0001581552 Energy 11, L.P. false --12-31 FY 2025 Energy 11, L.P. true true true false 203,009,147 175,017,198 18,973,474 18,973,474 18,973,474 18,973,474 62,500 62,500 62,500 62,500 1.45 1.40 0 0 2 1 35 35 January 31, 2026 February 28, 2026 1 10 10 false false false false true false Revisions to previous estimates increased proved reserves by a net amount of 3,266 MBOE. These revisions result from 4,423 MBOE of positive adjustments attributable to changes in the future drill schedule and recovery projections, offset by 973 MBOE of downward adjustments attributable to well performance, and 184 MBOE of downward adjustments caused by lower oil, natural gas and NGL prices when comparing the Partnership’s reserve estimates at December 31, 2024 to December 31, 2023. Revisions to previous estimates decreased proved reserves by a net amount of 774 MBOE. These revisions result from 773 MBOE of downward adjustments attributable to well performance and 99 MBOE of downward adjustments caused by lower oil, natural gas and NGL prices, offset by 98 MBOE of positive adjustments attributable to changes in the future drill schedule when comparing the Partnership’s reserve estimates at December 31, 2025 to December 31, 2024. The annual review of the PUDs resulted in a positive revision of approximately 69 MBOE. This revision was the result of 98 MBOE of positive adjustments attributable to changes in the future drill schedule and recovery projections, offset by 23 MBOE of downward adjustments attributable to changes in natural gas shrink and NGL yield and 6 MBOE of downward adjustments caused by lower oil, natural gas and NGL prices when comparing the Partnership’s reserves at December 31, 2025 to December 31, 2024. The Partnership completed 15 new wells during 2024; therefore, the Partnership converted these 15 wells to proved developed reserves during 2024, which resulted in a downward adjustment to PUDs of 1,534 MBOE. In 2024, extensions, discoveries and other additions of 152 MBOE were primarily attributable to successful drilling by the Partnership’s primary operator of the Sanish Field Assets. In 2024, extensions, discoveries and other additions of 152 MBOE were primarily attributable to successful drilling by the Partnership’s primary operator of the Sanish Field Assets. The annual review of the PUDs resulted in a positive revision of approximately 4,299 MBOE. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-K

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

For the fiscal year ended: December 31, ~~2024~~2025

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

COMMISSION FILE NUMBER: 000-55615

ENERGY 11, L.P.

(Exact name of Registrant as specified in its charter)

Delaware		46-3070515
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification Number)

120 W 3rd Street, Suite 220
Fort Worth, Texas		76102
(Address of principal executive office)		(Zip Code)

Registrant’s telephone number, including area code: (817) 882-9192

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

Title of each class		Trading Symbol		Name of each exchange on which registered
None

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

Common Units of Limited Partnership Interest

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Table of Contents

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There is no established public market for the registrant’s outstanding limited partnership interests. The aggregate market value of the registrant’s limited partnership interests held by non-affiliates of the registrant as of June 30, 2025 ~~2024~~ was $0.

As of March 1413, ~~2025~~2026, the Partnership had 18,973,474 common units outstanding.

Table of Contents

ENERGY 11, L.P.

FORM 10-K

Index

		Page
Part I
	Item 1. Business	7
	Item 1A. Risk Factors	25
	Item 1B. Unresolved Staff Comments	42
	Item 1C. Cybersecurity	42
	Item 2. Properties	42
	Item 3. Legal Proceedings	42
	Item 4. Mine Safety Disclosures	42
Part II
	Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	43
	Item 6. [Reserved]	47
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk	5857
	Item 8. Financial Statements and Supplementary Data	5958
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	8078
	Item 9A. Controls and Procedures	8078
	Item 9B. Other Information	8078
	Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	8078
Part III
	Item 10. Directors, Executive Officers and Corporate Governance	8179
	Item 11. Executive Compensation	8280
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	8381
	Item 13. Certain Relationships and Related Transactions, and Director Independence	8583
	Item 14. Principal Accounting Fees and Services	8684
Part IV
	Item 15. Exhibits, Financial Statement Schedules	8785
	Item 16. Form 10-K Summary	8886
Signatures		8987

Table of Contents

FORWARD LOOKING STATEMENTS

Certain statements within this report may constitute forward-looking statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “continue,” “further,” “seek,” “plan” or “project” and variations of these words or comparable words or phrases of similar meaning.

These forward-looking statements include such things as:

● any impact of the ongoing Iranian-Israeli-American and Russian-Ukrainian conflicts and/or other Middle Eastern conflicts on the global energy markets;

●

references to future success in the Partnership’s drilling and marketing activities;

●

the Partnership’s business strategy;

●

estimated future capital expenditures;

●

estimated future distributions;

●

sales of the Partnership’s properties and other liquidity events;

●

competitive strengths and goals; and

●

other similar matters.

These forward-looking statements reflect the Partnership’s current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside the Partnership’s control that may cause actual results to differ materially from those projected. Such factors include, but are not limited to, those described under “Risk Factors” and the following:

●

that the Partnership’s development of its oil and natural gas properties may not be successful or that the Partnership’s operations on such properties may not be successful;

●

general economic, market, or business conditions;

●

changes in laws or regulations;

●

the risk that the wells in which the Partnership acquired an interest are productive, but do not produce enough revenue to return the investment made;

●

the risk that the wells the Partnership drills do not find hydrocarbons in commercial quantities or, even if commercial quantities are encountered, that actual production is lower than expected on the productive life of wells is shorter than expected;

●

current credit market conditions and the Partnership’s ability to obtain long-term financing for its property drilling activities in a timely manner and on terms that are consistent with what the Partnership projects when it invests in a property;

●

uncertainties concerning the price of oil and natural gas, which may decrease and remain low for prolonged periods; and

●

the risk that any hedging policy the Partnership employs to reduce the effects of changes in the prices of its production will not be effective.

Although the Partnership believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Partnership cannot assure investors that its expectations will be attained or that any deviations will not be material. Investors are cautioned that forward-looking statements speak only as of the date they are made and that, except as required by law, the Partnership undertakes no obligation to update these forward-looking statements to reflect any future events or circumstances. All subsequent written or oral forward-looking statements attributable to the Partnership or to individuals acting on its behalf are expressly qualified in their entirety by this section.

Table of Contents

RISK FACTOR SUMMARY

The following is a summary of some of the principal risks that could materially adversely affect the Partnership’s business, financial condition and results of operations. This summary should be read together with the more detailed description of each risk factor contained in “Part I, Item 1A. Risk Factors.”

Risks Related to the Partnership’s Business, Financial Condition, Results of Operations and Cash Flows

●

If oil, natural gas or other hydrocarbon prices decrease and/or remain depressed for a prolonged period cash flows from operations will decline and cash available for distributions will be impacted.

●

The Partnership may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to the General Partner, to enable the Partnership to make cash distributions to holders of its common units under its cash distribution policy.

●

The Partnership has limited control over the activities on its properties.

●

The Partnership participates in oil and gas leases with third parties who may not be able to fulfill their commitments to the Partnership’s projects.

●

The Partnership’s results from operations may be impacted by a lack of geographical diversification.

●

The Partnership depends on oil and natural gas transportation and processing facilities and other assets that are owned by third parties.

●

The Partnership and the operators of its properties may encounter obstacles to marketing the Partnership’s share of oil, natural gas and other hydrocarbons, which could adversely impact the Partnership’s revenues.

●

The Partnership may need additional funding for the Sanish Field Assets in order to retain its full interest therein.

●

Property interests that the Partnership has purchased or of which the Partnership participates in the development may not produce as projected and the Partnership may be unable to realize reserve potential, which could adversely affect the Partnership’s cash available for distribution.

●

Compliance with financial and other covenants in the Partnership’s existing or future debt agreements may reduce operational flexibility and create default risk.

● ~~The~~Ongoing ~~Partnership~~inflationary ~~experienced~~pressures ~~higher~~have ~~costs~~resulted in ~~2023~~and ~~due~~may result in increases to ~~inflation~~the ~~having~~costs ~~widespread~~of ~~effects~~goods, onservices ~~the~~and ~~economy.~~personnel, ~~Sustained~~and sustained periods of higher costs could reduce the Partnership’s profitability and cash flow.

●

Any future hedging transactions in which the Partnership elects to engage will expose it to counterparty credit risk.

●

Hedging activities could result in financial losses or could reduce the Partnership’s net income, which may adversely affect the Partnership’s ability to pay cash distributions to holders of its common units.

●

The Partnership plans to rely on drilling to fully develop the properties the Partnership has acquired. If drilling is unsuccessful, the Partnership’s cash available for distributions and financial condition will be adversely affected.

●

The Partnership’s business is subject to operational risks that will not be fully insured, which, if they were to occur, could adversely affect the Partnership’s financial condition or results of operations and, as a result, the Partnership’s ability to pay distributions to holders of its common units and service its debt obligations.

Risks Related to Investment in the Partnership

●

The Partnership depends on key personnel, the loss of any of whom could materially adversely affect future operations.

●

The common units are not liquid and a limited partner’s ability to resell common units will be limited by the absence of a public trading market and substantial transfer restrictions.

●

Distributions to the Partnership’s common unitholders may not be sourced from its cash generated from operations but from indebtedness, and therefore the Partnership’s distributions during certain periods may exceed earnings and cash flows from operations, and this will decrease the Partnership’s distributions in the future; furthermore, the Partnership cannot guarantee that investors will receive any specific return on their investment.

●

If the General Partner elects to cause the Partnership to make distributions rather than reinvesting the cash flow in its business, the Partnership may be required to sell or farm-out properties or to elect not to participate in exploration or development drilling activities on its properties, which activities could turn out to be profitable.

●

The General Partner will be subject to conflicts of interest in operating the Partnership, including conflicts of interest arising out of the General Partner’s ownership of the incentive distribution rights. The Partnership Agreement limits the General Partner’s fiduciary duties to the Partnership in connection with these conflicts of interest.

●

The General Partner has sole responsibility for conducting the Partnership’s business and managing its operations. The General Partner and its affiliates will have conflicts of interest, which may permit them to favor their own interests to the detriment of holders of the Partnership’s common units.

●

Amounts paid to the General Partner, regardless of success of the Partnership’s activities, will reduce the cash the Partnership has available for distribution.

●

Because the General Partner has discretion to determine the amount and timing of any distribution the Partnership may make, there is no guarantee that cash distributions will be paid by the Partnership in any amount or frequency even if its operations generate revenues.

●

The Partnership may be unable to sell its properties, merge with another entity or list the common units on a national securities exchange within its planned timeline or at all.

●

The General Partner may cause the Partnership not to participate with the operator in the drilling of wells on the Partnership’s properties.

● Table ~~Fees and cost reimbursements that must be paid to the General Partner and the Dealer Manager regardless~~ of ~~success of the Partnership’s activities will reduce the cash the Partnership has available for distribution.~~Contents

Risks Related to Laws, Regulations, Cybersecurity and Other External Factors

●

The Partnership is subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting the Partnership’s operations.

●

Federal and state legislative initiatives and executive orders relating to hydraulic fracturing and oil and natural gas lease sales could result in increased costs and additional operating restrictions or delays, and even could result in the Partnership ceasing business operations.

●

Additional regulatory scrutiny by the EPA could make it difficult to perform hydraulic fracturing, impact the Partnership’s ability to conduct business, and increase the Partnership’s costs of compliance and doing business.

●

The Partnership’s financial condition and results of operations may be materially adversely affected if the Partnership incurs costs and liabilities due to a failure to comply with environmental regulations or a release of hazardous substances into the environment.

●

Climate change legislation or regulations restricting emissions of greenhouse gases, or GHGs, could result in increased operating costs and reduced demand for the oil, natural gas and natural gas liquids the Partnership produces.

●

Significant physical effects of climatic change have the potential to damage the Partnership’s facilities, disrupt the Partnership’s production activities and cause the Partnership to incur significant costs in preparing for or responding to those effects.

●

Cyber-attacks targeting systems and infrastructure used by the oil and gas industry may adversely impact the Partnership’s operations.

●

Loss of Partnership information and computer systems could adversely affect the Partnership’s business.

Tax Risks to Limited Partners

●

The Partnership’s tax treatment depends on its status as a partnership for U.S. federal income tax purposes and not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service treats the Partnership as a corporation or the Partnership becomes subject to a material amount of entity-level taxation for state tax purposes, it would reduce the amount of cash available for distribution to the Partnership’s limited partners.

●

An IRS contest of the Partnership’s U.S. federal income tax positions may adversely affect the value for the Partnership’s common units, and the cost of any IRS contest will reduce the Partnership’s cash available for distribution to the Partnership’s limited partners.

●

If the IRS makes audit adjustments to the Partnership’s income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from the Partnership, in which case cash available for distribution to limited partners might be substantially reduced.

●

Tax-exempt entities and foreign persons face unique tax issues from owning common units that may result in adverse tax consequences to them.

●

A limited partner may be required to pay taxes on income from the Partnership even if a limited partner did not receive any sufficient cash distributions from the Partnership.

●

A limited partner may not qualify for percentage depletion deductions, and even if a limited partner does so qualify, a limited partner will be required to determine, and maintain records supporting, the deduction.

●

The Partnership cannot assure its limited partners that it will meet the requirements for its limited partners to deduct intangible drilling and development costs.

●

If the Partnership is eligible to deduct IDCs, the Partnership cannot assure its limited partners that IDCs will be deductible in any given year.

●

The IRS could challenge the timing of the Partnership’s deductions of IDCs, which could result in an increase to limited partners’ tax liabilities.

●

The ability of a limited partner to deduct its share of our losses and deductions may be limited.

●

Certain federal income tax deductions currently available with respect to oil and natural gas exploration and development may be eliminated as a result of future legislation.

●

Limited partners may be subject to a limit on the ability to deduct interest expense incurred by the Partnership.

●

A limited partner will likely be subject to state and local taxes and tax return filing requirements in states where they do not live as a result of investing in the Partnership’s common units.

●

The Partnership may be required to remit state income taxes to applicable taxing authorities on behalf of its limited partners.

●

Tax gains or losses on the disposition of Partnership common units could be more or less than expected.

~~Index~~ Table of Contents

Item 1. Business

Overview

Energy 11, L.P. (the “Partnership”) is a Delaware limited partnership formed to acquire producing and non-producing oil and natural gas properties onshore in the United States and to develop those properties. The initial capitalization of the Partnership of $1,000 occurred on July 9, 2013. The Partnership completed its best-efforts offering on April 24, 2017 with a total of approximately 19 million common units sold for gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million.

As of December 31, ~~2024~~2025, the Partnership owns an approximate 24% non-operated working interest in ~~312~~309 producing wells and future development sites in the Sanish field located in Mountrail County, North Dakota (collectively, the “Sanish Field Assets”). Chord Energy Corporation (“Chord”) is , one of the largest producers in the basin ~~and~~ , operates substantially all of the Sanish Field Assets.

The general partner of the Partnership is Energy 11 GP, LLC (the “General Partner”).

Business Objective

The Partnership’s primary investment objectives are to (i) acquire producing and non-producing oil and natural gas properties with development potential, and to enhance the value of the properties through drilling and other development activities, (ii) make distributions to the holders of the common units, (iii) engage in a liquidity transaction, in which all properties are sold and the sales proceeds are distributed to the partners, merge with another entity, or list the common units on a national securities exchange, and (iv) permit holders of common units to invest in oil and natural gas properties in a tax efficient basis. The proceeds from the sale of the common units primarily have been used to acquire the Sanish Field Assets and develop these assets.

Investment and Historical Drilling Activity

On December 18, 2015, the Partnership completed its first purchase in the Sanish field, acquiring an approximate 11% non-operated working interest in the Sanish Field Assets for approximately $159.6 million. On January 11, 2017, the Partnership closed on its second purchase, acquiring an additional approximate 11% non-operated working interest in the Sanish Field Assets for approximately $128.5 million. On March 31, 2017, the Partnership closed on its third purchase, acquiring an additional approximate average 10.5% non-operated working interest in 82 of the Partnership’s then 216 existing producing wells and 150 of the Partnership’s then 253 future development locations in the Sanish Field Assets for approximately $52.4 million.

The ~~Partnership~~ ~~drilled and completed 86 new wells from 2018 to 2023; the~~ Partnership’s ~~share~~has ~~of capital expenditures for the drilling and completion of these 86 wells totaled approximately $120 million. The Partnership~~ drilled and completed 15101 new wells ~~that~~since ~~were turned to sales during~~ the ~~summer~~beginning of ~~2024~~2018; the Partnership’s ~~estimated~~ share of capital expenditures for the drilling and completion of these 15101 wells istotaled approximately $27 148 million.

Industry Operating Environment

The oil and natural gas industry is affected by many factors that the Partnership generally cannot control, including the prices of oil, natural gas and natural gas liquids (“NGL”). Global macroeconomic factors contributing to uncertainty within the industry include real or perceived geopolitical risks in oil-producing regions of the world, particularly the Middle East and Russia; current and/or future government sanctions impacting certain oil producing nations; forecasted levels of global economic growth combined with forecasted global supply; supply levels of oil and natural gas due to exploration and development activities in the United States; global health concerns; environmental and climate change regulation; actions taken by and production quotas set by the Organization of the Petroleum Exporting Countries ("OPEC") and certain non-member oil-producing countries, including Russia ("OPEC+"); and the strength of the U.S. dollar in international currency markets. Natural gas prices vary in accordance with North American supply and demand and are also affected by imports and exports of NGL. Weather also has a significant impact on demand for natural gas since it is a primary heating source in the United States.

~~The length~~During ~~and~~2025, ~~outcome~~oil ofprices ~~the~~were ~~military~~lower ~~conflict~~on ~~between~~average ~~Ukraine~~than 2024 and ~~Russia~~experienced asperiodic ~~well~~volatility asdriven ~~continued~~by ~~unrest~~many inof the ~~Middle~~factors ~~East~~discussed ~~are~~above, ~~highly~~specifically ~~unpredictable, and~~global ~~further~~supply-demand ~~escalation~~fundamentals ofas ~~these~~inventories ~~conflicts~~increased ~~could~~and ~~lead~~production tofrom ~~significant~~OPEC+ ~~market~~remained elevated. The oil and ~~other~~natural ~~disruptions,~~gas ~~such~~industry asis ~~volatility~~particularly involatile ~~commodity~~and ~~prices~~ cyclical, and ~~supply~~the ofdemand ~~energy~~for ~~resources,~~goods ~~instability~~and inservices ~~financial~~of ~~markets,~~oil ~~supply~~field ~~chain interruptions~~companies, ~~political~~suppliers and ~~social~~others ~~instability~~associated ~~and~~with ~~other material~~the ~~and~~industry ~~adverse~~put pressure ~~effects~~ on ~~macroeconomic~~the ~~conditions.~~economic ~~The~~stability ~~short-~~ and ~~long-term~~pricing ~~impact~~structure ofwithin ~~these~~the ~~conflicts~~industry. onOngoing ~~the~~inflationary ~~operations~~pressures have resulted in and ~~financial condition~~may ofresult ~~the~~in ~~Partnership~~increases ~~and~~to the ~~global~~costs ~~economy~~of isgoods, ~~uncertain~~services and personnel.

~~Index~~ Table of Contents

Consistent with non-operators of well interests within the industry, the Partnership engages in oil and natural gas well development by participating on a proportionate basis alongside third-party interests in wells drilled and completed in spacing units that include the Partnership’s acreage. The Partnership relies on its operators to propose, permit and initiate the drilling of wells. The Partnership assesses each drilling opportunity on a case-by-case basis and participates in wells that expect to meet a desired return based upon estimates of recoverable oil and natural gas, expected oil and gas prices, expertise of the operator and completed well cost from each project, as well as other factors. Historically, the Partnership has participated pursuant to its working interest in the majority of the wells proposed. Declines in oil prices typically reduce the number of well proposals the Partnership receives.

The Partnership’s operators generally market and sell the oil and natural gas extracted from Partnership wells. In addition, these operators coordinate the transportation of oil and natural gas production from wells in which the Partnership participates to appropriate pipelines or rail transport facilities pursuant to arrangements that such operators negotiate and maintain with various parties purchasing the production. The price at which Partnership production is sold is generally tied to a market spot price, and the differential between the market spot price and the Partnership’s realized sales price represents the imbedded transportation costs in moving the oil from wellhead to refinery and will fluctuate based on availability of pipeline, rail and other transportation methods.

Production, Prices and Production Cost History

The following table sets forth certain information regarding the production volumes, average prices received, and average production costs associated with the sale of oil, natural gas, and natural gas liquids for the periods indicated below.

	Year Ended December 31,				Percent
	Year Ended Ended December 31,				Percent
	2024		2023		Change
	2025		2024		Change
Sold production (BOE):
Oil		1844,~~010,751~~717		1,~~128~~010,~~242~~751		-1016.4	%
Natural gas		~~257~~294,~~067~~667		~~273~~257,~~795~~067		-614.16	%
Natural gas liquids		~~265~~276,~~272~~311		265,~~002~~272		04.12	%
Total		1,~~533~~415,~~090~~695		1,~~667~~533,~~039~~090		-87.07	%
Average sales price per unit:
Oil (per Bbl)	$	7363.9685	$	7873.1496		-513.37	%
Natural gas (per Mcf)		12.5660		21.3556		~~-33~~66.67	%
Natural gas liquids (per Bbl)		3228.5804		2932.3358		11-13.19	%
Combined (per BOE)		5546.9782		5955.8697		-616.53	%
Average unit cost per BOE:
Production costs
Production expenses		1416.3447		1514.9134		-914.9	%
Production taxes		43.4622		4.7546		-627.18	%
Total production costs		1819.8069		2018.6680		-94.07	%
Depreciation, depletion, amortization and accretion		1819.9080		1618.3290		154.8	%

Related Parties

The Partnership has, and is expected to continue to engage in, significant transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Partnership’s operations may be different than if conducted with non-related parties. The General Partner’s Board of Directors oversees and reviews the Partnership’s related party relationships and is required to approve any significant modifications to any existing related party transactions, as well as any new significant related party transactions.

See further discussion of transactions with related parties in “Note 76. Related Parties” in Part II, Item 8 – Financial Statements and Supplementary Data, appearing elsewhere in this Annual Report on Form 10-K.

~~Index~~ Table of Contents

Partners’ Equity and Distributions

The Partnership completed its best-efforts offering of common units on April 24, 2017. As of the conclusion of the offering on April 24, 2017, the Partnership had completed the sale of approximately 19.0 million common units for total gross proceeds of $374.2 million and proceeds net of offerings costs of $349.6 million. David Lerner Associates, Inc. was the dealer manager for the Partnership’s best-efforts offering (the “Dealer Manager”). Under the agreement with the Dealer Manager, the Dealer Manager received a total of 6% in selling commissions and marketing expense allowance based on gross proceeds of the common units sold. The Dealer Manager will also be paid a contingent incentive fee, which is a cash payment of up to an amount equal to 4% of gross proceeds of the common units sold based on the performance of the Partnership. Based on the common units sold in the offering, the total contingent fee is a maximum of approximately $15.0 million, which will only be paid if Payout occurs, as defined below.

Prior to “Payout,” which is defined below, all of the distributions made by the Partnership, if any, will be paid to the holders of common units. Accordingly, the Partnership will not make any distributions with respect to the Incentive Distribution Rights (owned by the General Partner), with respect to Class B units or the contingent, incentive payments to the Dealer Manager, until Payout occurs.

