1993~~14.0% and an11.3%, ~~oral~~respectively. ~~arrangement after~~A ~~termination~~subsidiary of ~~the~~Torch ~~Administrative~~operates ~~Services~~40 ~~Agreement~~of onthese ~~January 29,~~wells. ~~2008~~The ~~through~~remaining ~~April 1,~~wells are ~~2008~~operated by Samson Lone Star Limited Partnership (“Samson”).

On11 November 7, 2008, the Trust and Torch entered an agreement whereby Torch provided certain accounting services in connection with the preparation of the Trust’s Form 10-K for the year ended December 31, 2007. Such service agreement expired December 23, 2008.

ToTable facilitate the winding down of the Trust, Torch currently provides certain accounting and other services for the Trust pursuant to an agreement with the Trust entered into on March 26, 2009. The initial term of the agreement expired on March 31, 2010. On March 31, 2011, Torch and the Trust extended the expiration date of the agreement by one year to March 31, 2012 or as sooner terminated by written notice from either party Contents

11 Torch Energy Royalty Trust

~~Table~~Austin Chalk Fields. The Underlying Properties include an average of ~~Contents~~16.9% working interest (13.2% net revenue interest) in 59 wells in the Austin Chalk Fields of Central Texas. Production from these fields is derived primarily from the highly fractured Austin Chalk formation using horizontal drilling techniques. A subsidiary of Torch operates two wells in the Austin Chalk Fields. The remaining wells in the Austin Chalk Fields are operated by third parties.

~~Torch~~All ~~Energy~~of the ~~Royalty~~Net Profits Interests have been sold as of August 2013 and the Trustee is in the process of winding down and liquidating the Trust after the affirmative vote of the requisite number of Unitholders. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of the effective date of the purchase agreement for those fields (May 1, 2013).

~~within~~Oil ~~5 business days notice. The inability of the Trust to hire qualified services providers to assist in the wind up~~ and ~~liquidation~~Natural ofGas ~~the~~Reserves ~~Trust may have a material adverse effect on the operations of the Trust.~~

~~Unitholders~~The ~~have~~pre-tax ~~limited~~future ~~voting~~net ~~rights~~cash flows, discounted at 10%, attributable to the net proved reserves of the Net Profits Interests was approximately $8.2 million as of December 31, 2011. See Note 8 of the Trust’s accompanying financial statements for additional information concerning the net proved reserves of the Net Profits Interests.

~~Voting~~Well ~~rights~~Count as a Unitholder are more limited than those of stockholders of most public corporations. For example, there is no requirement for annual meetings of Unitholders or an annual or other periodic re-election of the Trustee. Unlike corporations which are generally governed by boards of directors elected by their equity holders, the Trust is administered by a corporate trustee in accordance with the Trust Agreement and ~~other~~Acreage ~~organizational~~Summary ~~documents. The Trustee has extremely limited discretion in its administration of the Trust as set forth in the Trust’s Trust Agreement.~~

~~Item~~The following table shows, as of December ~~1B.~~31, ~~Unresolved~~2011, ~~Staff~~the ~~Comments.~~ gross and net interest in oil and natural gas wells for the Underlying Properties:

The Trust does not currently have any unresolved Securities and Exchange Commission staff comments.


	Natural Gas Wells				Oil Wells
	Gross		Net		Gross		Net
Chalkley Field		6		0.8		—		—
Robinson’s Bend Field (a)		—		—		—		—
Cotton Valley Fields		73		25.4		—		—
Austin Chalk Fields		26		4.3		35		5.9

Total		105		30.5		35		5.9

~~Item~~The following table shows the gross and net acreage for the Underlying Properties as of December 231, 2011. ~~Properties~~A gross acre in the following table refers to the number of acres in which a working interest is burdened by the Trust’s Net Profits Interests. The number of net acres is the sum of the fractional ownership of working interests burdened by the Trust’s Net Profits Interests in the gross acres expressed as a whole number and percentages thereof. A net acre is deemed to exist when the sum of fractional ownership of working interests in gross acres equals one.

Description of the Underlying Properties


	Acreage
	Gross		Net
Chalkley Field		2,152		348
Robinson’s Bend Field (a)		—		—
Cotton Valley Fields		4,411		2,606
Austin Chalk Fields		22,468		3,791

Total		29,031		6,745

~~Chalkley~~(a) ~~Field.~~On ~~The~~December ~~Underlying Properties in the Chalkley Field~~13, ~~located in Cameron Parish~~2011, ~~Louisiana,~~ ~~include an average 16.2% working interest (12.1% net revenue interest) in five unitized wells (excluding Infill Wells) producing from~~ the ~~Miogyp~~Trust ~~“B”~~sold ~~reservoir.~~all As of ~~December 31,~~its ~~2010, one~~Net ~~Infill~~Profits ~~Well~~Interests ~~has~~attributable ~~been~~to ~~drilled on~~ the Underlying Properties in the ~~Chalkley~~Robinson’s Bend Field. ~~The~~See ~~average working~~Note ~~interest~~5 and ~~net~~Item ~~revenue interest (net to the Trust’s 20% interest) for the Chalkley Infill Well is approximately~~ 3.2% ~~and~~Legal ~~2.4%.~~Proceedings ~~These~~for ~~wells~~additional ~~produce from a depth in excess of 14,000 feet~~information. ~~A subsidiary of ExxonMobil Corporation operates the wells.~~

~~Robinson’s~~12 Bend Field. The Underlying Properties include an average 40.2% working interest (30.5% net revenue interest) in 392 wells (excluding Infill Wells) in the Robinson’s Bend Field in the Black Warrior Basin of Alabama. As of December 31, 2010, 34 Infill Wells have been drilled on the Underlying Properties in the Robinson’s Bend Field. The average working interest and net revenue interest of the Robinson’s Bend Infill Wells (net to the Trust’s 20% interest) is approximately 6.8% and 5.2%, respectively. All of the wells in the Robinson’s Bend Field are operated by a third party, Robinson’s Bend Operating II, LLC, a subsidiary of Constellation Energy Partners LLC.

CottonTable Valley Fields. The Underlying Properties include an average 53.7% working interest (39.5% net revenue interest) in 41 wells (excluding Infill Wells) in four fields that produce from the Upper and Lower Cotton Valley formations in Texas. As of December 31, 2010, 32 Infill Wells have been drilled on the Underlying Properties in the Cotton Valley Fields. The average working interest and net revenue interest of the Cotton Valley Fields Infill Wells (net to the Trust’s 20% interest) is approximately 14.6% and 11.1%, respectively. A subsidiary of Torch operates 40 of these wells. The remaining wells are operated by Samson Lone Star Limited Partnership (“Samson”). Contents

Austin Chalk Fields. The Underlying Properties include an average of 16.1% working interest (11.4% net revenue interest) in 59 wells in the Austin Chalk Fields of Central Texas. Production from these fields is derived primarily from the highly fractured Austin Chalk formation using horizontal drilling techniques. A subsidiary of Torch ~~operates~~Energy ~~two~~Royalty ~~wells~~Trust ~~in the Austin Chalk Fields. The remaining wells in the Austin Chalk Fields are operated by third parties.~~

12 Drilling Activity

~~Table~~The following table sets forth the results of ~~Contents~~drilling activity for the Underlying Properties during the three years ended December 31, 2011. Gross wells, as it applies to wells in the following table, refers to the number of wells in which a working interest is owned directly by the owners of the Underlying Properties and Infill Wells (“Gross Well”). A net well (“Net Well”) represents the sum of the fractional ownership working interests in the Gross Wells expressed as whole numbers and percentages thereof.

~~Torch~~All ~~Energy~~of ~~Royalty~~the wells shown below represent Infill Wells drilled on the Underlying Properties. The Net Profits Interests entitle the Trust to 20% of Infill Well Net Proceeds which is defined as gross proceeds from the sale of production attributable to Infill Wells less all production, drilling and completion costs of such wells. Infill Well Net Proceeds are calculated by aggregating the proceeds and costs from Infill Wells on a state by state basis.

Oil and Natural Gas Reserves


Development Wells – Chalkley Field (a)
	Gross						Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2011		0		0		0		0		0		0
2010		0		0		0		0		0		0
2009		0		0		0		0		0		0

Development Wells – Cotton Valley Fields
	Gross						Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2011		0		0		0		0		0		0
2010		0		0		0		0		0		0
2009		0		0		0		0		0		0

Development Wells – Austin Chalk Fields
	Gross						Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2011		0		0		0		0		0		0
2010		0		1		1		0		0.04		0.04
2009		0		0		0		0		0		0

Development Wells – Robinson’s Bend Field (b)
	Gross						Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2011		0		0		0		0		0		0
2010		0		0		0		0		0		0
2009		0		0		0		0		0		0

~~The~~(a) ~~pre-tax~~In ~~future net cash flows~~2007, ~~discounted~~an atInfill ~~10%,~~Well ~~attributable~~was todrilled in the ~~net~~Chalkley ~~proved~~Field ~~reserves~~for of which the ~~Net~~Trust ~~Profits~~has ~~Interests~~not ~~was~~received ~~approximately~~cash ~~$10~~distributions.~~3 million~~ asAs of December 31, ~~2010.~~2011, ~~Future~~costs ~~cash flows~~and ~~attributable~~expenses toexceeded ~~the~~gross ~~Robinson’s~~revenues ~~Bend~~by ~~Field’s~~approximately ~~Net~~$2.2 ~~Profits~~million ~~Interests~~(before ~~were~~interest ~~estimated~~expense). toThe ~~have~~Trust will receive no ~~value~~ payments for distributions with respect to the ~~Trust~~Chalkley asField ofInfill ~~December 31,~~Well ~~2010.~~until ~~See~~the ~~Note~~future 7proceeds ofexceed the ~~audited~~sum ~~financial~~of ~~statements for~~future ~~additional~~costs ~~information~~and ~~concerning~~expenses and the ~~net~~cumulative ~~proved~~excess ~~reserves~~ of ~~the~~such ~~Net~~costs ~~Profits~~and ~~Interests~~expenses including interest.

~~Well~~(b) ~~Count~~On December 13, 2011, the Trust sold all of its net profits interests attributable to the Underlying Properties in the Robinson’s Bend Field. See Note 5 of the Trust’s accompanying financial statements and ~~Acreage~~Item ~~Summary~~ 3. Legal Proceedings for additional information.

~~The~~13 ~~following table shows, as of December 31, 2010, the gross and net interest in oil and natural gas wells for the Underlying Properties:~~

	Natural Gas Wells				Oil Wells
	Gross		Net		Gross		Net
Chalkley Field		6		0.8		—		—
Robinson’s Bend Field		426		170.4		—		—
Cotton Valley Fields		73		25.4		—		—
Austin Chalk Fields		26		4.3		35		5.9
Total		531		200.9		35		5.9

~~The~~Torch ~~following~~Energy ~~table~~Royalty shows the gross and net acreage for the Underlying Properties as of December 31, 2010. A gross acre in the following table refers to the number of acres in which a working interest is owned directly by the Trust. The number of net acres is the sum of the fractional ownership of working interests owned directly by the Trust in the gross acres expressed as a whole number and percentages thereof. A net acre is deemed to exist when the sum of fractional ownership of working interests in gross acres equals one.

	Acreage
	Gross		Net
Chalkley Field		2,152		348
Robinson’s Bend Field		33,404		14,288
Cotton Valley Fields		4,411		2,606
Austin Chalk Fields		22,468		3,791
Total		62,435		21,033

Oil and Natural Gas Sales Prices and Production Costs

~~Drilling~~The ~~Activity~~following table sets forth, for the Underlying Properties, the net production volumes of natural gas and oil, the weighted average lifting cost and taxes per Mcfe deducted in calculating Net Proceeds and the weighted average sales price per Mcf of natural gas and Bbl of oil for production attributable to Net Proceeds during the years ended December 31, 2011, 2010 and 2009 (derived from production during the twelve months ended September 30, 2011, 2010 and 2009, respectively).

~~The~~In ~~following~~2011, ~~table~~Net ~~sets~~Proceeds ~~forth~~paid to the ~~results~~Trust were reduced by $0.4 million as a result of ~~drilling~~TRC ~~activity~~recouping ~~for~~overpayments made to the ~~Underlying~~Trust ~~Properties during~~in 1994 and 1995 pertaining to the ~~three~~Chalkley ~~years~~Field ~~ended~~(“Chalkley ~~December 31,~~Gas ~~2010~~Volume Adjustment”). ~~Gross~~In ~~wells~~2010, asNet itProceeds ~~applies~~paid to ~~wells in~~ the ~~following~~ ~~table,~~Trust ~~refers~~with respect to net profits income generated in the ~~number~~Austin ofChalk ~~wells~~Fields inwere ~~which~~reduced aby ~~working~~$826,000 (including interest isexpense ~~owned~~of ~~directly~~$70,000) byto recoup overpayments to the ~~owners~~ ofTrust by TRC during the ~~Underlying~~five ~~Properties~~year ~~and~~period ~~Infill~~ended ~~Wells~~December 31, 2009 (“~~Gross~~Austin ~~Well~~Chalk Gas Volume Adjustment”). AThe ~~net~~effects ~~well~~of ~~(“Net~~the ~~Well”) represents~~Chalkley ~~the~~Gas ~~sum~~Volume ofAdjustment and the ~~fractional~~Austin ~~ownership~~Chalk ~~working~~Gas ~~interests~~Volume Adjustment have been excluded from the data set forth in the ~~Gross~~table ~~Wells~~below, ~~expressed~~except ~~as whole~~for ~~numbers~~information ~~and~~included ~~percentages~~in ~~thereof~~footnote (a) and (b).

All of the wells shown below represent Infill Wells drilled on the Underlying Properties. The Net Profits Interests entitle the Trust to 20% of Infill Well Net Proceeds which is defined as gross proceeds from the sale of production attributable to Infill Wells less all production, drilling and completion costs of such wells. Infill Well Net Proceeds are calculated by aggregating the proceeds and costs from Infill Wells on a state by state basis.


	Chalkley, Cotton Valley And Austin Chalk Fields
	2011 (a)		2010 (b)		2009 (b)
Production:
Natural Gas (MMcf)		1,004		1,156		1,342
Oil (Mbbl)		8		13		15
Weighted average lifting cost per Mcfe	$	1.56	$	1.47	$	1.31
Weighted average taxes on production per Mcfe	$	0.27	$	0.33	$	0.33
Weighted average sales price (c)
Natural Gas ($/Mcf)	$	3.20	$	3.34	$	3.46
Oil ($/Bbl)	$	83.09	$	69.10	$	48.11

	Robinson’s Bend Field
	2011		2010		2009
Production:
Natural Gas (MMcf)		1,416		1,473		1,530
Oil (Mbbl)		—		—		—
Weighted average lifting cost per Mcfe	$	4.60	$	4.80	$	4.49
Weighted average taxes on production per Mcfe	$	0.18	$	0.21	$	0.23
Weighted average sales price (c)
Natural Gas ($/Mcf)	$	2.73	$	2.89	$	2.92
Oil ($/Bbl)	$	—	$	—	$	—

Development Wells — Chalkley Field (a)
Gross							Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2010		0		0		0		0		0		0
2009		0		0		0		0		0		0
2008		0		0		0		0		0		0

(a)	Excludes the effect of the Chalkley Gas Volume Adjustment which reduced Net Proceeds received by the Trust in 2011 by $0.4 million. See Note 4 of the accompanying financial statements for additional information.

13 (b) Excludes the effect of the Austin Chalk Gas Volume Adjustment. Gas volumes related to such adjustment were 53 MMcf pertaining to gas sales during the twelve month ended December 31, 2009 and 0 MMcf pertaining to gas sales during each twelve month period ended 2011 and 2010. The total natural gas sales volumes pertaining to the Austin Chalk Gas Volume Adjustment of 198 MMcf were compensated with natural gas sales volumes in 2010.

~~Table~~(c) Average sales prices are reflective of ~~Contents~~natural gas prices received by the Trust less certain gathering, treating and transportation charges.

~~Torch~~Item ~~Energy~~3. ~~Royalty~~Legal ~~Trust~~ Proceedings.

Development Wells — Cotton Valley Fields
Gross							Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2010		0		0		0		0		0		0
2009		0		0		0		0		0		0
2008		1		0		1		0.2		0		0.2

On October 16, 2008, Trust Venture Company, LLC and Wilmington Trust Company, solely in its capacity as Trustee for the Torch Energy Royalty Trust, (together, “Plaintiffs”) filed a petition against TRC, Torch E&P Company, and Constellation Energy Partners LLC (collectively, “Defendants”) in the District Court of Harris County, Texas. The petition sought to vacate the arbitration award issued by the JAMS Panel in Defendants’ favor on July 18, 2008 in the arbitration captioned Torch Royalty Co., et al. v. Wilmington Trust

Development Wells — Austin Chalk Fields (b)
Gross							Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2010		0		1		1		0		0.04		0.04
2009		0		0		0		0		0		0
2008		0		0		0		0		0		0

Development Wells — Robinson’s Bend Field (c)
Gross							Net
	Productive		Dry Holes		Total		Productive		Dry Holes		Total
2010		0		0		0		0		0		0
2009		0		0		0		0		0		0
2008		3		0		3		0.2		0		0.2

~~(a)~~Torch InEnergy ~~2007,~~Royalty ~~an Infill Well was drilled in the Chalkley Field for which the~~ Trust has not received cash distributions. No Infill Wells were drilled in the Chalkley Field during the three years ended December 31, 2010. As of December 31, 2010, costs and expenses exceeded gross revenues by approximately $2.2 million (before interest expense). The Trust will receive no payments for distributions with respect to the Chalkley Field Infill Well until the future proceeds exceed the sum of future costs and expenses and the cumulative excess of such costs and expenses including interest. (b) Dry hole costs pertaining to Austin Chalk Field Infill Well drilling reduced Infill Well Net Proceeds recognized by the Trust during the year ended December 31, 2010 by $49,319. (c) The Trust has not received cash distributions with respect to the Infill Wells drilled in the Robinson’s Bend Field. As of December 31, 2010 (pertaining to sales through September 30, 2010), costs and expenses exceeded gross revenues by approximately $1.6 million. The Trust will receive no payments for distributions with respect to the Robinson’s Bend Infill Wells until the future proceeds exceed the sum of future costs and expenses and the cumulative excess of such costs and expenses including interest.

~~There~~ Co., ~~was~~et noal., ~~other~~JAMS ~~drilling~~Reference ~~activity~~No. 13100017310. onSee ~~the~~Item 1. ~~Underlying~~Business ~~Properties~~– ~~during~~General for a description of the ~~three~~arbitration. ~~years~~Defendants ~~ended~~filed a motion to dismiss the Plaintiffs’ petition and to confirm the arbitration award. On or about December 3110, ~~2010~~2008, the Court entered an Order dismissing the petition and granting the Defendants’ motion to confirm the arbitration award.

~~Oil~~On December 22, 2008, the Trustee received a demand letter from Trust Venture Company, LLC with respect to certain enumerated costs - including administrative costs and ~~Natural~~costs ~~Gas~~for ~~Sales~~water ~~Prices~~gathering, treating and ~~Production~~disposal ~~Costs~~- that are deducted by the working interest owners of certain of the Underlying Properties from the Net Profit Interests before remitting the Net Proceeds to the Trustee and the Trust. Trust Venture Company, LLC has concluded that the Trust has been overcharged (and continues to be overcharged) by the working interest owners of certain of the Underlying Properties and that these overcharges have damaged the Trust (and as a result, all of the Trust’s Unitholders). In addition, Trust Venture Company, LLC asserts that the working interest owners have failed to provide the required accountings as set forth in the Conveyances and that the Trust may request the court to require the working interest owners to provide such an accounting. Trust Venture Company, LLC requested that the Trustee either institute legal action against the working interest owners, or authorize Trust Venture Company, LLC to commence a derivative action against the current working interest owner of the Alabama property in accordance with, inter alia, Section 3816 of the Delaware Statutory Trust Act, codified at 12 Del. C. 3816(a), to recover all overcharges related to administrative costs, water gathering, treating and disposal costs and all overcharges reflected in the accounting. The Trustee responded on December 22, 2008 to Trust Venture Company, LLC with a request for additional information which it has now received. The Trustee carefully considered Trust Venture Company, LLC’s demand letter, and concluded, in the reasoned exercise of its business judgment, that it is in the best interest of the Trust and all Unitholders to authorize Trust Venture Company, LLC to commence a derivative action and provided its authorization as of December 30, 2008.

~~The~~As ~~following~~disclosed ~~table~~by ~~sets~~the ~~forth,~~Trust in its Annual Report on Form 10-K for the ~~Underlying~~year ~~Properties~~ended December 31, 2007 (“2007 Annual Report”), Trust Venture intended to commence a derivative action against Constellation Energy Partners LLC, the ~~net~~working ~~production~~interest ~~volumes~~owner of ~~natural~~ ~~gas~~certain oil and ~~oil~~natural gas fields located in Alabama, in accordance with, inter alia, Section 3816 of the ~~weighted~~Delaware ~~average~~Statutory ~~lifting~~Trust ~~cost~~Act, ~~and~~codified ~~taxes~~at ~~per~~12 ~~Mcfe~~Del. ~~deducted~~C. in3816(a), ~~calculating~~to (i) recover any overcharges to the Trust by Constellation Energy Partners LLC related to ~~Net~~administrative ~~Proceeds~~costs, water gathering, treating and ~~the~~disposal ~~weighted~~costs ~~average~~and ~~sales~~severance ~~price~~taxes ~~per~~and ~~Mcf~~(ii) require Constellation Energy Partners LLC to provide an accounting of ~~natural~~its ~~gas~~revenues and ~~Bbl~~expenses as required under the Conveyance filed of ~~oil~~record ~~for~~in ~~production~~Tuscaloosa ~~attributable~~County, toAlabama. On December 30, 2008, Trust Venture Company, LLC filed and subsequently served a derivative lawsuit against Constellation Energy Partners LLC in Alabama state court alleging such overcharges, challenging the calculation of the Net ~~Proceeds~~Profits ~~received~~Interests byunder the ~~Trust~~Conveyances ~~during~~that were used to transfer the ~~years~~Net ~~ended~~Profits ~~December 31~~Interests in each state, and demanding an accounting of Constellation Energy Partners LLC’s revenues and expenses. In response to the ~~2010~~derivative lawsuit, on February 9, 2009, ~~and~~Constellation ~~2008~~Energy ~~(derived~~Partners ~~from~~LLC ~~production~~filed ~~during~~in ~~the~~Alabama ~~twelve~~state ~~months~~court ~~ended~~a ~~September 30~~motion to dismiss such lawsuit without prejudice in favor of arbitration in Texas on various grounds, ~~2010~~including Trust Venture Company, ~~2009~~LLC’s alleged lack of standing and ~~2008,~~Trust ~~respectively)~~Venture’s alleged failure to comply with certain contractual agreements. The Alabama state court denied Constellation Energy Partners LLC’s motion to dismiss on February 25, 2009, and so the Alabama derivative action is proceeding against Constellation Energy Partners LLC.

InOn ~~2010~~February 12, ~~Net~~2009, ~~Proceeds paid to~~ the ~~Trust~~Trustee ~~with~~received ~~respect~~a tocertified ~~net~~copy of ~~profits~~a ~~income~~demand ~~generated~~for inarbitration ~~the~~dated ~~Austin Chalk~~February 9, ~~Fields~~2009 ~~were reduced~~ by ~~$826,000~~Constellation ~~(including~~Energy ~~interest~~Partners ~~expense~~LLC ofbefore ~~$70,000)~~JAMS toin ~~recoup overpayments~~Texas to (the ~~Trust~~“Demand byNotice”) ~~TRC~~seeking ~~during~~a ~~the~~declaratory ~~five~~judgment ~~year~~that ~~period~~Constellation ~~ended~~Energy ~~December 31,~~Partners ~~2009~~LLC (~~“Austin~~i) correctly ~~Chalk~~calculated and ~~Gas~~paid ~~Volume~~the ~~Adjustment”).~~Net ~~The~~Profits ~~effect~~Interests ofpayments ~~the~~due ~~Austin~~to ~~Chalk~~the ~~Gas~~Trust, ~~Volume~~(ii) correctly ~~Adjustment~~charged ~~has~~the ~~been~~Trust ~~excluded from~~for ~~the~~certain ~~data~~well ~~set~~accounting ~~forth~~services inand ~~the~~severance ~~table below~~taxes, ~~except~~and ~~for~~(iii) has ~~information~~complied ~~included~~with inits ~~footnote~~contractual ~~(a). See~~reporting ~~Note~~requirements 4due to the Trust’s. ~~audited financial statements for additional information~~In ~~concerning~~ the ~~Austin~~Demand ~~Chalk~~Notice, ~~Gas~~Constellation ~~Volume~~Energy ~~Adjustment.~~Partners ~~The~~LLC ~~Trust~~claimed that, ~~Trustee~~because ~~and~~ the Trust’s ~~service providers~~authorized ~~continue~~Trust Venture to ~~review~~file ~~and~~the ~~analyze~~derivative ~~the~~lawsuit, ~~appropriateness~~“there ofexists ~~and~~a ~~verify~~judicable ~~the~~conflict ~~information~~between ~~and~~Constellation ~~data provided~~Energy byPartners ~~TRC~~LLC ~~concerning~~and the ~~Austin~~Trust ~~Chalk~~that ~~gas~~is subject ~~production~~to ~~volumes~~resolution by arbitration. ”

14 15

Torch Energy Royalty Trust

	Chalkley, Cotton Valley And Austin Chalk Fields
	2010 (a)		2009 (a)		2008 (a)
Production:
Natural Gas (MMcf)		1,156		1,342		1,544
Oil (Mbbl)		13		15		14
Weighted average lifting cost per Mcfe	$	1.47	$	1.31	$	0.92
Weighted average taxes on production per Mcfe	$	0.33	$	0.33	$	0.47
Weighted average sales price (b)
Natural Gas ($/Mcf)	$	3.34	$	3.46	$	5.51
Oil ($/Bbl)	$	69.10	$	48.11	$	95.11

On February 12, 2009, Trust Venture Company, LLC filed an emergency motion in Alabama state court to stay the arbitration demanded by Constellation Energy Partners LLC until such time as the court issues a judgment as to the enforceability of the arbitration agreement made by and between the Trust and Constellation Energy Partners LLC. The court denied that motion on February 25, 2009. On March 9, 2009, the Trustee filed its own motion in the same Alabama state court seeking to intervene in the derivative action for the limited purpose of moving for a stay of the Texas arbitration until resolution of the derivative action. The Alabama state court heard oral argument on the Trustee’s motion on March 25, 2009, and on April 1, 2009, the Alabama state court denied the Trustee’s motion to stay the Texas arbitration and further denied Constellation Energy Partners LLC’s motion to stay the Alabama state court derivative action. Subsequently, the Trustee filed a motion to dismiss or stay the Texas arbitration with JAMS and the arbitration panel heard oral argument on April 10, 2009 and on April 13, 2009 granted the Trustee’s motion to stay the Texas arbitration proceedings pending the outcome of the Alabama derivative action. The arbitration panel subsequently entered an Order of Dismissal with respect to the Texas arbitration dated July 27, 2009. There can be no assurance as to the outcome or result of the Alabama derivative litigation or that Constellation Energy Partners LLC will not challenge the Order of Dismissal entered by the arbitration panel on July 27, 2009 or file other arbitration claims. On August 21, 2009, the Alabama state court added the Trust as a nominal plaintiff in the Alabama derivative action that is proceeding against Constellation Energy Partners LLC.

	Robinson’s Bend Field
	2010		2009		2008
Production:
Natural Gas (MMcf)		1,473		1,530		1,579
Oil (Mbbl)		—		—		—
Weighted average lifting cost per Mcfe	$	4.80	$	4.49	$	4.19
Weighted average taxes on production per Mcfe	$	0.21	$	0.23	$	0.47
Weighted average sales price (b)
Natural Gas ($/Mcf)	$	2.89	$	2.92	$	4.85
Oil ($/Bbl)	$	—	$	—	$	—

The Trust has also previously disclosed information regarding the termination of the Trust, the ongoing Alabama derivative litigation, the concluded Texas arbitration and other information regarding the Trust on its 2007, 2008, 2009 and 2010 Annual Report on Form 10-K filed with the SEC and its Current Reports on Form 8-K filed with the SEC. The Unitholders are urged to read the above mentioned and all other filings by the Trust with the SEC carefully and in their entirety.