The Partnership Agreement provides that Payout occurs on the day when the aggregate amount distributed with respect to each of the common units equals $20.00 plus the Payout Accrual. The Partnership Agreement defines “Payout Accrual” as 7% per annum simple interest accrued monthly until paid on the Net Investment Amount outstanding from time to time. The Partnership Agreement defines Net Investment Amount initially as $20.00 per common unit, regardless of the amount paid for the common unit. If at any time the Partnership distributes to holders of common units more than the Payout Accrual, the amount the Partnership distributes in excess of the Payout Accrual will reduce the Net Investment Amount.

All distributions made by the Partnership after Payout, which may include all or a portion of the proceeds of the sale of all or substantially all of the Partnership’s assets, will be made as follows:

	●	First, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) to the Dealer Manager, as the Dealer Manager contingent incentive fee paid under the Dealer Manager Agreement, 30%, and (iv) the remaining amount, if any (currently 13.125%), to the Record Holders of outstanding common units, pro rata based on their percentage interest until such time as the Dealer Manager receives the full amount of the Dealer Manager contingent incentive fee under the Dealer Manager Agreement;
	●	Thereafter, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) the remaining amount to the Record Holders of outstanding common units, pro rata based on their percentage interest (currently 43.125%).

All items of income, gain, loss and deduction will be allocated to each Partner’s capital account in a manner generally consistent with the distribution procedures outlined above.

In January 2024, the General Partner declared a special distribution of $0.05 per common unit that reduced the accumulated unpaid distribution total described below; the $0.05 special distribution to limited partners was paid in February 2024. For the year ended December 31, ~~2024~~ 2025, the Partnership paid distributions of $1.45 40 per common unit, or $2726.5 6 million. In addition, the Partnership declared a monthly cash distribution to its holders of common units of $0.12 per common unit for the month of December ~~2024~~2025. The declared distribution of approximately $2.3 million, which is included in Accounts payable and accrued expenses on the Partnership’s balance sheet as of December 31, ~~2024~~2025, was paid on January 6, ~~2025~~ 2026 to the common unit holders on record as of December 31, ~~2024~~2025.

For the year ended December 31, ~~2023~~2024, the Partnership paid distributions of $1.~~425753~~45 per common unit, or $27.1 5 million.

The Partnership accumulates unpaid distributions based on an annualized return of seven percent (7%), and all accumulated unpaid distributions are required to be paid before final Payout occurs, as defined above. As of December 31, ~~2024~~2025, the unpaid Payout Accrual, for the period from March 2020 through November 2021, totaled $2.~~260447~~239365 per common unit, or approximately $43 42 million.

~~Index~~ Table of Contents

Oil and Natural Gas Reserves

The table below summarizes the Partnership’s estimated net proved reserves as of December 31, ~~2024~~2025:

Number of wells

Oil (MBbls)

Natural Gas (MMcf)

NGL (MBbls)

Total (MBOE)

Standardized Measure (2) (in thousands)

Number of

Oil

Natural Gas

NGL

Total

Standardized Measure (2)

wells

(MBbls)

(MMcf)

(MBbls)

(MBOE)

(in thousands)

Proved Reserves (1)

PDP Properties

~~312~~309

97,~~436~~582

1312,~~902~~518

2,~~233~~059

1311,~~986~~728

~~201~~138,~~225~~697

PUD Properties

5152

6,~~358~~433

5,~~811~~692

~~924~~938

8,~~250~~319

6947,~~969~~498

Total Proved Reserves

~~363~~361

1514,~~794~~015

1918,~~713~~210

32,~~157~~997

2220,~~236~~047

~~271~~186,~~194~~195

(1) The following terms have been used by the Partnership to classify its reserves: Proved developed producing reserves (“PDP”) are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves (“PUD”) are reserves expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for development (reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled). The Partnership’s proved reserves as of December 31, ~~2024~~2025 were calculated using oil and natural gas price parameters established by current SEC guidelines and accounting rules based on unweighted arithmetic average prices as of the first day of each of the twelve months ended on such date. The average realized oil, natural gas and NGL prices, including the effect of price differential adjustments, used in computing the Partnership’s reserves as of December 31, ~~2024~~2025 were $7463.7299 per barrel of oil, $12.5733 per MMcf of natural gas and $929.0640 per barrel of NGL. See “Note 98 — Supplementary Information on Oil, Natural Gas and Natural Gas Liquid Reserves (Unaudited)” in the accompanying notes to consolidated financial statements included elsewhere in this report for information concerning proved reserves.

(2)

The standardized measure of discounted future net cash flows represents the estimated future net revenue, discounted at a rate of 10% per annum, after income taxes and with no price or cost escalation, in accordance with Accounting Standards Codification Topic 932 – Extractive Activities – Oil and Gas. Because the Partnership was formed as a limited partnership, the Partnership is not subject to federal taxes in the calculation of the standardized measure. In addition, there are no entity level or gross receipts taxes in North Dakota, where all Partnership wells are located, that would give rise to an additional state tax provision.

The table above represents estimates only. Reserves estimates are based upon various assumptions, including assumptions required by the SEC relating to oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The process of estimating reserves is complex. This process requires significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. Furthermore, different reserve engineers may make different estimates of reserves and cash flow based on the same available data and these differences may be significant. Therefore, these estimates are not precise. Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and natural gas reserves will most likely vary from those estimated. In addition, the Partnership may adjust estimates of proved reserves to reflect production history, results of exploration and development, prevailing oil and natural gas prices and other factors, many of which are beyond its control. Prices for oil at December 31, ~~2024~~2025 were below the ~~2024~~ 2025 average prices using the parameters established by the SEC. Due to the volatility of the market, a period of sustained higher or lower prices will have a positive or negative impact to the estimated quantities and present values of the Partnership’s reserves.

~~Index~~ Table of Contents

Proved Undeveloped Reserves (PUD)

At December 31, ~~2024~~2025, the Partnership had PUDs of approximately 8,~~250~~ 319 MBOE, or approximately 3742% of total proved reserves. Total PUDs at December 31, ~~2023~~2024 were 58,~~333~~ 250 MBOE. The following table reflects the changes in PUDs during ~~2024~~2025:

	BOE
Proved undeveloped reserves, December 31, 2023		5,333,201
Revisions of previous estimates (1)		4,298,920
Extensions, discoveries and other additions (2)		151,643
Conversion to proved developed reserves (3)		(1,533,558	)
Proved undeveloped reserves, December 31, 2024		8,250,206
Revisions of previous estimates (1)		68,960
Extensions, discoveries and other additions		-
Conversion to proved developed reserves		-
Proved undeveloped reserves, December 31, 2025		8,319,166

(1) The annual review of the PUDs resulted in a positive revision of approximately ~~4,299~~69 MBOE. This revision was the result of ~~4,423~~98 MBOE of positive adjustments attributable to changes in the future drill schedule and recovery projections, offset by ~~114~~23 MBOE of downward adjustments attributable to changes in natural gas shrink and NGL yield and 106 MBOE of downward adjustments caused by lower oil, natural gas and NGL prices when comparing the Partnership’s reserves at December 31, ~~2024~~2025 to December 31, ~~2023~~2024.

~~(2)~~Under Incurrent ~~2024~~SEC requirements, ~~extensions~~PUD reserves may only be booked if they relate to wells scheduled to be drilled within five years of their date of original booking unless specific circumstances justify a longer time. The Partnership will be required to remove current PUDs if the Partnership does not drill those reserves within the required five-year time frame, ~~discoveries~~unless ~~and~~specific ~~other~~circumstances ~~additions~~justify a longer time. All of ~~152~~the ~~MBOE~~Partnership’s PUDs at December 31, 2025 are scheduled to be drilled within five years of the date they were ~~primarily~~initially ~~attributable~~recorded. However, since the Partnership is not the operator of any of its oil and natural gas properties, it is difficult to ~~successful~~predict with certainty the timing of drilling byand completion of wells currently classified as PUD reserves. Historically, energy commodity prices have been volatile, and the Partnership continues to expect significant price volatility. Sustained lower prices for oil and natural gas may cause the Partnership in the future to forecast less capital to be available for development of its PUDs, which may cause the Partnership to decrease the number of PUDs it expects to develop within the five-year time frame. In addition, lower oil and natural gas prices may cause the Partnership’s ~~primary~~PUDs ~~operator~~to ofbecome uneconomic to develop, which would cause the ~~Sanish~~Partnership ~~Field~~to ~~Assets~~remove them from the proved undeveloped category.

~~(3)~~Internal ~~The~~Controls ~~Partnership~~Over ~~completed~~Reserve 15Estimates ~~new~~and ~~wells~~Qualifications ~~during 2024; therefore, the Partnership converted these 15 wells to proved developed reserves during 2024, which resulted in a downward adjustment to PUDs~~ of ~~1,533~~Technical ~~MBOE.~~Persons

~~Under current~~The ~~SEC~~Partnership’s ~~requirements,~~policies ~~PUD~~and ~~reserves~~practices ~~may~~regarding ~~only~~internal becontrols ~~booked~~over ifthe ~~they~~recording ~~relate~~of toreserves ~~wells~~is ~~scheduled~~structured to beobjectively ~~drilled~~and ~~within~~accurately ~~five~~estimate ~~years~~its ofoil ~~their date~~and ofgas ~~original~~reserves ~~booking~~quantities ~~unless~~and ~~specific~~present ~~circumstances~~values ~~justify~~in acompliance ~~longer~~with ~~time.~~rules, ~~The~~regulations ~~Partnership~~and ~~will~~guidance beprovided ~~required~~by ~~to remove current PUDs if~~ the ~~Partnership~~SEC, ~~does~~as ~~not~~well ~~drill~~as ~~those~~established ~~reserves~~industry ~~within~~practices ~~the~~used ~~required~~by ~~five-year~~independent ~~time~~engineering ~~frame,~~firms ~~unless~~and ~~specific circumstances justify a longer time. All of~~ the Partnership’s ~~PUDs at December 31~~peers, ~~2024~~and ~~are~~in ~~scheduled~~accordance towith bethe ~~drilled~~SPE ~~within~~2007 ~~five~~Standards ~~years~~promulgated ofby the ~~date~~Society ~~they~~of ~~were~~Petroleum ~~initially recorded~~Engineers. ~~However,~~The ~~since the~~ Partnership isengaged ~~not~~Pinnacle ~~the~~Energy ~~operator~~Services, ofLLC ~~any~~(“Pinnacle ofEnergy”) ~~its~~to ~~oil~~prepare ~~and~~the ~~natural~~reserve ~~gas~~estimates ~~properties,~~for itall isof ~~difficult~~the toPartnership’s ~~predict with~~assets ~~certainty~~for the ~~timing~~year ofended ~~drilling~~December ~~and~~31, ~~completion~~2025 ofin ~~wells~~this ~~currently~~annual ~~classified as PUD reserves~~report. ~~Historically,~~Pinnacle ~~energy~~Energy ~~commodity~~founder ~~prices have~~J.P. ~~been~~Dick ~~volatile,~~has ~~and~~over ~~due~~30 toyears ~~geopolitical~~of ~~risks~~experience in ~~oil producing regions of~~ the ~~world~~oil ~~as well as global supply~~ and ~~demand~~natural ~~fluctuations~~gas industry, ~~the~~ ~~Partnership~~with ~~continues~~exposure to ~~expect~~reserves ~~significant~~and ~~price~~reserve ~~volatility.~~related ~~Sustained~~valuations ~~lower~~and ~~prices~~issues ~~for~~during ~~oil~~that time and ~~natural~~is ~~gas~~a ~~may~~Registered ~~cause~~Professional ~~the~~Engineer ~~Partnership~~ in the ~~future~~states toof ~~forecast~~Texas ~~less~~and ~~capital~~Oklahoma. toFurther bequalifications ~~available~~include ~~for~~a ~~development~~Bachelor of ~~its~~Science ~~PUDs,~~in ~~which~~petroleum ~~may~~engineering, ~~cause~~extensive ~~the~~internal ~~Partnership~~and toexternal ~~decrease~~reserve ~~the~~training, ~~number of~~and ~~PUDs~~asset itevaluation ~~expects~~and ~~to develop within the five-year time frame~~management. In addition, ~~lower~~Mr. ~~oil~~Dick ~~and~~is ~~natural~~an ~~gas~~active ~~prices~~participant ~~may~~in ~~cause~~industry ~~the~~reserve ~~Partnership’s PUDs to become uneconomic to develop~~seminars, ~~which~~professional ~~would~~industry ~~cause~~groups ~~the~~and ~~Partnership~~is toa ~~remove~~member ~~them~~of ~~from~~ the ~~proved~~Society ~~undeveloped~~of ~~category~~Petroleum Engineers.

~~Internal Controls~~The ~~Over~~Partnership’s ~~Reserve~~controls ~~Estimates~~over reserve estimates include engaging Pinnacle Energy as the Partnership’s independent petroleum engineer. The Partnership provided information about its oil and ~~Qualifications~~natural gas properties, including production profiles, prices and costs, to Pinnacle Energy, and they prepared estimates of ~~Technical~~the ~~Persons~~Partnership’s reserves attributable to the Partnership’s properties. All of the information regarding reserves in this annual report on Form 10-K is derived from the report of Pinnacle Energy, which is included as an exhibit to this annual report on Form 10-K.

~~The~~ ~~Partnership’s policies and practices regarding internal controls over the recording of reserves is structured to objectively and~~ 11 accurately estimate its oil and gas reserves quantities and present values in compliance with rules, regulations and guidance provided by the SEC, as well as established industry practices used by independent engineering firms and the Partnership’s peers, and in accordance with the SPE 2007 Standards promulgated by the Society of Petroleum Engineers. The Partnership engaged Pinnacle Energy Services, LLC (“Pinnacle Energy”) to prepare the reserve estimates for all of the Partnership’s assets for the year ended December 31, 2024 in this annual report. Pinnacle Energy founder J.P. Dick has over 30 years of experience in the oil and natural gas industry, with exposure to reserves and reserve related valuations and issues during that time and is a Registered Professional Engineer in the states of Texas and Oklahoma. Further qualifications include a Bachelor of Science in petroleum engineering, extensive internal and external reserve training, and asset evaluation and management. In addition, Mr. Dick is an active participant in industry reserve seminars, professional industry groups and is a member of the Society of Petroleum Engineers.

~~The~~ ~~Partnership’s~~ Table controls over reserve estimates include engaging Pinnacle Energy as the Partnership’s independent petroleum engineer. The Partnership provided information about its oil and natural gas properties, including production profiles, prices and costs, to Pinnacle Energy, and they prepared estimates of ~~the Partnership’s reserves attributable to the Partnership’s properties.~~Contents ~~All of the information regarding reserves in this annual report on Form 10-K is derived from the report of Pinnacle Energy, which is included as an exhibit to this annual report on Form 10-K.~~

11The Partnership’s management works closely with Pinnacle Energy to ensure the integrity, accuracy and timeliness of data that is furnished to them for their reserve estimation process as well as to review properties and discuss the methods and assumptions used by Pinnacle Energy in their preparation of the year-end reserve estimates. The Partnership also reviews the methods and assumptions used by Pinnacle Energy in the preparation of year-end reserve estimates and assesses them for reasonableness. The Board of Directors of the General Partner also meets with Partnership management to discuss matters and policies related to the Partnership’s reserves.

~~Index~~The Partnership’s methodologies include reviews of production trends, analogy to comparable properties, and/or volumetric analysis. Performance methods are preferred. Reserve estimates for proved undeveloped properties are based primarily on volumetric analysis or analogy to offset production in the same or similar fields. The Partnership applies and maintains internal controls, including but not limited to the following, to ensure the reliability of reserves estimations:

~~The Partnership~~● no employee’s ~~management~~compensation ~~works~~is ~~closely~~tied ~~with Pinnacle Energy~~ to ~~ensure~~ the ~~integrity,~~amount ~~accuracy and timeliness~~ of ~~data~~reserves ~~that~~booked; is● ~~furnished to~~the ~~them~~Partnership ~~for~~follows ~~their~~comprehensive ~~reserve~~SEC-compliant ~~estimation~~internal ~~process~~policies ~~as well as~~ to ~~review~~determine ~~properties~~ and ~~discuss~~report ~~the~~proved ~~methods~~reserves; ~~and~~● ~~assumptions~~reserve ~~used~~estimates byare ~~Pinnacle Energy~~made inby ~~their~~experienced ~~preparation~~reservoir ofengineers ~~the~~or ~~year-end~~under ~~reserve~~their ~~estimates.~~direct ~~The~~supervision; ~~Partnership~~● ~~also~~annual ~~reviews~~review by the ~~methods~~Board ~~and~~of ~~assumptions~~Directors ~~used~~of bythe ~~Pinnacle Energy~~General inPartner of the ~~preparation~~Partnership’s of year-end reserve estimates ~~and~~prepared ~~assesses~~by ~~them~~Pinnacle ~~for~~Energy; ~~reasonableness.~~and ~~The~~● semi-annually, the Board of Directors of the General Partner ~~also~~ ~~meets~~reviews ~~with~~all ~~Partnership~~significant ~~management~~reserves tochanges ~~discuss matters~~ and ~~policies~~all ~~related~~new toproved ~~the~~undeveloped ~~Partnership’s~~ reserves additions.

~~The Partnership’s~~Total ~~methodologies~~Productive include reviews of production trends, analogy to comparable properties, and/or volumetric analysis. Performance methods are preferred. Reserve estimates for proved undeveloped properties are based primarily on volumetric analysis or analogy to offset production in the same or similar fields. The Partnership applies and maintains internal controls, including but not limited to the following, to ensure the reliability of reserves estimations:Wells

●The nofollowing ~~employee’s~~table ~~compensation~~sets isforth ~~tied~~information towith ~~the~~respect ~~amount of reserves booked; ● the Partnership follows comprehensive SEC-compliant internal policies~~ to ~~determine and report proved reserves; ● reserve estimates are made by experienced reservoir engineers or under their direct supervision; ● annual review by~~ the ~~Board of Directors of the General Partner of the~~ Partnership’s ~~year-end~~ownership ~~reserve~~interest ~~estimates~~in ~~prepared~~productive bywells ~~Pinnacle~~as ~~Energy;~~of ~~and~~December ~~● semi-annually~~31, ~~the Board of Directors of the General Partner reviews all significant reserves changes and all new proved undeveloped reserves additions.~~2025:

Total Productive Wells

	December 31, 2025
	Gross		Net
Oil wells:
Sanish Field		317		75.4

~~The following~~Of ~~table sets forth information with respect to~~ the ~~Partnership’s~~total ~~ownership~~well ~~interest~~count infor ~~productive~~2025, ~~wells~~none asare ofmultiple ~~December 31, 2024:~~completions.

	December 31, 2024
	Gross		Net
Oil wells:
Sanish Field		317		75.4

Productive wells are producing wells and wells the Partnership deems mechanically capable of production, including shut-in wells, wells waiting for completion, plus wells that are drilled/cased and completed, but waiting for pipeline hook-up. At December 31, 2025, the Partnership had 309 currently producing wells and eight shut-in wells. A gross well is a well in which the Partnership owns a working interest. The number of net wells represents the sum of fractional working interests the Partnership owns in gross wells.

~~Of the~~Developed ~~total~~and ~~well~~Undeveloped ~~count~~Acreage ~~for 2024, none are multiple completions.~~Position

~~Productive wells~~The ~~are~~following ~~producing~~table ~~wells~~sets ~~and~~forth ~~wells~~information ~~the~~with ~~Partnership~~respect ~~deems~~to ~~mechanically~~the ~~capable~~Partnership’s ofgross ~~production,~~and ~~including~~net ~~shut-in~~developed ~~wells,~~and ~~wells~~undeveloped ~~waiting for~~oil ~~completion, plus wells that are drilled/cased~~ and ~~completed,~~natural ~~but~~gas ~~waiting~~acreage ~~for~~under ~~pipeline~~lease ~~hook-up.~~as Atof December 31, ~~2024~~2025, ~~the~~all ~~Partnership had~~of ~~312~~which ~~currently producing wells and five shut-in wells. A gross well~~ is alocated ~~well~~ in ~~which~~ the ~~Partnership~~State ~~owns a working interest. The number~~ of ~~net~~North ~~wells~~Dakota ~~represents~~in the ~~sum~~United ~~of fractional working interests the Partnership owns in gross wells.~~States:

Developed and Undeveloped Acreage Position

Acreage allocated to

developed properties

undeveloped wellsites

Total Acres

Gross

Net

Gross

Net

Gross

Net

Sanish Field, Mountrail County, ND

21,291

6,595

13,987

4,333

35,278

10,928

~~The following~~As ~~table~~is ~~sets~~customary ~~forth~~in ~~information~~the ~~with~~oil ~~respect~~and tonatural gas industry, the Partnership’s ~~gross~~can ~~and~~generally ~~net~~retain ~~developed~~an ~~and~~interest in undeveloped acreage through drilling activity that establishes commercial production sufficient to maintain the leases or by paying delay rentals during the remaining primary term of leases. The oil and natural gas ~~acreage~~leases in which the Partnership has an interest are for varying primary terms and, if production under a lease ascontinues offrom ~~December~~developed ~~31,~~lease ~~2024,~~acreage ~~all~~beyond ofthe ~~which~~primary term, the Partnership is ~~located~~entitled into hold the ~~State~~lease for as long as oil or natural gas is produced. The oil and natural gas properties consist primarily of ~~North~~oil ~~Dakota~~and natural gas wells and interests in ~~the~~developed ~~United~~leasehold ~~States:~~acreage.

Acreage allocated to developed properties

Acreage allocated to undeveloped wellsites

Total Acres

Gross

Net

Gross

Net

Gross

Net

Sanish Field, Mountrail County, ND

21,372

6,621

13,906

4,307

35,278

10,928

As is Table customary in the oil and natural gas industry, the Partnership can generally retain an interest in undeveloped acreage through drilling activity that establishes commercial production sufficient to maintain the leases or by paying delay rentals during the remaining primary term of ~~leases. The oil and natural gas leases in which the Partnership has an interest are for varying primary terms and, if production~~Contents under a lease continues from developed lease acreage beyond the primary term, the Partnership is entitled to hold the lease for as long as oil or natural gas is produced. The oil and natural gas properties consist primarily of oil and natural gas wells and interests in developed leasehold acreage.

12Undeveloped Acreage Expirations

~~Index~~The Partnership has no undeveloped acreage expirations as all acreage is held by production.

~~Undeveloped Acreage~~Delivery ~~Expirations~~Commitments

~~The~~ As of December 31, 2025, the Partnership ~~has~~had no ~~undeveloped~~commitments ~~acreage~~to ~~expirations~~deliver asa ~~all~~fixed ~~acreage~~quantity isof ~~held~~oil byor ~~production~~natural gas.

~~Delivery Commitments~~Marketing and Customers

As The market for the Partnership’s oil and natural gas production depends on factors beyond its control, including the extent of ~~December~~domestic 31production and imports of oil and natural gas, ~~2024~~the proximity and capacity of natural gas pipelines and other transportation facilities, the ~~Partnership~~demand ~~had~~for nooil ~~commitments~~and tonatural ~~deliver~~gas, athe ~~fixed~~marketing ~~quantity~~of competitive fuels and the effect of state and federal regulation. The oil orand natural gas industry also competes with other industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers.

~~Marketing~~ Chord, as the primary operator of Partnership’s properties, operates 99% of the Partnership’s wells and ~~Customers~~sold approximately 99% of the Partnership’s production on the Partnership’s behalf in 2025.