(a)		Excludes the effect of the Austin Chalk Gas Volume Adjustment. Gas volumes related to such adjustment were 0 MMcf, 53 MMcf and 37 MMcf pertaining to gas sales during the twelve month ended December 31, 2010, 2009 and 2008, respectively. The cumulative natural gas sales volume adjustment for periods prior to 2008 was 108 MMcf. The total natural gas sales volumes pertaining to the Austin Chalk Gas Volume Adjustment of 198 MMcf were compensated with natural gas sales volumes in 2010.
(b)		Average sales prices are reflective of natural gas prices received by the Trust less certain gathering, treating and transportation charges.

On February 23, 2011, the Trust issued a press release and disclosed information regarding the ongoing Alabama derivative litigation on its Current Report on Form 8-K. In the press release, the Trust announced that it and the derivative unitholder plaintiff reached an agreement in principle with Constellation Energy Partners LLC to settle certain claims in the litigation, captioned Trust Venture Company, LLC v. Constellation Energy Partners LLC (CV-2008-900751), filed by the derivative plaintiff on the Trust’s behalf in the Circuit Court of Tuscaloosa County, Alabama (the “Settlement”).

~~Item~~As stated in the press release and the Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear, in the form approved by the Court and attached to the Form 8-K filed with the SEC on February 3.23, ~~Legal~~2011, ~~Proceedings~~subject to the approval of the Court, the derivative plaintiff (Trust Venture Company, LLC) and the Trust have agreed to settle the claims against Constellation Energy Partners LLC in the derivative action, and to enter into mutual, general releases with Constellation Energy Partners LLC in return for (i) a payment of $1,200,000 to the derivative plaintiff by Robinson’s Bend Production II (“RBP II”), which is a Delaware limited liability company and an affiliate of Constellation Energy Partners LLC, to reimburse the derivative plaintiff for the legal fees and expenses it incurred in prosecuting the derivative action, (ii) an irrevocable bid by RBP II of not less than $1,000,000 for its purchase from the Trust of the net overriding royalty interest (“Alabama NORRI”), when such Alabama NORRI is separately offered for sale by the Trust at public auction within 180 days of the effective date of the Settlement, with such bid amount to be deposited by RBP II in a third-party escrow account pending the public auction, and (iii) a third amendment to that certain Water Gathering and Disposal Agreement providing that, for a period of ten years commencing on the first day of the month following the effective date of the settlement, the charges for the gathering, separation, and disposal of water from oil and gas wells located in Tuscaloosa County, Alabama that are owned and operated by RBP II (“Wells”) shall be $0.53 per barrel of water. (RBP II currently charges $1.00 per barrel of water for the gathering, separation, and disposal of such water from the Wells).

~~On October~~ 16, 2008, Trust Venture Company, LLC and Wilmington Trust Company, solely in its capacity as Trustee for the Torch Energy Royalty Trust, (together, “Plaintiffs”) filed a petition against TRC, Torch E&P Company, and Constellation Energy Partners LLC (collectively, “Defendants”) in the District Court of Harris County, Texas. The petition sought to vacate the arbitration award issued by the JAMS Panel in Defendants’ favor on July 18, 2008 in the arbitration captioned Torch Royalty Co., et al. v. Wilmington Trust Co., et al., JAMS Reference No. 13100017310. See Item 1. Business — General for a description of the arbitration. Defendants filed a motion to dismiss the Plaintiffs’ petition and to confirm the arbitration award. On or about December 10, 2008, the Court entered an Order dismissing the petition and granting the Defendants’ motion to confirm the arbitration award.

OnTable December 22, 2008, the Trustee received a demand letter from Trust Venture Company, LLC with respect to certain enumerated costs — including administrative costs and costs for water gathering, treating and disposal — that are deducted by the working interest owners of certain of the Underlying Properties from the Net Profit Interests before remitting the Net Proceeds to the Trustee and the Trust. Trust Venture Company, LLC has concluded that the Trust has been overcharged (and continues to be overcharged) by the working interest owners of certain of the Underlying Properties and that these overcharges have damaged the Trust (and as a result, all of the Trust’s Unitholders). In addition, Trust Venture Company, LLC asserts that the working interest owners have failed to provide the required accountings as set forth in the Conveyances and that the Trust may request the court to require the working interest owners to provide such an accounting. Trust Venture Company, LLC requested that the Trustee either institute legal action against the working interest owners, or authorize Trust Venture Company, LLC to commence a derivative action against the current working interest owner of the Alabama property in accordance with, inter alia, Section 3816 of the Delaware Statutory Trust Act, codified at 12 Del. C. 3816(a), to recover all overcharges related to administrative costs, water gathering, treating and disposal costs and all overcharges reflected in the Contents

15 Torch Energy Royalty Trust

~~Table~~The Alabama Circuit Court of ~~Contents~~Tuscaloosa County, Alabama convened a hearing on the settlement on April 11, 2011, at 2:00 p.m. CDT (the “Settlement Hearing”). At the Settlement Hearing, the Court determined whether or not (i) to approve the Settlement as memorialized in the proposed Settlement and Release Agreement with Constellation Energy Partners LLC, and (ii) to approve an Order ending this derivative action. On February 23, 2011, the Trust sent the Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear to the Trust’s unitholders of record as of February 11, 2011, as required by the Settlement. On April 18, 2011, the Trust issued a press release and disclosed information on its Current Report on Form 8-K that the Alabama Circuit Court of Tuscaloosa County, Alabama approved in all respects the settlement as memorialized in the proposed Settlement and Release Agreement and ordered that the matter be dismissed, with prejudice, costs taxed as paid. In the Order and Final Judgment entered by the Court dated as of April 13, 2011, the Circuit Court acknowledged receiving the report from counsel for the trustee of the Trust that no objections to the proposed settlement in this matter had been received, and the Court confirmed after review that the Settlement and Release Agreement is fair, reasonable and adequate. The Settlement and Release Agreement became effective on June 13, 2011.

~~Torch~~As ~~Energy~~previously ~~Royalty~~disclosed on current Report Form 8-K filed on January 31, 2008, the Trust received the affirmative vote of the Unitholders of more than 66 2/3% of the outstanding units to terminate the Trust at the meeting of Unitholders held January 29, 2008. Pursuant to the Trust Agreement of the Trust, the “Termination Date” of the Trust is January 29, 2008.

~~accounting.~~Upon ~~The~~termination ~~Trustee~~of ~~responded~~the onTrust, ~~December 22~~among other things, ~~2008~~the Trustee is required to ~~Trust~~sell ~~Venture~~the ~~Company~~Net Profits Interests. Specifically, ~~LLC~~pursuant ~~with~~to aSection 9.03(e) ~~request~~of ~~for~~the ~~additional~~Trust ~~information~~Agreement ~~which~~if itthe ~~has~~property ~~now~~of ~~received.~~the ~~The~~Trust ~~Trustee~~Estate ~~carefully~~(as ~~considered Trust~~defined ~~Venture~~in ~~Company,~~the ~~LLC’s~~Trust ~~demand~~Agreement) ~~letter,~~has ~~and~~not ~~concluded,~~been insold ~~the~~prior ~~reasoned~~to ~~exercise~~the end of ~~its~~one ~~business judgment,~~calendar ~~that~~year itfollowing isthe intermination date, the ~~best~~Trustee ~~interest~~must cause such assets to be sold at public auction. All of the ~~Trust~~Net Profits Interests have been sold and ~~all~~the ~~Unitholders~~Trust is wind-down operations. No assurances can be given that the Trustee with respect to ~~authorize~~the ~~Trust Venture~~amount ~~Company,~~that ~~LLC~~will be distributed to ~~commence~~Unitholders afollowing ~~derivative~~the ~~action~~sales. ~~and~~Such ~~provided~~distributions ~~its~~could ~~authorization~~be below asthe market value of ~~December 30,~~the ~~2008~~Units.

AsItem disclosed by the Trust in its Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Annual Report”), Trust Venture intended to commence a derivative action against Constellation Energy Partners LLC, the working interest owner of certain oil and natural gas fields located in Alabama, in accordance with, inter alia, Section 3816 of the Delaware Statutory Trust Act, codified at 12 Del4. ~~C. 3816~~(~~a),~~Removed ~~to (i) recover any overcharges to the Trust by Constellation Energy Partners LLC related to administrative costs, water gathering, treating~~ and ~~disposal costs and severance taxes and (ii~~Reserved) ~~require Constellation Energy Partners LLC to provide an accounting of its revenues and expenses as required under the Conveyance filed of record in Tuscaloosa County, Alabama~~. On December 30, 2008, Trust Venture Company, LLC filed and subsequently served a derivative lawsuit against Constellation Energy Partners LLC in Alabama state court alleging such overcharges, challenging the calculation of the Net Profits Interests under the Conveyances that were used to transfer the Net Profits Interests in each state, and demanding an accounting of Constellation Energy Partners LLC’s revenues and expenses. In response to the derivative lawsuit, on February 9, 2009, Constellation Energy Partners LLC filed in Alabama state court a motion to dismiss such lawsuit without prejudice in favor of arbitration in Texas on various grounds, including Trust Venture Company, LLC’s alleged lack of standing and Trust Venture’s alleged failure to comply with certain contractual agreements. The Alabama state court denied Constellation Energy Partners LLC’s motion to dismiss on February 25, 2009, and so the Alabama derivative action is proceeding against Constellation Energy Partners LLC.

OnPART ~~February 12,~~II 2009, the Trustee received a certified copy of a demand for arbitration dated February 9, 2009 by Constellation Energy Partners LLC before JAMS in Texas (the “Demand Notice”) seeking a declaratory judgment that Constellation Energy Partners LLC (i) correctly calculated and paid the Net Profits Interests payments due to the Trust, (ii) correctly charged the Trust for certain well accounting services and severance taxes, and (iii) has complied with its contractual reporting requirements due to the Trust. In the Demand Notice, Constellation Energy Partners LLC claimed that, because the Trust authorized Trust Venture to file the derivative lawsuit, “there exists a judicable conflict between Constellation Energy Partners LLC and the Trust that is subject to resolution by arbitration.”

16The Units are currently listed and traded on the Pink Sheets under the symbol “TRRU.” At March 31, 2013, there were 8,600,000 Units outstanding and approximately 158 Unitholders of record. The following table sets forth, for the periods indicated, the high and low sales prices per Unit on the NYSE and the amount of quarterly cash distributions per Unit made by the Trust:


	High		Low		Distributions
Fiscal Year Ended December 31, 2010:
Quarter ended March 31, 2010	$	5.35	$	3.36	$	0.00
Quarter ended June 30, 2010	$	5.48	$	3.75	$	0.00
Quarter ended September 30, 2010	$	4.64	$	3.19	$	0.00
Quarter ended December 31, 2010	$	4.99	$	3.50	$	0.00
Fiscal Year Ended December 31, 2011:
Quarter ended March 31, 2011	$	4.22	$	2.50	$	0.00
Quarter ended June 30, 2011	$	3.08	$	1.50	$	0.00
Quarter ended September 30, 2011	$	3.59	$	1.50	$	0.17
Quarter ended December 31, 2011	$	6.30	$	2.05	$	0.00

~~Torch~~17 ~~Energy Royalty Trust~~

TheTable Trust has also previously disclosed information regarding the termination of the Trust, the ongoing Alabama derivative litigation, the concluded Texas arbitration and other information regarding the Trust on its 2007, 2008 and 2009 Annual Report on Form 10-K filed with the SEC and its Current Reports on Form 8-K filed with the SEC. The Unitholders are urged to read the above mentioned and all other filings by the Trust with the SEC carefully and in their entirety. Contents

OnTorch February 23, 2011, the Trust issued a press release and disclosed information regarding the ongoing Alabama derivative litigation on its Current Report on Form 8-K. In the press release, the Trust announced that it and the derivative unitholder plaintiff reached an agreement in principle with Constellation Energy ~~Partners~~Royalty ~~LLC to settle certain claims in the litigation, captioned~~ Trust Venture Company, LLC v. Constellation Energy Partners LLC (CV-2008-900751), filed by the derivative plaintiff on the Trust’s behalf in the Circuit Court of Tuscaloosa County, Alabama (the “Settlement”).

AsItem stated in the press release and the Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear, in the form approved by the Court and attached to the Form 8-K filed with the SEC on February 23, 2011, subject to the approval of the Court, the derivative plaintiff (Trust Venture Company, LLC) and the Trust have agreed to settle the claims against Constellation Energy Partners LLC in the derivative action, and to enter into mutual, general releases with Constellation Energy Partners LLC in return for (i) a payment of one million two hundred thousand United States dollars ($1,200,000) to the derivative plaintiff by Robinson’s Bend Production II (“RBP II”), which is a Delaware limited liability company and an affiliate of Constellation Energy Partners LLC, to reimburse the derivative plaintiff for the legal fees and expenses it incurred in prosecuting the derivative action, (ii) an irrevocable bid by RBP II of not less than one million United States dollars ($1,000,000) for its purchase from the Trust of the net overriding royalty interest (“Alabama NORRI”), when such Alabama NORRI is separately offered for sale by the Trust at public auction within 180 days of the effective date of the Settlement, with such bid amount to be deposited by RBP II in a third-party escrow account pending the public auction, and (iii) a third amendment to that certain Water Gathering and Disposal Agreement providing that, for a period of ten years commencing on the first day of the month following the effective date of the settlement, the charges for the gathering, separation, and disposal of water from oil and gas wells located in Tuscaloosa County, Alabama that are owned and operated by RBP II (“Wells”) shall be fifty-three cents ($06.~~53)~~ ~~per~~Selected ~~barrel~~Financial ~~of water~~Data. (~~RBP~~In ~~II currently~~thousands, ~~charges~~except ~~one United States dollar ($1.00)~~ per ~~barrel~~unit ~~of water for the gathering, separation, and disposal of such water from the Wells~~amounts).

The Alabama Circuit Court of Tuscaloosa County, Alabama convened a hearing on the settlement on April 11, 2011, at 2:00 p.m. CDT (the “Settlement Hearing”). At the Settlement Hearing, the Court determined whether or not (i) to approve the Settlement as memorialized in the proposed Settlement and Release Agreement with Constellation Energy Partners LLC, and (ii) to approve an Order ending this derivative action. On February 23, 2011, the Trust sent the Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear to the Trust’s unitholders of record as of February 11, 2011, as required by the Settlement. On April 18, 2011, the Trust issued a press release and disclosed information on its Current Report on Form 8-K that the Alabama Circuit Court of Tuscaloosa County, Alabama approved in all respects the settlement as memorialized in the proposed Settlement and Release Agreement and ordered that the matter be dismissed, with prejudice, costs taxed as paid. In the Order and Final Judgment entered by the Court dated as of April 13, 2011, the Circuit Court acknowledged receiving the report from counsel for the trustee of the Trust that no objections to the proposed settlement in this matter had been received, and the Court confirmed after review that the Settlement and Release Agreement is fair, reasonable and adequate. The proposed Settlement and Release Agreement shall become effective on the date on which the Order and Final Judgment becomes final and unappealable, which absent appeal, is anticipated to be June 13, 2011.


	2011			2010			2009		2008		2007
Net profits income	$	1,411	(a)	$	1,285	(b)	$	2,516	$	6,217	$	4,842
Net Profits Interests sale proceeds	$	1,000	(c)	$	—		$	—	$	—	$	—
Infill Well Net Proceeds	$	320		$	1,937		$	89	$	161	$	400
Distributable income	$	1,251	(a)	$	2,060	(b)	$	1,236	$	3,162	$	4,133
Distributions declared	$	1,462		$	—		$	3,891	$	258	$	4,102
Distributable income per Unit	$	$0.15	(a)	$	0.24	(b)	$	0.14	$	0.37	$	0.48
Cash Reserve per Unit	$	0.28		$	0.29		$	0.10	$	0.46	$	0.00
Distributions per Unit	$	0.17		$	0.00		$	0.45	$	0.03	$	0.48
Total assets (at end of period)	$	5,865		$	14,219		$	15,250	$	19,623	$	16,694

As(a) ~~previously~~In ~~disclosed~~2011, onnet ~~current~~profits ~~Report~~income ~~Form~~and ~~8-K~~distributable ~~filed~~income onwere ~~January 31,~~each ~~2008,~~reduced ~~the~~by ~~Trust~~$369,000, ~~received the~~or ~~affirmative~~$0.04 ~~vote~~per ofunit, ~~the~~as ~~Unitholders~~a result of ~~more~~the ~~than~~Chalkley 66Gas ~~2/3%~~Volume ofAdjustment. ~~the~~See ~~outstanding~~Note ~~units~~4 to ~~terminate~~ the Trust’s at accompanying financial statements for additional information.

17 (b) In 2010, net profits income and distributable income were reduced by $756,000 and 826,000 (including $70,000 of interest expense), respectively, by the Austin Chalk Gas Volume Adjustment. Distributable income per unit was reduced by $0.10 for such adjustment. See Note 4 to the Trust’s accompanying financial statements for additional information.

~~Table~~(c) On December 13, 2011, the Trust sold all of ~~Contents~~its net profits interests attributable to the Underlying Properties in the Robinson’s Bend Field. See Note 5 of the accompanying financial statements and Item 3. Legal Proceedings for additional information concerning the sale of the Robinson’s Bend Field Net Profits Interests.

~~Torch~~Distributable ~~Energy~~income ~~Royalty~~of the Trust consists of the excess of net profits income plus Net Profits Interests sale proceeds and Infill Well Net Proceeds less general and administrative expenses and interest expense. The Trust recognizes net profits income and Net Profits Interests Sale proceeds during the period in which such amounts are received by the Trust.

~~the~~18 ~~meeting of Unitholders held January 29, 2008. Pursuant to the Trust Agreement of the Trust, the “Termination Date” of the Trust is January 29, 2008.~~

UponTable termination of the Trust, among other things, the Trustee is required to sell the Net Profits Interests. Specifically, pursuant to Section 9.03(e) of the Trust Agreement if the property of the Trust Estate (as defined in the Trust Agreement) has not been sold prior to the end of one calendar year following the termination date, the Trustee must cause such assets to be sold at public auction. As the Trust was terminated by a vote of the Unitholders on the Termination Date, the Trustee anticipates it will continue to consult with the Trust’s and Trustee’s financial and legal advisors in preparing the sales process and obtaining the necessary information required for disclosure regarding the Units to carry out the sale requirement under Section 9.03(e) of the Trust Agreement. Contents

NoTorch ~~assurances~~Energy ~~can~~Royalty be given that the Trustee will be able to sell the Net Profits Interests or the amount that will be distributed to Unitholders following such a sale. Such distributions could be below the market value of the Units. The Trust can give no assurances of the effect of the results of the affirmative vote to terminate the Trust by the Unitholders on the continued listing of the Units on the New York Stock Exchange (NYSE) or any other national quotation system.

Item 4 7. ~~(Removed~~Management’s Discussion and ~~Reserved)~~Analysis of Financial Condition and Results of Operations.

18 Results of Operations

~~Table~~Discussion of ~~Contents~~Years Ended December 31, 2011, 2010, and 2009

~~Torch~~Because ~~Energy~~a ~~Royalty~~modified cash basis of accounting is utilized by the Trust, Net Proceeds attributable to the Underlying Properties for the years ended December 31, 2011, 2010 and 2009 are derived from actual oil and natural gas production from October 1, 2010 through September 30, 2011, October 1, 2009 through September 30, 2010 and October 1, 2008 through September 30, 2009, respectively. The following tables set forth oil and natural gas sales attributable to the Underlying Properties during the three years ended December 31, 2011.

~~PART~~The IIdata set forth in the table below, except for information contained in footnotes (a) and (b), excludes the effect of the Chalkley Gas Volume Adjustment and the Austin Chalk Gas Volume Adjustment. See Note 4 to the Trust’s accompanying financial statements for additional information concerning these adjustments.

Item 5. Market for Registrant’s Units, Related Unitholder Matters and Registrant Purchases of Equity Securities.


	Bbls of Oil
	2011 (a)		2010			2009
Chalkley Field		1,906		2,337			2,906
Robinson’s Bend Field		—		—			—
Cotton Valley Fields		1,038		1,042			1,560
Austin Chalk Fields		5,261		9,256			10,322

Total		8,205		12,635			14,788


	Mcf of Natural Gas
	2011 (a)		2010			2009
Chalkley Field		536,449		609,035			702,898
Robinson’s Bend Field		1,416,087		1,473,483			1,529,997
Cotton Valley Fields		414,982		438,941			513,335
Austin Chalk Fields		53,002		108,062	(b)		125,887	(b)

Total		2,420,520		2,629,521			2,872,117

~~The~~(a) ~~Units~~Excludes ~~are~~the ~~listed~~effect ~~and~~of ~~traded on~~ the ~~NYSE~~Chalkley ~~under~~Gas ~~the~~Volume ~~symbol~~Adjustment ~~“TRU.”~~which Atreduced ~~March 31,~~Net ~~2011,~~Proceeds ~~there~~paid ~~were 8,600,000~~to ~~Units~~the ~~outstanding~~Trust ~~and~~in ~~approximately~~2011 ~~164~~by ~~Unitholders~~$0.4 ~~of record~~million. The ~~following~~Chalkley ~~table~~Gas ~~sets forth,~~Volume ~~for~~Adjustment ~~the~~did ~~periods~~not ~~indicated,~~affect ~~the~~Net ~~high~~Proceeds ~~and~~received ~~low~~by ~~sales~~the ~~prices~~Trust ~~per~~in ~~Unit~~2009 onand ~~the~~2010. ~~NYSE~~See ~~and~~Note ~~the~~4 ~~amount of~~to ~~quarterly~~the ~~cash~~Trust’s ~~distributions~~accompanying ~~per~~financial ~~Unit~~statements ~~made~~for byadditional ~~the Trust:~~ information.

					Cash
	High		Low		Distributions
Fiscal Year Ended December 31, 2009:
Quarter ended March 31, 2009	$	2.99	$	1.19	$	0.00
Quarter ended June 30, 2009	$	4.80	$	1.44	$	0.35
Quarter ended September 30, 2009	$	8.74	$	3.20	$	0.00
Quarter ended December 31, 2009	$	7.35	$	4.36	$	0.10
Fiscal Year Ended December 31, 2010:
Quarter ended March 31, 2010	$	5.35	$	3.36	$	0.00
Quarter ended June 30, 2010	$	5.48	$	3.75	$	0.00
Quarter ended September 30, 2010	$	4.64	$	3.19	$	0.00
Quarter ended December 31, 2010	$	4.99	$	3.50	$	0.00

(b)

Excludes the effect of the Austin Chalk Gas Volume Adjustment. Such adjustment adversely affected gas sales attributable to the Underlying Properties in the Austin Chalk Fields during the twelve months ended 2009 by 53 MMcf. The Austin Chalk Gas Volume Adjustment did not affect gas attributable to 2010 and 2011. Oil sales were not impacted by this adjustment. See Note 4 to the Trust’s accompanying financial statements for additional information.

~~Item~~For the year ended December 631, 2011, net profits income was $1.4 ~~Selected~~million, ~~Financial~~as ~~Data~~compared to $1.3 million in 2010. Net profits income in 2011 was adversely impacted by $0.4 million as a result of the Chalkley Gas Volume Adjustment which recouped overpayments made to the Trust by TRC in 1994 and 1995. During the three months ended December 31, 2011, TRC determined that it had overpaid the Trust $3.0 million (Inincluding ~~thousands~~$1.9 million of accrued interest) with respect to TRC’s Underlying Property interests in the Chalkley Field. Neither the Trust nor Unitholders are obligated to return such overpayment to TRC; however, the ~~except~~Trust ~~per~~will ~~Unit~~receive ~~amounts~~no Net Proceeds with respect to TRC’s interests in the Underlying Properties of the Chalkley Field, the Cotton Valley Fields and the Austin Chalk Fields (“TRC Underlying Property Interests”) until future Net Proceeds from the TRC Underlying Property Interests, plus accrued interest,

	Year Ended December 31,
	2010			2009		2008		2007		2006
Net profits income	$	1,285	(a)	$	2,516	$	6,217	$	4,842	$	7,796
Infill Well Net Proceeds	$	1,937		$	89	$	161	$	400	$	516
Distributable income	$	2,060	(a)	$	1,236	$	3,162	$	4,133	$	7,262
Distributions declared	$	—		$	3,891	$	258	$	4,102	$	7,250
Distributable income per Unit	$	0.24	(a)	$	0.14	$	0.37	$	0.48	$	0.84
Cash Reserve per Unit	$	0.29		$	0.10	$	0.46	$	0.00	$	0.00
Distributions per Unit	$	0.00		$	0.45	$	0.03	$	0.48	$	0.84
Total assets (at end of period)	$	14,219		$	15,250	$	19,623	$	16,694	$	18,386

(a)Table In 2010, net profits income and distributable income were reduced by $756,000 and 826,000 (including $70,000 of interest expense), respectively, by the Austin Chalk Gas Volume Adjustment. Distributable income per unit was reduced by $0.10 for such adjustment. See Note 4 to the Trust’s audited financial statements for additional information concerning the Austin Chalk Gas Volume Adjustment.Contents

~~Distributable~~Torch ~~income~~Energy ofRoyalty ~~the~~ Trust consists of the excess of net profits income plus Infill Well Net Proceeds and other income less general and administrative expenses and interest expense. The Trust recognizes net profits income during the period in which amounts are received by the Trust.

19 exceed the unrecouped balance of such overpayment. Accordingly, during the quarter ended December 31, 2011, TRC did not pay the Trust Net Proceeds of $0.4 million generated from TRC’s Underlying Property Interests attributable to oil and gas sales during the three months ended September 30, 2011. As of December 31, 2011, the unrecouped balance of the Chalkley Gas Volume Adjustment was $2.6 million.

~~Table~~Net profits income was $1.3 million in 2010, or 48% lower than net profits income of ~~Contents~~$2.5 million in 2009. The decrease in net profits income during 2010 is mainly due to Austin Chalk Gas Volume Adjustment which recouped overpayments to the Trust by TRC totaling $726,000 (before interest expense) during the five year period ended December 31, 2009.

~~Torch~~Commencing ~~Energy~~with ~~Royalty~~the ~~Trust~~second quarter of 2003 distribution (pertaining to the quarter ended March 31, 2003 production) lease operating expenses and capital expenditures have been deducted in calculating Robinson’s Bend Net Proceeds. The Trust received no payments with respect to the Robinson’s Bend Field during each of the years ended December 31, 2011, 2010 and 2009.

~~Item~~On December 7.13, ~~Management~~2011, the Trust entered into a purchase and sale agreement by and among the Trust and Robinson’s ~~Discussion~~Bend Production II, LLC (“RBP II”), a Delaware limited liability company and ~~Analysis~~a subsidiary of ~~Financial~~Constellation ~~Condition~~Energy Partners LLC, pursuant to which the Trust agreed to sell, and ~~Results~~RBP II agreed to purchase, all of the Trust’s Net Profits Interests attributable to the ~~Operations~~Underlying Properties in the Robinson’s Bend Field for a purchase price of $1,000,000. See Note 5 of the Trust accompanying financial statements and Item 3. Legal Proceedings concerning the sale of the Robinson’s Bend Field Net Profits Interests.

~~Results~~Prior to the effects of ~~Operations~~the Chalkley Gas Volume Adjustment and Austin Chalk Gas Volume Adjustment (See Note 4 to the Trust’s accompanying financial statements), natural gas production attributable to the Underlying Properties in the Chalkley, Cotton Valley and Austin Chalk Fields was 1,004 MMcf, 1,156 MMcf and 1,342 MMcf in 2011, 2010 and 2009, respectively. Natural gas production decreased during each of the three years ended December 31, 2011 mainly as a result of normal production declines.

~~Discussion~~Natural gas production attributable to the Underlying Properties (excluding production generated from the Infill Wells) in the Robinson’s Bend Field was 1,416 MMcf, 1,473 MMcf and 1,530 MMcf in 2011, 2010 and 2009, respectively. Natural gas production decreased during each of ~~Years~~the ~~Ended~~three years ended December 31, ~~2010~~2011 mainly as a result of normal production declines. Oil production attributable to the Underlying Properties for the year ended December 31, ~~2009~~2011 was 8,205 ~~and~~Bbls ~~2008~~as compared to 12,635 Bbls and 14,788 Bbls for the same periods in 2010 and 2009, respectively.

~~Because~~The aaverage ~~modified~~price ~~cash~~used ~~basis~~to ofcalculate ~~accounting~~Net isProceeds ~~utilized~~for bynatural gas, before gathering, treating and transportation deductions, during the ~~Trust~~year ended December 31, ~~Net~~2011 ~~Proceeds~~was ~~attributable~~$3.27 per MMBtu as compared to ~~the~~ ~~Underlying~~$3.36 ~~Properties~~and $3.41 per MMBtu for the years ended December 31, 2010, and 2009, ~~and~~respectively. ~~2008~~Such ~~are~~average ~~derived~~gas ~~from~~price ~~actual~~calculations ~~oil~~exclude ~~and~~the ~~natural~~effects ~~gas~~of ~~production~~the ~~from~~Chalkley ~~October 1,~~Gas ~~2009~~Volume ~~through~~Adjustment ~~September 30,~~and ~~2010,~~Austin ~~October 1, 2008~~Chalk ~~through~~Gas ~~September 30,~~Volume ~~2009~~Adjustment ~~and~~discussed ~~October 1,~~in ~~2007~~Note ~~through~~4 ~~September 30,~~of ~~2008,~~the ~~respectively.~~Trust’s ~~The following~~accompanying ~~tables~~financial ~~set~~statements. ~~forth~~The ~~oil~~average ~~and~~price ~~natural~~used ~~gas~~to ~~sales~~calculate ~~attributable~~Net toProceeds ~~the~~for ~~Underlying~~oil ~~Properties~~ during the ~~three~~ years ended December 31, 2011, 2010 and 2009 was $83. 09, $69.11 and $48.11 per Bbl, respectively.

~~The~~Prior ~~data~~to ~~set~~the ~~forth~~Trust’s intermination on January 29, 2008, TEMI deducted the ~~table~~Price ~~below,~~Differential ~~except~~and was committed to pay a Minimum Price for ~~information~~natural ~~contained~~gas. inWhen ~~footnote~~TEMI (paid a) purchase price for natural gas based on the Minimum Price, ~~excludes~~TEMI received Price Credits which it was entitled to deduct in determining the ~~effect~~purchase ofprice when the ~~Austin~~Index ~~Chalk~~Price ~~Gas~~for ~~Volume~~natural ~~Adjustment~~gas exceeded the Minimum Price. ~~See~~TEMI ~~Note~~had 4not exercised its right to discontinue the ~~Trust’s~~Minimum ~~audited~~Price commitment and had no outstanding Price Credits on the Termination Date. ~~financial~~Additionally, ~~statements~~if the Index Price for ~~additional~~natural ~~information~~gas ~~concerning~~exceeded $2.10 per MMBtu, adjusted annually for inflation, TEMI deducted 50% of such excess in calculating the ~~Austin~~Net ~~Chalk~~Proceeds ~~Gas~~payable ~~Volume~~to ~~Adjustment~~the Trust.

	Bbls of Oil
	2010		2009		2008
Chalkley Field		2,337		2,906		3,550
Robinson’s Bend Field		—		—		—
Cotton Valley Fields		1,042		1,560		1,552
Austin Chalk Fields		9,256		10,322		9,069
Total		12,635		14,788		14,171

	Mcf of Natural Gas
	2010			2009			2008
Chalkley Field		609,035			702,898			822,474
Robinson’s Bend Field		1,473,483			1,529,997			1,579,276
Cotton Valley Fields		438,941			513,335			580,232
Austin Chalk Fields		108,062	(a)		125,887	(a)		140,911	(a)
Total		2,629,521			2,872,117			3,122,893

~~(a)~~Torch ~~Excludes~~Energy ~~the~~Royalty effect of the Austin Chalk Gas Volume Adjustment. Such adjustment adversely affected gas sales attributable to the Underlying Properties in the Austin Chalk Fields during the twelve months ended September 30, 2010, 2009 and 2008 by 0 MMcf, 53 MMcf and 37 MMcf, respectively. Oil sales were not impacted by this adjustment. See Note 4 to the Trust’s audited financial statements for additional information. The cumulative natural gas sales volume adjustment for periods prior to 2008 was 108 MMcf. The total natural gas sales volumes pertaining to the Austin Chalk Gas Volume Adjustment of 198 MMcf were compensated with natural gas sales volumes in 2010.

~~For~~Upon the ~~year~~Trust’s ~~ended December 31~~termination, ~~2010,~~the ~~net~~Working ~~profits~~Interest ~~income~~Owners ~~was~~used ~~$1.3 million,~~the assame ~~compared~~pricing mechanisms to(including ~~$2.5 million~~the ~~and~~Sharing ~~$6.2 million~~Price ~~for~~and ~~the~~Minimum ~~same~~Price ~~periods~~commitment mechanisms) in ~~2009~~calculating ~~and~~Net ~~2008,~~Proceeds ~~respectively~~due to the Trust. The ~~decrease~~Minimum inPrice ~~net profits~~per ~~income~~MMBtu ~~during~~for 2011, 2010 asand ~~compared~~2009 towas ~~2009~~$1.99, is$1.97 ~~mainly~~and ~~due~~$1.95, torespectively. ~~Austin~~The ~~Chalk~~Sharing ~~Gas~~Price ~~Volume~~per ~~Adjustment~~MMBtu ~~which~~for ~~recouped~~2011, ~~overpayments~~2010 toand ~~the~~2009 ~~Trust~~was by$2.46, ~~TRC~~$2.43 ~~totaling~~and $~~726~~2.40,~~000~~ ~~(before~~respectively. ~~interest~~The ~~expense)~~deduction ~~during~~ of the ~~five~~Price ~~year~~Differential ~~period~~in connection with the Sharing Price mechanism reduced Net Proceeds during the years ended December 31, ~~2009.~~2011, ~~The~~2010, ~~decrease~~and in2009 ~~net~~by ~~profits~~$1.9 million, ~~income~~$2.5 ~~during~~million ~~2009~~and ~~as compared~~$3.0 tomillion, ~~2008~~respectively. isFollowing ~~mainly~~the ~~due~~Trust’s totermination, ~~lower~~the ~~average~~Working ~~oil~~Interest ~~and~~Owners ~~natural~~also ~~gas~~have ~~prices~~the ~~paid~~same annual option to discontinue the ~~Trust~~Minimum ~~in 2009~~Price commitment. ~~The~~As ~~Trust~~of December 31, ~~Trustee~~2011, ~~and~~ the ~~Trust’s~~Working Interest ~~service~~Owners ~~providers~~had ~~continue~~no tooutstanding ~~review~~Price Credits and ~~analyze~~had not exercised their right to discontinue the ~~appropriateness~~ ofMinimum ~~and~~Price ~~verify~~commitment. No Price Credits were deducted in calculating the ~~information~~purchase ~~and~~price ~~data~~related ~~provided~~to bynet ~~TRC~~profits ~~concerning~~income during the ~~Austin~~three ~~Chalk~~years ~~gas~~ended ~~production~~December 31, ~~volumes~~2011.

~~Commencing~~In 2008 and 2009, the Trust received $1.3 million from a certain working interest owner with respect to the ~~second~~Infill ~~quarter~~Wells which ofwas ~~2003~~classified ~~distribution~~as ~~(pertaining~~restricted cash prior to 2010 due to potential overpayment (“Restricted Infill Well Net Proceeds”). In 2010, the ~~quarter~~Trust ~~ended~~determined ~~March~~that the Restricted Infill Well Net Proceeds were rightly owned by the Trust. 31Accordingly, ~~2003~~in ~~production)~~2010 ~~lease~~the ~~operating~~Trust ~~expenses~~classified ~~and~~the ~~capital~~Restricted ~~expenditures~~Infill ~~have~~Well ~~been~~Net ~~deducted~~Proceeds ~~in calculating~~as ~~Robinson~~unrestricted cash, decreased the Trust expense payable on the Trust’s Statements of Assets, Liabilities and Trust Corpus and increased Infill Well Net Proceeds included in distributable income by $1.3 million.

20During the three years ended December 31, 2011, 2010 and 2009, Infill Well Net Proceeds were $320,000, $1.9 million and $89,000, respectively. Infill Well Net Proceeds in 2010 were favorably impacted by the recognition of the $1.3 million of Restricted Infill Well Net Proceeds. See Note 4 of the Trust’s accompanying financial statements for information concerning Restricted Infill Well Net Proceeds. Infill Well Net Proceeds during each of the three years ended December 31, 2011 were mainly generated from Infill Wells in the Cotton Valley Fields.

~~Table~~Prior to the effect of ~~Contents~~the Chalkley Gas Volume Adjustment, lease operating expenses and capital expenditures attributable to the Underlying Properties in the Chalkley, Cotton Valley and Austin Chalk Fields deducted in calculating Net Proceeds were $1.7 million in 2011 and $2.2 million for each year in 2010 and 2009.

General and administrative expenses during the year ended December 31, 2011 were $1.5 million as compared to $1.1 million and $1.4 million during each of the years ended December 31, 2010 and 2009, respectively. During each of the three years ended December 31, 2011, general and administrative expenses include costs pertaining to administrative services provided by Torch ~~Energy~~and ~~Royalty~~the ~~Trust~~Trustee, legal fees, accounting fees, reserve report preparation fees, and Unitholder report printing fees.

~~Bend~~Pursuant ~~Net~~to ~~Proceeds~~Section 3.07 ~~The~~of the Trust Agreement, the Trustee established a cash reserve (“Cash Reserve”) following the Trust’s termination in 2008 for the payment of actual, contingent and uncertain liabilities associated with the liquidation and winding down of the Trust and the Trust’s arbitration. During 2011, 2010 and 2009, the Trust received nocash payments ~~with~~totaling ~~respect~~$1.7 million, $1.9 million and $3.2 million from the Working Interest Owners of the Underlying Properties pertaining to net profits income. In 2011, the Trust received $1,000,000 from RBP II in connection with the Trust’s sale of all its Net Profits Interests in the Robinson’s Bend Field. ~~during~~During 2011 and 2010, $1.3 million and $3.2 million (including Restricted Infill Well Net Proceeds of ~~each~~$1.3 million), respectively, of the ~~years~~cash ~~ended~~payments received by the Trust were allocated into the Cash Reserve. No cash payments received by the Trust in 2009 were allocated to the Cash Reserve. In 2009, cash receipts received by the Trust from the Working Interest Owners during 2009 (excluding restricted cash), net of general and administrative costs paid by the Trust during 2009, were distributed to Unitholders along with the release of certain Cash Reserves accumulated in 2008. The Cash Reserve as of December 31, 2011 and 2010, ~~2009~~was $2.4 million and ~~2008~~$2. 5 million, respectively.

~~The~~21 Robinson’s Bend Field Cumulative Deficit, excluding the Robinson’s Bend Infill Wells (pertaining to production as of September 30, 2010) is approximately $6.1 million. Neither the Trust nor Unitholders are liable to pay such deficit. However, the Trust will receive no payments with respect to the Robinson’s Bend Field until future proceeds exceed the Robinson’s Bend Cumulative Deficit.

PriorTable to the effect of the Austin Chalk Gas Volume Adjustment (see Note 4 to the Trust’s audited financial statements), natural gas production attributable to the Underlying Properties in the Chalkley, Cotton Valley and Austin Chalk Fields was 1,156 MMcf, 1,342 MMcf and 1,544 MMcf in 2010, 2009 and 2008, respectively. The Austin Chalk Gas Volume Adjustment, which reduced Net Proceeds received by the Trust in 2010, decreased gas volumes included in net profits income calculations in 2010. The Trust, Trustee and the Trust’s service providers continue to review and analyze the appropriateness of and verify the information and data provided by TRC concerning the Austin Chalk gas production volumes. Contents

~~Natural~~Torch ~~gas~~Energy ~~production~~Royalty ~~attributable~~Trust to the Underlying Properties (excluding production generated from the Infill Wells) in the Robinson’s Bend Field was 1,473 MMcf, 1,530 MMcf and 1,579 MMcf in 2010, 2009 and 2008, respectively. Natural gas production decreased during each of the three years ended December 31, 2010 mainly as a result of normal production declines. Oil production attributable to the Underlying Properties for the year ended December 31, 2010 was 12,635 Bbls as compared to 14,788 Bbls and 14,171 Bbls for the same periods in 2009 and 2008, respectively.

~~The~~For ~~average~~the ~~price~~year ~~used~~ended toDecember 31, ~~calculate~~2011, ~~Net~~distributable ~~Proceeds~~income ~~for~~was ~~natural~~$1.3 ~~gas~~million, ~~before gathering, treating and~~or ~~transportation~~$0.15 ~~deductions~~per Unit, ~~during~~as ~~the~~compared ~~year~~to ~~ended~~$2.1 ~~December 31~~million, ~~2010~~or ~~was~~ $30.3624 per ~~MMBtu~~Unit, asand ~~compared to~~ $31.412 ~~and~~million, or $50.4214 per ~~MMBtu~~Unit, for the years ended December 31, ~~2009~~2010 and ~~2008~~2009, respectively. ~~Such average~~Total ~~gas~~cash ~~price~~distributions ~~calculations exclude the impact~~ of ~~the~~$1.5 ~~Austin~~million, ~~Chalk~~or ~~Gas~~$0.17 ~~Volume~~per ~~Adjustment discussed~~Unit, inand ~~Note 4 of the Trust’s audited financial statements~~$3.9 ~~The~~million, ~~average price used to~~or ~~calculate~~$0.45 ~~Net~~per ~~Proceeds~~Unit, ~~for~~were ~~oil~~made during the years ended December 31, ~~2010,~~2011 and 2009, ~~and~~respectively. ~~2008~~No ~~was~~cash ~~$69.11, $48.11~~distributions ~~and~~were ~~$95.11~~made ~~per~~to ~~Bbl,~~Unitholders ~~respectively~~in 2010.

~~Prior~~Net toprofits ~~the~~income Trust’s termination on January 29, 2008, TEMI deducted the Price Differential and was committed to pay a Minimum Price for natural gas. When TEMI paid a purchase price for natural gas based on the Minimum Price, TEMI received ~~Price~~by ~~Credits which it was entitled to deduct in determining~~ the ~~purchase~~Trust ~~price~~during ~~when~~ the ~~Index~~years ~~Price~~ended ~~for~~December 31, ~~natural~~2011, ~~gas~~2010 ~~exceeded~~and ~~the~~2009, ~~Minimum~~derived ~~Price. TEMI~~from ~~had~~production ~~not~~sold ~~exercised~~during ~~its right to discontinue~~ the ~~Minimum~~twelve ~~Price commitment and had no outstanding~~months ~~Price~~ended ~~Credits~~September 30, ~~on the Termination Date. Additionally~~2011, if2010 ~~the~~and ~~Index Price for natural gas exceeded $2.10 per MMBtu~~2009, ~~adjusted annually for inflation~~respectively, ~~TEMI~~was ~~deducted~~computed ~~50%~~as ofshown ~~such excess~~ in ~~calculating~~ the ~~Net~~following ~~Proceeds~~table ~~payable~~(in tothousands): ~~the Trust.~~

Upon the Trust’s termination, the Working Interest Owners used the same pricing mechanisms (including the Sharing Price and Minimum Price commitment mechanisms) in calculating Net Proceeds due to the Trust. The Minimum Price per MMBtu for 2010, 2009 and 2008 was $1.97, $1.95 and $1.87, respectively. The Sharing Price per MMBtu for 2010, 2009 and 2008 was $2.43, $2.40 and $2.30, respectively. The deduction of the Price Differential in connection with the Sharing Price mechanism reduced Net Proceeds during the years ended December 31, 2010, 2009, and 2008 by $2.5 million, $3.0 million and $10.1 million, respectively. Following the Trust’s termination, the Working Interest Owners also have the same annual option to discontinue the Minimum Price commitment. As of December 31, 2010, the Working Interest Owners had no outstanding Price Credits and had not exercised their right to discontinue the Minimum Price commitment. No Price Credits were deducted in calculating the purchase price related to net profits income during the three years ended December 31, 2010.


	Year Ended December 31,
	2011 (a)											2010 (b)								2009
	Chalkley, Cotton Valley and Austin Chalk Fields			Robinson’s Bend Field			Total		Chalkley, Cotton Valley and Austin Chalk Fields			Robinson’s Bend Field			Total		Chalkley, Cotton Valley and Austin Chalk Fields			Robinson’s Bend Field			Total
Oil and natural gas revenues	$	3,899		$	3,868				$	3,944		$	4,254				$	5,356		$	4,472

Direct operating expenses:
Lease operating expenses (including property tax)		1,640			6,513					1,811			7,074					1,872			6,877
Severance tax		280			258					404			305					474			358

		1,920			6,771					2,215			7,379					2,346			7,235

Net proceeds before capital expenditures		1,979			(2,903	)				1,729			(3,125	)				3,010			(2,763	)
Capital expenditures		105			56					376			14					362			1

		1,874			(2,959	)				1,353			(3,139	)				2,648			(2,764	)
Net profits percentage		95	%		—	(c)				95	%		—	(c)				95	%		—	(c)

		1,780			(2,959	)				1,285			(3,139	)				2,516			(2,764	)
Chalkley Gas Volume Adj (a)		(369	)		—					—			—					—			—

Net profits income	$	1,411		$	—		$	1,411	$	1,285		$	—		$	1,285	$	2,516		$	—		$	2,516

21 (a) The Chalkley Gas Volume Adjustment reduced net profits income in 2011 by $369,000. See Note 4 to the Trust’s accompanying financial statements for additional information.

~~Table~~(b) Net of ~~Contents~~the Austin Chalk Gas Volume Adjustment which reduced net profits income in 2010 by $756,000. See Note 4 to the Trust’s accompanying financial statements for additional information.

~~Torch~~(c) ~~Energy~~With ~~Royalty~~respect to the Robinson’s Bend Field, the Trust received no cash distributions during each of the years ended December 31, 2011, 2010 and 2009 (pertaining to production during the twelve months ended September 30, 2011, 2010 and 2009, respectively.) The Trust sold all of its net profits interests attributable to the Underlying Properties in the Robinson’s Bend Field on December 13, 2011. See Note 5 of the accompanying financial statements. See also Item 3. Legal Proceeding for additional information concerning the sale of the Robinson’s Bend Field Net Profits Interests.

In22 2008 and 2009, the Trust received $1.3 million from a certain working interest owner with respect to the Infill Wells which was classified as restricted cash prior to 2010 due to potential overpayment (“Restricted Infill Well Net Proceeds”). In 2010, the Trust determined that the Restricted Infill Well Net Proceeds were rightly owned by the Trust. Accordingly, in 2010 the Trust classified the Restricted Infill Well Net Proceeds as unrestricted cash, decreased the Trust expense payable on the Trust’s Statements of Assets, Liabilities and Trust Corpus and increased Infill Well Net Proceeds included in distributable income by $1.3 million.

DuringTable the three years ended December 31, 2010, 2009 and 2008, Infill Well Net Proceeds were $1.9 million, $89,000 and $161,000, respectively. Infill Well Net Proceeds in 2010 were favorably impacted by the recognition of the $1.3 million of Restricted Infill Well Net Proceeds. Infill Well Net Proceeds during each of the three years ended December 31, 2010 were mainly generated from Infill Wells in the Cotton Valley Fields. Contents

~~Lease~~Torch ~~operating~~Energy ~~expenses~~Royalty ~~and~~Trust capital expenditures attributable to the Underlying Properties in the Chalkley, Cotton Valley and Austin Chalk Fields deducted in calculating Net Proceeds during the years ended December 31, 2010 and 2009 were $2.2 million for each year and $2.5 million in 2008.

~~General~~Critical ~~and~~Accounting ~~administrative~~Policies expenses during the year ended December 31, 2010 were $1.1 million as compared to $1.4 million and $3.3 million during each of the years ended December 31, 2009 and 2008, respectively. General and administrative expenses were significantly greater in 2008 as compared to 2009 and 2010 as a result of legal fees incurred by the Trust in connection with the arbitration proceeding between the Trust and certain working interest owners of the Underlying Properties relating to the proper calculation of the quarterly Net Profits Interests payments owed to the Trust following the termination of the Trust. See Item 3. Legal Proceedings. During each of the three years ended December 31, 2010, general and administrative expenses include costs pertaining to administrative services provided by Torch and the Trustee, legal fees, accounting fees, reserve report preparation fees, and Unitholder report printing fees.

~~Pursuant to Section 3.07 of the Trust Agreement, the Trustee established a cash reserve (“Cash~~ Reserve”) ~~following~~Estimates the Trust’s termination in 2008 for the payment of actual, contingent and uncertain liabilities associated with the liquidation and winding down of the Trust and the Trust’s arbitration. During 2010, 2009 and 2008, the Trust received cash payments totaling $1.9 million, $3.2 million and $7.1 million from the Working Interest Owners of the Underlying Properties pertaining to net profits income attributable to production from the Underlying Properties during the twelve months ended September 30, 2010, 2009 and 2008, respectively. During 2010 and 2008, $3.2 million (including Restricted Infill Well Net Proceeds of $1.3 million) and $6.1 million, respectively, of the cash payments received by the Trust were allocated into the Cash Reserve. No cash payments received by the Trust in 2009 were allocated to the Cash Reserve. In 2009, cash receipts received by the Trust from the Working Interest Owners during 2009 (excluding restricted cash), net of general and administrative costs paid by the Trust during 2009, were distributed to Unitholders along with the release of certain Cash Reserves accumulated in 2008. The Cash Reserve as of December 31, 2010, 2009 and 2008 was $2.5 million, $0.8 million and $4.0 million, respectively.

~~For~~The proved reserves of the ~~year~~Trust ~~ended~~are estimated ~~December 31~~quantities of oil and natural gas which geological and engineering data demonstrate, ~~2010~~with reasonable certainty, ~~distributable~~to ~~income~~be ~~was~~recoverable ~~$2.1 million,~~in orfuture $0years from known reservoirs under existing economic and operating conditions.24 ~~per~~The ~~Unit,~~accuracy asof any ~~compared~~reserve toestimate ~~$1.2 million,~~is ora ~~$0.14~~function ~~per~~of ~~Unit~~the quality of available data, engineering and ~~$3.2 million~~geological interpretation, orand $0judgment.37 ~~per~~For ~~Unit~~example, ~~for~~estimates ~~the~~are ~~same period~~made inregarding ~~2009~~the amount and ~~2008~~timing of future operating costs, ~~respectively.~~production ~~Total~~volumes ~~cash~~and ~~distributions~~severance taxes, all of ~~$3.9 million,~~which ormay $0in fact vary considerably from actual results.45 ~~per Unit~~In addition, ~~were~~as ~~made~~prices ~~during~~and ~~the~~cost levels change from year ~~ended~~to ~~December 31~~year, ~~2009~~the asestimate ~~compared~~of toproved ~~$0.3 million,~~reserves oralso $0change.03 ~~per Unit~~Any ~~for~~variance in these assumptions could materially affect the estimated ~~same~~quantity ~~period~~and invalue ~~2008~~of the Trust’s reserves. NoIndependent ~~cash~~petroleum ~~distributions~~engineering ~~were~~firms ~~made~~are engaged to ~~Unitholders~~estimate inthe ~~2010~~Trust’s proved hydrocarbon liquid and natural gas reserves.

~~Net~~Chalkley ~~profits~~Gas ~~income~~Volume ~~received~~Adjustment by the Trust during the years ended December 31, 2010, 2009 and 2008, derived from production sold during the twelve months ended September 30, 2010, 2009 and 2008, respectively, was computed as shown in the following table (in thousands):

22During the three months ended December 31, 2011, TRC determined that it had overpaid the Trust $3.0 million (including $1.9 million of accrued interest) with respect to TRC’s Underlying Property interests in the Chalkley Field. Neither the Trust nor Unitholders are obligated to return such overpayment to TRC; however, the Trust will receive no Net Proceeds with respect to TRC’s interests in the Underlying Properties of the Chalkley Field, the Cotton Valley Fields and the Austin Chalk Fields (“TRC Underlying Property Interests”) until future Net Proceeds from the TRC Underlying Property Interests, plus accrued interest, exceed the unrecouped balance of such overpayment. Accordingly, during the quarter ended December 31, 2011, TRC did not pay the Trust Net Proceeds of $0.4 million generated from TRC’s Underlying Property Interests attributable to oil and gas sales during the three months ended September 30, 2011. As of December 31, 2011, the unrecouped balance of the Chalkley Gas Volume Adjustment was $2.6 million.

~~Table~~On August 30, 2013, the Trust simultaneously signed and closed a Purchase and Sale Agreement (“PSA”) by and among the Trust, TRC, Torch E&P Company, N.M.L. Inc., of ~~Contents~~Texas (formerly Torch Energy Services, Inc.), and Torch, pursuant to which the Trust and the Torch Energy Louisiana Royalty Trust sold all of its remaining net profits interests attributable to the underlying working interests in certain fields that produce from the Cotton Valley Fields, Austin Chalk Fields and Chalkley Field for a purchase price of $3,258,330.

~~Torch~~Pursuant ~~Energy~~to ~~Royalty~~the PSA, TRC provided the Trust a release, including a release of claims with respect to TRC’s unrecouped balance pertaining to the Chalkley Gas Volume Adjustment. The unrecouped balance of $0.5 million consisted of the total amount claimed by TRC of $3.1 million minus net proceeds from the underlying properties withheld by TRC of $2.6 million. The PSA also provided TRC a release of claims with respect to the Trust Net Proceeds generated from TRC’s Underlying Property Interest attributable to oil and gas sales. The PSA also contains customary representations, warranties and covenants. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of May 1, 2013.

	Year Ended December 31,
	2010								2009								2008
	Chalkley,
	Cotton Valley			Robinson’s					Chalkley, Cotton			Robinson’s					Chalkley, Cotton			Robinson’s
	and Austin			Bend					Valley and Austin			Bend					Valley and Austin			Bend
	Chalk Fields			Field			Total		Chalk Fields			Field			Total		Chalk Fields			Field			Total
Oil and natural gas revenues (a)	$	3,944		$	4,254				$	5,356		$	4,472				$	9,846		$	7,662
Direct operating expenses:
Lease operating expenses (including property tax)		1,811			7,074					1,872			6,877					1,491			6,619
Severance tax		404			305					474			358					771			743
		2,215			7,379					2,346			7,235					2,262			7,362
Net proceeds before capital expenditures		1,729			(3,125	)				3,010			(2,763	)				7,584			300
Capital expenditures		376			14					362			1					1,040			4
		1,353			(3,139	)				2,648			(2,764	)				6,544			296
Net profits percentage		95	%		—	(b)				95	%		—	(b)				95	%		—	(b)
Net profits income	$	1,285		$	—		$	1,285	$	2,516		$	—		$	2,516	$	6,217		$	—		$	6,217

Austin Chalk Gas Volume Adjustment

(a)		Net of the Austin Chalk Gas Volume Adjustment which reduced net profits income in 2010 by $756,000. See Note 4 to the Trust’s audited financial statements for additional information.
(b)		With respect to the Robinson’s Bend Field, the Trust received no cash distributions during each of the years ended December 31, 2010, 2009 and 2008 (pertaining to production during the twelve months ended September 30, 2010, 2009 and 2008, respectively.)

The Austin Chalk Gas Volume Adjustment reduced proceeds received by the Trust in 2010 by $826,000 (including $70,000 of interest expense) pertaining to net profits income generated by the Underlying Properties in the Austin Chalk Fields. The Austin Chalk Gas Volume Adjustment recouped overpayments to the Trust by TRC during the five year period ended December 31, 2009 which resulted from TRC utilizing estimated wellhead gas volumes for certain wells in the Austin Chalk Fields in computing Net Proceeds due to the Trust. In 2010, the Austin Chalk Gas Volume Adjustment was calculated utilizing actual wellhead gas sales volumes and resulted in a 198 MMcf downward adjustment to gas sales volumes included in the net profits income calculations with respect to the Austin Chalk Field. Oil revenues, severance taxes, lease operating expenses and capital expenditures included in Net Proceeds due to the Trust during the five year period ended December 31, 2009 were not affected by the Austin Chalk Gas Volume Adjustment.

~~Critical~~23 ~~Accounting Policies~~

ReserveTable Estimates of Contents

~~The~~Torch ~~proved~~Energy ~~reserves~~Royalty ~~of the~~ Trust are estimated quantities of oil and natural gas which geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under existing economic and operating conditions. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation, and judgment. For example, estimates are made regarding the amount and timing of future operating costs, production volumes and severance taxes, all of which may in fact vary considerably from actual results. In addition, as prices and cost levels change from year to year, the estimate of proved reserves also change. Any variance in these assumptions could materially affect the estimated quantity and value of the Trust’s reserves. Independent petroleum engineering firms are engaged to estimate the Trust’s proved hydrocarbon liquid and natural gas reserves.