~~The market~~Title ~~for~~to the Partnership’s oil and natural gas production depends on factors beyond its control, including the extent of domestic production and imports of oil and natural gas, the proximity and capacity of natural gas pipelines and other transportation facilities, the demand for oil and natural gas, the marketing of competitive fuels and the effect of state and federal regulation. The oil and natural gas industry also competes with other industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers.Properties

~~Chord,~~As asis customary in the ~~primary~~Partnership’s ~~operator~~industry, a preliminary review of title records, which may include opinions or reports of appropriate professionals or counsel, was made at the time the Partnership’s acquired its properties. The Partnership believes that its title to all of the various interests set forth above is satisfactory and consistent with the standards generally accepted in the oil and gas industry, ~~operates~~subject ~~99%~~only to immaterial exceptions that do not detract substantially from the value of the interests or materially interfere with their use in the Partnership’s ~~wells~~operations. The interests owned by the Partnership may be subject to one or more royalty, overriding royalty, or other outstanding interests (including disputes related to such interests) customary in the industry. The interests may additionally be subject to obligations or duties under applicable laws, ordinances, rules, regulations, and ~~sold~~orders ~~approximately~~of ~~99%~~arbitral or governmental authorities. In addition, the interests may be subject to burdens such as net profits interests, liens incident to operating agreements and current taxes, development obligations under oil and gas leases, and other encumbrances, easements, and restrictions, none of which detract substantially from the ~~Partnership’s~~value ~~production~~of onthe interests or materially interfere with their use in the Partnership’s ~~behalf~~ ~~in 2024~~operations.

~~Title to Properties~~Insurance

~~As is~~Since ~~customary in~~ the Partnership’s ~~industry,~~is anot ~~preliminary~~the ~~review~~operator of ~~title~~any ~~records, which may include opinions or reports~~ of ~~appropriate professionals~~its ~~or counsel~~properties, ~~was made at~~ the ~~time the~~ Partnership ~~acquired~~relies ~~its~~on ~~properties.~~the ~~The~~insurance ~~Partnership believes that its title to all~~ of the ~~various~~operators ~~interests~~of ~~set~~its ~~forth~~properties, ~~above~~of iswhich ~~satisfactory and consistent with~~ the ~~standards~~Partnership’s ~~generally~~share ~~accepted~~of in the ~~oil~~cost ~~and~~is ~~gas~~allocated ~~industry, subject~~back ~~only~~ to ~~immaterial exceptions that do not detract substantially from~~ the ~~value~~Partnership ofthrough the ~~interests~~joint oroperating ~~materially~~agreement. ~~interfere~~The ~~with their use in the~~ Partnership’s ~~operations.~~operators ~~The~~have ~~interests~~insurance ~~owned~~policies bythat ~~the~~include ~~Partnership~~coverage ~~may~~for begeneral ~~subject~~liability ~~to one or more royalty, overriding royalty, or other outstanding interests~~ (~~including~~includes ~~disputes~~sudden ~~related~~and toaccidental ~~such interests~~pollution), ~~customary~~physical indamage ~~the industry. The interests may additionally be subject~~ to ~~obligations~~its oroil ~~duties~~and ~~under~~natural ~~applicable~~gas ~~laws~~properties, ~~ordinances,~~control ~~rules, regulations, and orders~~ of ~~arbitral or governmental authorities. In addition~~well, ~~the~~auto ~~interests may be subject to burdens such as net profits interests~~liability, ~~liens~~marine ~~incident to operating agreements and current taxes~~liability, ~~development~~worker’s ~~obligations~~compensation ~~under oil~~ and ~~gas~~employer’s ~~leases~~liability, ~~and~~among other ~~encumbrances, easements, and restrictions, none of which detract substantially from the value of the interests or materially interfere with their use in the Partnership’s operations~~things.

~~Insurance~~The Partnership re-evaluates the purchase of insurance, coverage limits and deductibles annually. Future insurance coverage for the oil and gas industry could increase in cost and may include higher deductibles or retentions. In addition, some forms of insurance may become unavailable in the future or unavailable on terms that are economically acceptable. No assurance can be given that the Partnership will be able to maintain insurance in the future at rates that the Partnership considers reasonable and the Partnership may elect to self-insure or maintain only catastrophic coverage for certain risks in the future.

Since the Partnership is not the operator of any of its properties, the Partnership relies on the insurance of the operators of its properties, of which the Partnership’s share of the cost is allocated back to the Partnership through the joint operating agreement. The Partnership’s operators have insurance policies that include coverage for general liability (includes sudden and accidental pollution), physical damage to its oil and natural gas properties, control of well, auto liability, marine liability, worker’s compensation and employer’s liability, among other things.Competition

The ~~Partnership~~ ~~re-evaluates~~oil ~~the~~and ~~purchase~~natural ofgas ~~insurance,~~industry ~~coverage~~is ~~limits~~highly ~~and~~competitive. ~~deductibles~~The ~~annually.~~Partnership ~~Future~~will ~~insurance~~encounter ~~coverage~~strong ~~for~~competition ~~the~~from independent oil and gas ~~industry~~companies, ~~could~~master ~~increase~~limited inpartnerships ~~cost~~ and ~~may~~from ~~include~~major ~~higher~~oil ~~deductibles~~and orgas ~~retentions.~~companies Inin ~~addition,~~contracting ~~some~~for ~~forms~~drilling ofequipment ~~insurance~~and ~~may~~arranging ~~become unavailable in~~ the ~~future~~services orof ~~unavailable~~trained ~~on terms that are economically acceptable~~personnel. NoMany ~~assurance~~of ~~can~~these becompetitors ~~given~~have ~~that~~financial ~~the~~and ~~Partnership~~technical ~~will be~~resources ~~able to maintain insurance in the future at rates that the Partnership considers reasonable~~ and ~~the~~staffs ~~Partnership~~substantially ~~may~~larger ~~elect~~than tothose ~~self-insure or~~of ~~maintain only catastrophic coverage for certain risks in~~ the ~~future~~Partnership.

~~Competition~~ 13

~~The~~ ~~oil~~ Table and natural gas industry is highly competitive. The Partnership will encounter strong competition from independent oil and gas companies, master limited partnerships and from major oil and gas companies in contracting for drilling equipment and arranging the services of ~~trained~~ ~~personnel. Many of these competitors have financial and technical resources and staffs substantially larger than those of the~~Contents ~~Partnership.~~

13The Partnership also may be affected by competition for drilling rigs, human resources and the availability of related equipment. In the past, the oil and natural gas industry has experienced shortages of drilling rigs, equipment, pipe and personnel, which have delayed development drilling and other exploitation activities and have caused significant price increases. The Partnership is unable to predict when, or if, such shortages may occur or how they would affect the Partnership’s development and exploitation program.

~~Index~~Seasonal Nature of Business

~~The Partnership~~Seasonal ~~also~~weather ~~may~~conditions beand ~~affected~~lease bystipulations ~~competition~~can ~~for~~limit the Partnership’s drilling ~~rigs,~~and ~~human~~producing ~~resources~~activities and ~~the~~other ~~availability~~operations ofin ~~related~~certain ~~equipment.~~areas Inwhere the ~~past,~~ ~~the~~Partnership ~~oil~~may ~~and~~acquire ~~natural~~producing ~~gas~~properties. ~~industry~~These ~~has~~seasonal ~~experienced~~anomalies ~~shortages~~can ofpose challenges for meeting the Partnership’s drilling ~~rigs,~~objectives and increase competition for equipment, ~~pipe~~supplies and personnel during the drilling season, which ~~have~~could ~~delayed development~~lead ~~drilling~~to shortages and ~~other~~increased ~~exploitation~~costs ~~activities~~or ~~and~~delay ~~have~~the ~~caused~~Partnership’s ~~significant~~operations. ~~price~~Generally, ~~increases.~~demand ~~The~~for ~~Partnership~~natural gas is ~~unable~~higher toin ~~predict when,~~summer orand ~~if,~~winter ~~such~~months. ~~shortages~~In ~~may~~addition, ~~occur~~certain ornatural ~~how~~gas ~~they~~users ~~would~~utilize ~~affect~~natural ~~the~~gas ~~Partnership’s~~storage ~~development~~facilities and ~~exploitation~~purchase ~~program~~some of their anticipated winter natural gas requirements during off–peak months. This can lessen seasonal demand fluctuations.

~~Seasonal Nature~~Environmental, ofHealth ~~Business~~and Safety Matters and Regulation

~~Seasonal weather~~The ~~conditions and lease stipulations can limit the~~ Partnership’s ~~drilling and producing activities and other~~ operations ~~in certain~~are ~~areas~~subject ~~where~~to ~~the~~stringent ~~Partnership may acquire producing properties. These seasonal anomalies can pose challenges for meeting the Partnership’s drilling objectives~~ and ~~increase~~complex ~~competition for equipment~~federal, ~~supplies~~state and ~~personnel~~local ~~during~~laws ~~the drilling season, which could lead to shortages~~ and ~~increased~~regulations ~~costs~~that orgovern ~~delay~~ the ~~Partnership’s~~oil ~~operations.~~and ~~Generally, demand for~~ natural gas ~~is higher in summer and winter months. In addition~~industry, ~~certain~~as ~~natural~~well ~~gas~~as ~~users~~regulations ~~utilize~~that ~~natural~~protect ~~gas~~the ~~storage~~environment ~~facilities~~from ~~and~~the ~~purchase~~discharge ~~some~~ of ~~their~~materials ~~anticipated~~into ~~winter~~the ~~natural~~environment. ~~gas requirements~~These ~~during~~laws ~~off–peak~~and ~~months.~~regulations ~~This~~may, ~~can~~among ~~lessen~~other ~~seasonal demand fluctuations.~~things:

~~Environmental~~● require the acquisition of various permits before drilling commences; ● require the installation of pollution control equipment in connection with operations; ● place restrictions or regulations upon the use or disposal of the material utilized in the Partnership’s operations; ● restrict the types, ~~Health~~ quantities and ~~Safety~~concentrations ~~Matters~~of various substances that can be released into the environment or used in connection with drilling, production and ~~Regulation~~transportation activities; ● limit or prohibit drilling activities on lands lying within wilderness, wetlands and other protected areas; ● require remedial measures to mitigate or remediate pollution from former and ongoing operations, and may also require site restoration, pit closure and plugging of abandoned wells; and ● require the expenditure of significant amounts in connection with worker health and safety.

These laws, rules and regulations may also restrict the rate of oil and natural gas production below the rate that would otherwise be possible. The ~~Partnership’s~~ ~~operations~~regulatory ~~are~~burden ~~subject~~on tothe ~~stringent~~oil and ~~complex~~natural gas industry increases the cost of doing business in the industry and consequently affects profitability. Additionally, Congress and federal, state and local agencies frequently revise environmental laws and regulations, ~~that~~and ~~govern~~such changes could result in increased costs for environmental compliance, such as waste handling, permitting, or cleanup for the oil and natural gas industry, asand ~~well~~could ashave ~~regulations~~a ~~that~~significant ~~protect~~impact on the ~~environment~~Partnership’s ~~from~~operating costs. In general, the ~~discharge~~oil ofand ~~materials~~natural ~~into~~gas industry has been the ~~environment~~subject of increased legislation and regulatory attention with respect to environmental matters. ~~These laws~~The trend of more expansive and ~~regulations~~stricter environmental regulation may, ~~among~~continue ~~other~~for ~~things:~~the long term.

●The ~~require~~following ~~the~~is ~~acquisition~~a summary of ~~various~~some ~~permits~~of ~~before drilling commences; ● require~~ the ~~installation~~existing oflaws, ~~pollution~~rules ~~control~~and ~~equipment in connection with operations; ● place restrictions or~~ regulations ~~upon~~to ~~the~~which ~~use or disposal of~~ the ~~material utilized in the~~ Partnership’s ~~operations;~~business ● restrict the types, quantities and concentrations of various substances that can be released into the environment or used in connection with drilling, production and transportation activities; ● limit or prohibit drilling activities on lands lying within wilderness, wetlands and other protected areas; ● require remedial measures to mitigate or remediate pollution from former and ongoing operations, ~~and~~are ~~may also require site restoration, pit closure and plugging of abandoned wells; and ● require the expenditure of significant amounts in connection with worker health and safety~~subject.

~~These laws,~~Solid ~~rules~~ and ~~regulations~~Hazardous ~~may~~Waste also restrict the rate of oil and natural gas production below the rate that would otherwise be possible. The regulatory burden on the oil and natural gas industry increases the cost of doing business in the industry and consequently affects profitability. Additionally, Congress and federal, state and local agencies frequently revise environmental laws and regulations, and such changes could result in increased costs for environmental compliance, such as waste handling, permitting, or cleanup for the oil and natural gas industry and could have a significant impact on the Partnership’s operating costs. In general, the oil and natural gas industry has been the subject of increased legislation and regulatory attention with respect to environmental matters. The trend of more expansive and stricter environmental regulation may continue for the long term.Handling

The ~~following~~ isfederal aResource ~~summary~~Conservation ofand ~~some~~Recovery ofAct, or RCRA, and comparable state statutes regulate the ~~existing~~generation, ~~laws~~transportation, ~~rules~~treatment, storage, disposal and cleanup of hazardous waste. Although oil and natural gas waste generally is exempt from regulations toas ~~which~~hazardous waste under RCRA, the Partnership’s ~~business~~expects that its operators will generate waste as a routine part of their operations ~~are~~that may be subject to RCRA. Although a substantial amount of the waste expected to be generated is regulated as non–hazardous solid waste rather than hazardous waste, there is no guarantee that the Environmental Protection Agency (“EPA”) or individual states will not adopt more stringent requirements for the handling of non–hazardous or exempt waste or categorize some non–hazardous or exempt waste as hazardous in the future.

~~Solid~~ ~~and Hazardous Waste Handling~~ 14

~~The~~ ~~federal~~ Table ~~Resource Conservation and Recovery Act, or RCRA, and comparable state statutes regulate the generation, transportation, treatment, storage, disposal and cleanup~~ of ~~hazardous waste. Although oil and natural gas waste generally is exempt from regulations as hazardous~~Contents waste under RCRA, the Partnership expects its operators to generate waste as a routine part of their operations that may be subject to RCRA. Although a substantial amount of the waste expected to be generated is regulated as non–hazardous solid waste rather than hazardous waste, there is no guarantee that the Environmental Protection Agency (“EPA”) or individual states will not adopt more stringent requirements for the handling of non–hazardous or exempt waste or categorize some non–hazardous or exempt waste as hazardous in the future.

14Comprehensive Environmental Response, Compensation and Liability Act

~~Index~~The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, imposes strict, joint and several liability for costs of investigation and remediation and for natural resource damages without regard to fault or legality of the original conduct, on certain classes of persons with respect to the release into the environment of substances designated under CERCLA as hazardous substances. These classes of persons, or so-called potentially responsible parties, or PRPs, include the current and past owners or operators of a site where the release occurred and anyone who disposed or arranged for the disposal of a hazardous substance found at the site. CERCLA also authorizes the EPA and, in some instances, third parties to take actions in response to threats to public health or the environment and to seek to recover from the PRPs the costs of such action. Many states have adopted comparable or more stringent statutes.

~~Comprehensive Environmental~~Although ~~Response~~CERCLA generally exempts “petroleum” from the definition of hazardous substance, ~~Compensation~~the Partnership expects that the operators will generate wastes that may fall within CERCLA’s definition of hazardous substance and ~~Liability~~may ~~Act~~dispose of these wastes at disposal sites owned and operated by others. Comparable state statutes may not provide a comparable exemption for petroleum, and there is no guarantee that federal law will not adopt more stringent requirements with respect to the petroleum substances. The Partnership may also be the owner of sites on which hazardous substances have been released. If contamination is discovered at a site on which the Partnership is or has been an owner or to which the Partnership sent hazardous substances, the Partnership could be liable for the costs of investigation and remediation and natural resources damages. Further, the Partnership could be required to suspend or cease operations in contaminated areas.

The ~~Comprehensive~~ ~~Environmental~~Partnership ~~Response,~~may ~~Compensation~~own ~~and~~producing ~~Liability~~properties ~~Act,~~that orhave ~~CERCLA,~~been ~~imposes~~used ~~strict,~~for ~~joint~~oil and ~~several~~natural ~~liability~~gas ~~for~~exploration ~~costs of investigation~~ and ~~remediation~~production ~~and~~ for ~~natural~~many ~~resource~~years. ~~damages~~Hazardous ~~without~~substances, ~~regard~~wastes ~~to fault~~ or ~~legality~~hydrocarbons ofmay ~~the~~have ~~original~~been ~~conduct,~~released on ~~certain classes~~or ofunder ~~persons~~the ~~with~~Partnership’s ~~respect~~properties, toor ~~the~~on ~~release~~or ~~into~~under ~~the~~other ~~environment~~locations, ofincluding ~~substances~~offsite ~~designated~~locations, ~~under~~where ~~CERCLA~~such ~~as hazardous~~ substances. ~~These classes~~have ofbeen ~~persons,~~taken orfor ~~so-called~~disposal. ~~potentially~~In ~~responsible parties~~addition, orsome ~~PRPs,~~of ~~include~~ the ~~current~~properties ~~and~~the ~~past~~Partnership ~~owners~~has oracquired ~~operators~~may ofhave abeen ~~site where~~operated ~~the~~by ~~release~~third ~~occurred~~parties ~~and~~or ~~anyone~~by ~~who~~previous ~~disposed~~owners or ~~arranged~~operators ~~for~~whose ~~the~~treatment and disposal of a hazardous ~~substance found at the site. CERCLA also authorizes the EPA and~~substances, ~~in some instances~~wastes, ~~third~~or ~~parties~~hydrocarbons towere ~~take~~not ~~actions~~under inPartnership ~~response~~control. toThese ~~threats~~properties ~~to public health or the environment~~ and to ~~seek to recover from~~ the ~~PRPs~~substances ~~the~~disposed ~~costs~~or ofreleased ~~such~~on ~~action.~~them ~~Many~~may ~~states~~be ~~have~~subject ~~adopted~~to ~~comparable~~CERCLA, orRCRA ~~more~~and ~~stringent~~analogous ~~statutes~~state laws.

~~Although CERCLA~~In ~~generally exempts “petroleum” from the definition of hazardous substance~~general, in the ~~course~~list of ~~the~~substances ~~Partnership’s operators’~~regulated ~~expected~~as ~~operations,~~hazardous ~~the~~under ~~operators~~CERCLA ~~will~~has ~~generate~~been ~~wastes~~expanding ~~that~~over ~~may~~time. ~~fall~~For ~~within~~example, ~~CERCLA’s~~in ~~definition~~May of2024, ~~hazardous substance~~the ~~and~~EPA ~~may~~published ~~dispose~~a offinal ~~these~~rule ~~wastes~~designating atperfluorooctanoic ~~disposal~~acid ~~sites~~(“PFOA”) ~~owned~~ and ~~operated~~perfluorooctanesulfonic byacid ~~others.~~(“PFOS”), ~~Comparable~~both ~~state~~forms ~~statutes~~of ~~may~~prevalent ~~not~~manufactured ~~provide~~chemicals ~~a comparable~~known ~~exemption~~as ~~for~~per- ~~petroleum,~~ and ~~there~~polyfluoroalkyl ~~is no guarantee that federal law will not adopt more stringent requirements with respect to the petroleum~~ substances., ~~The~~as ~~Partnership~~CERCLA ~~may also be the owner of sites on which~~ hazardous substances ~~have been released~~. IfThe ~~contamination is~~rulemaking ~~discovered~~requires atentities ato ~~site~~report onto ~~which~~regulators ~~the~~releases ~~Partnership~~of isPFOA or ~~has~~PFOS ~~been~~above anreportable ~~owner or to which the Partnership sent hazardous substances~~quantities, ~~the Partnership could be liable for the costs of investigation~~ and ~~remediation~~imposes ~~and~~new ~~natural~~cleanup ~~resources~~obligations ~~damages.~~for ~~Further,~~these ~~the Partnership could be required to suspend or cease operations in contaminated areas~~chemicals.

~~The~~ ~~Partnership may own producing properties that have been used for oil and natural gas exploration and production for many years. Hazardous~~ 15 substances, wastes or hydrocarbons may have been released on or under the Partnership’s properties, or on or under other locations, including offsite locations, where such substances have been taken for disposal. In addition, some of the properties the Partnership has acquired may have been operated by third parties or by previous owners or operators whose treatment and disposal of hazardous substances, wastes, or hydrocarbons were not under Partnership control. These properties and the substances disposed or released on them may be subject to CERCLA, RCRA and analogous state laws.

In ~~general,~~ Table ~~the list~~ of ~~substances regulated as hazardous under CERCLA has been expanding over time. For example, in May 2024, the EPA published~~Contents a final rule designating perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”), both forms of prevalent manufactured chemicals known as per- and polyfluoroalkyl substances (“PFAS”), as CERCLA hazardous substances. The rulemaking requires entities to report to regulators releases of PFOA or PFOS above reportable quantities, and imposes new cleanup obligations for these chemicals.

15In the future, the Partnership could be required to remediate property, including groundwater, containing or impacted by previously disposed wastes (including wastes disposed or released by prior owners or operators, or property contamination, including groundwater contamination by prior owners or operators) or to perform remedial plugging operations to prevent future or mitigate existing contamination.

~~Index~~Clean Water Act

~~In the~~The ~~future~~Federal Water Pollution Control Act, also known as the ~~Partnership~~Clean ~~could~~Water beAct, ~~required~~and analogous state laws impose restrictions and strict controls with respect to ~~remediate~~the ~~property~~discharge of pollutants, including ~~groundwater,~~spills ~~containing~~and orleaks ~~impacted~~of byproduced ~~previously~~water ~~disposed wastes~~and ~~(including~~other oil and natural gas wastes, ~~disposed~~into orstate ~~released~~waters byand ~~prior~~waters ~~owners~~of orthe ~~operators~~United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or ~~property~~an ~~contamination~~analogous state agency. The Clean Water Act also prohibits the discharge of dredge and fill material in regulated waters, including ~~groundwater~~wetlands, ~~contamination~~ unless authorized by ~~prior~~a ~~owners~~permit issued by the U.S. Army Corps of Engineers. Federal and state regulatory agencies can impose administrative, civil and criminal penalties, as well as require remedial or ~~operators)~~mitigation measures, for noncompliance with discharge permits or toother ~~perform~~requirements ~~remedial~~of ~~plugging~~the ~~operations~~Clean Water Act and analogous state laws and regulations. In the event of an unauthorized discharge of wastes, the Partnership may be liable for penalties and cleanup and response costs. The federal Clean Water Act only regulates surface waters. However, most of the state analogs to ~~prevent~~the ~~future~~Clean orWater ~~mitigate~~Act ~~existing~~also ~~contamination~~regulate discharges which impact groundwater.

In 2018, the EPA commenced a management study of oil and gas extraction wastewater from both conventional extraction and unconventional extraction such as hydraulic fracturing. The purpose of this study is to understand if support exists for new regulations that would allow for a broader discharge of oil and gas extraction wastewater directly to surface waters under the Clean Water Act’s National Pollutant Discharge Elimination System, in addition to the primary existing disposal methods of underground injection or discharge to centralized wastewater treatment facilities. The EPA produced a report of its findings in May 2020, which did not announce any new regulatory requirements regarding oil and gas extraction wastewater.

~~The~~ ~~Federal Water Pollution Control Act, also known as the Clean Water Act, and analogous state laws impose restrictions and strict controls~~ 16 with respect to the discharge of pollutants, including spills and leaks of produced water and other oil and natural gas wastes, into state waters and waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The Clean Water Act also prohibits the discharge of dredge and fill material in regulated waters, including wetlands, unless authorized by a permit issued by the U.S. Army Corps of Engineers. Federal and state regulatory agencies can impose administrative, civil and criminal penalties, as well as require remedial or mitigation measures, for noncompliance with discharge permits or other requirements of the Clean Water Act and analogous state laws and regulations. In the event of an unauthorized discharge of wastes, the Partnership may be liable for penalties and cleanup and response costs. The federal Clean Water Act only regulates surface waters. However, most of the state analogs to the Clean Water Act also regulate discharges which impact groundwater.

In ~~2018,~~ Table ~~the EPA commenced a management study~~ of ~~oil and gas extraction wastewater from both conventional extraction and unconventional~~Contents extraction such as hydraulic fracturing. The purpose of this study is to understand if support exists for new regulations that would allow for a broader discharge of oil and gas extraction wastewater directly to surface waters under the Clean Water Act’s National Pollutant Discharge Elimination System, in addition to the primary existing disposal methods of underground injection or discharge to centralized wastewater treatment facilities. The EPA produced a report of its findings in May 2020, which did not announce any new regulatory requirements regarding oil and gas extraction wastewater.

16In April 2020, the EPA and the U.S. Army Corps, under the first Trump administration, issued a navigable waters protection rule under the Clean Water Act, narrowing the definition of “waters of the United States” for which discharge permits would be required during development. In August 2021, the U.S. District Court for the District of Arizona vacated and remanded the new rule. Based on this ruling, in December 2022, the EPA and the U.S. Army Corps, under the Biden administration, finalized a rule that in practice restored a pre-2015, expansive definition of “waters of the United States”. This December 2022 rule was challenged by states and industry groups, and in May 2023, in a case called Sackett v. U.S. Environmental Protection Agency, the Supreme Court adopted a narrow test for wetlands covered by the Clean Water Act. In response to this decision, the EPA and the U.S. Army Corps issued a revised definition of “waters of the United States” that was meant to be expansive but also consistent with the Supreme Court’s ruling. On November 17, 2025, the EPA and the U.S. Army Corps, under the second Trump administration, proposed a new rule that defines “waters of the United States” more narrowly than the Biden-era rule. This latest rule may be the subject of litigation and, to the extent that any future judgments or rules expand the scope of the Clean Water Act’s jurisdiction, we could face increased costs and delays with respect to obtaining permits for activities in jurisdictional waters of the United States, including wetlands.

~~Index~~Safe Drinking Water Act and Hydraulic Fracturing

~~In April~~Many ~~2020,~~of the ~~EPA~~properties ~~and~~ the ~~U.S.~~Partnership ~~Army~~owns ~~Corps~~will ~~issued~~require aadditional ~~navigable~~drilling ~~waters~~operations ~~protection~~to ~~rule~~fully ~~under~~develop the ~~Clean~~reserves ~~Water~~attributable ~~Act,~~to ~~narrowing~~ the ~~definition of “waters of the United States” for which discharge permits would be required during development~~properties. InHydraulic ~~August~~fracturing ~~2021,~~involves the ~~U.S. District~~injection ~~Court for the District~~ of ~~Arizona vacated and remanded the new rule. Based on this ruling~~water, insand ~~December 2022, the EPA~~ and ~~the U.S.~~chemicals ~~Army~~under ~~Corps~~pressure ~~finalized~~into aformations ~~rule~~to ~~that~~fracture ~~in practice restored~~ the ~~old~~surrounding ~~definition.~~rock ~~This December 2022 rule was challenged by states~~ and ~~industry groups,~~stimulate ~~and in May 2023, in a case called Sackett v~~production. ~~U.S.~~Hydraulic ~~Environmental~~fracturing ~~Protection~~activities ~~Agency,~~are ~~the~~typically ~~United~~regulated ~~States Supreme Court adopted a narrow test for wetlands covered~~ by ~~the~~state ~~Clean~~oil ~~Water Act. In response to this decision, the EPA~~ and ~~the~~gas ~~U.S.~~commissions ~~Army~~but ~~Corps~~not ~~issued~~at ~~a revised definition of “waters of~~ the United States” that was meant to be consistent with the Supreme Court’s ruling. This revised definition, however, has been subject to legal challenges by states, industry groups and individual landowners. In June 2024, a federal ~~district~~ ~~court upheld the U.S. Army Corps’ revised decision~~level, ~~but~~as ~~other legal challenges remain ongoing. To~~ the ~~extent~~federal ~~that~~Safe ~~any future~~Drinking ~~rules expand the scope of the Clean~~ Water Act’s ~~jurisdiction,~~expressly weexcludes ~~could~~regulation ~~face~~of ~~increased~~these ~~costs~~fracturing ~~and~~activities ~~delays~~(except ~~with respect to obtaining permits~~ for fracturing activities ininvolving ~~jurisdictional~~the ~~waters~~use of ~~the United States, including wetlands~~diesel).

In prior sessions, Congress has considered legislation to amend the federal Safe Drinking Water Act to remove the exemption for hydraulic fracturing operations and ~~Hydraulic~~require ~~Fracturing~~reporting and disclosure of chemicals used by the oil and natural gas industry in the hydraulic fracturing process. This legislation has not passed. A number of states, local and regional regulatory authorities have or are considering hydraulic fracturing regulation and other regulations imposing new or more stringent permitting, disclosure and well construction requirements on hydraulic fracturing operations or restricting or banning hydraulic fracturing. Further, the EPA has issued an effluent limitations guideline prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned treatment plants.

~~Many of~~In December 2016, the ~~properties~~EPA released its final report on the ~~Partnership~~potential ~~owns~~impacts ~~will~~of ~~require~~hydraulic ~~additional~~fracturing ~~drilling~~on ~~operations~~drinking towater ~~fully~~resources, ~~develop~~concluding ~~the~~that ~~reserves~~“water ~~attributable~~cycle” toactivities ~~the properties.~~associated ~~Hydraulic~~with hydraulic fracturing ~~involves~~may ~~the~~impact ~~injection~~drinking water resources “under some circumstances,” including water withdrawals for fracturing in times or areas of low water, ~~sand~~availability; ~~and~~surface spills during the management of fracturing fluids, chemicals ~~under~~or ~~pressure~~produced ~~into~~water; ~~formations~~injection toof ~~fracture~~fracturing ~~the~~fluids ~~surrounding rock~~into ~~and~~wells ~~stimulate~~with ~~production.~~inadequate ~~Hydraulic~~mechanical integrity; injection of fracturing ~~activities~~fluids ~~are~~directly ~~typically~~into ~~regulated~~groundwater byresources; ~~state~~discharge ~~oil~~of inadequately treated fracturing wastewater to surface waters; and ~~gas~~disposal ~~commissions~~or ~~but~~storage ~~not~~of atfracturing ~~the federal~~wastewater ~~level,~~in asunlined ~~the~~pits. ~~federal~~This ~~Safe~~report ~~Drinking~~could ~~Water~~result ~~Act~~in ~~expressly~~additional ~~excludes~~regulatory ~~regulation~~scrutiny ofthat ~~these~~could ~~fracturing~~make ~~activities~~it ~~(except~~more ~~for~~difficult to perform hydraulic fracturing ~~activities~~ ~~involving~~and increase the ~~use~~Partnership’s costs of ~~diesel)~~compliance and business.

~~In prior~~If ~~sessions,~~new ~~Congress~~laws ~~has~~or ~~considered~~regulations ~~legislation~~imposing tosignificant ~~amend~~restrictions ~~the~~or ~~federal~~conditions ~~Safe~~on ~~Drinking~~hydraulic ~~Water~~fracturing ~~Act~~activities toare ~~remove~~adopted ~~the~~in ~~exemption~~areas ~~for~~where ~~hydraulic fracturing~~the ~~operations~~Partnership ~~and~~owns properties that require ~~reporting~~additional ~~and~~drilling, ~~disclosure~~the ofPartnership ~~chemicals~~could ~~used~~incur bysubstantial ~~the~~compliance ~~oil~~costs and ~~natural~~such ~~gas~~requirements ~~industry~~could inadversely ~~the~~delay ~~hydraulic~~or ~~fracturing process.~~restrict ~~This~~its ~~legislation~~ability ~~has~~to ~~not~~conduct ~~passed.~~fracturing Aactivities ~~number~~on ofits ~~states,~~assets. ~~local~~In ~~and~~December ~~regional~~2017, ~~regulatory~~the ~~authorities~~Bureau ~~have~~of orLand ~~are~~Management ~~considering~~(“BLM”) ~~hydraulic fracturing~~rescinded ~~regulation~~its ~~and~~own ~~other~~rule ~~regulations~~from ~~imposing~~2015 ~~new~~that orwould ~~more~~have ~~stringent~~required ~~permitting,~~oil ~~disclosure~~ and ~~well~~gas ~~construction~~companies ~~requirements on~~to ~~hydraulic~~seek ~~fracturing~~approval ~~operations~~from orBLM ~~restricting~~before orconducting ~~banning~~ hydraulic fracturing. ~~Further,~~operations ~~the~~on ~~EPA~~public ~~has~~lands ~~issued~~and anfor ~~effluent~~companies ~~limitations guideline~~to ~~prohibiting~~disclose the ~~discharge~~chemicals ofused ~~wastewater~~in ~~from~~fracking ~~onshore unconventional oil and natural gas extraction facilities to publicly owned treatment plants~~fluid.

~~In December~~Oil ~~2016,~~Pollution the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources, concluding that “water cycle” activities associated with hydraulic fracturing may impact drinking water resources “under some circumstances,” including water withdrawals for fracturing in times or areas of low water availability; surface spills during the management of fracturing fluids, chemicals or produced water; injection of fracturing fluids into wells with inadequate mechanical integrity; injection of fracturing fluids directly into groundwater resources; discharge of inadequately treated fracturing wastewater to surface waters; and disposal or storage of fracturing wastewater in unlined pits. This report could result in additional regulatory scrutiny that could make it more difficult to perform hydraulic fracturing and increase the Partnership’s costs of compliance and business.Act

~~If new~~The ~~laws~~primary orfederal ~~regulations~~law ~~imposing~~for ~~significant~~oil ~~restrictions~~spill liability is the Oil Pollution Act, or ~~conditions~~OPA, onwhich ~~hydraulic~~amends ~~fracturing~~and ~~activities~~augments ~~are~~oil ~~adopted~~spill inprovisions ~~areas~~of ~~where~~ the ~~Partnership~~Clean ~~owns~~Water ~~properties~~Act ~~that~~and ~~require~~imposes ~~additional~~certain ~~drilling,~~duties ~~the~~and ~~Partnership~~liabilities ~~could~~on ~~incur~~certain ~~substantial~~“responsible ~~compliance~~parties” ~~costs~~related to the prevention of oil spills and damages resulting from such ~~requirements could~~spills ~~adversely~~in ~~delay~~or threatening United States waters or ~~restrict~~adjoining ~~its~~shorelines. ~~ability~~A toliable ~~conduct~~“responsible ~~fracturing~~party” ~~activities~~includes onthe ~~its~~owner ~~assets.~~or Inoperator ~~December~~of ~~2017~~a facility, vessel or pipeline that is a source of an oil discharge or that poses the ~~Bureau~~substantial threat of ~~Land~~discharge, ~~Management (“BLM”)~~or ~~rescinded~~in ~~its~~the ~~own~~case ~~rule~~of ~~from~~offshore ~~2015~~facilities, ~~that~~the ~~would~~lessee ~~have~~or ~~required~~permittee ~~oil~~of the area in which a discharging facility is located. OPA assigns joint and ~~gas~~several ~~companies~~liability, without regard to ~~seek~~fault, ~~approval~~to ~~from~~each ~~BLM~~liable ~~before conducting~~party ~~hydraulic~~for ~~fracturing~~oil ~~operations~~removal oncosts ~~public~~and ~~lands~~a variety of public and ~~for~~private ~~companies~~damages. Although defenses exist to ~~disclose~~the liability imposed by OPA, they are limited. In the ~~chemicals~~event ~~used~~of inan ~~fracking~~oil ~~fluid~~discharge or substantial threat of discharge on properties it owns, the Partnership may be liable for costs and damages.

~~Oil~~ ~~Pollution Act~~ 17

~~The~~ ~~primary~~ Table ~~federal law for oil spill liability is the Oil Pollution Act, or OPA, which amends and augments oil spill provisions~~ of ~~the Clean~~Contents Water Act and imposes certain duties and liabilities on certain “responsible parties” related to the prevention of oil spills and damages resulting from such spills in or threatening United States waters or adjoining shorelines. A liable “responsible party” includes the owner or operator of a facility, vessel or pipeline that is a source of an oil discharge or that poses the substantial threat of discharge, or in the case of offshore facilities, the lessee or permittee of the area in which a discharging facility is located. OPA assigns joint and several liability, without regard to fault, to each liable party for oil removal costs and a variety of public and private damages. Although defenses exist to the liability imposed by OPA, they are limited. In the event of an oil discharge or substantial threat of discharge on properties it owns, the Partnership may be liable for costs and damages.

17Air Emissions

~~Index~~The operations of the Partnership’s operators are subject to the federal Clean Air Act, or CAA, and analogous state laws and local ordinances governing the control of emissions from sources of air pollution. The CAA and analogous state laws require new and modified sources of air pollutants to obtain permits prior to commencing construction. Major sources of air pollutants are subject to more stringent, federally imposed requirements including additional permits. Federal and state laws designed to control hazardous or toxic air pollutants, might require installation of additional controls. Administrative enforcement actions for failure to comply strictly with air pollution regulations or permits are generally resolved by payment of monetary fines and correction of any identified deficiencies. Alternatively, regulatory agencies could bring lawsuits for civil penalties or seek injunctive relief, requiring the Partnership to forego construction, modification or operation of certain air emission sources.

~~Air Emissions~~On April 17, 2012, the EPA issued final rules that subject oil and natural gas production, processing, transmission and storage operations to regulation. The EPA rules include standards for completions of hydraulically fractured natural gas wells. Before January 1, 2015, these standards required owners/operators to reduce volatile organic compound, or VOC, emissions from natural gas not sent to the gathering line during well completion either by flaring, using a completion combustion device, or by capturing the natural gas using green completions with a completion combustion device. Beginning January 1, 2015, operators must capture the natural gas and make it available for use or sale, which can be done through the use of “green completions.” The standards are applicable to newly fractured wells and also existing wells that are refractured. Further, the finalized regulations established specific new requirements for emissions from compressors, controllers, dehydrators, storage tanks, natural gas processing plants and certain other equipment.

~~The operations~~In ofAugust 2020, the ~~Partnership’s~~EPA ~~operators~~removed ~~are~~sources ~~subject~~in to the ~~federal~~transmission ~~Clean Air Act, or CAA,~~ and ~~analogous~~storage ~~state~~segment ~~laws~~from ~~and~~regulation ~~local ordinances~~under ~~governing~~ the ~~control~~2012 ofand ~~emissions~~2016 ~~from~~New ~~sources~~Source ofPerformance ~~air~~Standards ~~pollution.~~(“NSPS”) ~~The~~for ~~CAA~~the oil and ~~analogous~~natural ~~state~~gas ~~laws~~industry ~~require~~for ~~new~~ozone-forming VOCs and ~~modified sources~~for ofgreenhouse ~~air~~gases ~~pollutants~~(“GHGs”) tofrom ~~obtain permits prior to commencing construction~~methane. ~~Major~~On ~~sources~~June of30, ~~air pollutants are subject to more stringent~~2021, ~~federally~~ ~~imposed~~President ~~requirements~~Biden ~~including~~signed ~~additional~~into ~~permits.~~law ~~Federal~~a ~~and~~joint ~~state~~resolution ~~laws~~of ~~designed~~Congress todisapproving ~~control~~this ~~hazardous~~final orrule. ~~toxic~~The ~~air~~resolution ~~pollutants, might~~had ~~require~~the ~~installation~~effect of ~~additional~~reinstating ~~controls.~~the ~~Administrative~~2012 ~~enforcement~~and ~~actions~~2016 ~~for~~VOC ~~failure~~and tomethane ~~comply~~standards ~~strictly~~for ~~with~~the ~~air~~transmission ~~pollution regulations or permits are generally resolved by payment of monetary fines~~ and ~~correction~~storage ofsegment, ~~any~~as ~~identified~~well ~~deficiencies.~~as ~~Alternatively, regulatory~~the ~~agencies~~methane ~~could~~standards ~~bring lawsuits~~ for ~~civil penalties or seek injunctive relief, requiring~~ the ~~Partnership~~production toand ~~forego~~processing ~~construction, modification or operation of certain air emission sources~~segments.

~~On April~~In ~~17,~~December ~~2012~~2023, the EPA ~~issued~~announced a final ~~rules~~rule ~~that~~to ~~subject~~reduce ~~oil~~methane and ~~natural~~VOC ~~gas~~emissions ~~production,~~from ~~processing,~~the ~~transmission~~oil and ~~storage~~gas ~~operations to regulation~~sector. The ~~EPA~~rule ~~rules~~consists ~~include~~of ~~standards~~NSPS for ~~completions~~methane ofand ~~hydraulically~~VOCs ~~fractured~~emissions ~~natural~~from ~~gas~~new ~~wells.~~sources ~~Before~~and ~~January~~emissions 1,guidelines ~~2015, these~~for ~~standards~~states ~~required owners/operators~~ to ~~reduce~~follow ~~volatile~~in ~~organic~~developing ~~compound,~~implementation orplans ~~VOC,~~that ~~emissions~~will ~~from~~cover ~~natural~~existing ~~gas~~sources. ~~not~~Any ~~sent~~“new” tosources ~~the~~(those ~~gathering line~~constructed, ~~during~~modified ~~well~~or ~~completion~~reconstructed ~~either~~after byDecember ~~flaring~~6, ~~using~~2022) awill ~~completion~~need ~~combustion~~to ~~device,~~comply orwith ~~by capturing~~ the ~~natural~~2023 ~~gas using green completions with a completion combustion device~~NSPS. ~~Beginning~~Any ~~January~~“existing” 1,sources ~~2015,~~(those ~~operators~~constructed ~~must~~before ~~capture~~December ~~the natural gas and make it available for use or sale~~6, ~~which~~2022) ~~can~~will be ~~done~~subject ~~through~~to the ~~use of “green completions.” The~~ standards ~~are~~promulgated ~~applicable~~pursuant to ~~newly~~the ~~fractured~~state ~~wells and~~implementation ~~also~~plans. ~~existing~~States ~~wells~~have ~~that~~two ~~are~~years ~~refractured.~~from ~~Further,~~ the ~~finalized~~rule’s ~~regulations~~effective ~~established~~date ~~specific~~to ~~new~~submit ~~requirements~~implementation ~~for~~plans ~~emissions from~~to ~~compressors,~~the ~~controllers~~EPA, ~~dehydrators,~~and ~~storage~~companies ~~tanks,~~have ~~natural~~three ~~gas~~years ~~processing~~from ~~plants~~this ~~and~~submission ~~certain~~date ~~other~~to ~~equipment~~comply.

~~In August~~The ~~2020~~December 2023 rule, for the ~~EPA~~first ~~removed~~time, extends the categories of sources incovered ~~the~~by ~~transmission~~methane and ~~storage~~VOC ~~segment~~emission ~~from~~standards ~~regulation~~to ~~under~~flared ~~the~~gas, ~~2012~~compressors ~~and~~at ~~2016~~centralized ~~New~~tank ~~Source~~batteries, ~~Performance Standards~~liquids ~~(“NSPS”)~~unloading, ~~for~~and ~~the~~process ~~oil~~pumps. ~~and~~Most routine flaring from natural gas ~~industry~~wells will be phased out through routing to a control device, or routing the flared gas to a sales line, using it for ~~ozone-forming~~fuel ~~VOCs~~or another beneficial purpose, or reinjecting it into a well. The rule requires that all wellhead sites and compressor stations are regularly monitored for ~~greenhouse~~leaks, ~~gases~~also (known as “~~GHGs~~fugitive emissions.”~~) from~~ ~~methane~~Wellhead-only sites are no longer excluded. OnThe ~~June~~type ~~30,~~and ~~2021~~frequency of monitoring are based on the amount and types of equipment at a site, ~~President~~rather ~~Biden~~than ~~signed~~on ~~into~~estimated ~~law~~emissions from a ~~joint~~site. ~~resolution~~Control ofdevices ~~Congress~~are ~~disapproving~~subject ~~this~~to ~~final~~continuous ~~rule~~monitoring and regular inspections. The ~~resolution had~~rule authorizes the ~~effect~~use of ~~reinstating~~new ~~the~~advanced ~~2012~~measurement ~~and~~technologies ~~2016~~such ~~VOC~~as ~~and~~on-site ~~methane~~sensor ~~standards~~networks ~~for~~and ~~the~~aerial ~~transmission~~flyovers ~~and~~using ~~storage~~remote-sensing ~~segment~~technologies, asalthough ~~well~~any asnew ~~the~~technologies ~~methane standards~~must ~~for~~be ~~the~~preapproved ~~production~~by ~~and~~the ~~processing segments~~EPA.

~~In December~~A ~~2023,~~novel ~~the~~feature ~~EPA~~of ~~announced~~the aDecember ~~final~~2023 rule tois ~~reduce~~the ~~methane~~establishment ~~and~~of ~~VOC emissions from~~ the ~~oil~~“Super ~~and~~Emitter ~~gas sector~~Program.” ~~The~~Under ~~rule~~the ~~consists~~program, ofthe ~~NSPS for~~EPA ~~methane~~will ~~and~~certify ~~VOCs~~third ~~emissions~~parties ~~from~~to ~~new~~monitor ~~sources~~for ~~and~~“super ~~emissions~~emitter ~~guidelines~~events.” ~~for~~The ~~states~~certified tothird ~~follow~~parties inare ~~developing~~authorized ~~implementation~~to ~~plans~~report ~~that will~~any ~~cover~~such ~~existing~~events ~~sources.~~to ~~Any~~the ~~“new”~~EPA, ~~sources~~and ~~(those~~the ~~constructed~~EPA, ~~modified~~upon orverification ~~reconstructed~~of ~~after~~the ~~December 6~~event, ~~2022)~~ will ~~need~~ torequire ~~comply with~~ the ~~2023~~owner ~~NSPS.~~or ~~Any~~operator ~~“existing”~~to ~~sources~~correct ~~(those~~the ~~constructed~~cause ~~before~~of ~~December~~the 6,event. ~~2022)~~The ~~will~~certified bethird ~~subject~~parties ~~to the~~are ~~standards~~not ~~promulgated~~allowed ~~pursuant~~ to ~~the~~enter ~~state~~an ~~implementation~~owner ~~plans.~~or ~~States~~operator’s ~~have~~well ~~two~~site ~~years~~or ~~from~~other ~~the~~facility, ~~rule’s~~but ~~effective~~instead ~~date~~must touse ~~submit implementation~~EPA-approved ~~plans~~remote-sensing ~~to the EPA~~technologies, ~~and~~such ~~companies~~as ~~have~~those ~~three~~used ~~years~~on ~~from~~satellites ~~this~~or ~~submission~~in ~~date~~aerial ~~to comply~~surveys.

~~The December~~In ~~2023~~November ~~rule~~2018, ~~for~~ the ~~first~~EPA ~~time,~~revised ~~extends~~a ~~the~~previously ~~categories~~stayed of2009 ~~sources~~rule ~~covered~~defining bysite ~~methane~~aggregation ~~and~~for ~~VOC~~air ~~emission~~permitting ~~standards to flared gas, compressors at centralized tank batteries, liquids unloading, and process pumps~~purposes. ~~Most~~Under ~~routine~~this ~~flaring from natural gas wells will be phased out through routing to a control device~~rule, ~~or routing the flared gas to a sales line, using~~ it ~~for~~is ~~fuel~~possible ~~or another beneficial purpose, or reinjecting it into a well. The rule requires~~ that ~~all~~some ~~wellhead~~ sites ~~and~~could ~~compressor~~require ~~stations~~additional ~~are~~permitting ~~regularly~~under ~~monitored~~the ~~for leaks~~CAA, ~~also known~~an asoutcome ~~“fugitive~~that ~~emissions.”~~could ~~Wellhead-only~~result ~~sites~~in ~~are~~costs ~~no longer excluded. The type~~ and ~~frequency~~delays ~~of monitoring are based on the amount and types of equipment at a site, rather than on estimated emissions from a site. Control devices are subject~~ to ~~continuous monitoring and regular inspections. The rule authorizes~~ the ~~use~~Partnership’s ~~of new advanced measurement technologies such as on-site sensor networks and aerial flyovers using remote-sensing technologies, although any new technologies must be preapproved by the EPA~~operations.