23 Modified Cash Basis

~~Table~~The financial statements of ~~Contents~~the Trust are prepared on a modified cash basis although financial statements filed with the Securities and Exchange Commission are normally required to be prepared in accordance with accounting principles generally accepted in the United States. Since the operations of the Trust are limited to the distribution of income from the Net Profits Interests, the item of primary importance to the reader of the financial statements of the Trust is the amount of cash distributions to the Unitholders for the period reported.

~~Torch~~Item ~~Energy~~7A. ~~Royalty~~Quantitative ~~Trust~~ and Qualitative Disclosures About Market Risk.

~~Austin~~The ~~Chalk~~Trust ~~Gas~~is ~~Volume~~exposed ~~Adjustment~~to market risk, including adverse changes in commodity prices. The Trust’s assets constitute Net Profits Interests in the Underlying Properties. As a result, the Trust’s operating results can be significantly affected by fluctuations in commodity prices caused by changing market forces and the price received for production from the Underlying Properties.

~~The~~All ~~Austin~~production ~~Chalk~~from ~~Gas~~the ~~Volume~~Underlying ~~Adjustment~~Properties ~~reduced~~during ~~proceeds~~the ~~received~~period byfrom the inception of the Trust into ~~2010~~the byTrust’s ~~$826,000 (including~~termination ~~$70~~on January 29,~~000~~ of2008 ~~interest~~was ~~expense)~~sold ~~pertaining~~pursuant to ~~net~~a ~~profits~~Purchase ~~income~~Contract ~~generated~~between byTRC, ~~the Underlying~~Velasco, ~~Properties~~and inTEMI. ~~the~~The ~~Austin~~Purchase ~~Chalk~~Contract ~~Fields.~~expired ~~The~~upon ~~Austin~~the ~~Chalk~~Trust’s ~~Gas~~termination. ~~Volume~~Pursuant ~~Adjustment~~to ~~recouped~~the Purchase ~~overpayments~~Contract, TEMI was obligated to ~~the~~purchase ~~Trust~~all bynet ~~TRC~~production ~~during~~attributable to the ~~five~~Underlying ~~year~~Properties ~~period~~for ~~ended~~an ~~December 31~~Index Price, ~~2009~~less ~~which~~certain ~~resulted from~~other ~~TRC~~charges, ~~utilizing~~which ~~estimated~~were ~~wellhead~~calculated ~~gas~~monthly. ~~volumes~~The ~~for~~Index ~~certain~~Price ~~wells~~calculation inwas ~~the~~based ~~Austin~~on ~~Chalk~~market ~~Fields~~prices inof oil and ~~computing~~natural ~~Net~~gas ~~Proceeds~~and ~~due~~therefore was subject to ~~the~~commodity ~~Trust~~price risk. InThe ~~2010,~~Purchase ~~the~~Contract ~~Austin~~also ~~Chalk~~provided ~~Gas~~a ~~Volume~~Minimum ~~Adjustment~~Price ~~was calculated~~paid ~~utilizing~~by ~~actual~~TEMI ~~wellhead~~for natural gas, ~~sales~~adjusted ~~volumes~~annually ~~and~~for ~~resulted~~inflation. inWhen TEMI paid a ~~198~~purchase ~~MMcf~~price ~~downward~~based on the Minimum Price, it received ~~adjustment~~Price Credits equal to ~~gas~~the ~~sales~~difference ~~volumes~~between ~~included~~the inIndex Price and the ~~net~~Minimum ~~profits~~Price ~~income~~that ~~calculations~~TEMI ~~with~~was ~~respect~~entitled to deduct when the ~~Austin~~ ~~Chalk~~Index ~~Field.~~Price ~~Oil~~exceeded ~~revenues,~~the ~~severance~~Minimum ~~taxes~~Price. Additionally, ~~lease~~if ~~operating~~the ~~expenses~~Index ~~and~~Price ~~capital expenditures~~exceeded ~~included~~the inSharing ~~Net~~Price, ~~Proceeds~~TEMI ~~due~~was entitled to deduct ~~the~~such ~~Trust~~excess, ~~during~~Price Differential. TEMI had the ~~five~~annual ~~year~~option ~~period~~to ~~ended~~discontinue ~~December 31,~~the ~~2009~~Minimum ~~were~~Price ~~not~~commitment. ~~affected~~However, byif TEMI discontinued the ~~Austin~~Minimum ~~Chalk~~Price ~~Gas~~commitment, ~~Volume~~it ~~Adjustment.~~would ~~The~~no ~~Trust,~~longer ~~Trustee~~be ~~and~~entitled to deduct the Price Differential and would ~~Trust’s~~forfeit ~~service~~all ~~providers~~accrued ~~continue~~Price toCredits. ~~review~~TEMI ~~and~~did ~~analyze~~not ~~the~~exercise ~~appropriateness~~its ofright ~~and~~to ~~verify~~discontinue the ~~information~~ ~~and~~Minimum ~~data~~Price ~~provided~~commitment byand ~~TRC~~had ~~concerning~~no ~~the~~outstanding ~~Austin~~Price ~~Chalk~~Credits ~~gas~~on ~~production~~the ~~volumes~~Termination Date.

~~Modified~~Upon ~~Cash~~the ~~Basis~~Trust’s termination, the Working Interest Owners calculated Net Proceeds owed to the Trust utilizing the same pricing mechanisms (including the Sharing Price and Minimum Price commitment mechanisms) as the terminated Purchase Contract. The Minimum Price per MMBtu was $1.99, $1.97 and $1.95 for 2011, 2010 and 2009, respectively. The Sharing Price was $2.46, $2.43 and $2.40 per MMBtu in 2011, 2010 and 2009, respectively. See Item 1. Business and Item 1A. Risk Factors relating to the termination of the Trust and the arbitration proceeding relating to the proper calculation of the Net Profits Interests payments owed to the Trust following termination of the Trust and the Alabama litigation. Following the Trust’s termination, the Working Interest Owners also have the same annual option to discontinue the Minimum Price commitment. However, if the Working Interest Owners discontinue the Minimum Price commitment, they will no longer be entitled to deduct the Price Differential and will forfeit all accrued Price Credits. The Working Interest Owners have not exercised their option to discontinue the Minimum Price commitment and have no outstanding Price Credits as of December 31, 2011.

~~The~~24 financial statements of the Trust are prepared on a modified cash basis although financial statements filed with the Securities and Exchange Commission are normally required to be prepared in accordance with accounting principles generally accepted in the United States. Since the operations of the Trust are limited to the distribution of income from the Net Profits Interests, the item of primary importance to the reader of the financial statements of the Trust is the amount of cash distributions to the Unitholders for the period reported.

ItemTable 7A.of Quantitative and Qualitative Disclosures About Market Risk.Contents

~~The~~Torch ~~Trust~~Energy isRoyalty ~~exposed to market risk, including adverse changes in commodity prices. The~~ Trust~~’s assets~~ constitute Net Profits Interests in the Underlying Properties. As a result, the Trust’s operating results can be significantly affected by fluctuations in commodity prices caused by changing market forces and the price received for production from the Underlying Properties.

~~All~~Item production from the Underlying Properties during the period from the inception of the Trust to the Trust’s termination on January 29, 2008 was sold pursuant to a Purchase Contract between TRC, Velasco, and TEMI8. ~~The~~Financial ~~Purchase~~Statements Contract expired upon the Trust’s termination. Pursuant to the Purchase Contract, TEMI was obligated to purchase all net production attributable to the Underlying Properties for an Index Price, less certain other charges, which were calculated monthly. The Index Price calculation was based on market prices of oil and ~~natural~~Supplementary ~~gas and therefore was subject to commodity price risk~~Data. The Purchase Contract also provided a Minimum Price paid by TEMI for natural gas, adjusted annually for inflation. When TEMI paid a purchase price based on the Minimum Price, it received Price Credits equal to the difference between the Index Price and the Minimum Price that TEMI was entitled to deduct when the Index Price exceeded the Minimum Price. Additionally, if the Index Price exceeded the Sharing Price, TEMI was entitled to deduct such excess, Price Differential. TEMI had the annual option to discontinue the Minimum Price commitment. However, if TEMI discontinued the Minimum Price commitment, it would no longer be entitled to deduct the Price Differential and would forfeit all accrued Price Credits. TEMI did not exercise its right to discontinue the Minimum Price commitment and had no outstanding Price Credits on the Termination Date.

~~Upon~~INDEX ~~the~~TO ~~Trust’s~~FINANCIAL ~~termination,~~STATEMENTS the Working Interest Owners calculated Net Proceeds owed to the Trust utilizing the same pricing mechanisms (including the Sharing Price and Minimum Price commitment mechanisms) as the terminated Purchase Contract. The Minimum Price per MMBtu was $1.97, $1.95 and $1.87 for 2010, 2009 and 2008, respectively. The Sharing Price was $2.43, $2.40 and $2.30 per MMBtu in 2010, 2009 and 2008, respectively. See Item 1. Business and Item 1A. Risk Factors relating to the


	Page
Report of Independent Registered Public Accounting Firm		26
Statements of Assets, Liabilities and Trust Corpus at December 31, 2011 and 2010		27
Statements of Distributable Income for the Years Ended December 31, 2011, 2010 and 2009		28
Statements of Changes in Trust Corpus for the Years Ended December 31, 2011, 2010 and 2009		29
Notes to Financial Statements		30

~~Table~~25 ~~of Contents~~

TorchTable Energyof Royalty Trust Contents

~~termination~~Torch ofEnergy ~~the~~Royalty Trust and the arbitration proceeding relating to the proper calculation of the Net Profits Interests payments owed to the Trust following termination of the Trust and the Alabama litigation. Following the Trust’s termination, the Working Interest Owners also have the same annual option to discontinue the Minimum Price commitment. However, if the Working Interest Owners discontinue the Minimum Price commitment, they will no longer be entitled to deduct the Price Differential and will forfeit all accrued Price Credits. The Working Interest Owners have not exercised their option to discontinue the Minimum Price commitment and have no outstanding Price Credits as of December 31, 2010.

~~Item~~REPORT 8.OF ~~Financial~~INDEPENDENT ~~Statements~~REGISTERED ~~and~~PUBLIC ACCOUNTING ~~Supplementary~~FIRM ~~Data.~~

~~INDEX~~Wilmington TOTrust ~~FINANCIAL~~Company ~~STATEMENTS~~

		Page
Report of Independent Registered Public Accounting Firm		26
Statements of Assets, Liabilities and Trust Corpus at December 31, 2010 and 2009		27
Statements of Distributable Income for the Years Ended December 31, 2010, 2009 and 2008		28
Statements of Changes in Trust Corpus for the Years Ended December 31, 2010, 2009 and 2008		29
Notes to Financial Statements		30

as Trustee of Torch Energy Royalty Trust

25 and to the Unitholders:

~~Table~~We have audited the accompanying statements of ~~Contents~~assets, liabilities and trust corpus of the Torch Energy Royalty Trust (the “Trust”) as of December 31, 2011 and 2010, and the related statements of distributable income and changes in trust corpus for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Trust. Our responsibility is to express an opinion on these financial statements based on our audits.

~~Torch~~We ~~Energy~~conducted ~~Royalty~~our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Trust, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~REPORT~~We OFwere ~~INDEPENDENT~~not ~~REGISTERED~~engaged ~~PUBLIC~~to ~~ACCOUNTING~~examine ~~FIRM~~the Trustee’s assertion about the effectiveness of the Trust’s internal control over financial reporting as of December 31, 2011 included in the accompanying annual report on Form 10-K and, accordingly we do not express an opinion thereon.

~~Wilmington~~As described ~~Trust~~in ~~Company as~~Note ~~Trustee~~2, the accompanying financial statements are prepared on a modified cash basis of ~~Torch~~accounting, ~~Energy~~which ~~Royalty~~is ~~Trust and~~a tocomprehensive basis of accounting other than accounting principles generally accepted in the ~~Unitholders:~~ United States of America.

WeIn ~~have~~our ~~audited~~opinion, the ~~accompanying~~financial statements ofreferred ~~assets,~~to ~~liabilities~~above ~~and~~present ~~trust~~fairly, ~~corpus~~in ofall material respects, the ~~Torch Energy~~financial ~~Royalty~~position ~~Trust~~of (the “Trust”) as of December 31, ~~2010~~2011 and ~~2009~~2010, and the ~~related~~results ~~statements~~ of ~~distributable~~ ~~income~~its operations and ~~changes~~its incash ~~trust~~flows ~~corpus~~ for each of the three years in the period ended December 31, ~~2010.~~2011, ~~These~~in ~~financial~~conformity ~~statements~~with ~~are~~ the ~~responsibility~~basis of ~~the~~accounting ~~Trust.~~described ~~Our responsibility~~in isNote ~~to express an opinion on these financial statements based on our audits~~2.

WeAs ~~conducted~~discussed ~~our audits~~ in ~~accordance~~Note ~~with~~1 ~~the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits~~ to ~~obtain reasonable assurance about whether~~ the financial statements, ~~are~~the ~~free~~Trust ofterminated ~~material~~effective ~~misstatement. An audit includes examining~~January 29, on2008. aCertain ~~test~~responsibilities ~~basis,~~of ~~evidence supporting~~ the ~~amounts~~Trustee, ~~and disclosures in the~~including ~~financial~~those ~~statements.~~associated Anwith ~~audit~~selling ~~also includes assessing~~ the ~~accounting~~assets ~~principles~~of ~~used and significant estimates made by~~ the Trust, asare ~~well~~also as ~~evaluating~~described ~~the~~in ~~overall~~Note ~~financial statement presentation~~1. ~~We believe that our audits provide a reasonable basis for our opinion.~~

~~We were not engaged to examine the Trustee’~~/s/ ~~assertion~~UHY ~~about~~LLP ~~the effectiveness of the Trust’s internal control over financial reporting as of December 31~~Houston, ~~2010~~Texas ~~included~~February ~~in the accompanying annual report on Form 10-K and~~3, ~~accordingly we do not express an opinion thereon.~~ 2014

As26 described in Note 2, the accompanying financial statements are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

InTable our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Trust as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with the basis of accounting described in Note 2. Contents

AsTorch ~~discussed~~Energy inRoyalty ~~Note 1 to the financial statements, the~~ Trust ~~terminated effective January 29, 2008. Certain responsibilities of the Trustee, including those associated with selling the assets of the Trust, are also as described in Note 1.~~

~~/s/~~STATEMENTS ~~UHY~~OF ~~LLP Houston~~ASSETS, ~~Texas April 22,~~LIABILITIES ~~2011~~AND TRUST CORPUS

26 (In Thousands)

~~Table of Contents~~ASSETS

Torch Energy Royalty Trust


	December 31, 2011		December 31, 2010
Cash reserve	$	2,383	$	2,486
Net profits interests in oil and natural gas properties (net of accumulated amortization of $177,118 and $168,867 at December 31, 2011 and 2010, respectively)		3,482		11,733

	$	5,865	$	14,219

LIABILITIES AND TRUST CORPUS
Trust expense payable	$	475	$	367
Trust corpus		5,390		13,852

	$	5,865	$	14,219

~~STATEMENTS~~The OFaccompanying ~~ASSETS,~~notes ~~LIABILITIES~~to ~~AND~~financial ~~TRUST~~statements ~~CORPUS (In Thousands)~~

~~ASSETS~~ are an integral part of these statements.

	December 31,		December 31,
	2010		2009
Cash reserve	$	2,486	$	847
Restricted cash		—		1,288
Net profits interests in oil and natural gas properties (net of accumulated amortization of $168,867 and $167,485 at December 31, 2010 and 2009, respectively)		11,733		13,115
	$	14,219	$	15,250
LIABILITIES AND TRUST CORPUS
Trust expense payable	$	367	$	2,076
Trust corpus		13,852		13,174
	$	14,219	$	15,250

TheTable accompanying notes to financial statements are an integral part of these statements. Contents

27 Torch Energy Royalty Trust

~~Table~~STATEMENTS ofOF ~~Contents~~DISTRIBUTABLE INCOME

~~Torch~~(In ~~Energy~~thousands, ~~Royalty~~except ~~Trust~~ per unit amounts)

STATEMENTS OF DISTRIBUTABLE INCOME (In thousands, except per Unit amounts)


	Year Ended December 31,
	2011		2010		2009
Net profits income	$	1,411	$	1,285	$	2,516
Infill well net proceeds Infill well net proceeds		320		1,937		89
Net profits interests sale proceeds Other income		1,000		—		24

		2,731		3,222		2,629
General and administrative expenses		1,480		1,092		1,393
Interest expense		—		70		—

Distributable income	$	1,251	$	2,060	$	1,236

Distributable income per Unit (8,600 Units)	$	0.15	$	0.24	$	0.14

Distributions per Unit	$	0.17	$	0.00	$	0.45

	Year Ended December 31,
	2010		2009		2008
Net profits income	$	1,285	$	2,516	$	6,217
Infill well net proceeds Infill well net proceeds		1,937		89		161
Other income Other income		—		24		37
		3,222		2,629		6,415
General and administrative expenses		1,092		1,393		3,253
Interest expense		70		—		—
Distributable income	$	2,060	$	1,236	$	3,162
Distributable income per Unit (8,600 Units)	$	0.24	$	0.14	$	0.37
Distributions per Unit	$	0.00	$	0.45	$	0.03

The accompanying notes to financial statements

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

Torch Energy Royalty Trust

STATEMENTS OF CHANGES IN TRUST CORPUS ~~(In~~ ~~thousands)~~

	Year Ended December 31,
	2010			2009			2008
Trust corpus, beginning of year	$	13,174		$	17,644		$	16,449
Amortization of Net Profits Interests		(1,382	)		(1,815	)		(1,709	)
Distributable income		2,060			1,236			3,162
Distributions to Unitholders		—			(3,891	)		(258	)
Trust Corpus, end of year	$	13,852		$	13,174		$	17,644

(In thousands)

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


	Year Ended December 31,
	2011			2010			2009
Trust corpus, beginning of year	$	13,852		$	13,174		$	17,644
Amortization of Net Profits Interests		(1,501	)		(1,382	)		(1,815	)
Impairment expense		(6,750	)		—			—
Distributable income		1,251			2,060			1,236
Distributions to Unitholders		(1,462	)		—			(3,891	)

Trust Corpus, end of year	$	5,390		$	13,852		$	13,174

29 The accompanying notes to financial statements

~~Table~~are an integral part of ~~Contents~~these statements.

~~Torch~~29 ~~Energy Royalty Trust~~

NotesTable toof the Financial Statements Contents

1.Torch ~~Nature~~Energy ofRoyalty ~~Operations~~ Trust

~~The~~Notes ~~Torch Energy Royalty Trust (“Trust”) was formed effective October 1, 1993, pursuant~~ to ~~a trust agreement (“Trust Agreement”) among Wilmington Trust Company, not in its individual capacity but solely as trustee of~~ the ~~Trust~~Financial ~~(“Trustee”),~~Statements Torch Royalty Company (“TRC”) and Velasco Gas Company, Ltd. (“Velasco”) as owners of certain oil and natural gas properties (“Underlying Properties”) and Torch Energy Advisors Incorporated (“Torch”) as grantor. The Trust was formed under the Delaware statutory trust act (formerly known as the Delaware business trust act). TRC and Velasco created net profits interests (“Net Profits Interests”) which burden the Underlying Properties and conveyed such interests to Torch. Torch conveyed the Net Profits Interests to the Trust in exchange for an aggregate of 8,600,000 units of beneficial interest (“Units”). Such Units were sold to the public through various underwriters in November 1993. The current working interest owners of the Underlying Properties are Torch Royalty Company, Torch E&P Company, Samson Lone Star Limited Partnership and Constellation Energy Partners LLC (“Working Interest Owners”).

~~The Trust has no officers, directors or employees~~1. ~~The~~Nature Trust and Trustee rely solely on receiving accurate information, reports and other representations from Torch and other service providers to the Trust. In executing and submitting this report on behalf of ~~the~~Operations Trust and with respect to Bruce L. Bisson in executing the certifications relating to this report, the Trustee and Bruce L. Bisson have relied upon the accuracy of such reports, information and representations.

The ~~Trust~~Torch ~~received~~Energy ~~the~~Royalty ~~affirmative~~Trust ~~vote~~(“Trust”) ofwas ~~the~~formed ~~Unitholders~~effective ofOctober 1, ~~more~~1993, ~~than~~pursuant 66to ~~2/3%~~a oftrust ~~the~~agreement ~~outstanding~~(“Trust ~~Units~~Agreement”) toamong ~~terminate~~Wilmington ~~the~~ Trust atCompany, ~~the~~not ~~meeting~~in ofits ~~Unitholders~~individual ~~held~~capacity onbut ~~January 29,~~solely ~~2008.~~as ~~Upon termination~~trustee of the Trust, ~~among other things~~(“Trustee”), ~~the~~Torch ~~Trustee~~Royalty isCompany ~~required~~(“TRC”) toand ~~sell~~Velasco ~~the~~Gas ~~Net Profits Interests. Specifically~~Company, ~~pursuant to Section 9~~Ltd.03 (e“Velasco”) ofas ~~the~~owners ~~Trust Agreement if the property~~ of ~~the~~ ~~Trust~~certain ~~Estate~~oil ~~(as~~and ~~defined~~natural ingas ~~the~~properties ~~Trust~~(“Underlying ~~Agreement~~Properties”) ~~has~~and ~~not~~Torch ~~been~~Energy ~~sold~~Advisors ~~prior~~Incorporated to(“Torch”) ~~the~~as ~~end~~grantor. ofThe ~~one~~Trust ~~calendar year~~was ~~following~~formed ~~the~~under ~~termination date,~~ the ~~Trustee,~~Delaware ~~thereafter,~~statutory ~~must~~trust ~~cause~~act ~~such~~(formerly ~~assets~~known toas bethe ~~sold~~Delaware atbusiness ~~public~~trust ~~auction~~act). AsTRC ~~the~~and ~~Trust~~Velasco ~~was~~created ~~terminated~~net byprofits ainterests ~~vote of the Unitholders on January 29, 2008~~ (~~the~~ “~~Termination~~Net ~~Date~~Profits Interests”), ~~the~~which ~~Trustee~~burden ~~anticipates it will continue to consult with~~ the ~~Trust’s~~Underlying ~~and Trustee’s~~Properties ~~financial~~ and ~~legal~~conveyed ~~advisors~~such ininterests ~~preparing~~to ~~the~~Torch. ~~sales~~Torch ~~process~~conveyed ~~and obtaining~~ the ~~necessary information~~Net ~~required~~Profits ~~for~~Interests ~~disclosure~~to ~~regarding~~ the ~~Units~~Trust toin ~~carry~~exchange ~~out~~for ~~the sale requirement under~~an ~~Section 9.03(e).~~aggregate ~~Therefore, after termination~~ of ~~the Trust~~8,600,000 ~~the~~units ~~remaining~~of ~~assets~~beneficial ofinterest ~~the~~(“Units”). ~~Trust~~Such ~~will be~~Units were sold, ~~and~~to the ~~proceeds~~public ~~therefrom~~through ~~(after~~various ~~expenses)~~underwriters ~~will~~in beNovember ~~distributed to the unitholders (“Unitholders”)~~1993. ~~The~~During ~~sole~~2011 ~~purpose of~~ the ~~Trust~~working isinterest toowners ~~hold~~of the ~~Net~~Underlying ~~Profits~~Properties ~~Interests,~~were toTorch ~~receive~~Royalty ~~payments~~Company, ~~from~~Torch ~~TRC~~E&P ~~and Velasco~~Company, ~~and~~Samson toLone ~~make~~Star ~~payments~~Limited toPartnership ~~Unitholders.~~and ~~The~~Constellation ~~Trust~~Energy ~~does~~Partners ~~not~~LLC ~~conduct~~(“Working ~~any business~~Interest ~~activity~~Owners”).

NoThe Trust ~~assurances~~has ~~can~~no beofficers, ~~given~~directors ~~that~~or ~~the~~employees. ~~Trustee~~The ~~will~~Trust beand ~~able~~Trustee torely ~~sell~~solely ~~the~~on ~~Net~~receiving ~~Profits~~accurate ~~Interests~~information, orreports ~~the price~~and ~~that~~other ~~will~~representations befrom ~~distributed~~Torch toand ~~Unitholders~~other ~~following~~service ~~such~~providers ato ~~sale~~the Trust. ~~Such~~In ~~distributions~~executing ~~could~~and ~~be below~~submitting ~~the~~this ~~market~~report ~~value~~on behalf of the ~~Units. The~~ Trust ~~can~~and ~~give~~with norespect ~~assurances~~to ofDavid ~~the~~A. ~~effect~~Vanaskey ofin ~~the~~executing ~~results of~~ the ~~affirmative~~certifications ~~vote~~relating to ~~terminate~~this ~~the~~report, ~~Trust by~~ the ~~Unitholders~~Trustee onand ~~the~~David ~~continued~~A. ~~listing~~Vanaskey ofhave ~~the Units~~relied onupon the ~~New~~accuracy ~~York~~of ~~Stock~~such ~~Exchange~~reports, ~~(NYSE) or~~information ~~any~~and ~~other national quotation system~~representations.

~~TRC~~The ~~and~~Trust ~~Velasco~~received ~~receive~~the ~~payments~~affirmative ~~reflecting~~vote of the ~~proceeds~~Unitholders of ~~oil~~more ~~and~~than ~~natural~~66 ~~gas~~2/3% ~~sold~~of ~~and~~the ~~aggregate~~outstanding Units to terminate the Trust at the meeting of Unitholders ~~these~~held ~~payments~~on January 29, ~~deduct~~2008 ~~applicable~~(the ~~costs~~“Termination ~~and~~Date”). ~~make~~Upon ~~payments~~termination toof the ~~Trustee~~Trust, ~~each~~among ~~quarter~~other ~~for~~things, the ~~amounts~~ ~~due~~Trustee is required to sell the ~~Trust~~Net Profits Interests. ~~Prior~~Specifically, pursuant to Section 9.03(e) of the Trust’s ~~termination~~Agreement onif the ~~January 29,~~property ~~2008,~~of ~~Unitholders received~~the ~~quarterly~~Trust ~~cash~~Estate ~~distributions~~(as ~~relating~~defined toin ~~oil~~the ~~and~~Trust ~~natural~~Agreement) ~~gas~~has ~~produced~~not ~~and~~been sold ~~from~~prior to the ~~Underlying~~ ~~Properties.~~end ~~Pursuant~~of toone ~~Section 3.07~~calendar ofyear following the ~~Trust~~termination ~~Agreement~~date, the Trustee, ~~established~~thereafter, ~~a cash~~must ~~reserve~~cause ~~(“Cash~~such ~~Reserve”)~~assets into ~~2008~~be ~~following~~sold ~~the~~at ~~Trust’s~~public ~~termination~~auction. See Note ~~4 (Distributions~~5 ~~and Income Computations)~~ of the Trust’s accompanying financial statements for additional information ~~regarding~~concerning ~~cash~~the ~~distributions~~liquidation ~~and~~of the ~~Cash~~Trust’s ~~Reserve~~Net Profits Interests.

30The sole purpose of the Trust is to hold the Net Profits Interests, to receive payments from TRC and Velasco, and to make payments to Unitholders. The Trust does not conduct any business activity. The Trust has sold all of the Net Profits Interests and is winding down operations.

~~Table~~TRC and Velasco receive payments reflecting the proceeds of ~~Contents~~oil and natural gas sold and aggregate these payments, deduct applicable costs and make payments to the Trustee each quarter for the amounts due to the Trust. Prior to the Trust’s termination on January 29, 2008, Unitholders received quarterly cash distributions relating to oil and natural gas produced and sold from the Underlying Properties. Pursuant to Section 3.07 of the Trust Agreement, the Trustee established a cash reserve (“Cash Reserve”) in 2008 following the Trust’s termination. See Note 4 (Distributions and Income Computations) of the Trust’s financial statements for additional information regarding cash distributions and the Cash Reserve. Because no additional properties will be contributed to the Trust, the assets of the Trust deplete over time and a portion of each cash distribution made by the Trust is analogous to a return of capital.