A ~~novel feature of the December 2023 rule is the establishment of the “Super Emitter Program.” Under the program, the EPA will~~ 18 certify third parties to monitor for “super emitter events.” The certified third parties are authorized to report any such events to the EPA, and the EPA, upon verification of the event, will require the owner or operator to correct the cause of the event. The certified third parties are not allowed to enter an owner or operator’s well site or other facility, but instead must use EPA-approved remote-sensing technologies, such as those used on satellites or in aerial surveys.

In ~~November~~ Table ~~2018,~~of ~~the EPA revised a previously stayed rule defining site aggregation for air permitting purposes. Under this rule, it is~~Contents ~~possible that some sites could require additional permitting under the Clean Air Act, an outcome that could result in costs and delays to the Partnership’s operations.~~

18In April 2024, the BLM issued a final rule that limits monthly royalty-free natural gas flaring at wells on federal and tribal lands and strengthens requirements to mitigate waste from these wells, including through the implementation of a leak detection and repair program. Several states brought legal challenges to the final rule. In September 2024, a federal court issued a preliminary injunction blocking enforcement of the rule in the plaintiff states of North Dakota, Texas, Montana, Wyoming, and Utah. The rule remains in effect in the balance of the states that were not covered by the preliminary injunction. At the request of the Trump administration, the litigation is being held in abeyance pending the administration's review of the rule. In November 2025, the BLM announced that it was delaying enforcement of two provisions of the rule relating to flare measurement and sampling requirements as well as the submission of leak detection and repairs plan until December 2026.

~~Index~~In November 2021, the Department of Transportation finalized rules that brought, for the first time, significant miles of natural gas gathering pipelines under federal safety regulation and imposed new requirements to report incidents, including methane leaks, from these pipelines.

~~On November~~National ~~18,~~Environmental ~~2016,~~Policy the BLM published a final rule that was intended to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian leases. BLM’s rule was challenged and struck down in federal court in 2020. In April 2024, the BLM issued a new final rule that limits monthly royalty-free natural gas flaring at wells on federal and tribal lands and strengthens requirements to mitigate waste from these wells, including through the implementation of a leak detection and repair program. Several states brought legal challenges to the new final rule. In September 2024, a federal court issued a preliminary injunction blocking enforcement of the rule in the plaintiff states of North Dakota, Texas, Montana, Wyoming, and Utah, and the litigation remains ongoing. BLM is enforcing the new final rule in states that are not covered by the court order.Act

~~In November~~Oil ~~2021~~and natural gas exploration and production activities on federal lands may be subject to the National Environmental Policy Act, or NEPA, which requires federal agencies, including the Department of ~~Transportation~~the ~~finalized~~Interior, ~~rules~~to ~~that~~evaluate ~~brought~~major agency actions having the potential to significantly impact the environment. In the course of such evaluations, ~~for~~an agency will prepare an environmental assessment that assesses the ~~first~~potential ~~time~~direct, ~~significant~~indirect ~~miles~~and cumulative impacts of ~~natural~~a ~~gas~~proposed ~~gathering pipelines~~project ~~under~~and, ~~federal~~if ~~safety~~necessary, ~~regulation~~will prepare a more detailed environmental impact statement that may be made available for public review and ~~imposed~~comment. ~~new~~All proposed exploration and development plans on federal lands require governmental permits that are subject to the requirements of NEPA. This process has the potential to ~~report~~delay ~~incidents,~~or ~~including~~impose ~~methane~~additional ~~leaks,~~conditions ~~from~~upon ~~these~~the ~~pipelines~~development of oil and natural gas projects.

~~National~~ In May 2025, in a case called Seven County Infrastructure Coalition vs Eagle Country Colorado, the Supreme Court issued a ruling that is anticipated to result in more focused and timelier NEPA reviews. The Court emphasized that federal agencies that take the lead in NEPA reviews should consider specific proposed projects and not other future or geographically separate projects that may be built in the wake of the project being reviewed. The Court also held that federal agencies are not required to analyze the environmental impacts of projects they have no authority over; in the case before the Court, the U.S. Surface Transportation Board only needed to evaluate the effects of a railway and not upstream oil drilling or downstream oil refining that may occur later. The second Trump administration has taken steps that are anticipated to further narrow the scope and accelerate the timing of NEPA reviews. In January 2025, as part of the Unleashing American Energy executive order, the administration directed the Council of Environmental ~~Policy~~Quality, ~~Act~~or CEQ, to propose rescinding CEQ’s NEPA regulations. In September 2025, citing the Supreme Court’s decision in Seven County Infrastructure Coalition, CEQ issued guidance to federal agencies to revise their NEPA implementing procedures to expedite permitting approvals and ensure consistency across NEPA reviews. In January 2026, the Department of the Interior published a final rule that rescinds all CEQ regulations that implemented NEPA. With the regulations rescinded, the individual federal agency rules, guidance and policies, along with the CEQ guidance, will establish the parameters of NEPA reviews.

~~Oil and~~Climate ~~natural~~Change gas exploration and production activities on federal lands may be subject to the National Environmental Policy Act, or NEPA, which requires federal agencies, including the Department of Interior, to evaluate major agency actions having the potential to significantly impact the environment. In the course of such evaluations, an agency will prepare an environmental assessment that assesses the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed environmental impact statement that may be made available for public review and comment. All proposed exploration and development plans on federal lands require governmental permits that are subject to the requirements of NEPA. This process has the potential to delay or impose additional conditions upon the development of oil and natural gas projects.Legislation

~~The first~~More ~~Trump~~stringent ~~administration~~federal ~~EPA~~and ~~issued~~state laws regulations that significantly changed how a NEPA analysis is conducted. Key changes included eliminating cumulative impact analysis, revising the definition of effects, narrowing what actions are subject to NEPA review, and allowing project proponents a greater role in the environmental review of their own projects. In April 2022, the Biden administration finalized Phase 1 of a planned two-part NEPA rulemaking effort. The Phase 1 rule reversed most of the rollbacks introduced through the previous Trump-era regulations. Itrelating ~~provides agencies with more flexibility~~ to ~~define~~climate ~~the~~change ~~purpose~~ and ~~need~~GHG ofemissions amay ~~proposed~~be ~~action,~~adopted ~~and~~in ~~to work with project proponents and communities to mitigate environmental harm by analyzing alternative designs and approaches; establishes NEPA procedures as a floor rather than a ceiling; restoring~~ the ~~ability~~future ~~of federal agencies to tailor their NEPA procedures to meet agency-specific needs;~~ and ~~restores~~could ~~and~~cause ~~clarifies~~ the ~~definitions~~Partnership ~~of direct, indirect, and cumulative effects~~ to ~~include~~incur ~~environmental~~material ~~impacts~~expenses ~~related~~in tocomplying ~~climate change~~with ~~and environmental justice~~them. InBoth ~~May~~houses ~~2024, the Biden administration finalized the Phase 2 rule. This rule accelerates the deployment~~ of ~~clean~~Congress ~~energy~~have ~~projects~~considered bylegislation ~~potentially~~to ~~exempting~~reduce ~~them~~emissions ~~from the requirement~~ of ~~issuing environmental impact statements; require agencies to consider climate change effects and mitigative alternatives~~GHGs, ~~including,~~but ~~where~~federal ~~feasible,~~legislation ~~quantifying~~has GHG emissions; require agencies to consider environmental justice issues such as reducing disproportionate effects on communities; and remove onerous content-requirements on public comments to proposed projectspassed.

~~Climate Change~~In ~~Legislation~~2007, in Massachusetts vs the EPA, the Supreme Court found that GHGs meet the definition of air pollutant under the CAA and that the EPA could only avoid taking actions with respect to GHGs if it determined they do not contribute to climate change or if it provided a rationale for not making such a determination. In light of this ruling, in December 2009, the EPA issued the Endangerment Finding, finding that six GHGs threaten public health and welfare. This triggered an obligation for the EPA to issue GHG emissions standards for new vehicles and engines. The EPA also determined that the Endangerment Finding enabled it to regulate GHG emissions from stationary sources. In 2015, the EPA issued regulations governing GHG emissions from new and existing power plants. These regulations were repealed and replaced in the first Trump administration. In 2024, the Biden administration promulgated new GHG rules for power plants.

~~More stringent~~In ~~laws~~February ~~and~~2026, ~~regulations~~the ~~relating~~second toTrump ~~climate~~administration ~~change~~repealed ~~and~~the ~~GHG~~EPA’s ~~emissions~~2009 ~~may~~Endangerment beFinding. ~~adopted~~In inrepealing the ~~future~~Endangerment ~~and~~Finding, ~~could~~the ~~cause~~EPA cited the ~~Partnership to~~June ~~incur~~2022 ~~material~~Supreme ~~expenses~~Court decision in ~~complying~~a ~~with~~case ~~them~~called West Virginia v. ~~Both~~U.S. ~~houses~~Environmental ofProtection ~~Congress~~Agency. ~~have~~In ~~considered~~this ~~legislation~~case, the Supreme Court held that the “major questions” doctrine limits the EPA’s power to ~~reduce~~curtail GHG emissions ofby ~~GHGs,~~requiring ~~but no~~power ~~legislation~~plants ~~has~~to ~~yet~~shift ~~passed~~generation to lower emitted fuel sources. InThe ~~the~~case ~~absence~~involved ofa ~~comprehensive~~challenge by Republican-led states and coal companies to a federal ~~legislation~~court onruling that struck down a Trump-era EPA rule that relaxed GHG ~~emission~~requirements ~~control,~~for ~~the~~power plants. The EPA ~~attempted~~also tocited ~~require~~ the ~~permitting~~June of2024 ~~GHG~~Supreme ~~emissions;~~Court ~~although~~decision in a case called Loper Bright Enterprises v Raimondo, in which the Supreme Court ~~struck~~found ~~down~~that courts must uphold the ~~permitting~~“best” ~~requirements,~~reading itof ~~upheld~~ambiguous ~~the~~statutes ~~EPA~~instead of deferring to a regulatory agency’s ~~authority to~~reading. ~~control~~The ~~GHG~~EPA ~~emissions~~argued ~~when~~that athese ~~permit~~two iscases ~~required~~suggest ~~due~~that, tosince ~~emissions~~the ofCAA ~~other~~does ~~pollutants~~not mention GHGs or climate change explicitly, Congress did not intend for the EPA to regulate them.

~~The~~ ~~EPA has adopted a mandatory GHG emissions reporting program that imposes reporting and monitoring requirements on various types of facilities~~ 19 and industries including onshore and offshore oil and natural gas production, processing, transmission, storage, and distribution facilities. In May 2024, the EPA issued a final rule to strengthen, expand and update methane emissions reporting requirements for petroleum and natural gas systems under the GHG emissions reporting program. The final rule includes changes to reporting obligations that may involve expanded emissions monitoring and reporting requirements and changes to emissions calculation methodologies.

19 Table of Contents

~~Index~~As the Endangerment Finding was the prerequisite for the EPA regulating GHGs, its repeal creates uncertainty with respect to any regulation of GHGs by the EPA. A coalition of health and environmental groups is suing the EPA over the repeal, and states, including California and Massachusetts, have also indicated their intent to sue the EPA. Under the second Trump administration, the EPA has taken other steps to dismantle its regulation of GHGs. In 2009, the EPA adopted a mandatory GHG emissions reporting program that imposed reporting and monitoring requirements on various types of facilities and industries including onshore and offshore oil and natural gas production, processing, transmission, storage, and distribution facilities. In September 2025, the EPA proposed to end the 2009 GHG emissions mandatory reporting program for 47 of 48 covered industries (all but the petroleum and natural gas systems industries), and in February 2026 the EPA extended the deadline to report 2025 GHG emissions from March 31, 2026 to October 30, 2026.

~~The Biden~~In ~~administration~~addition ~~declared~~to ~~efforts~~possible tofederal ~~manage~~regulation, a number of states, individually and ~~control~~regionally ~~climate~~as ~~change~~well aas ~~priority~~some localities, ~~evidenced~~are byconsidering ~~the~~or ~~immediate~~have reimplemented GHG regulatory programs or other steps to reduce GHG emissions. These regional, state and local initiatives may result in so-~~commitment~~called ofcap and trade programs, under which overall GHG emissions are limited and GHG emissions are then allocated and sold, and possibly other regulatory requirements, that could result in the ~~United~~ ~~States~~Partnership incurring material expenses to ~~the~~comply, ~~Paris~~e.g., ~~Agreement~~by being required to purchase or to surrender allowances for GHGs resulting from its operations. The ~~second~~federal, ~~Trump~~regional ~~administration~~and ~~withdrew~~local regulatory initiatives also could adversely affect the ~~United~~marketability ~~States~~of ~~from~~the oil and natural gas the ~~Paris~~Partnership ~~Agreement,~~produces. asThe ~~was~~impact ~~done during~~of such future programs cannot be predicted, but the ~~first~~Partnership ~~Trump~~does ~~administration~~not expect its operations to be affected any differently than other similarly situated domestic competitors.

~~In January~~Endangered ~~2021,~~Species the first Trump administration EPA issued a rule requiring the EPA to find that an individual industry, such as the power sector or oil and gas operators, collectively emits at least 3% of total U.S. GHGs before setting emissions controls. Only the electric power sector would satisfy that requirement, according to the EPA’s own calculations. The Biden administration succeeded in its court petition to have this rule vacated and remanded.Act

~~Nonetheless, because~~The ofEndangered ~~the~~Species ~~lack~~Act of(“ESA”) ~~any~~was ~~comprehensive~~established ~~legislative~~to ~~program~~protect ~~addressing~~endangered ~~GHGs~~and threatened species. Pursuant to that act, ~~there~~if a species is ~~still~~listed aas ~~great~~threatened ~~deal~~or ofendangered, ~~uncertainty~~restrictions asmay be imposed on activities that would harm the species or that would adversely affect that species’ habitat. Similar protections are offered to ~~how~~migratory birds under the Migratory Bird Treaty Act. The Partnership’s operators may conduct operations on oil and ~~whether~~ ~~federal~~natural ~~regulation~~gas ofleases ~~GHGs~~that ~~might~~have ~~take~~species ~~place.~~that Inare ~~June~~listed ~~2022,~~and inspecies athat ~~case~~could ~~called~~be ~~West~~listed ~~Virginia~~as vthreatened or endangered under the act. The U.S. ~~Environmental~~Fish ~~Protection~~and ~~Agency,~~ Wildlife Service designates the ~~United~~species’ ~~States~~protected ~~Supreme~~habitat ~~Court~~as ~~held~~part ~~that~~of the ~~“major~~effort ~~questions”~~to ~~doctrine~~protect ~~limits~~the species. A protected habitat designation or the ~~EPA’s~~mere ~~power~~presence toof ~~curtail~~threatened ~~GHG~~or ~~emissions by~~endangered ~~requiring~~species ~~power~~could ~~plants~~result toin ~~shift~~material ~~generation~~restrictions to ~~lower~~use ~~emitted~~of ~~fuel~~the ~~sources.~~land ~~The~~and ~~case~~may ~~involved~~materially adelay ~~challenge~~or byprohibit ~~Republican-led~~land ~~states~~access for oil and ~~coal~~ ~~companies~~natural togas adevelopment. ~~federal~~It ~~court~~also ~~ruling~~may ~~that~~adversely ~~struck~~impact ~~down~~the avalue ~~Trump-era~~of ~~EPA~~the ~~rule~~affected properties that ~~relaxed~~the ~~GHG~~Partnership ~~requirements~~owns. ~~for~~The ~~power~~designation ~~plants~~of previously unprotected species as threatened or endangered in areas where the Partnership might conduct operations could result in limitations or prohibitions on its activities and could adversely impact the value of its leases.

~~Prior~~ In August 2019, the Fish and Wildlife Service finalized revisions to ~~this~~ESA ~~Supreme~~regulations ~~Court~~that ~~decision~~in part removed the requirement that listing, delisting or reclassification of species be made “without reference to possible economic or other impacts of such determination.” The rules also relaxed the ~~Biden~~protection ~~administration~~afforded ~~EPA~~to ~~had~~species ~~indicated~~listed ~~that~~as it“threatened” ~~was~~from ~~preparing~~those athat ~~new~~are ~~strategy~~endangered, with the protection for ~~regulation~~“threatened” species being made on more of ~~GHGs~~a case-by-case basis. ~~Even~~ ~~after~~In ~~this~~March ~~decision~~2024, the Biden~~-era~~ ~~EPA~~administration ~~was~~issued ~~committed~~three rules that revised the rules issued under the first Trump administration. The revisions include reinstating the rule that automatically extends protections for “endangered” species to ~~using~~“threatened” species, and the ~~full~~rule ~~scope~~requiring that listing, delisting or reclassification of ~~its~~species ~~authority~~be made “without reference to ~~combat~~possible ~~climate~~economic ~~change.~~or ~~Among~~other impacts of such determination” among other ~~things,~~ inchanges. In ~~September~~November ~~2022~~2025, the ~~EPA~~second ~~initiated~~Trump aadministration ~~pre-proposal~~proposed ~~docket~~rules ~~for~~that ~~public~~would ~~input~~largely onrescind ~~how~~the toBiden ~~regulate~~administration’s ~~GHG~~rules ~~emissions~~and ~~from~~revert ~~new~~to ~~and~~the ~~existing fuel-fired~~first ~~plants~~Trump administration’s August 2019 revisions, ~~with~~including ~~comments~~rescinding ~~due~~the inrule ~~March~~that ~~2023.~~delisting ~~Nevertheless,~~or ~~any~~reclassification ~~significant~~of ~~federal~~species ~~agency~~be ~~effort~~made without reference to ~~introduce~~possible ~~new~~economic ~~regulations limiting~~impacts ~~GHG~~and ~~emissions~~the isrule ~~likely~~that toautomatically ~~continue~~extended toprotections befor ~~challenged~~endangered inspecies ~~the~~to ~~courts~~threatened species.

In ~~addition to possible federal regulation, a number of states, individually and regionally as well as some localities, are considering~~ 20 or have implemented GHG regulatory programs or other steps to reduce GHG emissions. These regional, state and local initiatives may result in so-called cap and trade programs, under which overall GHG emissions are limited and GHG emissions are then allocated and sold, and possibly other regulatory requirements, that could result in the Partnership incurring material expenses to comply, e.g., by being required to purchase or to surrender allowances for GHGs resulting from its operations. The federal, regional and local regulatory initiatives also could adversely affect the marketability of the oil and natural gas the Partnership produces. The impact of such future programs cannot be predicted, but the Partnership does not expect its operations to be affected any differently than other similarly situated domestic competitors.

~~Endangered~~ ~~Species~~ Table ~~Act~~of Contents

~~The Endangered~~OSHA ~~Species Act (“ESA”) was established to protect endangered~~ and ~~threatened~~Other ~~species.~~Laws Pursuant to that act, if a species is listed as threatened or endangered, restrictions may be imposed on activities that would harm the species or that would adversely affect that species’ habitat. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. The Partnership’s operators may conduct operations on oil and natural gas leases that have species that are listed and species that could be listed as threatened or endangered under the act. The U.S. Fish and Wildlife Service designates the species’ protected habitat as part of the effort to protect the species. A protected habitat designation or the mere presence of threatened or endangered species could result in material restrictions to use of the land and may materially delay or prohibit land access for oil and natural gas development. It also may adversely impact the value of the affected properties that the Partnership owns. The designation of previously unprotected species as threatened or endangered in areas where the Partnership might conduct operations could result in limitations or prohibitions on its activities and could adversely impact the value of its leases.Regulation

~~In August~~The ~~2019,~~Partnership ~~the~~is ~~Fish~~subject ~~and Wildlife Service finalized revisions~~ to ~~ESA regulations that in part removed~~ the ~~requirement~~requirements ~~that listing, delisting or reclassification~~ of ~~species~~the befederal ~~made~~Occupational ~~“without~~Safety ~~reference~~and toHealth ~~possible~~Act, ~~economic~~ or ~~other~~OSHA, ~~impacts~~and ofcomparable ~~such~~state ~~determination~~statutes.~~” The~~ ~~rules~~These ~~also~~laws ~~relaxed~~and the ~~protection~~implementing ~~afforded~~regulations tostrictly ~~species~~govern ~~listed~~the asprotection ~~“threatened”~~of ~~from those that are endangered, with~~ the ~~protection~~ ~~for~~health ~~“threatened”~~and ~~species~~safety ~~being made on more~~ of aemployees. ~~case-by-case~~The ~~basis.~~OSHA Inhazard ~~March~~communication ~~2024~~standard, the ~~Biden~~EPA ~~administration~~community ~~issued three~~right–to–know ~~rules~~regulations ~~that revised the rules issued~~ under ~~the~~Title ~~first~~III ~~Trump~~of ~~administration.~~CERCLA ~~The~~and ~~revisions~~similar ~~include~~state ~~reinstating~~statutes ~~the~~require ~~rule~~ that ~~automatically extends protections for “endangered” species to “threatened” species, and~~ the ~~rule~~Partnership ~~requiring~~organize ~~that listing, delisting~~ and/or ~~reclassification~~disclose ofinformation ~~species~~about behazardous ~~made~~substances ~~“without~~used ~~reference to possible economic~~ or ~~other~~produced ~~impacts~~in ofthe ~~such~~Partnership’s ~~determination” among other changes~~operations.

20Other Regulation of the Oil and Natural Gas Industry

~~Index~~The oil and natural gas industry is extensively regulated by numerous federal, state, local and tribal authorities. Rules and regulations affecting the oil and natural gas industry are under constant review for amendment or expansion, which could increase the regulatory burden and the potential for financial sanctions for noncompliance. Also, numerous departments and agencies, both federal and state, are authorized by statute to issue rules and regulations binding on the oil and natural gas industry and its individual members, some of which carry substantial penalties for failure to comply. Although the regulatory burden on the oil and natural gas industry increases the Partnership’s cost of doing business and, consequently, affects the Partnership’s profitability, these burdens generally do not affect the Partnership any differently or to any greater or lesser extent than they affect other companies in the industry with similar types, quantities and locations of production.

~~OSHA and~~Drilling ~~Other Laws~~ and ~~Regulation~~Production

~~The Partnership~~Statutes, isrules ~~subject~~and toregulations ~~the~~affecting ~~requirements~~exploration ofand ~~the~~production ~~federal~~undergo ~~Occupational~~constant ~~Safety~~review and ~~Health~~often ~~Act~~are amended, orexpanded ~~OSHA~~and reinterpreted, ~~and~~making ~~comparable~~difficult ~~state~~the ~~statutes. These~~prediction of future costs or the impact of regulatory compliance attributable to new laws and statutes. The regulatory burden on the ~~implementing~~oil ~~regulations~~and ~~strictly~~natural ~~govern~~gas industry increases the ~~protection~~cost of ~~the~~doing ~~health~~business and, ~~safety~~consequently, ofaffects ~~employees~~its profitability. The ~~OSHA~~drilling ~~hazard~~and ~~communication standard,~~production operations performed by the ~~EPA~~Partnership’s ~~community~~contracted ~~right–to–know~~operators ~~regulations~~are ~~under~~subject ~~Title~~to ~~III~~various types of ~~CERCLA~~regulation ~~and~~at ~~similar~~the federal, state ~~statutes~~and ~~require~~local ~~that~~levels. These types of regulation include requiring permits for the ~~Partnership~~ ~~organize~~drilling of wells, drilling bonds and~~/or~~ ~~disclose~~reports ~~information~~concerning ~~about~~operations. ~~hazardous~~Most ~~materials~~states ~~used~~and orsome ~~produced~~counties and municipalities in which the Partnership’s ~~operations.~~operates also regulate one or more of the following:

~~Other Regulation~~● the location of wells; ● the ~~Oil~~method of drilling, completing and ~~Natural~~operating ~~Gas~~wells; ~~Industry~~● the surface use and restoration of properties upon which wells are drilled; ● the plugging and abandoning of wells; ● the marketing, transportation and reporting of production; ● notice to surface owners and other third parties; and ● produced water and waste disposal.

~~The oil~~State and ~~natural~~federal ~~gas~~regulations ~~industry~~are isgenerally ~~extensively~~intended ~~regulated~~to byprevent ~~numerous~~waste ~~federal,~~of ~~state,~~oil ~~local~~ and ~~tribal~~natural ~~authorities.~~gas, ~~Rules~~protect ~~and~~correlative ~~regulations affecting~~rights ~~the~~to produce oil and natural gas ~~industry~~between ~~are~~owners ~~under~~in ~~constant~~a ~~review~~common ~~for~~reservoir ~~amendment~~ or ~~expansion~~formation, ~~which~~control ~~could increase~~ the ~~regulatory burden~~amount ~~and~~of ~~the~~oil ~~potential for financial sanctions for noncompliance. Also, numerous departments~~ and ~~agencies,~~natural ~~both~~gas ~~federal~~produced ~~and state, are authorized~~ by ~~statute~~assigning toallowable ~~issue~~rates ~~rules~~of production and ~~regulations~~control ~~binding~~contamination onof the ~~oil~~environment. Pipelines and natural gas ~~industry~~plants ~~and~~operated ~~its~~by ~~individual~~other ~~members,~~companies ~~some of~~that ~~which~~provide ~~carry~~midstream ~~substantial~~services ~~penalties for failure~~ to ~~comply. Although~~ the ~~regulatory~~Partnership ~~burden~~are onalso ~~the~~subject ~~oil~~to ~~and natural gas industry increases~~ the ~~Partnership’s~~jurisdiction ~~cost~~ of ~~doing~~various ~~business~~federal, state and, ~~consequently~~local authorities, ~~affects~~which can affect the Partnership’s ~~profitability,~~operations. ~~these~~State ~~burdens~~laws ~~generally do~~also ~~not~~regulate ~~affect~~ the ~~Partnership~~size ~~any~~and ~~differently~~shape orof todrilling ~~any~~and ~~greater~~spacing units or ~~lesser~~proration ~~extent~~units ~~than~~governing ~~they affect other companies in~~ the ~~industry~~pooling ~~with similar~~of ~~types,~~oil ~~quantities~~ and ~~locations~~natural ofgas ~~production~~properties.

~~Drilling~~ States generally impose a production, ad valorem or severance tax with respect to the production and ~~Production~~sale of oil and natural gas within their respective jurisdictions. States do not generally regulate wellhead prices or engage in other, similar direct economic regulation, but there can be no assurance they will not do so in the future.

~~Statutes,~~ ~~rules and regulations affecting exploration and production undergo constant review and often are amended, expanded and reinterpreted,~~ 21 making difficult the prediction of future costs or the impact of regulatory compliance attributable to new laws and statutes. The regulatory burden on the oil and natural gas industry increases the cost of doing business and, consequently, affects its profitability. The drilling and production operations performed by the Partnership’s contracted operators are subject to various types of regulation at the federal, state and local levels. These types of regulation include requiring permits for the drilling of wells, drilling bonds and reports concerning operations. Most states and some counties and municipalities in which the Partnership operates also regulate one or more of the following:

● Table ~~the location~~ of wells; ● the method of drilling, completing and operating wells; ● the surface use and restoration of properties upon which wells are drilled; ● the plugging and abandoning of wells; ● the marketing, transportation and reporting of production; ● notice to surface owners and other third parties; and ● produced water and waste disposal.Contents

~~State and~~In ~~federal~~addition, ~~regulations~~a ~~are~~number ~~generally intended to prevent waste~~ of ~~oil~~states, ~~and~~such ~~natural~~as ~~gas,~~North ~~protect~~Dakota ~~correlative~~where ~~rights~~the toPartnership’s ~~produce~~properties ~~oil~~are located, and ~~natural~~ ~~gas~~some ~~between~~tribal ~~owners~~nations inhave aenacted ~~common~~surface ~~reservoir~~damage statutes, or ~~formation,~~SDAs. ~~control~~These ~~the~~laws ~~amount~~are ofdesigned ~~oil~~to ~~and~~compensate ~~natural~~for ~~gas~~damage ~~produced~~caused by ~~assigning~~oil ~~allowable rates of production~~ and ~~control~~natural ~~contamination~~gas ofdevelopment ~~the environment~~operations. ~~Pipelines~~Most ~~and~~SDAs ~~natural~~contain ~~gas~~entry ~~plants~~notification ~~operated~~and bynegotiation ~~other~~requirements ~~companies that provide midstream services~~ to ~~the~~facilitate ~~Partnership~~contact ~~are~~between ~~also~~operators ~~subject~~and tosurface ~~the~~owners/users. ~~jurisdiction~~Most ofalso ~~various~~contain ~~federal,~~bonding ~~state~~requirements and ~~local~~require ~~authorities,~~specific ~~which~~payments ~~can affect~~by the ~~Partnership’s~~operator ~~operations.~~to ~~State~~surface ~~laws~~owners/users ~~also~~in ~~regulate~~connection ~~the~~with ~~size~~exploration and ~~shape~~producing ofactivities. ~~drilling~~Costs and ~~spacing~~delays ~~units~~associated orwith ~~proration~~SDAs ~~units governing~~could ~~the~~impair ~~pooling~~operational ofeffectiveness ~~oil~~ and ~~natural~~increase ~~gas~~development ~~properties~~costs.

~~States generally~~The ~~impose~~Partnership awill ~~production,~~not adcontrol ~~valorem~~the oravailability ~~severance~~of ~~tax~~transportation ~~with~~and ~~respect~~processing tofacilities ~~the~~that ~~production~~may ~~and~~be ~~sale~~used ofin ~~oil~~the ~~and~~marketing ~~natural~~of ~~gas~~its ~~within their respective jurisdictions~~production. ~~States~~For doexample, ~~not~~the ~~generally~~Partnership ~~regulate~~may ~~wellhead~~have ~~prices~~to ~~or engage~~ shut–in ~~other,~~a ~~similar~~productive ~~direct~~natural ~~economic~~gas ~~regulation,~~well ~~but there~~because ~~can~~of bea nolack ~~assurance~~of ~~they~~available ~~will~~natural ~~not~~gas dogathering soor intransportation ~~the future~~facilities.

21If the Partnership conducts operations on federal, state or Indian oil and natural gas leases, these operations must comply with numerous regulatory restrictions, including various non–discrimination statutes, royalty and related valuation requirements, and certain of these operations must be conducted pursuant to certain on-site security regulations and other appropriate permits issued by BLM, Bureau of Safety and Environmental Enforcement, Bureau of Indian Affairs, tribal or other appropriate federal, state and/or Indian tribal agencies.

~~Index~~The Mineral Leasing Act of 1920, or the Mineral Act, prohibits ownership of any direct or indirect interest in federal onshore oil and natural gas leases by a foreign citizen or a foreign entity except through equity ownership in a corporation formed under the laws of the United States or of any U.S. State or territory, and only if the laws, customs, or regulations of their country of origin or domicile do not deny similar or like privileges to citizens or entities of the United States. If these restrictions are violated, the oil and natural gas lease can be canceled in a proceeding instituted by the United States Attorney General. The Partnership qualifies as an entity formed under the laws of the United States or of any U.S. State or territory. Although the regulations promulgated and administered by the BLM pursuant to the Mineral Act provide for agency designations of non–reciprocal countries, there are presently no such designations in effect. It is possible that the holders of the Partnership’s common units may be citizens of foreign countries and do not own their common units in a U.S. corporation or even if such interest is held through a U.S. corporation, their country of citizenship may be determined to be non–reciprocal countries under the Mineral Act. In such event, any federal onshore oil and natural gas leases held by the Partnership could be subject to cancellation based on such determination.

~~In addition,~~Federal aRegulation ~~number~~ of ~~states~~Oil, ~~such~~Natural asGas ~~North Dakota where the Partnership’s properties are located,~~ and ~~some~~Natural ~~tribal~~Gas ~~nations have enacted surface damage statutes~~Liquids, orincluding ~~SDAs.~~Regulation ~~These~~of laws are designed to compensate for damage caused by oil and natural gas development operations. Most SDAs contain entry notification and negotiation requirements to facilitate contact between operators and surface owners/users. Most also contain bonding requirements and require specific payments by the operator to surface owners/users in connection with exploration and producing activities. Costs and delays associated with SDAs could impair operational effectiveness and increase development costs.Transportation

The ~~Partnership~~ ~~will~~availability, ~~not~~terms ~~control~~and ~~the~~cost ~~availability~~of transportation service significantly affect sales of natural gas. The interstate transportation and ~~processing~~sale ~~facilities~~for ~~that~~resale ~~may~~of benatural ~~used~~gas inare ~~the~~subject ~~marketing~~to federal regulation, including regulation of ~~its~~the ~~production. For~~terms, ~~example~~conditions and rates for interstate transportation, storage and various other matters, primarily by the ~~Partnership~~Federal ~~may~~Energy ~~have~~Regulatory toCommission ~~shut–in~~(“FERC”). aThe ~~productive~~intrastate transportation, local distribution and retail sale of natural gas ~~well~~generally ~~because~~are ofsubject ato ~~lack~~state ofregulation. ~~available~~FERC’s regulations for interstate natural gas ~~gathering or~~transmission in some circumstances may also affect the intrastate transportation ~~facilities~~of natural gas.

~~If the~~FERC ~~Partnership~~regulates ~~conducts~~the ~~operations on federal~~rates, ~~state~~terms ~~or Indian oil~~ and ~~natural~~conditions ~~gas~~applicable ~~leases,~~to ~~these~~the ~~operations~~interstate ~~must~~transportation ~~comply with numerous regulatory restrictions, including various non–discrimination statutes, royalty and related valuation requirements, and certain~~ of ~~these~~natural ~~operations~~gas ~~must~~by bepipelines ~~conducted~~under ~~pursuant~~the toNatural ~~certain~~Gas ~~on-site~~Act ~~security~~(“NGA”) ~~regulations~~as ~~and~~well ~~other~~as ~~appropriate~~under ~~permits~~Section ~~issued~~311 ~~by BLM, Bureau~~ of ~~Safety~~the ~~and~~Natural ~~Environmental~~Gas ~~Enforcement,~~Policy ~~Bureau~~Act of ~~Indian Affairs, tribal or other appropriate federal, state and/or Indian tribal agencies~~1978.

~~The Mineral~~Under ~~Leasing~~FERC’s ~~Act~~current ofregulatory ~~1920~~regime, orinterstate ~~the Mineral Act, prohibits ownership of any direct or indirect interest in federal onshore oil and~~ natural gas ~~leases~~transportation byservices amust ~~foreign~~be ~~citizen~~provided oron aan ~~foreign~~open-access, ~~entity~~non-discriminatory ~~except~~basis ~~through~~at ~~equity~~cost-based ~~ownership~~rates ~~in a corporation formed under the laws of the United States~~ or ofat ~~any~~market-based ~~U.S.~~rates ~~State or territory, and only~~ if the ~~laws,~~transportation ~~customs,~~market orat ~~regulations~~issue ofis ~~their~~sufficiently ~~country of origin or domicile do not deny similar or like privileges to citizens or entities of the United States~~competitive. IfAmong ~~these~~other ~~restrictions are violated~~things, the ~~oil~~FERC-regulated ~~and~~tariffs, ~~natural gas lease can be canceled in a proceeding instituted by the United States Attorney General. The Partnership qualifies as an entity formed~~ under ~~the~~which ~~laws~~interstate ofpipelines ~~the~~provide ~~United~~such ~~States~~open-access ortransportation ofservice, ~~any~~contain ~~U.S.~~strict ~~State~~limits oron ~~territory. Although~~ the ~~regulations~~means ~~promulgated and administered~~ by ~~the~~which ~~BLM pursuant~~a toshipper ~~the~~releases ~~Mineral~~its ~~Act~~pipeline ~~provide~~capacity ~~for~~to ~~agency~~another ~~designations~~potential ~~of non–reciprocal countries~~shipper, ~~there~~which ~~are~~provisions ~~presently~~include ~~no such designations in effect. It is possible that the holders of the Partnership~~FERC’s ~~common~~“shipper-must-have-title” ~~units may be citizens of foreign countries and do not own their common units in a U~~rule.S. ~~corporation~~Violations orby ~~even if such interest is held through~~ a Ushipper (i.Se. ~~corporation~~, ~~their~~a ~~country~~pipeline customer) of ~~citizenship~~FERC’s ~~may be~~capacity ~~determined~~release torules beor ~~non–reciprocal~~shipper-must-have-title ~~countries~~rule ~~under the Mineral Act. In such event, any federal onshore oil and natural gas leases held by the Partnership~~ could be subject toa ~~cancellation~~shipper ~~based~~to onsubstantial ~~such~~penalties ~~determination~~from FERC.

~~Federal Regulation~~FERC also authorizes the construction and operation of ~~Oil~~interstate natural gas pipelines under Section 7 of the NGA. With respect to its review of applications for the construction and operation of interstate natural gas pipeline facilities under the NGA, ~~Natural~~FERC ~~Gas~~must comply with environmental review requirements of NEPA. In 2021, in an individual pipeline certificate proceeding, FERC announced that, upon reconsideration of its prior position, it will assess the significance of a proposed pipeline project’s GHG emissions and ~~Natural~~those ~~Gas~~emissions’ ~~Liquids~~contribution to climate change in fulfilling its obligations under NEPA. In 2022, ~~including~~FERC ~~Regulation~~issued a nonbinding draft GHG policy statement that would have encouraged project applicants to disclose a project’s reasonably foreseeable GHG emissions and stipulated that projects that would exceed 100,000 tons of ~~Transportation~~GHG emissions would require an environmental impact statement. However, the Trump administration withdrew the GHG policy statement in January 2025.

~~The~~ ~~availability, terms and cost of transportation service significantly affect sales of natural gas. The interstate transportation and sale~~ 22 for resale of natural gas are subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”). The intrastate transportation, local distribution and retail sale of natural gas generally are subject to state regulation. FERC’s regulations for interstate natural gas transmission in some circumstances may also affect the intrastate transportation of natural gas.

~~FERC~~ ~~regulates~~ Table ~~the rates, terms and conditions applicable to the interstate transportation~~ of ~~natural gas by pipelines under the Natural Gas~~Contents ~~Act (“NGA”) as well as under Section 311 of the Natural Gas Policy Act of 1978.~~

~~Under FERC’s~~Wellhead ~~current regulatory regime, interstate~~ natural gas ~~transportation~~sale ~~services~~prices ~~must~~are beunregulated. ~~provided~~Sales onof ancondensate ~~open-access,~~and ~~non-discriminatory basis~~natural atgas ~~cost-based~~liquids ~~rates~~are ornot atcurrently ~~market-based~~regulated ~~rates~~and ifare ~~the~~made ~~transportation~~at market atprices. ~~issue~~The isPartnership ~~sufficiently~~cannot ~~competitive.~~predict ~~Among~~whether ~~other~~new ~~things, the~~legislation ~~FERC-regulated~~to ~~tariffs,~~regulate ~~under~~natural ~~which~~gas ~~interstate~~might ~~pipelines~~be ~~provide~~proposed, ~~such~~what ~~open-access~~proposals, ~~transportation~~if ~~service~~any, ~~contain~~might ~~strict~~actually ~~limits~~be ~~on the~~enacted ~~means~~ by ~~which~~Congress aor ~~shipper~~the ~~releases~~various ~~its~~state ~~pipeline~~legislatures, ~~capacity~~and towhat ~~another~~effect, ~~potential~~if ~~shipper~~any, ~~which~~the ~~provisions~~proposals ~~include~~might ~~FERC’s “shipper-must-~~have~~-title” rule.~~ ~~Violations~~on bythe aoperations ~~shipper (i.e., a pipeline customer)~~ of ~~FERC’s~~the ~~capacity~~properties ~~release~~the ~~rules~~Partnership ~~or shipper-must-have-title rule could subject a shipper to substantial penalties from FERC~~owns.

~~FERC also~~Sales ~~authorizes~~of the ~~construction~~Partnership’s oil and ~~operation of interstate~~ natural gas ~~pipelines~~liquids ~~under~~are ~~Section~~also 7affected ofby the ~~NGA.~~availability, ~~With~~terms ~~respect~~and tocosts ~~its review~~ of ~~applications~~transportation. ~~for~~The ~~the~~rates, ~~construction~~terms, and ~~operation~~conditions ofapplicable to the interstate transportation of oil and natural gas ~~pipeline~~liquids ~~facilities~~by ~~under~~pipelines ~~the~~are ~~NGA,~~regulated ~~FERC~~by ~~must~~the ~~comply~~FERC ~~with environmental~~under ~~review~~the ~~requirements~~Interstate ofCommerce ~~NEPA~~Act (“ICA”). InThe ~~2021,~~FERC inhas animplemented ~~individual~~a ~~pipeline~~simplified ~~certificate~~and ~~proceeding,~~generally ~~FERC~~applicable ~~announced~~ratemaking ~~that,~~methodology ~~upon~~for ~~reconsideration of~~interstate ~~its~~oil ~~prior~~and ~~position,~~natural itgas ~~will~~liquids ~~assess~~pipelines to fulfill the ~~significance~~requirements of aTitle ~~proposed~~XVIII ~~pipeline~~of ~~project’s~~the ~~GHG~~Energy ~~emissions~~Policy ~~and~~Act ~~those~~of ~~emissions’ contribution~~1992 comprised of an indexing system to ~~climate~~establish ~~change~~ceilings inon ~~fulfilling~~interstate ~~its~~oil ~~obligations~~and ~~under~~natural ~~NEPA~~gas liquids pipeline rates. In ~~2022~~2017, FERC issued a ~~nonbinding~~declaratory ~~draft~~holding ~~GHG~~that ~~policy~~certain ~~statement that~~arrangements ~~would~~between ~~have~~an ~~encouraged~~oil ~~project~~pipeline ~~applicants~~and toits ~~disclose~~marketing aaffiliate ~~project~~would violate the ICA’s ~~reasonably~~anti-discrimination ~~foreseeable~~provisions. ~~GHG~~FERC ~~emissions~~held ~~and~~that ~~stipulated~~providing ~~that projects~~transportation ~~that~~service ~~would~~to ~~exceed~~affiliates ~~100,000~~at ~~tons~~what is essentially the variable cost of ~~GHG~~the ~~emissions~~movement, ~~would~~while ~~require~~requiring annon-affiliated ~~environmental~~shippers ~~impact~~to ~~statement.~~pay ~~However~~the (higher) filed tariff rate, would violate the ~~Trump~~ICA. ~~administration withdrew~~In ~~the~~2022, ~~GHG~~FERC ~~policy~~denied ~~statement~~a inrehearing ~~January~~of ~~2025~~this order.

22Gathering service, which occurs on pipeline facilities located upstream of FERC-jurisdictional interstate transportation services, is regulated by the states onshore and in state waters. Depending on changes in the function performed by particular pipeline facilities, FERC has in the past reclassified certain FERC-jurisdictional transportation facilities as non-jurisdictional gathering facilities and FERC has reclassified certain non-jurisdictional gathering facilities as FERC-jurisdictional transportation facilities. Any such changes could result in an increase to the Partnership’s costs of transporting gas to point-of-sale locations.

~~Index~~The pipelines used to gather and transport natural gas being produced by the Partnership are also subject to regulation by the U.S. Department of Transportation (“DOT”) under the Natural Gas Pipeline Safety Act of 1968, as amended (“NGPSA”), the Pipeline Safety Act of 1992, as reauthorized and amended (“Pipeline Safety Act”), and the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011. The DOT Pipeline and Hazardous Materials Safety Administration (“PHMSA”) has established a risk–based approach to determine which gathering pipelines are subject to regulation and what safety standards regulated gathering pipelines must meet.

~~Wellhead natural~~Transportation ~~gas~~of ~~sale~~the ~~prices~~Partnership’s ~~are~~oil, ~~unregulated.~~natural ~~Sales~~gas ofliquids ~~condensate~~ and ~~natural~~purity ~~gas~~components ~~liquids~~(ethane, ~~are~~propane, ~~not~~butane, ~~currently~~iso–butane, ~~regulated~~ and ~~are~~natural ~~made~~gasoline) atby ~~market prices.~~rail ~~The~~is ~~Partnership~~also ~~cannot~~subject ~~predict~~to ~~whether~~regulation ~~new~~by ~~legislation~~the toDOT’s ~~regulate~~PHMSA ~~natural~~and ~~gas~~the ~~might~~DOT’s beFederal ~~proposed,~~Railroad ~~what~~Administration ~~proposals,~~(“FRA”) ifunder ~~any,~~the ~~might actually~~Hazardous beMaterials ~~enacted~~Regulations, byincluding ~~Congress~~Emergency orOrders by the ~~various~~FRA. ~~state~~Revisions ~~legislatures,~~to ~~and~~PHMSA ~~what~~gathering ~~effect,~~line ifregulations ~~any,~~and ~~the~~liquids ~~proposals~~pipelines ~~might~~regulations ~~have~~could onresult ~~the~~in ~~operations of~~ the ~~properties~~Partnership ~~the~~incurring ~~Partnership~~significant ~~owns~~expenses.