~~Torch~~The ~~Energy~~only ~~Royalty~~assets of the Trust, other than cash and temporary investments being held for the payment of actual, contingent and uncertain liabilities and for distribution to Unitholders, are the Net Profits Interests. Under the Trust Agreement, the Trustee receives the payments attributable to the Net Profits Interests and pays all expenses, liabilities and obligations of the Trust. The Trustee has the discretion to establish a cash reserve for the payment of any liability that is contingent or uncertain in amount or that otherwise is

~~Because~~30 ~~no additional properties will be contributed to the Trust, the assets of the Trust deplete over time and a portion of each cash distribution made by the Trust is analogous to a return of capital.~~

TheTable only assets of the Trust, other than cash and temporary investments being held for the payment of actual, contingent and uncertain liabilities and for distribution to Unitholders, are the Net Profits Interests. Under the Trust Agreement, the Trustee receives the payments attributable to the Net Profits Interests and pays all expenses, liabilities and obligations of the Trust. The Trustee has the discretion to establish a cash reserve for the payment of any liability that is contingent or uncertain in amount or that otherwise is not currently due and payable. The Trustee is entitled to cause the Trust to borrow money to pay expenses, liabilities and obligations that cannot be paid out of cash held by the Trust. The Trustee is entitled to cause the Trust to borrow from any source, including from the entity serving as Trustee, provided that the entity serving as Trustee shall not be obligated to lend to the Trust. To secure payment of any such indebtedness (including any indebtedness to the Trustee), the Trustee is authorized to (i) mortgage and otherwise encumber the entire Trust estate or any portion thereof; (ii) carve out and convey production payments; (iii) include all terms, powers, remedies, covenants and provisions it deems necessary or advisable, including confession of judgment and the power of sale with or without judicial proceedings; and (iv) provide for the exercise of those and other remedies available to a secured lender in the event of a default on such loan. The terms of such indebtedness and security interest, if funds were loaned by the Trustee, must be similar to the terms which the Trustee would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship, and the Trustee shall be entitled to enforce its rights with respect to any such indebtedness and security interest as if it were not then serving as Trustee. Contents

The Trustee is authorized and directed to sell and convey the Net Profits Interests without Unitholder approval in certain instances as described in the Trust Agreement, including upon termination of the Trust. The Trustee is empowered by the Trust Agreement to employ consultants, legal and financial advisors and agents (including Torch) ~~and~~Energy toRoyalty ~~make payments of all fees for services or expenses out of the assets of the~~ Trust.

2 not currently due and payable. ~~Basis~~The Trustee is entitled to cause the Trust to borrow money to pay expenses, liabilities and obligations that cannot be paid out of ~~Accounting~~cash held by the Trust. The Trustee is entitled to cause the Trust to borrow from any source, ~~Significant~~including ~~Accounting~~from ~~Policies~~the entity serving as Trustee, provided that the entity serving as Trustee shall not be obligated to lend to the Trust. To secure payment of any such indebtedness (including any indebtedness to the Trustee), the Trustee is authorized to (i) mortgage and ~~Recent~~otherwise ~~Accounting~~encumber ~~Pronouncements~~the entire Trust estate or any portion thereof; (ii) carve out and convey production payments; (iii) include all terms, powers, remedies, covenants and provisions it deems necessary or advisable, including confession of judgment and the power of sale with or without judicial proceedings; and (iv) provide for the exercise of those and other remedies available to a secured lender in the event of a default on such loan. The terms of such indebtedness and security interest, if funds were loaned by the Trustee, must be similar to the terms which the Trustee would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship, and the Trustee shall be entitled to enforce its rights with respect to any such indebtedness and security interest as if it were not then serving as Trustee.

The ~~financial~~Trustee ~~statements~~is ofauthorized and directed to sell and convey the ~~Trust~~Net ~~are~~Profits ~~prepared~~Interests onwithout aUnitholder ~~modified~~approval ~~cash~~in ~~basis~~certain ~~and~~instances ~~are~~as ~~not~~described ~~intended~~in tothe Trust ~~present~~Agreement, including upon termination of the ~~financial~~Trust. ~~position~~The ~~and~~Trustee ~~results~~is ofempowered ~~operations~~by inthe ~~conformity~~Trust ~~with~~Agreement ~~accounting~~to ~~principles generally~~employ ~~accepted~~consultants, inlegal ~~the~~and ~~United~~financial ~~States~~advisors ofand ~~America~~agents (~~“GAAP”~~including Torch). ~~Preparation~~and to make payments of ~~the~~all ~~Trust’s~~fees ~~financial statements~~for onservices ~~such~~or ~~basis~~expenses ~~includes~~out ~~the~~of ~~following:~~the assets of the Trust.

~~• Revenues are recognized in the period in which amounts are received by the Trust~~2. ~~Therefore,~~Basis ~~revenues~~of ~~recognized during the years ended December 31~~Accounting, ~~2010,~~Significant ~~2009~~Accounting ~~and~~Policies ~~2008 are derived from oil~~ and ~~natural~~Recent ~~gas~~Accounting ~~production~~Pronouncements sold during the twelve-month periods ended September 30, 2010, 2009 and 2008, respectively. General and administrative expenses are recognized on an accrual basis. • Amortization of the Net Profits Interests is calculated on a unit-of-production basis and charged directly to Trust corpus. • Distributions to Unitholders are recorded when declared by the Trustee. • The Trust reviews the Net Profits Interests for impairment whenever events or changes in circumstances indicate the carrying amount of the Net Profits Interests may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the Net Profits Interests. If such asset is considered to be impaired,

31The financial statements of the Trust are prepared on a modified cash basis and are not intended to present the financial position and results of operations in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Preparation of the Trust’s financial statements on such basis includes the following:

~~Table~~• Revenues are recognized in the period in which amounts are received by the Trust. Revenues recognized during the years ended December 31, 2011, 2010 and 2009 are generally derived from oil and natural gas production sold during the twelve-month periods ended September 30, 2011, 2010 and 2009, respectively. The Trust did not receive revenues from TRC with respect to production during the three-month period ended September 30, 2011 as a result of ~~Contents~~TRC recouping overpayments made to the Trust in 1994 and 1995 with respect to the Chalkley Field (the “Chalkley Gas Volume Adjustment”). See Note 4 of the Trust’s accompanying financial statements for additional information.

~~Torch~~• ~~Energy~~General ~~Royalty~~and ~~Trust~~ administrative expenses are recognized on an accrual basis.

the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds either the fair value or the estimated discounted cash flows of the assets, whichever is more readily measurable. At December 31, 2010 and 2009, no impairment was deemed necessary. • ~~The~~Amortization ~~financial statements~~ of the ~~Trust differ from financial statements prepared in accordance with GAAP because net profits income is not accrued in the period of production and amortization of the~~ Net Profits Interests is ~~not~~calculated ~~charged~~on ~~against operating results. • Restricted cash represents monies paid to the Trust by~~ a ~~Working Interest Owner~~ unit-of the Underlying Properties that may represent a potential overpayment pertaining to oil and natural gas sales from certain Infill Wells during periods subsequent to the Trust’s termination. In 2010, the Trust determined that the restricted cash was rightly owned by the Trust. Accordingly, in 2010 the Trust classified the restricted cash as unrestricted cash, decreased the Trust expense payable on the Trust’s Statements of Assets, Liabilities and Trust Corpus and increased Infill Well Net Proceeds included in distributable income by $1.3 million. • At December 31, 2009, the Trust adopted the Securities and Exchange Commission’s (“SEC”) Modernization of Oil and Gas Reporting, as well as the conforming rule changes issued by the Financial Accounting Standards Board. Upon adoption, the primary rule change that impacted the Trust’s year-~~end~~production ~~2009~~basis ~~reserve estimates were those related to assumptions for pricing. The SEC’s prior rules required proved reserve estimates to be calculated using prices as of the end of the period~~ and ~~held~~charged ~~constant~~directly ~~over the life of the reserves. The revised rules require reserve estimates~~ to betrust ~~calculated using an unweighted average of the first-day-of-the-month price for the preceding 12-month period~~corpus.

3.• ~~Federal~~Distributions ~~Income~~to ~~Taxes~~Unitholders ~~and~~are ~~Texas~~recorded ~~State~~when ~~Margin~~declared ~~Tax~~ by the Trustee.

~~Tax~~• ~~counsel~~The ~~has~~Trust ~~advised~~reviews the ~~Trust~~Net ~~and~~Profits ~~Trustee~~Interests ~~that,~~for ~~under~~impairment ~~current~~whenever ~~tax~~events ~~law,~~or changes in circumstances indicate the ~~Trust~~carrying amount of the Net Profits Interests may not be recoverable. Recoverability is ~~classified as~~measured by a ~~grantor~~comparison ~~trust~~of ~~for~~the ~~federal~~carrying ~~income~~amount ~~tax~~of ~~purposes~~an ~~and~~asset ~~not~~to anfuture ~~association~~net ~~taxable~~cash asflows aexpected ~~business entity~~to be generated by the Net Profits Interests. ~~However~~If such asset is considered to be impaired, the ~~opinion~~impairment recognized is measured by the amount by which the carrying amount of ~~tax~~the ~~counsel~~assets isexceeds ~~not~~either ~~binding~~the onfair value or the ~~Internal~~estimated ~~Revenue~~discounted ~~Service.~~cash Asflows ~~a grantor~~of ~~trust~~the assets, whichever is more readily measurable. During the ~~Trust~~year isended ~~not~~December ~~subject~~31, to2011, ~~federal~~an ~~income~~impairment ~~tax~~loss of $6. 8 million was recognized. At December 31, 2010 and 2009, no impairment was deemed necessary.

~~Because~~31 the Trust is treated as a grantor trust for federal income tax purposes and a Unitholder is treated as directly owning an interest in the Net Profits Interests, each Unitholder is taxed directly on such Unitholder’s pro rata share of income attributable to the Net Profits Interests consistent with the Unitholder’s method of accounting and without regard to the taxable year or accounting method employed by the Trust. Amounts payable with respect to the Net Profits Interests are paid to the Trust on the quarterly record date established for quarterly distributions in respect to each calendar quarter during the term of the Trust, and the income and deductions from such payments are allocated to the Unitholders of record on such date.

InTable May 2006, the State of Texas passed legislation to implement a margin tax at a rate of 1% to be imposed generally on federal gross revenues (up to 70%), as apportioned to Texas less certain costs and deductions, as specifically set forth in the new legislation. The effective date of the legislation was January 1, 2008, but the tax was generally imposed on revenues generated in 2007 and thereafter (earlier for certain fiscal year taxpayers). Entities subject to tax generally include trusts unless otherwise exempt and most other types of entities having limited liability protection. Trusts that meet certain statutory requirements are generally exempt from the margin tax as “passive entities.” Contents

~~Since~~Torch ~~the~~Energy ~~Trust~~Royalty ~~is exempt from the margin tax at the~~ Trust ~~level as a passive entity, each Unitholder that is a taxable entity would generally include its share of the Trust’s revenue in its margin tax computation.~~

32 • The financial statements of the Trust differ from financial statements prepared in accordance with GAAP because net profits income is not accrued in the period of production and amortization of the Net Profits Interests is not charged against operating results.

~~Table~~• At December 31, 2009, the Trust adopted the Securities and Exchange Commission’s (“SEC”) Modernization of ~~Contents~~Oil and Gas Reporting, as well as the conforming rule changes issued by the Financial Accounting Standards Board. Upon adoption, the primary rule change that impacted the Trust’s year-end 2009 reserve estimates were those related to assumptions for pricing. The SEC’s prior rules required proved reserve estimates to be calculated using prices as of the end of the period and held constant over the life of the reserves. The revised rules require reserve estimates to be calculated using an unweighted average of the first-day-of-the-month price for the preceding 12-month period.

~~Torch~~3. ~~Energy~~Federal ~~Royalty~~Income ~~Trust~~ Taxes and Texas State Margin Tax

~~This~~Tax ~~revenue~~counsel ~~would~~has beadvised ~~sourced~~the toTrust ~~Texas~~and Trustee that, under ~~Texas~~current ~~Comptroller~~tax ~~guidance~~law, ~~that~~the ~~provides~~Trust ~~such~~is classified as a grantor trust for federal income tax ispurposes ~~sourced~~and ~~according~~not toan ~~the~~association ~~principal~~taxable ~~place~~as ofa business entity. However, the opinion of tax counsel is not binding on the ~~Trust~~Internal Revenue Service. As a grantor trust, ~~which~~the Trust is ~~Texas~~not subject to federal income tax.

4.Because ~~Distributions~~the Trust is treated as a grantor trust for federal income tax purposes and ~~Income~~a ~~Computations~~Unitholder is treated as directly owning an interest in the Net Profits Interests, each Unitholder is taxed directly on such Unitholder’s pro rata share of income attributable to the Net Profits Interests consistent with the Unitholder’s method of accounting and without regard to the taxable year or accounting method employed by the Trust. Amounts payable with respect to the Net Profits Interests are paid to the Trust on the quarterly record date established for quarterly distributions in respect to each calendar quarter during the term of the Trust, and the income and deductions from such payments are allocated to the Unitholders of record on such date.

~~Each~~In ~~quarter~~May 2006, the ~~amount~~State of ~~cash~~Texas ~~available~~passed ~~for distribution~~ legislation to ~~Unitholders~~implement ~~(the~~a ~~“Quarterly Distribution~~margin ~~Amount”)~~tax isat ~~equal~~a torate ~~the excess, if any,~~ of ~~the~~1% ~~cash~~to ~~received~~be byimposed ~~the~~generally ~~Trust,~~ on ~~the last~~federal ~~day~~gross ofrevenues ~~the second month following the previous calendar quarter~~ (orup ~~the~~to ~~next business day thereafter~~70%), ~~ending~~as ~~prior~~apportioned to ~~the~~Texas ~~dissolution~~less ~~of the Trust, from the Net Profits Interests then held by the Trust plus, with~~ certain ~~exceptions,~~costs ~~any~~and ~~other cash receipts of the Trust during such quarter~~deductions, ~~subject~~as tospecifically ~~adjustments~~set ~~for~~forth ~~changes made by the Trustee during such quarter~~ in the ~~Cash Reserve~~new ~~established~~legislation. ~~for~~The ~~the~~effective ~~payment~~date of ~~actual, contingent and uncertain liabilities of~~ the ~~Trust.~~ ~~Based~~legislation onwas ~~the~~January 1, ~~payment procedures relating to the Net Profits Interests~~2008, ~~cash~~but ~~received by~~ the ~~Trust on~~tax ~~the~~was ~~last day of the second month of a particular quarter from the Net Profits Interests~~ generally ~~represents~~imposed ~~proceeds~~on ~~from~~revenues ~~the~~generated ~~sale~~in of2007 ~~oil~~ and ~~natural~~thereafter ~~gas~~(earlier ~~produced~~for ~~from~~certain ~~the~~fiscal ~~Underlying Properties~~year ~~during the preceding calendar quarter~~taxpayers). ~~The~~Entities ~~Quarterly~~subject ~~Distribution~~to ~~Amount~~tax ~~for each quarter is~~ generally ~~payable~~include totrusts ~~Unitholders~~unless ofotherwise ~~record~~exempt onand ~~the~~most ~~last~~other types ~~day~~ of ~~the~~entities ~~second~~having ~~month~~limited ofliability ~~the calendar quarter unless such day is not a business day, in which case the record date is the next business day thereafter~~protection. ~~The~~Trusts ~~Trust~~that ~~distributes~~meet ~~the~~certain ~~Quarterly~~statutory ~~Distribution~~requirements ~~Amount~~are ~~within approximately~~generally ~~10 days~~exempt ~~after~~from the ~~record~~margin ~~date~~tax toas ~~each~~“passive ~~person who was a Unitholder of record on the associated record date~~entities. ”

InSince ~~2008 and 2009,~~ the Trust ~~received~~is ~~$1.3 million~~exempt from athe ~~certain~~margin ~~working~~tax ~~interest~~at ~~owner with respect to~~ the ~~Infill~~Trust ~~Wells~~level ~~which was classified~~ as ~~restricted~~a ~~cash~~passive ~~prior~~entity, toeach ~~2010~~Unitholder ~~due~~that tois ~~potential overpayment~~a ~~(“Restricted~~taxable ~~Infill~~entity ~~Well~~would ~~Net~~generally ~~Proceeds”).~~include Inits share ~~2010,~~of the Trust’s ~~determined~~revenue ~~that~~in ~~the Restricted~~its ~~Infill~~margin ~~Well~~tax ~~Net Proceeds were rightly owned by the Trust~~computation. ~~Accordingly,~~This inrevenue ~~2010~~would ~~the Trust~~be ~~classified~~sourced ~~the~~to ~~Restricted~~Texas ~~Infill~~under ~~Well~~Texas ~~Net~~Comptroller ~~Proceeds~~guidance asthat ~~unrestricted~~provides ~~cash,~~such ~~decreased~~income ~~the~~is ~~Trust expense~~sourced ~~payable~~according onto the ~~Trust’s~~principal ~~Statements~~place of ~~Assets,~~business ~~Liabilities~~of ~~and~~the Trust, ~~Corpus~~which ~~and~~is ~~increased Infill Well Net Proceeds included in distributable income by $1~~Texas.~~3 million.~~

~~During the year ended December 31, 2010, the Trust received cash payments totaling $1~~4.~~9 million from~~ ~~the~~Distributions ~~Working Interest Owners which are recorded as net profits income~~ and ~~Infill~~Income ~~Well~~Computations Net Proceeds included in the statement of distributable income. No cash was distributed to Unitholders during the year ended December 31, 2010. As of December 31, 2010 the Cash Reserve was $2.5 million.

~~Cash~~Each ~~receipts~~quarter ~~received by~~ the ~~Trust~~amount inof ~~2010~~cash ~~were~~available ~~reduced~~for bydistribution ~~$826,000 (including $70,000 of interest expense) pertaining~~ to ~~net~~Unitholders ~~profits income generated by~~ (the ~~Underlying Properties in the Austin Chalk Field (~~“~~Austin~~Quarterly ~~Chalk~~Distribution ~~Gas Volume Adjustment~~Amount”). ~~The~~is ~~Austin~~equal ~~Chalk Gas Volume Adjustment recouped overpayments~~ to the excess, ~~Trust~~if byany, ~~TRC~~of ~~during~~ the ~~five~~cash ~~year~~received ~~period~~by ~~ended~~the ~~December 31~~Trust, ~~2009~~on ~~which resulted from TRC utilizing estimated wellhead gas volumes for certain wells in~~ the ~~Austin~~last ~~Chalk Field~~day inof ~~computing Net Proceeds due to~~ the ~~Trust.~~second Inmonth ~~2010,~~following the ~~Austin~~previous ~~Chalk~~calendar ~~Gas~~quarter ~~Volume~~(or ~~Adjustment was calculated utilizing actual wellhead gas sales volumes and resulted in a 198 MMcf downward adjustment to gas sales volumes included in~~ the ~~net~~next ~~profits~~business ~~income~~day ~~calculations~~thereafter) ~~with~~ending ~~respect~~prior to the ~~Austin~~ ~~Chalk~~dissolution ~~Field. Gas revenues, net~~ of ~~applicable revenue deducts and before interest expense, included in Net Proceeds paid to~~ the Trust ~~in 2010 were adjusted downward by $756~~,~~000.~~ ~~The~~from ~~Austin Chalk~~the ~~Gas~~Net ~~Volume~~Profits ~~Adjustment~~Interests ~~did not affect oil revenues, severance taxes, lease operating expenses~~then ~~and~~held ~~capital~~by ~~expenditures included in Net Proceeds due to~~ the Trust ~~during the five year period ended December 31~~plus, ~~2009.~~with ~~The~~certain ~~Trust~~exceptions, Trustee and the Trust’s service providers continue to review and analyze the appropriateness of and verify the information and data provided by TRC concerning the Austin Chalk gas production volumes.

~~During~~32 the year ended December 31, 2009, the Trust received cash payments totaling $3.2 million ($2.6 million recorded as net profits income and Infill Well Net Proceeds included in the statement of distributable income and $0.6 million recorded as accounts payable. During the twelve months ended

33 Table of Contents

~~Table~~Torch ofEnergy ~~Contents~~Royalty Trust

~~Torch~~ any ~~Energy~~other ~~Royalty~~cash receipts of the Trust during such quarter, subject to adjustments for changes made by the Trustee during such quarter in the Cash Reserve established for the payment of actual, contingent and uncertain liabilities of the Trust. Based on the payment procedures relating to the Net Profits Interests, cash received by the Trust on the last day of the second month of a particular quarter from the Net Profits Interests generally represents proceeds from the sale of oil and natural gas produced from the Underlying Properties during the preceding calendar quarter. The Quarterly Distribution Amount for each quarter is generally payable to Unitholders of record on the last day of the second month of the calendar quarter unless such day is not a business day, in which case the record date is the next business day thereafter. The Trust distributes the Quarterly Distribution Amount within approximately 10 days after the record date to each person who was a Unitholder of record on the associated record date.

~~December 31,~~Year ~~2009,~~Ended $3.9 million, or $0.45 per Unit, were distributed to Unitholders and recorded as payable to the Unitholders. Such cash distributions during 2009 included (i) a release of funds from the Cash Reserve representing Net Proceeds related to Underlying Property production during the twelve months ended December 31, ~~2008~~2011 ~~and (ii) Net Proceeds related to the Underlying Property production during the twelve months ended September 30, 2009. As of December 31, 2009 the Cash Reserve was $0.8 million.~~

During the ~~year~~three months ended December 31, ~~2008~~2011, TRC computed the ~~Trust~~Chalkley ~~received~~Gas ~~cash~~Volume ~~payments~~Adjustment ~~totaling~~which determined that TRC overpaid the Trust $73.1 0 million (including $61.4 9 million ~~recorded~~of asaccrued ~~net~~interest) ~~profits~~with ~~income~~respect ~~and~~to ~~Infill~~TRC’s ~~Well~~Underlying ~~net~~Property ~~proceeds~~interests ~~included~~ in the ~~statement~~Chalkley Field. Neither the Trust nor Unitholders are obligated to return such overpayment to TRC; however, the Trust will receive no Net Proceeds with respect to TRC’s interests in the Underlying Properties of ~~distributable~~the ~~income~~Chalkley Field, the Cotton Valley Fields and ~~$0.7 million~~the ~~recorded~~Austin asChalk anFields ~~accounts~~(“TRC ~~payable~~Underlying Property Interests”). Ofuntil future Net Proceeds from the ~~cash~~TRC ~~receipts,~~Underlying ~~$258~~Property Interests,~~000~~ plus accrued interest, orexceed the unrecouped balance of such overpayment. Accordingly, during the quarter ended December 31, 2011, TRC did not pay the Trust Net Proceeds of $0.034 ~~per~~million ~~Unit,~~generated ~~were~~from ~~distributed~~TRC’s Underlying Property Interests attributable to ~~Unitholders~~oil and ~~recorded~~gas assales ~~payable~~during to the ~~Unitholders~~ three months ended September 30, 2011. As of December 31, ~~2008~~2011, the ~~Cash~~unrecouped ~~Reserve~~balance of the Chalkley Gas Volume Adjustment was $42.0 6 million. The Chalkley Gas Volume Adjustment was settled on August 30, 2013. See Note 5 of the Trust’s accompanying financial statements for further discussion.

5During the year ended December 31, 2011, the Trust received cash payments totaling $1.8 ~~Related~~million ~~Party~~from ~~Transactions~~the Working Interest Owners which are recorded as net profits income and Infill Well Net Proceeds included in the Statements of Distributable Income. The Trust also received a cash payment of $1.0 million from RBP II in connection with the sale of all of the Trust’s Net Profits Interests in the Robinson’s Bend Field. Such receipt is classified as Net profits income sales proceeds in the statements of distributable Income. During the twelve months ended December 31, 2011, $1.5 million, or $0.17 per Unit, were distributed to Unitholders. As of December 31, 2011, the Cash Reserve was $2.4 million.

~~TRC~~Year ~~and~~Ended ~~Velasco contracted to sell the oil and natural gas production from the Underlying Properties to Torch Energy Marketing~~December 31, ~~Inc.~~2010 (“TEMI”), a subsidiary of Torch, under a purchase contract (“Purchase Contract”). Upon termination of the Trust, the Purchase Contract expired and the Working Interest Owners calculate the Net Proceeds owed to the Trust utilizing the same pricing mechanisms (including the sharing price and minimum price commitment mechanisms) as the expired Purchase Contract. The continuation of the sharing price and minimum price terms and conditions of the Purchase Contract terms was the subject of an arbitration and the Trust has applied the applicability of such terms for purpose of this report in accordance with the arbitration decision.

~~Marketing~~In ~~Arrangements~~2008 and ~~Price~~2009, ~~Sharing~~the Trust received $1.3 million from a certain working interest owner with respect to the Infill Wells which was classified as restricted cash prior to 2010 due to potential overpayment (“Restricted Infill Well Net Proceeds”). In 2010, the Trust determined that the Restricted Infill Well Net Proceeds were rightly owned by the Trust. Accordingly, in 2010 the Trust classified the Restricted Infill Well Net Proceeds as unrestricted cash, decreased the Trust expense payable on the Trust’s Statements of Assets, Liabilities and Trust Corpus and increased Infill Well Net Proceeds included in distributable income by $1.3 million.

InCash ~~connection~~receipts ~~with~~received ~~the~~by ~~formation of~~ the Trust, ~~TRC,~~in ~~Velasco~~2010 ~~and~~were ~~TEMI~~reduced ~~entered~~by ~~into~~$826,000 ~~the~~(including ~~Purchase Contract which expired on the Termination Date. Under the Purchase Contract~~$70,000 ~~TEMI~~of ~~was~~interest ~~obligated~~expense) pertaining to ~~purchase~~ ~~all~~ net ~~production~~profits ~~attributable~~income togenerated ~~the~~by the Underlying Properties ~~for~~in anthe ~~index~~Austin ~~price~~Chalk ~~for~~Field ~~oil and natural gas~~ (“~~Index~~Austin ~~Price”),~~Chalk ~~less~~Gas ~~certain~~Volume ~~gathering, treating and transportation charges, which were calculated monthly~~Adjustment”). The ~~Index~~Austin ~~Price~~Chalk ~~equals~~Gas ~~97%~~Volume ofAdjustment ~~the~~recouped ~~average~~overpayments ~~spot~~to ~~market~~the ~~prices~~Trust ofby ~~oil~~TRC ~~and natural~~during ~~gas (“Average Market Prices”) at~~ the ~~four~~five ~~locations~~year ~~where~~period ~~TEMI~~ended ~~sold~~December 31, ~~production.~~2009 which resulted

~~The~~33 Purchase Contract also provided that TEMI paid a minimum price (“Minimum Price”) for natural gas production, adjusted annually for inflation. When TEMI paid a purchase price based on the Minimum Price it received price credits (“Price Credits”), equal to the difference between the Index Price and the Minimum Price, that it was entitled to deduct in determining the purchase price when the Index Price for natural gas exceeded the Minimum Price. In addition, if the Index Price for natural gas exceeded the sharing price, which was adjusted annually for inflation (“Sharing Price”), TEMI was entitled to deduct 50% of such excess (“Price Differential”) in determining the purchase price. TEMI had an annual option to discontinue the Minimum Price commitment. However, if TEMI discontinued the Minimum Price commitment, it would no longer be entitled to deduct the Price Differential in calculating the purchase price and would have forfeited all accrued Price Credits. As of the Termination Date, TEMI had no outstanding Price Credits and had not exercised its option to discontinue the Minimum Price commitment.

UponTable the Trust’s termination, the Working Interest Owners utilized the same pricing mechanisms (including the Sharing Price and Minimum Price commitment mechanisms) as the expired Purchase Contract in calculating Net Proceeds due to the Trust. Following the Trust’s termination, the Working Interest Owners also have the same annual option to discontinue the Minimum Price commitment. The Minimum Price per MMBtu was $1.97, $1.95 and $1.87 for 2010, 2009 and 2008, respectively. The Sharing Price was $2.43, $2.40 and $2.30 per MMBtu in 2010, 2009 and 2008, respectively. As of Contents

34 Torch Energy Royalty Trust

~~Table~~ from TRC utilizing estimated wellhead gas volumes for certain wells in the Austin Chalk Field in computing Net Proceeds due to the Trust. In 2010, the Austin Chalk Gas Volume Adjustment was calculated utilizing actual wellhead gas sales volumes and resulted in a 198 MMcf downward adjustment to gas sales volumes included in the net profits income calculations with respect to the Austin Chalk Field. Gas revenues, net of ~~Contents~~applicable revenue deducts and before interest expense, included in Net Proceeds paid to the Trust in 2010 were adjusted downward by $756,000. The Austin Chalk Gas Volume Adjustment did not affect oil revenues, severance taxes, lease operating expenses and capital expenditures included in Net Proceeds due to the Trust during the five year period ended December 31, 2009. During the year ended December 31, 2010, the Trust received cash payments totaling $1.9 million from the Working Interest Owners which are recorded as net profits income and Infill Well Net Proceeds included in the statement of distributable income. No cash was distributed to Unitholders during the year ended December 31, 2010. As of December 31, 2010 the Cash Reserve was $2.5 million.

~~Torch~~Year ~~Energy~~Ended ~~Royalty~~December 31, ~~Trust~~ 2009

During the year ended December 31, ~~2010~~2009, the ~~Working~~Trust ~~Interest~~received ~~Owners~~cash ~~had~~payments nototaling ~~outstanding~~$3.2 ~~Price~~million ~~Credits~~($2.6 million recorded as net profits income and ~~had~~Infill Well ~~not~~Net Proceeds included in the Statements of Distributable Income and $0.6 million recorded as accounts payable.) During the twelve months ended December 31, 2009, $3.9 million, or $0.45 per Unit, were distributed to Unitholders. Such cash ~~exercised~~distributions ~~their~~during ~~right~~2009 included (i) a release of funds from the Cash Reserve representing Net Proceeds related to ~~discontinue~~Underlying Property production during the ~~Minimum~~twelve ~~Price~~months ~~commitment.~~ended December 31, 2008 and (ii) Net Proceeds related to the Underlying Property production during the twelve months ended September 30, 2009. As of December 31, 2009 the Cash Reserve was $0.8 million.

~~Natural~~5. ~~gas~~Termination ~~production~~and isLiquidation ~~purchased~~of at the ~~wellhead~~Net ~~and,~~Profits ~~therefore,~~Interests ~~distributions do not include any amounts received in connection with extracting natural gas liquids from such production at natural gas processing or treating facilities.~~

~~Gathering~~The Trust received the affirmative vote of the Unitholders of more than 66 2/3% of the outstanding Units to terminate the Trust at the meeting of Unitholders held on January 29, ~~Treating~~2008, ~~and~~the ~~Transportation~~Termination ~~Arrangements~~Date. Upon termination of the Trust, among other things, the Trustee is required to sell the Net Profits Interests. Specifically, pursuant to Section 9.03(e) of the Trust Agreement if the property of the Trust Estate (as defined in the Trust Agreement) has not been sold prior to the end of one calendar year following the termination date, the Trustee, thereafter, must cause such assets to be sold at public auction.

~~The~~On ~~Purchase Contract~~August 4, ~~which~~2011 ~~expired upon~~ the Trust’s ~~termination,~~entered ~~entitled~~into ~~TEMI~~a tomaterial ~~deduct~~definitive ~~certain natural~~agreement ~~gas~~for ~~gathering~~advisory and marketing services with an effective date of August 1, ~~treating~~2011 ~~and~~with ~~transportation~~respect ~~fees~~to inthe ~~calculating~~sale of the ~~purchase~~Net ~~price~~Profits ~~for natural~~Interests ~~gas~~pursuant into ~~the~~an agreement with PLS, Inc., a Texas corporation. The Trust notified Robinson’s Bend Production II, ~~Austin~~LLC. ~~Chalk~~(“RBP ~~and~~II”), ~~Cotton~~a ~~Valley~~Delaware ~~Fields.~~limited ~~The~~liability company ~~amounts~~and ~~that~~a ~~were deducted~~subsidiary inof ~~calculating~~Constellation ~~the~~Energy ~~purchase~~Partners, ~~price~~on ~~for~~November 3, ~~such~~2011 ~~natural~~that ~~gas~~it ~~were~~was ~~set~~the ~~forth~~successful bidder in the ~~Purchase Contract~~public ~~and~~auction ~~were~~of ~~not~~the ~~affected~~sale byof the ~~actual~~Net ~~costs~~Profits ~~incurred~~Interests byattributable ~~TEMI~~ to ~~gather,~~the ~~treat~~Robinson’s ~~and~~Bend ~~transport natural gas~~Field. ~~Upon~~On December 13, 2011, the Trust’s ~~termination,~~entered ~~the~~into ~~Working~~a ~~Interest~~purchase ~~Owners~~and ~~became~~sale ~~entitled~~agreement by and between RBP II pursuant to ~~deduct~~ which the ~~same~~Trust ~~natural~~agreed ~~gas~~to ~~gathering~~sell, ~~treating~~ and ~~transportation~~RBP ~~fees~~II ~~that~~agreed ~~had~~to ~~previously~~purchase, ~~been~~all ~~deducted by~~of ~~TEMI~~the ~~pursuant~~Trust’s Net Profits Interests attributable to the ~~Purchase~~Underlying ~~Contract~~Properties in the ~~calculating~~Robinson’s ~~Net~~Bend ~~Proceeds~~Field ~~due~~for toa ~~the~~purchase ~~Trust~~price of $1,000,000. The sale signed and closed simultaneously on December 13, 2011.

~~For~~The ~~the Robinson’s Bend Field, a gathering, treating and transportation fee of $0.260 per MMBtu,~~Trustee ~~adjusted~~anticipates ~~annually~~it ~~for~~will ~~inflation~~continue ~~($0.331, $0.327 and $0.314 per MMBtu for 2010, 2009, and 2008, respectively), plus fuel usage equal~~ to 5%consult ofwith ~~revenues is deducted in computing Net Proceeds due to~~ the Trust.’s ~~Additionally,~~and ~~a gathering fee of $0.05 per MMBtu is deducted in calculating the purchase price for production from 73 of the 426 wells in the Robinson~~Trustee’s ~~Bend~~financial ~~Field. In computing Net Proceeds due to the Trust for the Austin Chalk fields, $0.38 per MMBtu plus 17% of revenues are deducted as a fee to gather, treat~~ and ~~transport~~legal ~~natural~~advisors ~~gas production. TEMI deducted from the purchase price for natural gas for production attributable to certain wells~~ in the ~~Cotton~~wind ~~Valley Fields~~down ~~a transportation fee~~ of ~~$0.045~~the ~~per MMBtu~~Trust.

~~During~~34 the years ended December 31, 2010, 2009 and 2008, such fees deducted from the Net Proceeds calculations, attributable to production during the twelve months ended September 30, 2010, 2009 and 2008, in the Robinson’s Bend, Austin Chalk and Cotton Valley Fields, totaled $1.0 million, $1.0 million and $1.4 million, respectively. No amounts for gathering, treating or transportation are deducted in calculating the purchase price from the Chalkley Field.

OperatorTable Overheadof Fees Contents

~~A subsidiary of~~ Torch ~~operates~~Energy ~~certain~~Royalty ~~oil~~Trust and natural gas interests burdened by the Net Profits Interests in the Cotton Valley and Austin Chalk Fields. The Underlying Properties are charged, on the same basis as other third parties, for all customary expenses and costs reimbursements associated with these activities. Operator overhead fees deducted from the Net Proceeds computations for the Cotton Valley and Austin Chalk fields totaled $235,000, $227,000 and $215,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

~~Administrative~~6. ~~Services~~Related ~~Agreements~~ Party Transactions

~~The~~TRC ~~sole~~and ~~purpose~~Velasco ofcontracted to sell the ~~Trust~~oil isand tonatural ~~hold~~gas production from the ~~Net~~Underlying ~~Profits~~Properties ~~Interests~~to Torch Energy Marketing, toInc. (“TEMI”), ~~receive~~a ~~payments~~subsidiary ~~from~~of Torch, under a purchase contract (“Purchase Contract”). Upon termination of the Trust, the Purchase Contract expired and the Working Interest Owners, ~~and~~calculate tothe ~~make~~Net ~~payments~~Proceeds owed to ~~Unitholders.~~the ~~The~~ Trust ~~does~~utilizing the ~~not~~same ~~conduct~~pricing ~~any business~~mechanisms ~~activity~~(including the sharing price and ~~has~~minimum noprice ~~officers,~~commitment ~~directors~~mechanisms) oras ~~employees~~the expired Purchase Contract. The ~~Trust~~continuation of the sharing price and ~~Trustee~~minimum ~~rely~~price onterms ~~third~~and conditions of the Purchase Contract terms was the ~~party~~subject ~~service~~of ~~providers~~an toarbitration ~~perform~~and ~~administrative~~the ~~services~~Trust has applied the applicability of such terms for purpose of this report in accordance with the ~~Trust~~arbitration decision.

35 Marketing Arrangements and Price Sharing

~~Table~~In connection with the formation of ~~Contents~~the Trust, TRC, Velasco and TEMI entered into the Purchase Contract which expired on the Termination Date. Under the Purchase Contract, TEMI was obligated to purchase all net production attributable to the Underlying Properties for an index price for oil and natural gas (“Index Price”), less certain gathering, treating and transportation charges, which were calculated monthly. The Index Price equals 97% of the average spot market prices of oil and natural gas (“Average Market Prices”) at the four locations where TEMI sold production.

~~Torch~~The ~~Energy~~Purchase ~~Royalty~~Contract ~~Trust~~also provided that TEMI paid a minimum price (“Minimum Price”) for natural gas production, adjusted annually for inflation. When TEMI paid a purchase price based on the Minimum Price it received price credits (“Price Credits”), equal to the difference between the Index Price and the Minimum Price, that it was entitled to deduct in determining the purchase price when the Index Price for natural gas exceeded the Minimum Price. In addition, if the Index Price for natural gas exceeded the sharing price, which was adjusted annually for inflation (“Sharing Price”), TEMI was entitled to deduct 50% of such excess (“Price Differential”) in determining the purchase price. TEMI had an annual option to discontinue the Minimum Price commitment. However, if TEMI discontinued the Minimum Price commitment, it would no longer be entitled to deduct the Price Differential in calculating the purchase price and would have forfeited all accrued Price Credits. As of the Termination Date, TEMI had no outstanding Price Credits and had not exercised its option to discontinue the Minimum Price commitment.

~~Torch~~Upon ~~provided~~the ~~accounting,~~Trust’s ~~bookkeeping~~termination, ~~informational~~the ~~and~~Working Interest ~~other~~Owners ~~services~~utilized tothe same pricing mechanisms (including the ~~Trust~~Sharing ~~related~~Price to and Minimum Price commitment mechanisms) as the ~~Net~~expired ~~Profits~~Purchase ~~Interests~~Contract ~~pursuant~~in calculating Net Proceeds due to the ~~Administrative~~Trust. ~~Services~~Following ~~Agreement~~the ~~effective~~Trust’s ~~October 1~~termination, the ~~1993~~Working ~~and~~Interest anOwners ~~oral~~also ~~arrangement~~have ~~after~~the ~~termination~~same ofannual option to discontinue the ~~Administrative~~Minimum ~~Services~~Price ~~Agreement~~commitment. onThe ~~January 29,~~Minimum ~~2008~~Price ~~through~~per ~~April~~ MMBtu was $1.99, ~~2008~~$1.97 Onand ~~November 7~~$1.95 for 2011, ~~2008~~2010 and 2009, anrespectively. ~~agreement~~The Sharing Price was ~~entered~~$2.46, ~~into~~$2.43 ~~between~~and ~~the~~$2.40 per ~~Trust~~MMBtu in 2011, 2010 and ~~Torch~~2009, ~~that~~respectively. ~~engaged~~As ~~Torch~~of toDecember 31, ~~provide~~2011, ~~certain~~the ~~accounting~~Working ~~services~~Interest inOwners ~~connection~~had ~~with~~no ~~the Trust’s~~outstanding ~~preparation~~Price Credits and ~~filing~~had ofnot ~~the~~exercised ~~Trust’s~~their ~~Form~~right ~~10-K~~to ~~for~~discontinue the ~~year~~Minimum ~~ended~~Price ~~December 31, 2007~~commitment.

ToNatural ~~facilitate~~gas ~~the~~production ~~winding~~is ~~down~~purchased ofat the ~~Trust,~~wellhead ~~Torch currently provides certain accounting~~ and, ~~other services for the Trust pursuant to an agreement with the Trust entered into on March 26~~therefore, ~~2009.~~distributions ~~The initial~~do ~~term~~not ofinclude ~~the~~any ~~agreement~~amounts ~~was~~received ~~extended~~in toconnection ~~March 31,~~with ~~2011.~~extracting ~~On March 31, 2011, Torch and the~~natural ~~Trust~~gas ~~extended~~liquids ~~the~~from ~~expiration~~such ~~date~~production ofat ~~the~~natural ~~agreement~~gas byprocessing ~~one year to March 31, 2012~~ or astreating ~~sooner terminated by written notice from either party within 5 business days notice~~facilities.

~~Services fees charged to the Trust by Torch for the years ended December 31~~Gathering, ~~2010,~~Treating ~~2009~~ and ~~2008 were~~Transportation ~~$345,000,~~Arrangements ~~$335,000 and $371,000, respectively.~~

~~Compensation~~The ofPurchase Contract, which expired upon the ~~Trustee~~Trust’s termination, entitled TEMI to deduct certain natural gas gathering, treating and ~~Transfer~~transportation ~~Agent~~fees in calculating the purchase price for natural gas in the Robinson’s Bend, Austin Chalk and Cotton Valley Fields. The amounts that were deducted in calculating the purchase price for such natural gas were set forth in the Purchase Contract and were not

~~The~~35 Trust Agreement provides that the Trustee be compensated for its administrative services, out of the Trust assets, in an annual amount of $80,000, plus an hourly charge for services in excess of a combined total of 250 hours annually at its standard rate. In accordance with provisions in the Trust Agreement, the Trustee may increase its compensation for its administrative services as a result of unusual or extraordinary services rendered by the Trustee.

Additionally,Table the Trustee receives a transfer agency fee of $5.00 annually per account (minimum of $15,000 annually), subject to change each December, beginning December 1994, based upon the change in the Producer’s Price Index as published by the Department of Labor, Bureau of Labor Statistics, plus $1.00 for each certificate issued. The Trustee is entitled to reimbursement for out-of-pocket expenses. Contents

~~Total~~Torch ~~administrative~~Energy ~~and~~Royalty ~~transfer~~Trust ~~agent fees charged by the Trustee was $130,000 for each year in 2010 and 2009 and $177,000 during the year ended December 31, 2008.~~

6 affected by the actual costs incurred by TEMI to gather, treat and transport natural gas. Upon the Trust’s ~~Expense~~termination, ~~Payable~~the Working Interest Owners became entitled to deduct the same natural gas gathering, treating and transportation fees that had previously been deducted by TEMI pursuant to the Purchase Contract in calculating Net Proceeds due to the Trust.

~~Trust~~For ~~expense~~the ~~payable~~Robinson’s asBend ~~reflected~~Field, ona ~~the~~gathering, ~~Trust’s~~treating ~~statements~~and transportation fee of ~~assets~~$0.260 per MMBtu, ~~liabilities~~adjusted ~~and~~annually ~~trust corpus~~for ~~was~~inflation ($0.~~4 million~~335, ~~and~~$0.331 and $20.~~1 million~~327 atper ~~December 31~~MMBtu for 2011, 2010, and 2009, respectively.), ~~Included~~plus fuel usage equal to 5% of revenues is deducted in ~~such~~ ~~payable~~computing ~~are~~Net ~~general~~Proceeds ~~and~~due ~~administrative~~to ~~expense~~the ~~accruals~~Trust. Additionally, a gathering fee of $0.~~4 million~~05 ~~and~~per ~~$0.8 million~~MMBtu asis ofdeducted in calculating the purchase price ~~December 31,~~for ~~2010~~production ~~and~~from ~~2009,~~73 ~~respectively,~~of ~~mainly~~the ~~pertaining~~426 towells in the ~~Trust~~Robinson’s ~~legal~~Bend ~~fees,~~Field. ~~audit~~In ~~fees and~~computing ~~administrative~~Net ~~services~~Proceeds ~~fees.~~due to the Trust ~~Expense~~for ~~Payable~~the asAustin Chalk fields, $0.38 per MMBtu plus 17% of ~~December 31~~revenues are deducted as a fee to gather, ~~2009~~treat ~~includes~~and transport natural gas ~~Restricted~~production. ~~Infill~~TEMI ~~Well~~deducted ~~Net~~from ~~Proceeds~~the ofpurchase ~~$1.3 million~~price ~~which~~for ~~was~~natural ~~classified~~gas asfor ~~restricted~~production ~~cash~~attributable ~~at December 31,~~to ~~2009~~certain wells in the Cotton Valley Fields a transportation fee of $0. 045 per MMBtu.

7During the years ended December 31, 2011, 2010 and 2009, such fees deducted from the Net Proceeds calculations, attributable to production during the twelve months ended September 30, 2011, 2010 and 2009, in the Robinson’s Bend, Austin Chalk and Cotton Valley Fields, totaled $0.9 ~~Supplemental~~million, ~~Oil~~$1.0 million and ~~Natural~~$1.0 ~~Gas~~million, ~~Information~~respectively. ~~(Unaudited)~~No amounts for gathering, treating or transportation are deducted in calculating the purchase price from the Chalkley Field.

~~Total~~Operator ~~proved~~Overhead ~~oil~~Fees and natural gas reserves attributable to the Net Profits Interests as of December 31, 2010, 2009 and 2008 are based upon reserve reports prepared by T.J. Smith & Company, Inc. and Netherland, Sewell & Associates, Inc. (“Independent Reserve Engineers”). Future net cash flows were computed by applying the Purchase Contract prices for oil and natural gas to estimated future production, less the estimated future expenditures (based on current costs) to be incurred in developing and producing the reserves. The estimated reserve quantities in this report are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will

36A subsidiary of Torch operates certain oil and natural gas interests burdened by the Net Profits Interests in the Cotton Valley and Austin Chalk Fields. The Underlying Properties are charged, on the same basis as other third parties, for all customary expenses and costs reimbursements associated with these activities. Operator overhead fees deducted from the Net Proceeds computations for the Cotton Valley and Austin Chalk fields totaled $227,000, $235,000 and $227,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

~~Table~~Administrative ofServices ~~Contents~~Agreements

~~Torch~~The ~~Energy~~sole ~~Royalty~~purpose of the Trust is to hold the Net Profits Interests, to receive payments from the Working Interest Owners, and to make payments to Unitholders. The Trust does not conduct any business activity and has no officers, directors or employees. The Trust and Trustee rely on third party service providers to perform administrative services for the Trust.

~~materially~~Torch ~~affect~~provided accounting, bookkeeping, informational and other services to the ~~quantities~~Trust related to the Net Profits Interests pursuant to the Administrative Services Agreement effective October 1, 1993 and ~~present~~an ~~value~~oral arrangement after termination of the Administrative Services Agreement on January 29, 2008 through April 1, 2008. On November 7, 2008, an agreement was entered into between the Trust and Torch that engaged Torch to provide certain accounting services in connection with the Trust’s ~~reserves.~~preparation ~~See~~and ~~Item 1A.~~filing of the ~~Risk~~Trust’s ~~Factors~~Form 10-K for ~~information~~the ~~regarding~~year ~~assumptions~~ended ~~and~~December 31, ~~price volatility~~2007.

~~Reserve~~To ~~Quantities:~~facilitate the winding down of the Trust, Torch currently provides certain accounting and other services for the Trust pursuant to an agreement with the Trust entered into on March 26, 2009. The initial term of the agreement expired on March 31, 2010 and was thereafter extended from year to year, up to the period ending August 30, 2013. Torch currently provides the Trust via letter agreement the administrative services historically provided by Torch to the Trust through December 31, 2013 consistent with past practice and (ii) from December 31, 2013 to April 30, 2014 shall provide services to the Trust in support of any tax correspondence (tax booklet) and tax filings that might be necessary for the year ended

~~The~~36 following table sets forth the estimated total proved and proved developed oil and natural gas reserves attributable to the Trust’s Net Profits Interests (all located in the United States) for the years ended December 31, 2010, 2009 and 2008, based on reserve reports prepared by Independent Reserve Engineers. As a net profits interest does not entitle the Trust to a specific quantity of oil or natural gas, but to a portion of oil and natural gas sufficient to yield a specified portion of the Net Proceeds derived therefrom, proved reserves attributable to a net profits interest are calculated by deducting an amount of oil or natural gas sufficient, if sold at the prices used in preparing the reserve estimates for the Underlying Properties, to pay an amount of applicable future estimated production expenses, development costs and taxes for such Underlying Properties (“Net Equivalent Volumes”). The use of disclosing Net Equivalent Volumes to estimate reserve volumes attributable to the Net Profits Interests is standard practice in the industry.

AtTable December 31, 2009, the Trust adopted the SEC Modernization of Oil and Gas Reporting, as well as the conforming rule changes issued by the Financial Accounting Standards Board. Upon adoption, the primary rule change that impacted the Trust’s year-end 2009 reserve estimates were those related to assumptions for pricing. The SEC’s prior rules required proved reserve estimates to be calculated using prices as of the end of the period and held constant over the life of the reserves. The revised rules require reserve estimates to be calculated using an unweighted average of the first-day-of-the-month price for the preceding 12-month period. Contents

~~Year-end~~Torch ~~reserves~~Energy ~~for~~Royalty ~~2010 and 2009 attributable to the~~ Trust’s Net Profits Interests were estimated utilizing the unweighted average of the first-day-of-the-month price during each year in 2010 and 2009, pursuant to the revised SEC pricing rules. Year-end reserves for 2008 attributable to the Trust’s Net Profits Interests utilized year-end pricing for natural gas, pursuant to the SEC’s pricing rules which were in effect during the year ended December 31, 2008. In accordance with such SEC pricing rules, year-end reserves and the related future net revenues attributable to the Trust’s Net Profits Interests were estimated utilizing a Purchase Contract price for natural gas, after gathering fees, of $3.49 per Mcf, $3.20 per Mcf and $4.14 per Mcf for 2010, 2009 and 2008, respectively. Such Purchase Contract prices were calculated utilizing the Henry Hub natural gas prices of $4.38 per MMBtu, $3.87 per MMBtu and $5.71 per MMBtu for 2010, 2009 and 2008, respectively.

~~Year-end reserves at~~ December 31, ~~2010~~2013 ~~were~~consistent ~~4.0 billion~~with ~~cubic~~past ~~feet~~practice ~~equivalent (“Bcfe”) as compared to year-end 2009~~ and ~~2008~~other ~~reserves~~related ofservices ~~4.7~~necessary ~~Bcfe~~to ~~and~~complete ~~7.7~~the ~~Bcfe,~~wind ~~respectively.~~down ~~The revisions~~ of the ~~estimated~~ ~~oil~~Trust ~~and~~that ~~natural~~are ~~gas~~also ~~volumes~~consistent ~~and~~with ~~the~~past ~~related~~practice. ~~present~~Subsequently, ~~value~~the inability of the ~~estimated~~Trust ~~net~~to ~~future revenues~~hire asqualified ofservices ~~December 31,~~providers ~~2010,~~to ~~2009~~assist ~~and~~in ~~2008~~the iswind ~~primarily~~down aand ~~result~~liquidation of ~~fluctuations~~the ofTrust ~~natural gas~~may ~~prices~~have ~~utilized~~a inmaterial ~~computing~~adverse ~~the~~effect ~~year-end~~on ~~reserves~~the ~~for~~operations ~~each~~ of the ~~years then ended~~Trust.

~~The~~Services ~~Robinson’s~~fees ~~Bend~~charged ~~Field~~to ~~estimated~~the ~~reserves~~Trust asby ofTorch for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009 were ~~estimated to~~$460,000, ~~have~~$345,000 noand ~~value~~$335,000, respectively.

37 Compensation of the Trustee and Transfer Agent

~~Table~~The Trust Agreement provides that the Trustee be compensated for its administrative services, out of ~~Contents~~the Trust assets, in an annual amount of $80,000, plus an hourly charge for services in excess of a combined total of 250 hours annually at its standard rate. In accordance with provisions in the Trust Agreement, the Trustee may increase its compensation for its administrative services as a result of unusual or extraordinary services rendered by the Trustee.

~~Torch~~Additionally, ~~Energy~~the ~~Royalty~~Trustee ~~Trust~~receives a transfer agency fee of $5.00 annually per account (minimum of $15,000 annually), subject to change each December, beginning December 1994, based upon the change in the Producer’s Price Index as published by the Department of Labor, Bureau of Labor Statistics, plus $1.00 for each certificate issued. The Trustee is entitled to reimbursement for out-of-pocket expenses.

Description	2010						2009						2008
	Oil			Natural Gas			Oil			Natural Gas			Oil			Natural Gas
	(Bbls)			(Mcf)			(Bbls)			(Mcf)			(Bbls)			(Mcf)
Proved reserves at beginning of year		28			4,531			37			7,491			48			10,202
Revisions		(6	)		(7	)		(2	)		(2,381	)		(3	)		(1,710	)
Extensions and discoveries		—			—			—			—			—			—
Production		(5	)		(607	)		(7	)		(579	)		(8	)		(1,001	)
Proved reserves at end of year		17			3,917			28			4,531			37			7,491
Proved developed reserves at beginning of year		28			4,531			37			7,491			48			10,202
Proved developed reserves at end of year		17			3,917			28			4,531			37			7,491

Total administrative and transfer agent fees charged by the Trustee were $149,000 during the year ended December 31, 2011 and $130,000 for each year in 2010 and 2009.

~~Standardized~~7. ~~Measure~~Trust ofExpense ~~Discounted~~Payable ~~Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves (in thousands):~~

~~Estimated~~Trust ~~future~~expense ~~net~~payable ~~cash~~as ~~flows~~reflected ~~from~~on the ~~Net~~Trust’s ~~Profits~~Statements ~~Interests~~of inAssets, ~~proved~~Liabilities ~~oil~~and Trust Corpus was $0.5 million and ~~natural~~$0.4 ~~gas~~million ~~reserves~~ at December 31, 2011 and 2010, ~~2009~~respectively. ~~and~~Such ~~2008~~payables ~~are~~represent ~~presented~~general inand ~~the~~administrative ~~following~~expense ~~table:~~ accruals.

	December 31,
	2010			2009			2008
Future cash inflows	$	29,326		$	32,487		$	55,206
Future costs and expenses		(14,324	)		(16,344	)		(22,702	)
Net future cash flows		15,002			16,143			32,504
Discount at 10% for timing of cash flows		(4,656	)		(5,205	)		(12,090	)
Present value of future net cash flows for proved reserves	$	10,346		$	10,938		$	20,414

8. Supplemental Oil and Natural Gas Information (Unaudited)

~~The~~Total ~~following~~proved ~~table~~oil ~~sets~~and ~~forth~~natural ~~the~~gas ~~changes~~reserves inattributable to the ~~present~~Net ~~value~~Profits Interests as of ~~estimated~~December 31, ~~future~~2011, ~~net~~2010 and 2009 are based ~~revenues~~upon ~~from~~reserve ~~proved~~reports ~~reserves~~prepared ~~attributable~~by toT.J. ~~the~~Smith & ~~Trust’s~~Company, ~~Net~~Inc. ~~Profits~~and ~~Interests~~Netherland, ~~during~~Sewell & Associates, Inc. (“Independent Reserve Engineers”). Future net cash flows were computed by applying the ~~years~~Purchase Contract prices for oil ~~ended~~and ~~December 31,~~natural ~~2010~~gas to estimated future production, ~~2009~~less the estimated future expenditures (based on current costs) to be incurred in developing and ~~2008:~~producing the reserves. The estimated reserve quantities in this report are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of the Trust’s reserves.