~~Sales of~~Exports ~~the Partnership’s oil and natural gas liquids are also affected by the availability, terms and costs~~ of ~~transportation.~~US ~~The rates,~~Oil ~~terms,~~Production and ~~conditions~~Natural ~~applicable~~Gas to the interstate transportation of oil and natural gas liquids by pipelines are regulated by the FERC under the Interstate Commerce Act (“ICA”). The FERC has implemented a simplified and generally applicable ratemaking methodology for interstate oil and natural gas liquids pipelines to fulfill the requirements of Title XVIII of the Energy Policy Act of 1992 comprised of an indexing system to establish ceilings on interstate oil and natural gas liquids pipeline rates. In 2017, FERC issued a declaratory holding that certain arrangements between an oil pipeline and its marketing affiliate would violate the ICA’s anti-discrimination provisions. FERC held that providing transportation service to affiliates at what is essentially the variable cost of the movement, while requiring non-affiliated shippers to pay the (higher) filed tariff rate, would violate the ICA. In 2022, FERC denied a rehearing of this order.Production

~~Gathering service~~At the end of 2015, ~~which~~the ~~occurs~~U.S. onCongress ~~pipeline~~voted ~~facilities~~to ~~located~~end ~~upstream~~a decades-old prohibition of ~~FERC-jurisdictional~~exports ~~interstate~~of ~~transportation~~oil ~~services~~produced in the lower 48 states of the U.S. Under the NGA, isthe ~~regulated~~ U.S. Department of Energy (“DOE”) authorizes exports of U.S.-produced natural gas, including exports of natural gas by ~~the~~pipelines ~~states~~connecting ~~onshore~~U.S. ~~and~~natural gas production to pipelines in ~~state~~Mexico ~~waters~~and Canada. ~~Depending~~Under onthe ~~changes~~NGA, inFERC authorizes the ~~function~~construction ~~performed~~and byoperation ~~particular~~of natural gas pipeline facilities crossing the U.S. border used to export U.S.-produced natural gas. In addition, ~~FERC~~under ~~has in~~the NGA, the ~~past~~DOE ~~reclassified~~authorizes ~~certain~~the export of liquefied natural gas (“LNG”) through LNG export facilities, while FERC authorizes the siting and construction of onshore and near-~~jurisdictional~~shore ~~transportation~~LNG ~~facilities~~export asterminals. ~~non~~In 2020, DOE issued a Final Policy Statement discontinuing its practice of granting a standard 20-~~jurisdictional~~year ~~gathering~~export ~~facilities~~term ~~and~~for ~~FERC~~long-term authorizations to export domestically produced natural gas from the lower-48 states to countries with which the U.S. has ~~reclassified~~ ~~certain~~not ~~non~~entered into a free trade agreement providing for national treatment for trade in natural gas (“Non-~~jurisdictional~~FTA ~~gathering~~Countries”), ~~facilities~~and adopting a term through December 31, 2050, as ~~FERC~~the standard export term for long-~~jurisdictional~~term ~~transportation~~Non-FTA ~~facilities~~authorizations. ~~Any~~Under ~~such~~DOE’s ~~changes~~Policy ~~could result~~Statement, inholders of existing Non-FTA authorizations may file an ~~increase~~application with DOE requesting to amend its authorization to extend its export term through December 31, 2050. In January 2024, the ~~Partnership’s~~Biden ~~costs~~Administration ofpaused ~~transporting~~approvals ~~gas~~for pending and future applications to ~~point-~~export LNG from new projects while the DOE reviews the economic and environmental impacts of~~-sale~~ ~~locations~~those projects. In January 2025, the second Trump Administration rescinded this pause in approvals, and in February 2025, began to issue LNG export licenses.

~~The pipelines~~Other used to gather and transport natural gas being produced by the Partnership are also subject to regulation by the U.S. Department of Transportation (“DOT”) under the Natural Gas Pipeline Safety Act of 1968, as amended (“NGPSA”), the Pipeline Safety Act of 1992, as reauthorized and amended (“Pipeline Safety Act”), and the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011. The DOT Pipeline and Hazardous Materials Safety Administration (“PHMSA”) has established a risk–based approach to determine which gathering pipelines are subject to regulation and what safety standards regulated gathering pipelines must meet.Regulation

~~Transportation of~~In ~~the~~addition ~~Partnership’s~~to ~~oil,~~the ~~natural~~regulation ~~gas~~of ~~liquids~~oil and ~~purity~~natural ~~components~~gas ~~(ethane,~~pipeline ~~propane,~~transportation ~~butane~~rates, ~~iso–butane,~~the oil and natural ~~gasoline) by~~gas ~~rail~~industry generally is ~~also~~ subject to ~~regulation~~compliance bywith ~~the~~various ~~DOT’s~~other ~~PHMSA~~federal, state and ~~the~~local ~~DOT’s~~regulations ~~Federal~~and ~~Railroad~~laws. ~~Administration~~Some ~~(“FRA”) under~~of ~~the~~those ~~Hazardous~~laws ~~Materials~~relate ~~Regulations~~to occupational safety, ~~including~~resource ~~Emergency~~conservation ~~Orders~~and byequal ~~the~~employment ~~FRA~~opportunity. ~~Revisions~~The toPartnership ~~PHMSA~~does ~~gathering~~not ~~line~~believe ~~regulations~~that ~~and~~compliance ~~liquids pipelines~~with ~~regulations~~these ~~could~~laws ~~result~~will inhave ~~the~~a ~~Partnership~~material ~~incurring~~adverse ~~significant~~effect ~~expenses~~upon its operations.

~~Exports~~ ~~of US Oil Production and Natural Gas Production~~ 23

At ~~the~~ Table ~~end~~ of ~~2015, the U.S. Congress voted to end a decades-old prohibition of exports of oil produced in the lower 48 states of the U.S.~~Contents Under the NGA, the U.S. Department of Energy (“DOE”) authorizes exports of U.S.-produced natural gas, including exports of natural gas by pipelines connecting U.S. natural gas production to pipelines in Mexico and Canada. Under the NGA, FERC authorizes the construction and operation of natural gas pipeline facilities crossing the U.S. border used to export U.S.-produced natural gas. In addition, under the NGA, the DOE authorizes the export of liquefied natural gas (“LNG”) through LNG export facilities, while FERC authorizes the siting and construction of onshore and near-shore LNG export terminals. In 2020, DOE issued a Final Policy Statement discontinuing its practice of granting a standard 20-year export term for long-term authorizations to export domestically produced natural gas from the lower-48 states to countries with which the U.S. has not entered into a free trade agreement providing for national treatment for trade in natural gas (“Non-FTA Countries”), and adopting a term through December 31, 2050, as the standard export term for long-term Non-FTA authorizations. Under DOE’s Policy Statement, holders of existing Non-FTA authorizations may file an application with DOE requesting to amend its authorization to extend its export term through December 31, 2050. In January 2024, the Biden Administration paused approvals for pending and future applications to export LNG from new projects while the DOE reviews the economic and environmental impacts of those projects. In January 2025, the second Trump Administration rescinded this pause in approvals, and in February 2025, has begun to issue LNG export licenses.

~~Other Regulation~~Employees

~~In addition~~The toPartnership ~~the~~has ~~regulation~~no ofofficers, ~~oil~~directors ~~and~~or ~~natural~~employees. ~~gas~~Instead, ~~pipeline~~the ~~transportation~~General ~~rates,~~Partner manages the ~~oil~~day-to-day affairs of the Partnership, and ~~natural~~all ~~gas~~decisions ~~industry~~regarding ~~generally~~the ismanagement ~~subject to~~of ~~compliance~~the ~~with~~Partnership ~~various~~are ~~other~~made ~~federal,~~by ~~state~~the ~~and~~Board ~~local~~of ~~regulations~~Directors of the General Partner and ~~laws~~its officers. ~~Some~~The General Partner utilizes the services of ~~those~~qualified ~~laws~~third ~~relate~~parties toand ~~occupational~~consultants ~~safety~~for specific projects, ~~resource conservation~~such ~~and~~as ~~equal~~the ~~employment~~preparation ~~opportunity~~of the Partnership’s reserve estimates. The ~~Partnership~~Board of Directors of the General Partner does not ~~believe~~receive ~~that~~any ~~compliance~~salary, ~~with~~bonus ~~these~~or ~~laws~~consulting ~~will~~fees ~~have~~for aserving ~~material adverse~~on ~~effect~~the ~~upon~~board ~~its~~of ~~operations~~directors or managing the Partnership’s business. For more detail, refer to Part III, Items 10, 11 and 13, respectively, of this Form 10-K.

23General Corporate Information

~~Index~~Energy 11, L.P. is a Delaware limited partnership founded in 2013 with principal offices at 120 W 3rd Street, Suite 220, Fort Worth, Texas 76102. The Partnership’s phone number is (817) 882-9192 and its website address is www.energyeleven.com. The Partnership makes available, free of charge through its Internet website, its annual report on Form 10-K and quarterly reports on Form 10-Q, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the Partnership electronically files such material with, or furnishes it to, the SEC. Information contained on the Partnership’s website is not incorporated by reference into this report.

~~Employees~~ 24

~~The~~ ~~Partnership~~ Table ~~has no officers, directors or employees. Instead, the General Partner manages the day-to-day affairs~~ of ~~the Partnership,~~Contents and all decisions regarding the management of the Partnership are made by the Board of Directors of the General Partner and its officers. The General Partner utilizes the services of qualified third parties and consultants for specific projects, such as the preparation of the Partnership’s reserve estimates. The Board of Directors of the General Partner does not receive any salary, bonus or consulting fees for serving on the board of directors or managing the Partnership’s business. For more detail, refer to Part III, Items 10, 11 and 13, respectively, of this Form 10-K.

~~General Corporate~~Item ~~Information~~1A. Risk Factors

~~Energy 11,~~Risks ~~L.P.~~Related isto athe ~~Delaware limited partnership founded in 2013 with principal offices at 120 W 3rd Street, Suite 220, Fort Worth, Texas 76102. The~~ Partnership’s ~~phone number is (817) 882-9192 and its website address is www.energyeleven.com. The Partnership makes available~~Business, ~~free~~ ofFinancial ~~charge through its Internet website~~Condition, ~~its~~Results ~~annual~~of ~~report~~Operations ~~on Form 10-K~~ and ~~quarterly~~Cash reports on Form 10-Q, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the Partnership electronically files such material with, or furnishes it to, the SEC. Information contained on the Partnership’s website is not incorporated by reference into this report.Flows

24If oil, natural gas or other hydrocarbon prices decrease and/or remain depressed for a prolonged period cash flows from operations will decline and cash available for distributions will be impacted.

~~Index~~The Partnership’s revenue, profitability and cash flow depend upon the prices for oil, natural gas and other hydrocarbons. The prices the Partnership will receive for its production will be volatile and a drop in prices can significantly affect its financial results and adversely affect the Partnership’s ability to obtain credit, maintain its borrowing capacity and to repay indebtedness, if any, all of which can affect the Partnership’s ability to pay distributions. Changes in prices have a significant impact on the value of the Partnership’s reserves and on its cash flows. Prices may fluctuate widely in response to relatively minor changes in supply and demand, market uncertainty and a variety of additional factors that are beyond the Partnership’s control, such as:

~~Item 1A~~● the domestic and foreign supply of and demand for oil, natural gas and other hydrocarbons; ● regulations which may prevent or limit the export of oil, natural gas and other hydrocarbons; ● the amount of added production from development of unconventional natural gas reserves; ● the price and quantity of foreign imports of oil, natural gas and other hydrocarbons; ● the level of consumer product demand; ● adverse weather conditions, natural disasters and global health concerns, such as the COVID-19 coronavirus outbreak in early 2020; ● the value of the U.S. ~~Risk~~dollar ~~Factors~~relative to the currencies of other countries; ● 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, China 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 production and consumption; ● domestic and foreign governmental regulations and taxation; ● the impact of energy conservation efforts; ● the proximity and capacity of oil, natural gas and other hydrocarbon pipelines and other transportation facilities to its production; ● speculation as to the future price of oil and natural gas and the speculative trading of oil and natural gas futures contracts; ● price and availability of competitors’ supplies of oil and natural gas; and ● the price and availability of alternative fuels.

~~Risks Related~~Decreased oil, natural gas and other hydrocarbon prices will decrease Partnership revenues, and may also reduce the amount of oil, natural gas or other hydrocarbons that the Partnership can economically produce. If decreases occur, or if estimates of development costs increase, production data factors change or drilling results deteriorate, accounting rules may require the Partnership to write down, as a non–cash charge to earnings, the carrying value of its oil and natural gas properties for impairments. The Partnership is required to perform impairment tests on its assets whenever events or changes in circumstances lead to a reduction of the estimated useful life or estimated future cash flows that would indicate that the carrying amount may not be recoverable or whenever management’s ~~Business~~plans change with respect to those assets. The Partnership may incur impairment charges in the future, ~~Financial~~which ~~Condition~~could have a material adverse effect on its results of operations in the period taken and the Partnership’s ability to borrow funds under a credit facility, ~~Results~~which may adversely affect the Partnership’s ability to make cash distributions to holders of ~~Operations~~its common units and ~~Cash~~service ~~Flows~~its debt obligations.

If ~~oil, natural gas or other hydrocarbon prices decrease and/or remain depressed for a prolonged period cash flows from operations will~~ 25 ~~decline and cash available for distributions will be impacted.~~

~~The~~ ~~Partnership’s~~ Table revenue, profitability and cash flow depend upon the prices for oil, natural gas and other hydrocarbons. The prices the Partnership will receive for its production will be volatile and a drop in prices can significantly affect its financial results and adversely affect the Partnership’s ability to obtain credit, maintain its borrowing capacity and to repay indebtedness, all of ~~which can affect the Partnership’s ability to pay distributions. Changes in prices have a significant impact on the value of~~Contents the Partnership’s reserves and on its cash flows. Prices may fluctuate widely in response to relatively minor changes in supply and demand, market uncertainty and a variety of additional factors that are beyond the Partnership’s control, such as:

●The ~~the~~Partnership ~~domestic and foreign supply of and demand for oil, natural gas and other hydrocarbons; ● regulations which~~ may ~~prevent~~not orhave ~~limit~~sufficient ~~the~~cash ~~export~~from ofoperations ~~oil,~~following ~~natural gas and other hydrocarbons; ●~~ the ~~amount~~establishment of ~~added~~cash ~~production from development of unconventional natural gas~~ reserves; ~~● the price~~ and ~~quantity~~payment of ~~foreign~~fees ~~imports of oil, natural gas~~ and ~~other hydrocarbons; ● the level of consumer product demand; ● adverse weather conditions~~expenses, ~~natural~~including ~~disasters~~cost ~~and~~reimbursements ~~global health concerns, such as the COVID-19 coronavirus outbreak in early 2020; ● the value of the U.S. dollar relative~~ to the ~~currencies~~General ~~of other countries; ● overall domestic and global economic conditions; ● political and economic conditions and events in foreign oil and natural gas producing countries~~Partner, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, conditions in South America, China and Russia, and acts of terrorism or sabotage; ● the ability of members of the Organization of Petroleum Exporting Countries to ~~agree~~enable ~~to and maintain oil price and production controls; ● technological advances affecting energy production and consumption; ● domestic and foreign governmental regulations and taxation; ●~~ the ~~impact~~Partnership ~~of energy conservation efforts; ● the proximity and capacity of oil, natural gas and other hydrocarbon pipelines and other transportation facilities~~ to ~~its~~make ~~production;~~cash ●distributions ~~speculation as~~ to ~~the~~holders ~~future price~~ of ~~oil~~its ~~and~~common ~~natural~~units ~~gas~~under ~~and~~its ~~the~~cash ~~speculative~~distribution ~~trading of oil and natural gas futures contracts; ● price and availability of competitors’ supplies of oil and natural gas; and ● the price and availability of alternative fuels~~policy.

~~Decreased oil,~~The ~~natural gas and other hydrocarbon prices will decrease~~ Partnership ~~revenues, and~~ may ~~also~~not ~~reduce~~have ~~the~~sufficient ~~amount~~available ofcash ~~oil,~~each ~~natural~~month ~~gas or~~to ~~other~~enable ~~hydrocarbons~~it that the Partnership can economically produce. If decreases occur, or if estimates of development costs increase, production data factors change or drilling results deteriorate, accounting rules may require the Partnership to ~~write~~make ~~down, as a non–~~cash ~~charge~~ distributions to ~~earnings,~~ the ~~carrying~~holders ~~value~~ of ~~its~~common ~~oil and natural gas properties for impairments~~units. The ~~Partnership~~amount ~~is required to perform impairment tests on its assets whenever events or changes in circumstances lead to a reduction~~ of ~~the estimated useful life or estimated future~~ cash ~~flows that would indicate that~~ the ~~carrying~~Partnership ~~amount~~can ~~may~~distribute ~~not~~on beits ~~recoverable~~common orunits ~~whenever~~principally ~~management’s~~depends ~~plans~~upon ~~change with respect to those assets. The Partnership may incur impairment charges in~~ the ~~future,~~amount ~~which could have a material adverse effect on its results~~ of ~~operations~~cash in the ~~period taken and the~~ Partnership’s ~~ability~~generates tofrom ~~borrow~~its ~~funds under a credit facility~~operations, which ~~may~~will ~~adversely affect~~fluctuate ~~the~~from ~~Partnership’s~~month ~~ability~~ to ~~make~~month ~~cash~~based ~~distributions~~on, toamong ~~holders~~other ~~of its common units and service its debt obligations.~~things:

25● the amount of oil, natural gas and natural gas liquids the Partnership produces; ● the prices at which the Partnership sells its production; ● the Partnership’s ability to hedge commodity prices at economically attractive prices; ● the level of the Partnership’s capital expenditures, including its costs to participate in wells; ● the level of the Partnership’s operating and administrative costs including reimbursement to the General Partner; and ● the level of the Partnership’s interest expense, which depends on the amount of its indebtedness and the interest payable thereon.

~~Index~~In addition, the actual amount of cash the Partnership will have available for distribution will depend on other factors, some of which are beyond the Partnership’s control, including:

~~The Partnership~~● ~~may~~any ~~not~~contractual ~~have~~restrictions ~~sufficient~~on ~~cash~~the ~~from~~payment ~~operations~~of ~~following~~distributions contained in the ~~establishment~~Partnership’s credit facility agreement; ● the amount of cash reserves ~~and~~established ~~payment~~by the General Partner for the proper conduct of ~~fees~~the Partnership’s business and ~~expenses~~for capital expenditures, ~~including~~ ~~cost~~which ~~reimbursements~~may tobe substantial; ● the ~~General~~cost ~~Partner~~of operations, toinfrastructure ~~enable~~and drilling; ● the Partnership’s todebt ~~make~~service ~~cash~~requirements ~~distributions~~and other liabilities; ● fluctuations in the Partnership’s working capital needs; ● the Partnership’s ability to ~~holders~~borrow offunds; ~~its~~● ~~common~~the ~~units under~~timing ~~its~~and ~~cash~~collectability ~~distribution~~of ~~policy~~receivables; and ● prevailing economic conditions.

~~The Partnership~~As ~~may~~a ~~not~~result ~~have~~of ~~sufficient~~these ~~available~~factors, ~~cash each month to enable it to make cash distributions to~~ the ~~holders of common units. The~~ amount of cash the Partnership ~~can~~distributes ~~distribute~~to onholders of its common units ~~principally~~may ~~depends~~fluctuate ~~upon~~significantly ~~the amount of cash the Partnership generates~~ from ~~its operations, which will fluctuate from~~ month to month ~~based on, among other things:~~.

●The ~~the amount of oil, natural gas and natural gas liquids the~~ Partnership ~~produces;~~has ●limited ~~the~~control ~~prices~~over ~~at which~~ the ~~Partnership~~activities sells its production; ● the Partnership’s ability to hedge commodity prices at economically attractive prices; ● the level of the Partnership’s capital expenditures, including its costs to participate in wells; ● the level of the Partnership’s operating and administrative costs including reimbursement to the General Partner; and ● the level of the Partnership’s interest expense, which depends on ~~the amount of~~ its ~~indebtedness and the interest payable thereon~~properties.

~~In addition~~At December 31, 2025, Chord operates substantially all of the ~~actual~~properties in which the Partnership holds a working interest. The Partnership has limited ability to influence or control the operation or future development of the non-operated properties or the amount of ~~cash~~capital expenditures that it is required to fund. The failure of Chord, or the Partnership’s ~~will~~other ~~have~~operator, ~~available~~to ~~for~~adequately ~~distribution~~perform ~~will~~operations, ~~depend~~to comply with the applicable agreements or to act in ways that are in the Partnership’s best interest could reduce the Partnership’s production and revenues. The Partnership’s dependence on Chord and other ~~factors,~~working ~~some~~interest ofowners ~~which are~~for ~~beyond~~these projects and the Partnership’s limited ability to influence or control, ~~including:~~the operation and future development of these properties could materially adversely affect the realization of the Partnership’s targeted returns on capital in drilling or acquisition activities and lead to unexpected future costs.

●The ~~contractual~~Partnership ~~restrictions~~participates ~~on the payment of distributions contained~~ in ~~the~~oil ~~Partnership’s~~and ~~credit~~gas ~~facility~~leases ~~agreement;~~with ●third ~~the~~parties ~~amount~~who ~~of cash reserves established by the General Partner for the proper conduct of the Partnership’s business and for capital expenditures, which~~ may not be ~~substantial;~~able ●to ~~the~~fulfill ~~cost~~their ofcommitments ~~operations,~~to ~~infrastructure and drilling; ●~~ the Partnership’s debt service requirements and other liabilities; ● fluctuations in the Partnership’s working capital needs; ● the Partnership’s ability to borrow funds; ● the timing and collectability of receivables; and ● prevailing economic conditionsprojects.

~~As a~~The ~~result~~Partnership owns less than 100% of ~~these~~the ~~factors~~working interest in the Sanish Field Assets, and other parties own the ~~amount~~remaining portion of ~~cash~~the working interests. Financial risks are inherent in any operation where the cost of drilling, equipping, completing and operating wells is shared by more than one person or entity. The Partnership ~~distributes~~could be held liable for joint activity obligations of other working interest owners, such as nonpayment of costs and liabilities arising from the actions of other working interest owners. In addition, declines in oil, natural gas and NGL prices may increase the likelihood that some of the other working interest owners, particularly those that are smaller and less established, will not be able to ~~holders~~fulfill their joint activity obligations. Another working interest owner may be unable or unwilling to pay its share of project costs, and, in some cases, may declare bankruptcy. In the event any of the Partnership’s co-owners do not pay their share of such costs, the Partnership would likely have to pay its ~~common~~share ~~units~~of those costs, and the Partnership may ~~fluctuate~~be ~~significantly from~~unsuccessful ~~month~~in any efforts to ~~month~~recover these costs from its partners, which could materially adversely affect the Partnership’s financial position.

~~The~~ ~~Partnership has limited control over the activities on its properties.~~ 26

At ~~December~~ Table ~~31, 2024, Chord operates substantially all~~ of ~~the properties in which the Partnership holds a working interest. The Partnership~~Contents has limited ability to influence or control the operation or future development of the non-operated properties or the amount of capital expenditures that it is required to fund. The failure of Chord, or the Partnership’s other operator, to adequately perform operations, to comply with the applicable agreements or to act in ways that are in the Partnership’s best interest could reduce the Partnership’s production and revenues. The Partnership’s dependence on Chord and other working interest owners for these projects and the Partnership’s limited ability to influence or control the operation and future development of these properties could materially adversely affect the realization of the Partnership’s targeted returns on capital in drilling or acquisition activities and lead to unexpected future costs.

The Partnership’s ~~participates~~results infrom ~~oil~~operations ~~and gas leases with third parties who~~ may ~~not~~ be ~~able~~impacted toby ~~fulfill~~a ~~their~~lack ~~commitments~~of togeographical ~~the Partnership’s projects~~diversification.