	Year Ended December 31,
	2010			2009			2008
Balance at beginning of year	$	10,938		$	20,414		$	30,878
Sales of oil and natural gas produced, net of production costs		(1,301	)		(2,153	)		(6,286	)
Accretion of discount		1,094			2,041			3,088
Extensions and discoveries		0			0			0
Revision of prior-year estimates, change in prices and other		(385	)		(9,364	)		(7,266	)
Balance at end of year	$	10,346		$	10,938		$	20,414

Reserve Quantities:

~~Estimates~~The offollowing ~~future~~table ~~net~~sets ~~cash~~forth ~~flows~~the estimated ~~from~~total proved ~~reserves~~and ofproved developed oil and natural gas ~~and~~reserves ~~oil~~attributable ~~condensate~~to ~~were made~~the Trust’s Net Profits Interests (all located in ~~accordance~~the ~~with~~United ~~ASC~~States) ~~932,~~for ~~Extractive~~the ~~Activities~~years —ended ~~Oil~~December 31, 2011, 2010 and ~~Gas~~2009, based on reserve reports prepared by Independent Reserve Engineers. ~~The~~As ~~Trust~~a ~~has~~net profits interest does not ~~filed~~entitle the Trust to a specific quantity of oil or ~~included~~ innatural ~~reports~~gas, but to ~~any~~a ~~other~~portion ~~Federal~~of ~~authority~~oil orand ~~agency~~natural ~~any~~gas ~~estimates~~sufficient to yield a specified portion of the Net Proceeds derived therefrom, proved reserves attributable to a net profits interest are calculated by deducting an amount of oil ~~and~~ or natural gas ~~reserves.~~sufficient, if sold at the prices used in preparing the reserve estimates for the Underlying

38 37

Torch Energy Royalty Trust

8. Properties, ~~Quarterly~~to ~~Financial~~pay ~~Data~~an ~~(Unaudited~~amount —of inapplicable ~~thousands~~future estimated production expenses, ~~except~~development ~~per~~costs ~~Unit~~and ~~amounts~~taxes for such Underlying Properties (“Net Equivalent Volumes”). The use of disclosing Net Equivalent Volumes to estimate reserve volumes attributable to the Net Profits Interests is standard practice in the industry.

~~The~~At December 31, ~~following~~2009, ~~table~~the ~~sets~~Trust ~~forth~~adopted the SEC Modernization of Oil and Gas Reporting, as well as the conforming rule changes issued by the Financial Accounting Standards Board. Upon adoption, the primary rule change that impacted the Trust’s year-end 2009 reserve estimates were those related to assumptions for pricing. The SEC’s prior rules required proved reserve estimates to be calculated using prices as of the ~~periods~~end ~~indicated~~of ~~summarized~~the ~~quarterly~~period ~~financial~~and ~~data:~~held constant over the life of the reserves. The revised rules require reserve estimates to be calculated using an unweighted average of the first-day-of-the-month price for the preceding 12-month period.

						Distributable
	Net Profits		Distributable			Income
	Income		Income\(Loss)			Per Unit
Quarter ended March 31, 2010	$	450	$	381		$	0.044
Quarter ended June 30, 2010		60		(167	)		(0.019	)
Quarter ended September 30, 2010		337		118			0.014
Quarter ended December 31, 2010		438		1,728			0.201
	$	1,285	$	2,060		$	0.24
Quarter ended March 31, 2009	$	1,019	$	763		$	0.089
Quarter ended June 30, 2009		656		264			0.031
Quarter ended September 30, 2009		507		189			0.022
Quarter ended December 31, 2009		334		20			0.002
	$	2,516	$	1,236		$	0.144

Year-end reserves for 2010 and 2009 attributable to the Trust’s Net Profits Interests were estimated utilizing the unweighted average of the first-day-of-the-month price during each year in 2010 and 2009, pursuant to the revised SEC pricing rules. In accordance with such SEC pricing rules, year-end reserves and the related future net revenues attributable to the Trust’s Net Profits Interests were estimated utilizing a Purchase Contract price for natural gas, after gathering fees, of $3.37 per Mcf, $3.49 per Mcf and $3.20 per Mcf for 2011, 2010 and 2009, respectively. Such Purchase Contract prices were calculated utilizing the Henry Hub natural gas prices of $4.12 per MMBtu, $4.38 per MMBtu and $3.87 per MMBtu for 2011, 2010 and 2009, respectively.

9Year-end reserves at December 31, 2011 were 3.2 ~~Subsequent~~billion ~~Events~~cubic feet equivalent (“Bcfe”) as compared to year-end 2010 and 2009 reserves of 4.0 Bcfe and 4.7 Bcfe, respectively. The revisions of the estimated oil and natural gas volumes and the related present value of the estimated net future revenues as of December 31, 2011, 2010 and 2009 is primarily a result of fluctuations of natural gas prices utilized in computing the year-end reserves for each of the years then ended.

~~Except~~The asRobinson’s ~~set~~Bend ~~forth~~Field ~~below,~~estimated noreserves ~~events~~as ~~occurred~~of ~~from~~ December 31, 2010 and 2009 were estimated to have no value. On December 13, 2011, the Trust ~~date~~sold all of ~~this~~its ~~filing that~~Net ~~are~~Profits ~~reportable~~Interests ~~pursuant~~attributable to ~~FASB~~the ~~ASC~~Underlying ~~855~~Properties in the Robinson’s Bend Field. See Note 5 of the Trust’s accompanying financial statements and Item 3. Legal Proceedings for additional information concerning the Robinson’s Bend Field Net Profits Interests Sale.

On February 23, 2011, the Trust announced that the Trust and the derivative unitholder plaintiff reached an agreement in principle with Constellation Energy Partners LLC to settle litigation filed by the derivative plaintiff on the Trust’s behalf, captioned Trust Venture Company, LLC v. Constellation Energy Partners LLC (CV-2008-900751), in the Circuit Court of Tuscaloosa County, Alabama. The settlement agreement is subject to approval of the Court, and the Trust estimates that the process for approval will take approximately 60 days.


Description	2011						2010						2009
	Oil			Natural Gas			Oil			Natural Gas			Oil			Natural Gas
	(Bbls)			(Mcf)			(Bbls)			(Mcf)			(Bbls)			(Mcf)
Proved reserves at beginning of year		17			3,917			28			4,531			37			7,491
Revisions		1			(218	)		(6	)		(7	)		(2	)		(2,381	)
Extensions and discoveries		—			—			—			—			—			—
Production		(4	)		(542	)		(5	)		(607	)		(7	)		(579	)

Proved reserves at end of year		14			3,157			17			3,917			28			4,531

Proved developed reserves at beginning of year		17			3,917			28			4,531			37			7,491

Proved developed reserves at end of year		14			3,157			17			3,917			28			4,531

~~Under~~38 the proposed settlement, the derivative plaintiff and the Trust have agreed to settle the claims against Constellation Energy Partners LLC (“CEP”) in the derivative action, and to enter into mutual, general releases with CEP in return for (i) a payment of one million two hundred thousand United States dollars ($1,200,000) to the derivative plaintiff by Robinson’s Bend Production II (“RBP II”), which is a Delaware limited liability company and an affiliate of CEP, to reimburse the derivative plaintiff for the legal fees and expenses it incurred in prosecuting the derivative action, (ii) an irrevocable bid by RBP II of not less than one million United States dollars ($1,000,000) for its purchase from the Trust of the net overriding royalty interest (“Alabama NORRI”), when such Alabama NORRI is separately offered for sale by the Trust at public auction within 180 days of the effective date of the settlement, with such bid amount to be deposited by RBP II in a third-party escrow account pending the public auction, and (iii) a third amendment to that certain Water Gathering and Disposal Agreement providing that, for a period of ten years commencing on the first day of the month following the effective date of the settlement, the charges for the gathering, separation, and disposal of water from oil and gas wells located in Tuscaloosa County, Alabama that are owned and operated by RBP II (“Wells”) shall be fifty-three cents ($0.53) per barrel of water. (RBP II currently charges one United States dollar ($1.00) per barrel of water for the gathering, separation, and disposal of such water from the Wells).

39 Table of Contents

~~Table~~Torch ofEnergy ~~Contents~~Royalty Trust

~~Torch~~Standardized ~~Energy~~Measure ~~Royalty~~of ~~Trust~~Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves (in thousands):

~~The~~Estimated ~~Alabama~~future ~~Circuit~~net ~~Court~~cash offlows ~~Tuscaloosa~~from ~~County, Alabama convened a hearing on~~ the ~~settlement~~Net ~~on April 11,~~Profits ~~2011,~~Interests ~~at 2:00 p.m. CDT (the “Settlement Hearing”). At the Settlement Hearing, the Court determined whether or not (i) to approve the Settlement as memorialized~~ in ~~the~~proved ~~proposed~~oil ~~Settlement~~ and ~~Release~~natural ~~Agreement~~gas ~~with~~reserves Constellation Energy Partners LLC, and (ii) to approve an Order ending this derivative action. On February 23, 2011, the Trust sent the Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear to the Trust’s unitholders of record as of February 11, 2011, as required by the Settlement. The Alabama Circuit Court of Tuscaloosa County, Alabama convened a hearing on the settlement on April 11, 2011, at ~~2:00 p.m. CDT (the “Settlement Hearing”). At the Settlement Hearing, the Court determined~~ ~~whether or not (i)~~December ~~to approve the Settlement as memorialized in the proposed Settlement and Release Agreement with Constellation Energy Partners LLC~~31, ~~and (ii) to approve an Order ending this derivative action. On February 23,~~ 2011, ~~the~~2010 ~~Trust sent the Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing,~~ and ~~Right~~2009 toare ~~Appear~~presented to the Trust’s unitholders of record as of February 11, 2011, as required by the Settlement. On April 18, 2011, the Trust issued a press release and disclosed information on its Current Report on Form 8-K that the Alabama Circuit Court of Tuscaloosa County, Alabama approved in ~~all respects~~ the ~~settlement~~ asfollowing ~~memorialized~~table: in the proposed Settlement and Release Agreement and ordered that the matter be dismissed, with prejudice, costs taxed as paid. In the Order and Final Judgment entered by the Court dated as of April 13, 2011, the Circuit Court acknowledged receiving the report from counsel for the trustee of the Trust that no objections to the proposed settlement in this matter had been received, and the Court confirmed after review that the Settlement and Release Agreement is fair, reasonable and adequate. The proposed Settlement and Release Agreement shall become effective on the date on which the Order and Final Judgment becomes final and unappealable, which absent appeal, is anticipated to be June 13, 2011.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.


	December 31,
	2011			2010			2009
Future cash inflows	$	24,089		$	29,326		$	32,487
Future costs and expenses		(12,191	)		(14,324	)		(16,344	)

Net future cash flows		11,898			15,002			16,143
Discount at 10% for timing of cash flows		(3,744	)		(4,656	)		(5,205	)

Present value of future net cash flows for proved reserves	$	8,154		$	10,346		$	10,938

~~None.~~The following table sets forth the changes in the present value of estimated future net revenues from proved reserves attributable to the Trust’s Net Profits Interests during the years ended December 31, 2011, 2010 and 2009:

Item 9A. Controls and Procedures.


	Year Ended December 31,
	2011			2010			2009
Balance at beginning of year	$	10,346		$	10,938		$	20,414
Sales of oil and natural gas produced, net of production costs		(2,108	)		(1,301	)		(2,153	)
Accretion of discount		1,035			1,094			2,041
Extensions and discoveries		0			0			0
Revision of prior-year estimates, change in prices and other		(1,119	)		(385	)		(9,364	)

Balance at end of year	$	8,154		$	10,346		$	10,938

~~Evaluation~~Estimates of ~~Disclosure~~future ~~Controls~~net cash flows from proved reserves of natural gas and ~~Procedures.~~oil condensate were made in accordance with ASC 932, Extractive Activities – Oil and Gas. The Trust has not filed or included in reports to any other Federal authority or agency any estimates of proved net oil and natural gas reserves.

~~The~~39 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 as of the end of the period covered by this report. Based upon that evaluation, the Trustee concluded that the Trust’s disclosure controls and procedures are effective in timely alerting the Trustee to material information relating to the Trust required to be included in the Trust’s periodic filings with the SEC. In their evaluation of disclosure controls and procedures, the Trustee and Trust have relied, to the extent considered reasonable, on information provided by Torch and Watkins Meegan LLC, an accounting firm contracted by the Trust to perform certain Sarbanes-Oxley compliance for the Trust.

ChangesTable inof Internal Control over Financial Reporting. Contents

There has not been any change in the Trust’s internal control over financial reporting during the fourth quarter of 2010 that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting. The Trust and Trustee rely on third party service providers to perform administrative services for the Trust. Torch ~~provided~~Energy ~~accounting, bookkeeping,~~Royalty ~~informational and other services to the~~ Trust related to the Net Profits Interests pursuant to the Administrative Services Agreement effective October 1, 1993 and an oral arrangement after termination of the Administrative Services Agreement on January 29, 2008 through April 1, 2008. To facilitate the winding down of the Trust, Torch and the Trust entered into an Agreement on March 26, 2009. Pursuant to the agreement,

40 9. Quarterly Financial Data (Unaudited – in thousands, except per Unit amounts)

~~Table~~The offollowing ~~Contents~~table sets forth, for the periods indicated summarized quarterly financial data:

Torch Energy Royalty Trust


	Net Profits Income		Distributable Income\(Loss)			Distributable Income Per Unit
Quarter ended March 31, 2011	$	466	$	60		$	0.01
Quarter ended June 30, 2011		447		218			0.03
Quarter ended September 30, 2011		498		281			0.03
Quarter ended December 31, 2011 (a)		0		692			0.08

	$	1,411	$	1,251		$	0.15

Quarter ended March 31, 2010	$	450	$	381		$	0.04
Quarter ended June 30, 2010		60		(167	)		(0.02	)
Quarter ended September 30, 2010		337		118			0.01
Quarter ended December 31, 2010		438		1,728			0.20

	$	1,285	$	2,060		$	0.24

~~Torch~~(a) ~~provides~~Net ~~certain~~Profits ~~accounting~~Income and ~~other~~Distributable ~~services~~Income ~~for~~during the ~~Trust.~~quarter ~~The~~ended ~~initial~~December ~~term of such agreement was extended to March~~ 31, 2011. Onwere ~~March 31,~~adversely ~~2011,~~affected ~~Torch~~by ~~and~~$0.4 ~~the~~million ~~Trust~~as ~~extended~~a ~~the expiration~~result ~~date~~ of the ~~agreement~~Chalkley byVolume ~~one~~Adjustment. ~~year~~See toNote ~~March 31,~~4 ~~2012~~of orthe asTrust’s ~~sooner~~accompanying ~~terminated~~financial bystatements ~~written notice~~for ~~from~~additional ~~either party within 5 business days notice~~information.

~~Report~~10. onSubsequent ~~Internal~~Events ~~Control Over Financial Reporting.~~

~~The~~On January 24, 2013, the Trust ~~and~~received ~~Trustee~~notice ~~are~~from ~~responsible~~NYSE ~~for~~Regulation, ~~establishing~~Inc. ~~and~~(“NYSE ~~maintaining~~Regulation”) ~~adequate~~informing ~~control~~the ~~over~~Trust that NYSE ~~financial~~Regulation ~~reporting~~has determined to commence proceedings to delist the Trust’s units from the New York Stock Exchange (“NYSE”), aswith ~~such~~trading ~~term~~of isthe ~~defined~~units to be suspended prior to the opening of NYSE trading on January 30, 2013. NYSE Regulation informed the Trust that the delisting determination was based on the Trust’s delay in ~~Rule~~filing its Annual Report for the year ended December ~~13a~~31, 2011 on Form 10-15K ~~promulgated~~and ~~under~~subsequent Quarterly Reports for the ~~Securities~~fiscal quarters ending in 2012 with the Securities and Exchange ~~Act~~Commission. The Trust had previously utilized the six-month cure period under Section 802.01C of ~~1934~~the NYSE Listed Company Manual and a subsequent three-month extension of the filing date for the Annual Report to January 16, as2013 ~~amended~~from NYSE Regulation, the Trust was unable to file the Annual Report by this extended deadline. NYSE Regulation declined the Trust’s request for further extension under Section 802.01C of the NYSE Listed Company Manual of the filing deadline. NYSE Regulation also noted that the average closing price of the Trust’s units had previously fallen below the NYSE’s continued listing minimum share price standard (Section 802.01E of the NYSE Listed Company Manual) of $1.00 over a consecutive 30 trading day period. Trading of the Units was suspended prior to the opening of NYSE trading on Wednesday, January 30, 2013. The Trust commenced trading on the Pink Sheets on that same day, under the symbol “TRRU”.

~~The~~On ~~internal~~August 30, ~~control~~2013, ~~over~~the ~~financial~~Trust ~~reporting~~simultaneously ~~includes~~signed ~~those~~and ~~policies~~closed a Purchase and ~~procedures~~Sale ~~that~~Agreement (i“PSA”) ~~pertain~~ toby and among the ~~maintenance~~Trust, ~~of records that~~TRC, inTorch ~~reasonable~~E&P ~~detail~~Company, ~~accurately~~N.M.L. ~~and~~Inc., ~~fairly reflect the transactions and dispositions~~ of ~~the~~Texas ~~assets~~(formerly ofTorch ~~the~~Energy ~~Trust;~~Services, ~~(ii~~Inc.) ~~provide~~, ~~reasonable~~and ~~assurance~~Torch, ~~that transactions~~pursuant ~~are recorded as necessary~~ to ~~permit~~which ~~preparation~~the ofTrust ~~financial~~and ~~statements~~the inTorch ~~accordance with~~Energy aLouisiana ~~modified~~Royalty ~~cash~~Trust ~~basis~~sold all of ~~accounting~~its asremaining ~~described~~net inprofits ~~Note~~interests attributable 2 to the ~~notes~~underlying toworking ~~financial statements,~~interests ~~and~~in ~~that~~certain ~~receipts~~fields ~~and~~that ~~expenditures~~produce offrom the ~~Trust~~Cotton ~~are~~Valley ~~being~~Fields, ~~made~~Austin ~~only~~Chalk inFields ~~accordance with authorizations of the Trustee of the Trust;~~ and ~~(iii) provide~~Chalkley ~~reasonable~~Field ~~assurance~~for ~~regarding prevention~~a orpurchase ~~timely~~price ~~detection~~ of ~~unauthorized acquisition~~$3, ~~use~~258, ~~or disposition of the Trust’s assets that could have a material effect on the financial statements~~330.

~~Because~~40 of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

TheTable Trustee assessed the effectiveness of the internal control over financial reporting as of December 31, 2010. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on the assessment, the Trustee believes that, as of December 31, 2010, the Trust’s internal control over financial reporting was effective based on those criteria. Contents

~~This~~Torch ~~annual~~Energy ~~report~~Royalty ~~does~~Trust not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The Trustee’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only the Trustee’s report in this annual report.

~~Item 9B~~Pursuant to the PSA, TRC provided the Trust a release, including a release of claims with respect to TRC’s unrecouped balance pertaining to the Chalkley Gas Volume Adjustment. ~~Other~~The ~~Information~~unrecouped balance of $0.5 million consisted of the total amount claimed by TRC of $3.1 million minus net proceeds from the underlying properties withheld by TRC of $2.6 million. The PSA also provided TRC a release of claims with respect to the Trust Net Proceeds generated from TRC’s Underlying Property Interest attributable to oil and gas sales. The PSA also contains customary representations, warranties and covenants. The Trust no longer receives any proceeds from the Net Profits Interests for the Cotton Valley Fields, Austin Chalk Fields and the Chalkley Field as of May 1, 2013, the effective date of the PSA.

~~None~~On December 4, 2013, the Trust filed a Current Report on Form 8-K (the “Initial Report”) to report the announcement of a quarterly distribution. The Trust filed Amendment No. 1 to the Initial Report on Form 8-K/A on December 5, 2013, which amended and restated the Initial Report in its entirety, and which was filed solely for the purpose of clarifying the per unit reference of the distribution. On December 13, 2013, the Trust filed Amendment No. 2 on Form 8-K/A which amends and restates the Initial Report and Amendment No. 1 in its entirety and revised the distribution amount down due to additional expenses forecasted in the wind down and liquidation of the Trust. On December 13, 2013, the Trust announced the distribution to the unitholders of $3,031,349 or $.35 per unit, payable on December 30, 2013 to unitholders of record on December 23, 2013. Immediately following the distribution the Cash Reserve was approximately $510,000. To the extent that any of the Cash Reserve remains after the payment of all of the Trust’s expenses, the Trustee may make one or more additional cash distributions to the unitholders of record; however, no assurance can be made that any such distributions will occur.

41 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

~~Table~~None. ~~of Contents~~

~~Torch~~Item ~~Energy~~9A. ~~Royalty~~Controls ~~Trust~~ and Procedures.

~~PART~~Evaluation ~~III~~ of Disclosure Controls and Procedures.

~~Item~~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 1013a-15 and 15d-15 as of the end of the period covered by this report. ~~Directors~~Based upon that evaluation, ~~Executive~~the ~~Officers~~Trustee concluded that the Trust’s disclosure controls and ~~Corporate~~procedures ~~Governance~~are effective in timely alerting the Trustee to material information relating to the Trust required to be included in the Trust’s periodic filings with the SEC. In their evaluation of disclosure controls and procedures, the Trustee and Trust have relied, to the extent considered reasonable, on information provided by Torch and Watkins Meegan LLC, an accounting firm contracted by the Trust to perform certain Sarbanes-Oxley compliance for the Trust.

~~The~~41 Registrant has no directors, executive officers or employees. The Trustee is a corporate trustee that may be removed as trustee under the Trust Agreement, with or without cause, at a meeting duly called and held by the affirmative vote of Unitholders of not less than a majority of all the Units then outstanding. Any such removal of the Trustee shall be effective only at such time as a successor trustee fulfilling the requirements of Section 3807(a) of the Delaware Statutory Trust Act has been appointed and has accepted such appointment.

TheTable Registrant has not adopted a code of ethics applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because the Trust does not have any such officers or employees. The Trust has no directors and therefore no audit committee or audit committee financial expert or a nominating committee. Contents

~~Section 16(a)~~Torch ofEnergy ~~the~~Royalty Securities Exchange Act of 1934 requires that beneficial owners of more than 10% of the registrant’s equity securities file initial reports of beneficial ownership and reports of changes in beneficial ownership with the Securities and Exchange Commission and the New York Stock Exchange. To the Trustee’s knowledge, based solely on the information furnished to the Trust~~, the~~ ~~Trust is unaware of any person that failed to file on a timely basis reports required by Section 16(a) filing requirements with respect to the Units during and for the year ended December 31, 2010.~~

~~Item 11.~~Changes ~~Executive~~in ~~Compensation~~Internal Control over Financial Reporting.

~~The~~There ~~following~~has not been any change in the Trust’s internal control over financial reporting during the fourth quarter of 2011 that has materially affected, or is areasonably ~~description~~likely to materially affect, the Trust’s internal control over financial reporting. The Trust and Trustee rely on third party service providers to perform administrative services for the Trust. Torch provided accounting, bookkeeping, informational and other services to the Trust related to the Net Profits Interests pursuant to the Administrative Services Agreement effective October 1, 1993 and an oral arrangement after termination of the Administrative Services Agreement on January 29, 2008 through April 1, 2008. To facilitate the winding down of the Trust, Torch currently provides certain ~~fees~~accounting and ~~expenses~~other ~~paid~~services orfor ~~borne~~the byTrust pursuant to an agreement with the Trust entered into on March 26, ~~including~~2009. The initial term of the agreement expired on March 31, 2010. On March 31, 2011, Torch and the Trust extended the expiration date of the agreement by one year to March 31, 2012 or as sooner terminated by written ~~fees~~notice ~~paid~~from either party within 5 business days’ notice and thereafter such agreement was extended for the period covering up to August 30, 2013. Torch currently provides the Trust via letter agreement the administrative services historically provided by Torch to the Trust through December 31, 2013 consistent with past practice and (ii) from December 31, 2013 to April 30, 2014 shall provide services to the ~~Trustee~~Trust in support of any tax correspondence (tax booklet) and tax filings that might be necessary for the year ended December 31, 2013 consistent with past practice and other related services necessary to complete the ~~transfer~~wind ~~agent~~down orof ~~their~~the ~~affiliates~~Trust that are also consistent with past practice. Subsequently, the inability of the Trust to hire qualified services providers to assist in the wind up and liquidation of the Trust may have a material adverse effect on the operations of the Trust.

~~Ongoing~~Report ~~Administrative~~on ~~Expenses.~~Internal ~~The~~Control ~~Trust~~Over isFinancial responsible for paying all legal, accounting, engineering and stock exchange fees, printing costs and other administrative and out-of-pocket expenses incurred by or at the direction of the Trustee in its capacity as Trustee and/or transfer agentReporting.

~~Compensation of the Trustee and Transfer Agent.~~ The Trust ~~Agreement~~and ~~provides that the~~ Trustee ~~be compensated~~are responsible for ~~its~~establishing ~~administrative~~and ~~services,~~maintaining ~~out~~adequate ofcontrol ~~the~~over ~~Trust~~financial ~~assets~~reporting, inas ansuch ~~annual~~term ~~amount~~is ~~of $80,000,~~defined ~~plus~~in anRule 13a-15 ~~hourly~~promulgated ~~charge~~under ~~for~~the ~~services~~Securities inExchange ~~excess~~Act of ~~a combined total of 250 hours annually at its standard rate. In accordance with provisions in the Trust Agreement~~1934, ~~the Trustee may increase its compensation for its administrative services~~ as ~~a result of unusual or extraordinary services rendered by the Trustee~~amended.

~~Additionally,~~The ~~the~~internal ~~Trustee~~control ~~receives~~over afinancial ~~transfer~~reporting ~~agency~~includes ~~fee~~those ofpolicies ~~$5.00~~and ~~annually~~procedures ~~per~~that ~~account~~ (~~minimum~~i) pertain to the maintenance of records that, in reasonable ~~$15~~detail,~~000~~ ~~annually~~accurately and fairly reflect the transactions and dispositions of the assets of the Trust; (ii), provide ~~subject~~reasonable assurance that transactions are recorded as necessary to ~~change~~permit ~~each~~preparation ~~December,~~of ~~beginning~~financial ~~December 1994,~~statements ~~based~~in ~~upon~~accordance ~~the~~with ~~change~~a modified cash basis of accounting as described in Note 2 to the ~~Producer’s~~notes ~~Price~~to ~~Index~~financial asstatements, ~~published~~and bythat receipts and expenditures of the ~~Department~~Trust are being made only in accordance with authorizations of ~~Labor,~~the ~~Bureau~~Trustee of ~~Labor~~the ~~Statistics,~~Trust; and (iii) provide ~~plus~~reasonable ~~$1.00~~assurance ~~for~~regarding ~~each~~prevention ~~certificate~~or ~~issued.~~timely ~~The~~detection ~~Trustee~~of isunauthorized ~~entitled~~acquisition, touse, ~~reimbursement~~or ~~for~~disposition ~~out-~~of~~-pocket expenses~~ the Trust’s assets that could have a material effect on the financial statements.

~~Fees~~Because toof ~~Torch~~its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. ~~Torch~~All ~~receives~~internal acontrol ~~service~~systems, ~~fee~~no matter ~~for~~how ~~accounting~~well designed, ~~bookkeeping~~have inherent limitations, including the possibility of human error and ~~informational~~the ~~services~~circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance ~~related~~with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the ~~Net~~risk ~~Profits~~that ~~Interests~~controls asmay ~~described~~become ~~below~~inadequate because of changes in ~~“Item 13~~conditions, —or ~~Administrative~~that ~~Services~~the degree of compliance ~~Agreement~~with the policies or procedures may deteriorate.”

~~Item~~The Trustee assessed the effectiveness of the internal control over financial reporting as of December 1231, 2011. ~~Security~~In ~~Ownership~~making this assessment, it used the criteria set forth by the Committee of ~~Certain~~Sponsoring ~~Beneficial~~Organizations ~~Owners~~of ~~and~~the ~~Management~~Treadway ~~and~~Commission ~~Related Unitholders~~in ~~Matters~~Internal Control-Integrated Framework. Based on the assessment, the Trustee believes that, as of December 31, 2011, the Trust’s internal control over financial reporting was effective based on those criteria.

~~The~~42 ~~following table sets forth, as of August 1, 2010, certain information with respect to the ownership of Units held by all persons known by the Trust to be the beneficial owners of 5% or more of the~~

42 Table of Contents

~~Table~~Torch ofEnergy ~~Contents~~Royalty Trust

~~Torch~~This ~~Energy~~annual ~~Royalty~~report ~~Trust~~does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The Trustee’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only the Trustee’s report in this annual report.

~~outstanding~~Item ~~Units~~9B. ~~Information~~Other set forth in the table with respect to beneficial ownership of Units has been obtained from filings made by the named beneficial owners with the Securities and Exchange Commission as of August 1, 2010Information. ~~The Trust has no employees, officers or directors. The Trust does not have an “Equity Compensation Plan”.~~

Name of Beneficial Owner and Address	Shares Beneficially Owned
	Units		Percent of Class
5% Unitholder: (1)
Trust Venture Company, LLC (2)
Two Greenwich Plaza, First Floor
Greenwich, CT 06830		6,502,762		75.6	%
Trust Acquisition Company, LLC (2)
Two Greenwich Plaza, First Floor
Greenwich, CT 06830
Silver Point Capital, L.P. (2)
Two Greenwich Plaza, First Floor
Greenwich, CT 06830
Edward A. Mulé (2)
Two Greenwich Plaza, First Floor
Greenwich, CT 06830
Robert J. O’Shea (2)
Two Greenwich Plaza, First Floor
Greenwich Plaza, First Floor
Greenwich, CT 06830

None.

~~(1) Based~~43 ~~on Form 4 filed on April 30, 2008.~~

(2) TrustTable Venture Company, LLC, Trust Acquisition Company, LLC, Silver Point Capital, L.P., Edward A. Mule and Robert J. O’Shea are each a reporting person and member of a reporting group pursuant to a Joint Filing Agreement dated as of July 6, 2007 for purposes of the Securities Exchange Act of 1934, as amended. Contents

~~Item 13.~~Torch ~~Certain~~Energy ~~Relationships~~Royalty ~~and~~Trust ~~Related Transactions.~~

~~Administrative~~PART ~~Services~~III ~~Agreements~~

~~Pursuant~~Item ~~to the Trust Agreement, Torch and the Trust entered into the Administrative Services Agreement effective October 1, 1993~~10. ~~The following summary of certain provisions of the Administrative Services Agreement does not purport to be complete and is subject to~~Directors, ~~and~~Executive ~~is qualified~~Officers ~~in its entirety by reference to, the provisions of the Administrative Services Agreement. The Trust~~ and ~~Trustee~~Corporate ~~rely on third party service providers to perform administrative services for the Trust~~Governance.

~~Prior~~The toRegistrant ~~April 1,~~has ~~2008~~no directors, ~~Torch~~executive ~~provided~~officers ~~accounting~~or employees. The Trustee is a corporate trustee that may be removed as trustee under the Trust Agreement, with ~~bookkeeping~~or without cause, ~~informational~~at a meeting duly called and ~~other~~held ~~services~~by to the ~~Trust~~affirmative ~~related~~vote toof Unitholders of not less than a majority of all the ~~Net~~Units ~~Profits~~then ~~Interests~~outstanding. ~~pursuant~~Any tosuch anremoval ~~administrative~~of ~~services~~the ~~agreement effective~~Trustee ~~October 1,~~shall ~~1993~~be ~~(“Administrative~~effective ~~Services~~only ~~Agreement”)~~at ~~and~~such antime ~~oral~~as ~~arrangement~~a ~~after~~successor ~~termination~~trustee fulfilling the requirements of Section 3807(a) of the ~~Administrative~~Delaware ~~Services~~Statutory ~~Agreement~~Trust onAct ~~January 29,~~has ~~2008~~been ~~through~~appointed ~~April 1,~~and ~~2008~~has accepted such appointment.

OnThe Registrant ~~November 7,~~has ~~2008,~~not anadopted ~~agreement~~a ~~was~~code ~~entered~~of ~~into~~ethics ~~between~~applicable ~~the~~to ~~Trust~~its ~~and~~principal ~~Torch~~executive ~~which~~officer, ~~engaged~~principal ~~Torch to~~financial ~~provide~~officer, ~~certain~~principal accounting ~~services~~officer inor ~~connection~~controller, ~~with~~or persons performing similar functions because the Trust’s ~~preparation~~does ~~and~~not ~~filing~~have ofany ~~the~~such officers or employees. The Trust’s ~~Form~~has ~~10-K~~no ~~for~~directors ~~the~~and ~~year~~therefore ~~ended~~no ~~December 31,~~audit ~~2007.~~committee ~~Such~~or ~~agreement~~audit ~~expired~~committee onfinancial ~~December 23, 2008~~expert or a nominating committee.

ToSection 16(a) ~~facilitate~~of the ~~winding~~Securities ~~down~~Exchange Act of ~~the~~1934 ~~Trust,~~requires ~~Torch~~that ~~provides~~beneficial ~~certain~~owners ~~accounting~~of ~~and~~more ~~other~~than ~~services for~~10% of the ~~Trust~~registrant’s ~~pursuant~~equity tosecurities anfile initial ~~agreement~~reports of beneficial ownership and reports of changes in beneficial ownership with the ~~Trust~~Securities ~~dated~~and ~~March 26,~~Exchange ~~2009~~Commission and the New York Stock Exchange. ~~The~~To ~~initial~~the ~~term~~Trustee’s of knowledge, based solely on the ~~Services~~information ~~Agreement~~furnished ~~expired~~to ~~March 31~~the Trust, ~~2010.~~the OnTrust ~~March~~is unaware of any person that failed to file on a timely basis reports required by Section ~~31,~~16(a) ~~2010,~~filing ~~Torch~~requirements ~~and~~with respect to the ~~Trust~~Units ~~extended~~ during and for the ~~expiration~~ year ended December 31, 2011.

43 Item 11. Executive Compensation.

~~Table~~The following is a description of ~~Contents~~certain fees and expenses paid or borne by the Trust, including fees paid to Torch, the Trustee, the transfer agent or their affiliates.

~~Torch~~Ongoing ~~Energy~~Administrative ~~Royalty~~Expenses. The Trust is responsible for paying all legal, accounting, engineering and stock exchange fees, printing costs and other administrative and out-of-pocket expenses incurred by or at the direction of the Trustee in its capacity as Trustee and/or transfer agent.

~~date~~Compensation of the ~~agreement~~Trustee byand ~~one~~Transfer ~~year~~Agent. toThe ~~March 31,~~Trust ~~2012~~Agreement orprovides asthat ~~sooner~~the ~~terminated~~Trustee bybe ~~written~~compensated ~~notice~~for ~~from~~its administrative services, out of ~~either~~the ~~party~~Trust ~~within~~assets, 5in ~~business~~an ~~days~~annual ~~notice~~amount of $80,000, plus an hourly charge for services in excess of a combined total of 250 hours annually at its standard rate. In accordance with provisions in the Trust Agreement, the Trustee may increase its compensation for its administrative services as a result of unusual or extraordinary services rendered by the Trustee.

~~Administrative~~Additionally, ~~services~~the ~~fees~~Trustee receives a transfer agency fee of $~~345~~5.00 annually per account (minimum of $15,000 annually), ~~$335~~subject to change each December,~~000~~ ~~and~~beginning ~~$371~~December 1994,~~000~~ ~~are~~based ~~included~~upon the change in ~~general~~the ~~and administrative~~Producer’s ~~expenses~~Price ~~for~~Index as published by the ~~years~~Department ~~ended~~of ~~December 31~~Labor, ~~2010~~Bureau of Labor Statistics, ~~2009~~plus ~~and~~$1.00 ~~2008,~~for ~~respectively~~each certificate issued. The Trustee is entitled to reimbursement for out-of-pocket expenses.

~~Marketing~~Fees ~~Arrangements~~to Torch. Torch receives a service fee for accounting, bookkeeping and ~~Price~~informational ~~Sharing~~ services related to the Net Profits Interests as described below in “Item 13 – Administrative Services Agreement.”

In44 connection with the formation of the Trust, TRC, Velasco and TEMI entered into a Purchase Contract, which expired upon the termination of the Trust (January 29, 2008). Pursuant to the Purchase Contract, TEMI was obligated to purchase all net production attributable to the Underlying Properties for an Index Price for oil and natural gas less certain gathering, treating and transportation charges, which were calculated monthly. The Purchase Contract also provided that TEMI pay a Minimum Price for natural gas production, adjusted annually for inflation. When TEMI paid a purchase price based on the Minimum Price it received Price Credits equal to the difference between the Index Price and the Minimum Price, that it was entitled to deduct in determining the purchase price when the Index Price for natural gas exceeded the Minimum Price. In addition, if the Index Price for natural gas exceeded the Sharing Price, which is adjusted annually for inflation, TEMI was entitled to deduct 50% of such excess (“Price Differential”) in determining the purchase price. TEMI had an annual option to discontinue the Minimum Price commitment. However, if TEMI discontinued the Minimum Price commitment, it would no longer be entitled to deduct the Price Differential in calculating the purchase price and would have forfeited all accrued Price Credits. As of the Termination Date, TEMI had no outstanding Price Credits and had not exercised its option to discontinue the Minimum Price Commitment.

UponTable the Trust’s termination, the Working Interest Owners utilized the same pricing mechanisms (including the Sharing Price and Minimum Price commitment mechanisms) as the expired Purchase Contract in calculating Net Proceeds due to the Trust. The Working Interest Owners also have the same annual option to discontinue the Minimum Price commitment. The Minimum Price per MMBtu was $1.97, $1.95 and $1.87 for 2010, 2009 and 2008, respectively. The Sharing Price was $2.43, $2.40 and $2.30 per MMBtu in 2010, 2009 and 2008, respectively. As of December 31, 2010, the Working Interest Owners had no accumulated Price Credits and had not exercised their right to discontinue the Minimum Price commitment. Contents

NoTorch ~~Price~~Energy ~~Credits~~Royalty ~~were~~Trust deducted in calculating the purchase price related to Net Proceeds during the three years ended December 31, 2010. As a result the Sharing Price arrangement, Net Proceeds attributable to the Underlying Properties during the years ended December 31, 2010, 2009 and 2008 were reduced by $2.5 million, $3.0 million and $10.1 million, respectively.

~~Gathering,~~Item ~~Treating~~12. Security Ownership of Certain Beneficial Owners and ~~Transportation~~Management ~~Arrangements~~ and Related Unitholders Matters.

The ~~Purchase~~following ~~Contract,~~table ~~which~~sets ~~expired~~forth, ~~upon~~as ~~the~~of ~~Trust’s~~November 1, ~~termination~~2013, ~~entitled~~certain ~~TEMI~~information with respect to ~~deduct~~the ~~certain natural~~ownership ~~gas~~of ~~gathering,~~Units ~~treating~~held ~~and~~by ~~transportation~~all ~~fees~~persons inknown ~~calculating~~by the ~~purchase~~Trust ~~price~~to ~~for natural~~be ~~gas~~the inbeneficial ~~the~~owners ~~Robinson’s~~of ~~Bend,~~5% ~~Austin~~or ~~Chalk~~more ~~and~~of ~~Cotton~~the ~~Valley~~outstanding ~~Fields~~Units. ~~The~~Information ~~amounts~~set ~~that~~forth ~~were deducted~~ in ~~calculating~~ the ~~purchase~~table ~~price~~with ~~for~~respect ~~such~~to ~~natural~~beneficial ~~gas~~ownership ~~were~~of ~~set~~Units ~~forth~~has inbeen ~~the~~obtained ~~Purchase~~from ~~Contract~~filings ~~and~~made ~~were not affected~~ by the ~~actual~~named ~~costs~~beneficial ~~incurred~~owners bywith ~~TEMI~~the toSecurities ~~gather, treat~~ and ~~transport natural~~Exchange ~~gas.~~Commission ~~Upon~~as ~~the~~of ~~Trust’s termination~~November 1, ~~the~~2013. ~~Working~~The ~~Interest~~Trust ~~Owners~~has ~~became~~no ~~entitled to deduct the same natural gas gathering~~employees, ~~treating~~officers ~~and~~or ~~transportation~~directors. ~~fees~~The ~~that~~Trust ~~had~~does ~~previously~~not ~~been~~have ~~deducted by~~an ~~TEMI~~“Equity ~~pursuant~~Compensation ~~to the Purchase Contract in calculating Net Proceeds due to the Trust~~Plan”.

For the Robinson’s Bend Field, a gathering, treating and transportation fee of $0.260 per MMBtu, adjusted for inflation ($0.331, $0.327 and $0.314 per MMBtu for 2010, 2009, and 2008, respectively),


Name of Beneficial Owner and Address	Shares Beneficially Owned
	Units		Percent of Class
5% Unitholder: (1)
Trust Acquisition Company, LLC (2)
Two Greenwich Plaza, First Floor		5,917,320		68.81	%
Greenwich, CT 06830
Silver Point Capital, L.P. (2)
Two Greenwich Plaza, First Floor
Greenwich, CT 06830
Edward A. Mulé (2)
Two Greenwich Plaza, First Floor
Greenwich, CT 06830
Robert J. O’Shea (2)
Two Greenwich Plaza, First Floor
Greenwich Plaza, First Floor
Greenwich, CT 06830

44 (1) Based on Schedule 13D/A Amendment No. 15 filed with the Securities and Exchange Commission on February 28, 2012 (the “Schedule 13D”) and the most recent Form 4 filed January 2, 2013.

~~Table~~(2) Trust Acquisition Company, LLC, Silver Point Capital, L.P., Edward A. Mule and Robert J. O’Shea are each a reporting person and member of ~~Contents~~a reporting group pursuant to a Joint Filing Agreement dated as of February 282012 for purposes of the Securities Exchange Act of 1934, as amended, as filed as Exhibit 7.01 to the Schedule 13D.

~~plus~~Administrative ~~fuel~~Services ~~usage~~Agreements equal to 5% of revenues is deducted in computing Net Proceeds due to the Trust. Additionally, a gathering fee of $0.05 per MMBtu is deducted in calculating the purchase price for production from 73 of the 426 wells in the Robinson’s Bend Field. In computing Net Proceeds due to the Trust for the Austin Chalk Fields, $0.38 per MMBtu plus 17% of revenues are deducted as a fee to gather, treat and transport natural gas production. TEMI deducted from the purchase price for natural gas for production attributable to certain wells in the Cotton Valley Fields a transportation fee of $0.045 per MMBtu.

~~During~~Pursuant to the ~~years~~Trust ~~ended December 31~~Agreement, ~~2010,~~Torch ~~2009~~ and ~~2008,~~the ~~gathering,~~Trust ~~treating~~entered ~~and~~into ~~transportation fees~~the ~~deducted~~Administrative ~~from~~Services ~~the~~Agreement ~~Net~~effective ~~Proceeds~~October 1, ~~calculations~~1993. ~~pertaining~~The tofollowing ~~production~~summary of ~~during~~certain provisions of the ~~twelve~~Administrative ~~months ended~~Services ~~September 30,~~Agreement ~~2010,~~does ~~2009~~not ~~and~~purport ~~2008~~to inbe ~~the~~complete ~~Robinson’s~~and ~~Bend,~~is ~~Austin~~subject ~~Chalk~~to, and ~~Cotton~~is ~~Valley Fields,~~qualified ~~totaled~~in ~~$1.0 million,~~its ~~$1.0 million~~entirety ~~and~~by ~~$1.4 million~~reference ~~for 2010~~to, ~~2009~~the ~~and~~provisions ~~2008,~~of ~~respectively~~the Administrative Services Agreement. No ~~amounts~~The ~~for~~Trust ~~gathering,~~and ~~treating~~Trustee orrely on ~~transportation~~third ~~are~~party ~~deducted~~service inproviders ~~calculating~~to ~~the~~perform ~~purchase~~administrative ~~price from~~services for the ~~Chalkley Field~~Trust.

~~Item~~Prior to April ~~14.~~1, ~~Principal~~2008, ~~Accountant~~Torch ~~Fees~~provided accounting, bookkeeping, informational and other services to the Trust related to the Net Profits Interests pursuant to an administrative services agreement effective October 1, 1993 (“Administrative Services. Agreement”) and an oral arrangement after termination of the Administrative Services Agreement on January 29, 2008 through April 1, 2008.

~~UHY~~On ~~LLP~~November 7, ~~personnel~~2008, ~~work~~an ~~under~~agreement was entered into between the ~~direct~~Trust ~~control~~and ofTorch ~~UHY~~which ~~LLP~~engaged ~~partners~~Torch to provide certain accounting services in connection with the Trust’s preparation and ~~are~~filing ~~leased~~of ~~from wholly~~the Trust’s Form 10-~~owned~~K ~~subsidiaries~~for ofthe ~~UHY~~year ~~Advisors~~ended December 31, ~~Inc~~2007. inSuch anagreement expired ~~alternative~~on ~~practice~~December 23, ~~structure~~2008.

~~The~~45 Trust does not have an audit committee, and has no audit committee pre-approval policy with respect to fees paid to UHY. Any pre-approval of services performed by UHY and related fees is granted by the Trustee. The outside auditors are appointed and engaged by the Trust. Fees for services performed by UHY for the years ended December 31, 2010 and 2009 are:

	2010		2009
Audit Fees	$	110,000	$	100,000
Audit Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
	$	110,000	$	100,000

45 Torch Energy Royalty Trust

~~Table~~To facilitate the winding down of ~~Contents~~the Trust, Torch currently provides certain accounting and other services for the Trust pursuant to an agreement with the Trust entered into on March 26, 2009. The initial term of the agreement expired on March 31, 2010 and was thereafter extended from year to year, up to the period ending August 30, 2013. Torch currently provides the Trust via letter agreement the administrative services historically provided by Torch to the Trust through December 31, 2013 consistent with past practice and (ii) from December 31, 2013 to April 30, 2014 shall provide services to the Trust in support of any tax correspondence (tax booklet) and tax filings that might be necessary for the year ended December 31, 2013 consistent with past practice and other related services necessary to complete the wind down of the Trust that are also consistent with past practice. Subsequently, the inability of the Trust to hire qualified services providers to assist in the wind down and liquidation of the Trust may have a material adverse effect on the operations of the Trust.

~~Torch~~Administrative ~~Energy~~services ~~Royalty~~fees ~~Trust~~of $460,000, $345,000 and $335,000 are included in general and administrative expenses for the years ended December 31, 2011, 2010 and 2009, respectively.

~~PART~~Marketing IV Arrangements and Price Sharing

~~Item 15~~In connection with the formation of the Trust, TRC, Velasco and TEMI entered into a Purchase Contract, which expired upon the termination of the Trust (January 29, 2008). ~~Exhibits~~Pursuant to the Purchase Contract, ~~Financial~~TEMI ~~Statement~~was ~~Schedules~~obligated to purchase all net production attributable to the Underlying Properties for an Index Price for oil and natural gas less certain gathering, treating and transportation charges, which were calculated monthly. The Purchase Contract also provided that TEMI pay a Minimum Price for natural gas production, adjusted annually for inflation. When TEMI paid a purchase price based on the Minimum Price it received Price Credits equal to the difference between the Index Price and the Minimum Price, that it was entitled to deduct in determining the purchase price when the Index Price for natural gas exceeded the Minimum Price. In addition, if the Index Price for natural gas exceeded the Sharing Price, which is adjusted annually for inflation, TEMI was entitled to deduct 50% of such excess (“Price Differential”) in determining the purchase price. TEMI had an annual option to discontinue the Minimum Price commitment. However, if TEMI discontinued the Minimum Price commitment, it would no longer be entitled to deduct the Price Differential in calculating the purchase price and would have forfeited all accrued Price Credits. As of the Termination Date, TEMI had no outstanding Price Credits and had not exercised its option to discontinue the Minimum Price Commitment.

Upon the Trust’s termination, the Working Interest Owners utilized the same pricing mechanisms (aincluding the Sharing Price and Minimum Price commitment mechanisms) as the expired Purchase Contract in calculating Net Proceeds due to the Trust. The ~~following~~Working ~~documents~~Interest ~~are~~Owners ~~filed~~also ashave ~~part~~the ofsame annual ~~this~~option ~~report:~~to discontinue the Minimum Price commitment. The Minimum Price per MMBtu was $1.99, $1.97 and $1.95 for 2011, 2010 and 2009, respectively. The Sharing Price was $2.46, $2.43 and $2.40 per MMBtu in 2011, 2010 and 2009, respectively. As of December 31, 2011, the Working Interest Owners had no accumulated Price Credits and had not exercised their right to discontinue the Minimum Price commitment.

No Price Credits were deducted in calculating the purchase price related to Net Proceeds during the three years ended December 31, 2011. As a result the Sharing Price arrangement, Net Proceeds attributable to the Underlying Properties during the years ended December 31, 2011, 2010 and 2009 were reduced by $1.9 ~~Financial~~million, ~~Statements~~$2.5 million and $3.0 million, respectively.

~~Torch~~46 ~~Energy Royalty Trust~~

ReportTable of Independent Registered Public Accounting Firm Statements of Assets, Liabilities and Trust Corpus at December 31, 2010 and 2009 Statements of Distributable Income for the Years Ended December 31, 2010, 2009 and 2008 Statements of Changes in Trust Corpus for the Years Ended December 31, 2010, 2009 and 2008 Notes to Financial StatementsContents

	2.		Financial Statement Schedules
			Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements and notes thereto.
	3.		Exhibits

Torch Energy Royalty Trust

~~Exhibit~~Gathering, Treating and Transportation Arrangements

Number Exhibit
4.	Instruments Defining the Rights of Security Holders, Including Indentures.
	4.1 —	Form of Torch Energy Royalty Trust Agreement.*
	4.2 —	Form of Louisiana Trust Agreement.*
	4.3 —	Specimen Trust Unit Certificate.*
	4.4 —	Designation of Ancillary Trustee.*
10.	Material Contracts.
	10.1 —	Purchase Agreement between TRC, Velasco and TEMI.*
	10.2 —	Gas Gathering Agreement between TEMI and Bahia Gas Gathering, Ltd.*
	10.3 —	Amendment to Gas Gathering Agreement.*
	10.4 —	Water Gathering and Disposal Agreement and First Amendment between Torch
		Energy Associates, Ltd. and Velasco.*
	10.5 —	Form of Texas Conveyance.*
	10.6 —	Form of Louisiana Conveyance.*
	10.7 —	Form of Alabama Conveyance.*
	10.8 —	Standby Performance Agreement between Torch and the Trust.*
	10.9 —	Amendment to Water Gathering Contract.*
	10.10 —	First Amendment to Oil and Gas Purchase Contract (previously filed on form 10-Q for
		the quarter ended September 30, 1994). *
	10.11 —	Second amendment to Water Gathering and Disposal Agreement (previously filed on Form
		8-K on February 11, 2008).**

The Purchase Contract, which expired upon the Trust’s termination, entitled TEMI to deduct certain natural gas gathering, treating and transportation fees in calculating the purchase price for natural gas in the Robinson’s Bend, Austin Chalk and Cotton Valley Fields. The amounts that were deducted in calculating the purchase price for such natural gas were set forth in the Purchase Contract and were not affected by the actual costs incurred by TEMI to gather, treat and transport natural gas. Upon the Trust’s termination, the Working Interest Owners became entitled to deduct the same natural gas gathering, treating and transportation fees that had previously been deducted by TEMI pursuant to the Purchase Contract in calculating Net Proceeds due to the Trust.

46For the Robinson’s Bend Field, a gathering, treating and transportation fee of $0.260 per MMBtu, adjusted for inflation ($0.335, $0.331 and $0.327 per MMBtu for 2011, 2010, and 2009, respectively), plus fuel usage equal to 5% of revenues is deducted in computing Net Proceeds due to the Trust. Additionally, a gathering fee of $0.05 per MMBtu is deducted in calculating the purchase price for production from 73 of the 426 wells in the Robinson’s Bend Field. In computing Net Proceeds due to the Trust for the Austin Chalk Fields, $0.38 per MMBtu plus 17% of revenues are deducted as a fee to gather, treat and transport natural gas production. TEMI deducted from the purchase price for natural gas for production attributable to certain wells in the Cotton Valley Fields a transportation fee of $0.045 per MMBtu.

~~Table~~During ofthe ~~Contents~~years ended December 31, 2011, 2010 and 2009, gathering, treating and transportation fees deducted from the Net Proceeds calculations pertaining to production during the twelve months ended September 30, 2011, 2010 and 2009 in the Robinson’s Bend, Austin Chalk and Cotton Valley Fields, totaled $0.9 million, $1.0 million and $1.0 million, respectively. No amounts for gathering, treating or transportation are deducted in calculating the purchase price from the Chalkley Field.

~~Torch~~Item ~~Energy~~14. ~~Royalty~~Principal ~~Trust~~ Accountant Fees and Services.

23.	Consents of Experts and Counsel.
	23.1 —	Consent of T.J. Smith & Company, Inc.
	23.2 —	Consent of Netherland, Sewell and Associates, Inc.
	23.3 —	Consent of Watkins Meegan LLC
31.	Rule 13a-14(a)/15d-14(a) Certifications.
	31.1 —	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.	Section 1350 Certifications.
	32.1 —	Certification of Wilmington Trust Company pursuant to 18 U.S.C. Section 1350,
		as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The Trust does not have an audit committee, and has no audit committee pre-approval policy with respect to fees paid to UHY. Any pre-approval of services performed by UHY and related fees is granted by the Trustee. The outside auditors are appointed and engaged by the Trust. Fees for services performed by UHY for the years ended December 31, 2011 and 2010 are:

*	Incorporated by reference from Registration Statements on Form S-1 of Torch Energy Advisors Incorporated (Registration No. 33-68688) dated November 16, 1993.
	2011		2010
**	Incorporated by reference from Form 8-K dated February 11, 2008.
Audit Fees	$	129,000	$	110,000
Audit Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
	$	129,000	$	110,000

~~SIGNATURES~~ Torch Energy Royalty Trust

~~Pursuant~~PART toIV ~~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.~~

~~TORCH~~Item ~~ENERGY~~15. ~~ROYALTY TRUST By: Wilmington Trust Company~~Exhibits, ~~not~~Financial inStatement ~~its individual capacity but solely as Trustee for the Trust By: /s/ Bruce L~~Schedules. ~~Bisson Bruce L. Bisson, Vice President~~

~~Date:~~(a) ~~April 22,~~The ~~2011~~ following documents are filed as part of this report:

~~(The~~1. ~~Trust~~Financial ~~has no employees, directors or executive officers.)~~ Statements

48 Torch Energy Royalty Trust

Report of Independent Registered Public Accounting Firm

Statements of Assets, Liabilities and Trust Corpus at December 31, 2011 and 2010

Statements of Distributable Income for the Years Ended December 31, 2011, 2010 and 2009

Statements of Changes in Trust Corpus for the Years Ended December 31, 2011, 2010 and 2009

Notes to Financial Statements

Financial Statement Schedules

Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements and notes thereto.

Exhibits

Exhibit

Number Exhibit

Instruments Defining the Rights of Security Holders, Including Indentures.

4.1 -

Form of Torch Energy Royalty Trust Agreement.*

4.2 -

Form of Louisiana Trust Agreement.*

4.3 -

Specimen Trust Unit Certificate.*

4.4 -

Designation of Ancillary Trustee.*

10.

Material Contracts.

10.1 -

Purchase Agreement between TRC, Velasco and TEMI.*

10.2 -

Gas Gathering Agreement between TEMI and Bahia Gas Gathering, Ltd.*

10.3 -

Amendment to Gas Gathering Agreement.*

10.4 -

Water Gathering and Disposal Agreement and First Amendment between Torch Energy Associates, Ltd. and Velasco.*

10.5 -

Form of Texas Conveyance.*

10.6 -

Form of Louisiana Conveyance.*

10.7 -

Form of Alabama Conveyance.*

10.8 -

Standby Performance Agreement between Torch and the Trust.*

10.9 -

Amendment to Water Gathering Contract.*

10.10 -

First Amendment to Oil and Gas Purchase Contract (previously filed on Form 10-Q for the quarter ended September 30, 1994). *

10.11 -

Second amendment to Water Gathering and Disposal Agreement (previously filed on Form 8-K on February 11, 2008).**

10.12 -

Purchase and Sale Agreement between Trust, TRC, Torch E&P and Torch (previously filed on Form 8-K on August 30, 2013).

10.13 -

Purchase and Sale Agreement between Trust and RBP II (previously filed on Form 8-K on December 13, 2011).

Torch Energy Royalty Trust

23.

Consents of Experts and Counsel.

23.1 -

Consent of T.J. Smith & Company, Inc.

23.2 -

Consent of Netherland, Sewell and Associates, Inc.

23.3 -

Consent of Watkins Meegan LLC

31.

Rule 13a-14(a)/15d-14(a) Certifications.

31.1 -

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.

Section 1350 Certifications.

32.1 -

Certification of Wilmington Trust Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incorporated by reference from Registration Statements on Form S-1 of Torch Energy Advisors Incorporated (Registration No. 33-68688) dated November 16, 1993.

Incorporated by reference from Form 8-K dated February 11, 2008.

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.


TORCH ENERGY ROYALTY TRUST

By:		Wilmington Trust Company,
		not in its individual capacity but solely as Trustee for the Trust

By:		/s/ David A. Vanaskey
		David A. Vanaskey
		Vice President

Date: February 3, 2014

(The Trust has no employees, directors or executive officers.)

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