~~The~~ All of the Partnership’s ~~owns~~assets ~~less~~are ~~than~~located ~~100%~~in concentrated areas of the ~~working~~Williston ~~interest~~Basin in ~~the~~Mountrail ~~Sanish~~County, ~~Field~~North ~~Assets,~~Dakota. ~~and~~While other ~~parties~~companies ~~own~~and ~~the~~limited ~~remaining~~partnerships ~~portion~~may ofhave the ~~working~~ ~~interests.~~ability ~~Financial~~to ~~risks~~manage ~~are~~their ~~inherent~~risk inby ~~any~~diversification, ~~operation~~the ~~where~~narrow ~~the~~geographic ~~cost~~focus of ~~drilling,~~the ~~equipping,~~Partnership’s ~~completing~~business ~~and~~means ~~operating~~that ~~wells is~~it ~~shared~~may bybe impacted more ~~than~~acutely ~~one~~by ~~person~~factors affecting its industry or ~~entity.~~the ~~The~~region ~~Partnership~~in ~~could~~which bethe ~~held~~Partnership ~~liable~~operates ~~for~~than ~~joint~~it ~~activity~~would ~~obligations~~if ofits ~~other~~asset ~~working~~locations ~~interest owners,~~were ~~such~~more asdiversified. ~~nonpayment~~The ofPartnership ~~costs~~may ~~and~~be ~~liabilities~~disproportionately ~~arising~~exposed ~~from~~to the ~~actions~~effects of ~~other~~regional ~~working~~supply ~~interest~~and ~~owners.~~demand ~~In addition~~factors, ~~declines in~~delays ~~oil,~~or ~~natural~~interruptions ~~gas~~of ~~and~~production ~~NGL~~from ~~prices~~wells ~~may~~in ~~increase~~this ~~the~~area ~~likelihood~~caused ~~that~~by ~~some~~governmental ofregulation, ~~the~~processing ~~other~~or ~~working~~transportation ~~interest~~capacity ~~owners~~constraints, ~~particularly~~market ~~those~~limitations, ~~that are~~weather ~~smaller~~events ~~and~~or ~~less~~interruption ~~established,~~of ~~will~~the ~~not~~processing beor ~~able~~transportation toof ~~fulfill~~oil ~~their~~or ~~joint~~natural ~~activity obligations~~gas. ~~Another~~Additionally, ~~working~~the ~~interest~~Partnership ~~owner~~ may be ~~unable~~ orexposed ~~unwilling~~ to ~~pay~~further ~~its~~risks, ~~share~~such ofas ~~project~~changes ~~costs, and,~~ in ~~some~~field-wide ~~cases,~~rules ~~may~~and ~~declare~~regulations ~~bankruptcy.~~that Incould ~~the~~cause ~~event any of~~ the Partnership~~’s co-owners~~ doto ~~not~~permanently ~~pay~~or ~~their~~temporarily ~~share~~shut-in all of ~~such costs, the Partnership would likely have to pay~~ its ~~share~~wells ofwithin ~~those~~the ~~costs,~~Williston ~~and~~Basin. ~~the~~The Partnership ~~may~~ bedoes ~~unsuccessful~~not incurrently ~~any~~intend ~~efforts~~ to ~~recover~~broaden ~~these~~the ~~costs~~geographic ~~from~~scope of its ~~partners,~~asset ~~which could materially adversely affect the Partnership’s financial position~~base.

26The Partnership depends on oil and natural gas transportation and processing facilities and other assets that are owned by third parties.

~~Index~~The marketability of Partnership oil and natural gas depends in part on the availability, proximity and capacity of pipeline systems, processing facilities, oil trucking fleets and rail transportation assets owned by third parties. The lack of available capacity on these systems and facilities, whether as a result of proration, physical damage, scheduled maintenance, legal or other reasons such as suspension of service due to legal challenges (see below regarding the Dakota Access Pipeline), could result in a substantial increase in costs, the shut-in of producing wells or the delay or discontinuance of development plans for the Sanish Field Assets. The negative effects arising from these and similar circumstances may last for an extended period of time.

The ~~Partnership’s~~ ~~results~~Dakota Access Pipeline (“DAPL”), a major pipeline running out of the Williston Basin, is subject to publicized ongoing litigation that could threaten its continued operation. In July 2020, the U.S. District Court for D.C. (“D.C. District Court”) ruled that the Dakota Access Pipeline, a significant pipeline that transports oil and natural gas from North Dakota fields, must suspend operations ~~may~~due beto ~~impacted~~inadequate environmental review previously performed by the U.S. Army Corps of Engineers. In August 2020, the ruling was stayed on appeal by the U.S. Court of Appeals for the D.C. Circuit (“D.C. Appellate Court”), allowing the pipeline to operate until a ~~lack~~further ruling was made. In January 2021, the D.C. Appellate Court affirmed the D.C. District Court’s decision. Further, in May 2021, the D.C. District Court denied an injunction that would have required a shutdown of ~~geographical~~the ~~diversification~~Dakota Access Pipeline while the U.S. Army Corps of Engineers (“Army Corps”) completes its comprehensive environmental review. In June 2021, the D.C. District Court dismissed the existing claims against the Dakota Access Pipeline and its operators, but stated the plaintiffs could renew challenges against the pipeline after the Army Corps releases its environmental impact statement ("EIS"). In February 2022, the United States Supreme Court declined to take a case brought by the Dakota Access Pipeline operators that challenged the requirement of an updated environmental review as upheld by lower courts. The Army Corps released its initial draft of its EIS in September 2023 and released the final EIS in December 2025. The release of the final EIS opened up a 30-day period for the Army Corps to adopt a final record of decision (ROD), which will determine whether DAPL is authorized to continue operating as is, required to change conditions, or even face shutdown or removal.

~~All~~ of A ~~the~~court-ordered ~~Partnership’s~~shut-down ~~assets~~remains ~~are located in concentrated areas of the Williston Basin in Mountrail County~~possible, ~~North Dakota. While other companies~~ and ~~limited~~there ~~partnerships~~is ~~may~~no ~~have~~guarantee ~~the ability to manage their risk by diversification, the narrow geographic focus of the Partnership’s business means~~ that itDAPL ~~may~~will be ~~impacted~~permitted more acutely by factors affecting its industry or the region in which the Partnership operates than it would if its asset locations were more diversified. The Partnership may be disproportionately exposed to ~~the~~resume ~~effects of regional supply and demand factors, delays~~ or ~~interruptions~~continue ofoperations ~~production~~following ~~from wells in this area caused by governmental regulation, processing or transportation capacity constraints, market limitations, weather events or interruption of~~ the ~~processing~~completion ~~or transportation~~ of ~~oil or natural gas. Additionally,~~ the ~~Partnership~~environmental ~~may~~review ~~be exposed to further risks, such as changes in field-wide rules and regulations that could cause the Partnership to permanently~~ or ~~temporarily~~any ~~shut-in~~outstanding ~~all of its wells within the Williston Basin~~litigation. ~~The Partnership does not~~ ~~currently intend to broaden the geographic scope of its asset base.~~

~~The Partnership~~Any ~~depends~~significant oncurtailment ~~oil~~in ~~and~~gathering ~~natural~~system ~~gas~~or ~~transportation~~pipeline ~~and~~capacity, ~~processing~~or ~~facilities~~the ~~and~~unavailability ~~other~~of ~~assets~~sufficient ~~that~~third-party ~~are~~trucking ~~owned~~or byrail ~~third~~capacity, ~~parties~~could adversely affect the Partnership’s results of operations and financial condition.

The ~~marketability~~ of Partnership ~~oil~~ and ~~natural gas depends in part on~~ the ~~availability,~~operators ~~proximity and capacity~~ of ~~pipeline~~its ~~systems,~~properties ~~processing facilities,~~may ~~oil~~encounter ~~trucking~~obstacles ~~fleets~~to ~~and~~marketing ~~rail~~the ~~transportation~~Partnership’s ~~assets~~share ~~owned by third parties. The lack~~ of ~~available~~oil, ~~capacity~~natural ongas ~~these systems~~ and ~~facilities, whether as a result of proration, physical damage, scheduled maintenance, legal or~~ other ~~reasons such as suspension of service due to legal challenges (see below regarding the Dakota Access Pipeline)~~hydrocarbons, which could ~~result~~adversely inimpact ~~a substantial increase in costs,~~ the ~~shut-in~~ ofPartnership’s ~~producing wells or the delay or discontinuance of development plans for the Sanish Field Assets~~revenues. ~~The negative effects arising from these and similar circumstances may last for an extended period of time.~~

The ~~Dakota~~ ~~Access~~marketability ~~Pipeline (“DAPL”), a major pipeline running out~~ of the ~~Williston~~Partnership’s ~~Basin,~~production iswill ~~subject~~depend toupon ~~publicized~~numerous ~~ongoing~~factors ~~litigation that~~beyond ~~could~~the ~~threaten~~Partnership’s ~~its continued operation. In July 2020~~control, ~~the~~including ~~U.S. District Court for D.C. (“D.C. District Court”) ruled that~~ the ~~Dakota~~availability ~~Access~~and ~~Pipeline,~~capacity aof ~~significant pipeline that transports oil and~~ natural gas ~~from~~gathering ~~North Dakota fields~~systems, ~~must~~pipelines ~~suspend~~and ~~operations due~~other totransportation ~~inadequate~~and ~~environmental~~processing ~~review~~facilities ~~previously~~owned ~~performed~~ by ~~the~~third Uparties.S. ~~Army~~Transportation ~~Corps~~space ofon ~~Engineers. In August 2020,~~ the ~~ruling~~gathering ~~was~~systems ~~stayed on~~and ~~appeal~~pipelines by the ~~U.S.~~Partnership ~~Court~~expects ofto ~~Appeals~~utilize ~~for~~is ~~the~~occasionally ~~D.C.~~limited ~~Circuit~~or ~~(“D.C.~~unavailable ~~Appellate~~due ~~Court”),~~to ~~allowing~~repairs ~~the~~or ~~pipeline~~improvements to ~~operate~~facilities ~~until a~~or ~~further~~due ~~ruling~~to ~~was~~space ~~made.~~being Inutilized ~~January~~by ~~2021,~~other ~~the~~companies ~~D.C.~~that ~~Appellate~~have ~~Court~~priority ~~affirmed~~transportation ~~the D~~agreements.C. ~~District~~The ~~Court~~Partnership’s ~~decision.~~access ~~Further,~~to intransportation ~~May 2021,~~and ~~the~~processing ~~D.C.~~options ~~District~~and ~~Court~~the ~~denied~~marketing ~~an injunction that would have required a shutdown~~ of the ~~Dakota~~Partnership’s ~~Access~~production ~~Pipeline~~can ~~while~~also ~~the~~be affected by U.S. ~~Army Corps~~federal ofand ~~Engineers~~state ~~(“Army~~regulation ~~Corps”)~~of ~~completes~~oil ~~its~~and ~~comprehensive~~natural ~~environmental~~gas ~~review.~~production Inand ~~June 2021~~transportation, ~~the~~as ~~D.C.~~well ~~District~~as ~~Court dismissed~~ the ~~existing~~other ~~claims~~risks ~~against~~discussed ~~the~~above. ~~Dakota~~The ~~Access~~availability ~~Pipeline~~of ~~and~~markets ~~its~~is ~~operators,~~beyond ~~but stated~~ the ~~plaintiffs~~Partnership’s ~~could~~control. ~~renew~~If ~~challenges against~~market ~~the~~factors ~~pipeline~~dramatically ~~after~~change, the ~~Army~~impact ~~Corps~~on ~~releases its environmental review report. In February 2022,~~ the ~~United~~Partnership’s ~~States~~revenues ~~Supreme~~could ~~Court declined~~be tosubstantial ~~take~~and acould ~~case~~adversely ~~brought~~affect by the ~~Dakota~~Partnership’s ~~Access~~ability ~~Pipeline~~to ~~operators~~produce ~~that~~and ~~challenged~~market ~~the~~oil, ~~requirement~~natural ofgas anand ~~updated~~natural ~~environmental~~gas ~~review as upheld by lower courts. In September 2023~~liquids, the ~~Army~~value ~~Corps released an initial draft~~ of ~~its~~the ~~environmental~~Partnership’s ~~impact~~common ~~statement~~units ~~that outlined possible outcomes~~ and ~~alternatives to~~ the ~~use~~Partnership’s ofability ~~DAPL,~~to ~~and~~pay ~~opened~~distributions upon ~~a public comment period. No date has been set for~~ the ~~release of the Army Corps~~Partnership’s ~~final~~common ~~report,~~units ~~although it is expected in 2025. A court-ordered shut-down remains possible,~~ and ~~there~~service ~~is no guarantee that DAPL will be permitted to resume or continue operations following~~ the ~~completion~~Partnership’s ofdebt ~~the environmental review or any outstanding litigation~~obligations.

~~Any~~ ~~significant curtailment in gathering system or pipeline capacity, or the unavailability of sufficient third-party trucking or rail capacity,~~ 27 ~~could adversely affect the Partnership’s results of operations and financial condition.~~

~~The~~ ~~Partnership~~ Table ~~and the operators~~ of ~~its properties may encounter obstacles to marketing the Partnership’s share of oil,~~Contents ~~natural gas and other hydrocarbons, which could adversely impact the Partnership’s revenues.~~

The ~~marketability~~ ~~of the~~ Partnership’s ~~production~~may ~~will~~be ~~depend~~required ~~upon~~to ~~numerous~~shut-in ~~factors~~wells ~~beyond~~or ~~the~~delay ~~Partnership’s~~initial ~~control,~~production ~~including the~~for ~~availability~~lack ~~and capacity~~ of ~~natural~~a ~~gas~~viable ~~gathering~~market ~~systems,~~or ~~pipelines~~because ~~and~~of ~~other transportation and processing facilities owned by third parties. Transportation space on~~ the ~~gathering~~inadequacy ~~systems and pipelines the Partnership expects to utilize is occasionally limited~~ or ~~unavailable~~unavailability ~~due~~of topipeline, ~~repairs~~gathering orsystem, ~~improvements~~processing, totreating, ~~facilities~~fractionation or ~~due~~refining tocapacity. ~~space~~When ~~being utilized by other companies~~ that ~~have~~occurs, ~~priority transportation agreements. The Partnership’s access to transportation and processing options and~~ the ~~marketing of the~~ Partnership’s ~~production can~~will ~~also~~ be ~~affected~~unable byto ~~U.S.~~realize ~~federal~~revenue ~~and~~from ~~state~~such ~~regulation~~wells ofuntil ~~oil and natural gas production and transportation, as well as~~ the ~~other risks~~inadequacy ~~discussed~~or ~~above.~~unavailability ~~The availability of markets~~ is ~~beyond the Partnership’s control~~remedied. IfThis ~~market~~can ~~factors~~result ~~dramatically~~in ~~change, the~~considerable ~~impact~~delays onfrom the ~~Partnership’s~~initial ~~revenues~~discovery ~~could~~of bea ~~substantial~~reservoir ~~and~~to ~~could adversely affect~~ the ~~Partnership’s~~actual ~~ability~~production toof ~~produce and~~the ~~market~~ oil, ~~natural gas~~ and natural gas ~~liquids,~~and ~~the~~realization ~~value~~ of ~~the Partnership’s common units and the Partnership’s ability to pay distributions on the Partnership’s common units and service the Partnership’s debt obligations~~revenues.

27The Partnership may need additional funding for the Sanish Field Assets in order to retain its full interest therein.

~~Index~~The Partnership anticipates that it will be obligated to significantly invest in drilling capital expenditures within the next five years to participate in drilling activity in the Sanish Field Assets without becoming subject to non-consent penalties under the joint operating agreements governing those properties. The Partnership will depend, at least in part, on cash flow from operations and/or availability under its credit facility to fund the anticipated capital expenditures needed to retain its full interest in the Sanish Field Assets. None of these funding sources is guaranteed, and if the Partnership is unable to obtain all of this funding, it may lose all or a portion of the assets acquired, and the Partnership’s results of operations will be negatively affected accordingly.

~~The Partnership~~Property ~~may~~interests bethat ~~required~~the toPartnership ~~shut-in~~has ~~wells~~purchased or ~~delay initial production for lack~~ of awhich ~~viable~~the ~~market~~Partnership orparticipates ~~because~~in of the ~~inadequacy~~development ~~or unavailability~~may ofnot ~~pipeline,~~produce ~~gathering~~as ~~system,~~projected ~~processing,~~and ~~treating, fractionation or refining capacity. When that occurs,~~ the Partnership ~~will~~ may be unable to realize ~~revenue~~reserve ~~from~~potential, ~~such~~which ~~wells~~could ~~until~~adversely ~~the~~affect ~~inadequacy or unavailability is remedied. This can result in considerable delays from~~ the ~~initial~~Partnership’s ~~discovery~~cash ofavailable afor ~~reservoir to the actual production of the oil and natural gas and realization of revenues~~distribution.

The Partnership’s completed acquisitions and any decision to participate in the development of a property the Partnership owns required or will require an assessment of recoverable reserves, title, future oil, natural gas and natural gas liquids prices, operating costs, potential environmental hazards, potential tax and ERISA liabilities, and other liabilities and similar factors. Reserve estimates may ~~need~~be ~~additional~~prepared ~~funding~~by the operators or third parties for the ~~Sanish~~operators ~~Field~~of ~~Assets~~properties. The Partnership has engaged and may engage its own third-party petroleum engineers to review such reserve estimate reports and provide the Partnership with an independent assessment of the reserve estimates. The process of estimating oil and gas reserves is complex. It requires interpretations of available technical data and various assumptions, including assumptions relating to economic factors such as future oil and gas prices, drilling and operating expenses, capital expenditures, taxes and the availability of funds, all of which can be difficult to predict with accuracy. As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate. Inspections may not always be performed on every well, and potential problems, such as ground water contamination and other environmental conditions and deficiencies in ~~order~~the mechanical integrity of equipment are not necessarily observable even when an inspection is undertaken. Any unidentified problems could result in material liabilities and costs that negatively impact the Partnership’s financial conditions and results of operations and its ability to ~~retain~~make cash distributions to holders of its ~~full~~common ~~interest~~units ~~therein~~and service its debt obligations.

~~The Partnership~~Additional ~~anticipates~~potential ~~that~~risks related ~~it will be obligated~~ to ~~significantly~~development invest in drilling capital expenditures within the next five years to participate in drilling activity in the Sanish Field Assets without becoming subject to non-consent penalties under the joint operating agreements governing those properties. The Partnership will dependinclude, atamong ~~least~~other in part, on cash flow from operations and/or availability under its credit facility to fund the anticipated capital expenditures needed to retain its full interest in the Sanish Field Assets. None of these funding sources is guaranteed, and if the Partnership is unable to obtain all of this funding, it may lose all or a portion of the assets acquired, and the Partnership’s results of operations will be negatively affected accordingly.things:

~~Property interests~~● ~~that~~incorrect assumptions regarding the ~~Partnership~~future ~~has~~prices ~~purchased~~of oil, natural gas and other hydrocarbons or the future operating or development costs of ~~which~~properties; ~~the~~● ~~Partnership~~incorrect ~~participates~~estimates inof the reserves and projected development ~~may~~results ~~not~~attributable ~~produce~~to asa ~~projected and~~property the Partnership ~~may~~owns; be● ~~unable~~drilling, tooperating ~~realize~~and ~~reserve~~other ~~potential,~~cost ~~which~~overruns; ~~could~~● ~~adversely~~an ~~affect~~inability to integrate successfully the properties the Partnership has acquired; ● the assumption of liabilities; ● the diversion of management’s ~~cash available~~attention ~~for~~from ~~distribution~~other business concerns; and ● losses of key employees.

~~The Partnership’s~~Compliance completed acquisitions and any decision to participate in the development of a property the Partnership owns required or will require an assessment of recoverable reserves, title, future oil, natural gas and natural gas liquids prices, operating costs, potential environmental hazards, potential tax and ERISA liabilities, and other liabilities and similar factors. Reserve estimates may be prepared by the operators or third parties for the operators of properties. The Partnership has engaged and may engage its own third-party petroleum engineers to review such reserve estimate reports and provide the Partnership with anfinancial ~~independent assessment of the reserve estimates. The process of estimating oil~~ and gas reserves is complex. It requires interpretations of available technical data and various assumptions, including assumptions relating to economic factors such as future oil and gas prices, drilling and operating expenses, capital expenditures, taxes and the availability of funds, all of which can be difficult to predict with accuracy. As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate. Inspections may not always be performed on every well, and potential problems, such as ground water contamination and other ~~environmental conditions~~covenants ~~and deficiencies~~ in the mechanical integrity of equipment are not necessarily observable even when an inspection is undertaken. Any unidentified problems could result in material liabilities and costs that negatively impact the Partnership’s ~~financial~~existing ~~conditions and~~or ~~results~~future ofdebt ~~operations~~agreements ~~and~~may ~~its~~reduce ~~ability~~operational toflexibility ~~make cash distributions to holders of its common units~~ and ~~service~~create ~~its~~default ~~debt obligations~~risk.

~~Additional potential~~The ~~risks~~Partnership’s atexisting indebtedness contains, and indebtedness that the ~~acquisition~~Partnership ~~date~~may enter into in the future likely will contain, customary covenants that may restrict the Partnership’s operations and ~~those~~restrict ~~related~~its ability to ~~development~~make ~~include~~distributions to holders of its common units. The Partnership’s failure to comply with the covenants in its existing or future indebtedness, ~~among~~or its inability to make required principal and interest payments, could cause a default under the applicable debt agreement, which could result in increased interest rates and the acceleration of the debt, requiring the Partnership to repay such debt with capital obtained from other ~~things:~~sources, which may not be available to the Partnership or may only be available on unfavorable terms. In addition, if the Partnership defaults on its existing indebtedness, its lender may take possession of the portion of the Sanish Field Assets securing such debt.

● incorrect assumptions regarding the future prices of oil, natural gas and other hydrocarbons or the future operating or development costs of properties; ● incorrect estimates of the reserves and projected development results attributable to a property the Partnership owns; ● drilling, operating and other cost overruns; ● an inability to integrate successfully the properties the Partnership has acquired; ● the assumption of liabilities; ● the diversion of management’s attention from other business concerns; and ● losses of key employees. 28

~~Compliance~~ ~~with~~ Table ~~financial~~of ~~and other covenants in the Partnership’s existing or future debt agreements may reduce operational flexibility and~~Contents ~~create default risk.~~

~~The Partnership’s~~Ongoing ~~existing~~inflationary ~~indebtedness~~pressures ~~contains,~~have ~~and~~resulted ~~indebtedness~~in ~~that~~and ~~the Partnership~~ may ~~enter~~result ~~into~~ in ~~the~~increases ~~future~~to ~~likely will contain, customary covenants that may restrict~~ the ~~Partnership’s~~costs ~~operations and restrict its ability to make distributions to holders~~ of ~~its~~ ~~common units. The Partnership’s failure to comply with the covenants in its existing or future indebtedness~~goods, orservices ~~its inability to make required principal~~ and ~~interest payments~~personnel, ~~could cause a default under the applicable debt agreement, which could result in increased interest rates~~ and ~~the~~sustained ~~acceleration~~periods of ~~the~~higher ~~debt,~~costs ~~requiring~~could ~~the~~reduce ~~Partnership to repay such debt with capital obtained from other sources, which may not be available to~~ the Partnership’s orprofitability ~~may~~and ~~only~~cash ~~be available on unfavorable terms~~flow. ~~In addition, if the Partnership defaults on its existing indebtedness, its lender may take possession of the portion of the Sanish Field Assets securing such debt.~~

28Historically, capital and operating costs typically rise during periods of sustained increasing oil, natural gas and NGL prices. These cost increases result from a variety of factors beyond the Partnership’s control as drilling activity increases, such as increases in the cost of electricity, tubular goods, water, sand and other disposable materials used in fracture stimulation and other raw materials that the Partnership and its vendors will rely upon, and the cost of services and labor especially those required in horizontal drilling and completion. Historically, oil and natural gas prices have fluctuated resulting in fluctuating levels of drilling activity in the U.S. oil and natural gas industry. Lower prices typically lead to lower costs of some drilling and completion equipment, services, materials and supplies. As commodity prices rise or stabilize or drilling activity otherwise increases, these lower cost levels may not be sustainable over long periods. As a result, such costs may rise faster than selling prices thereby negatively impacting the Partnership’s profitability and cash flow.

~~Index~~Any future hedging transactions in which the Partnership elects to engage will expose it to counterparty credit risk.

~~The Partnership~~Historically, ~~experienced~~the ~~higher~~Partnership ~~costs~~has engaged in ~~2023~~hedging ~~due~~transactions to ~~inflation~~reduce, ~~having~~but ~~widespread~~not ~~effects~~eliminate, on the ~~economy~~effect of volatility in oil, gas and other hydrocarbon prices. ~~Sustained~~The Partnership may also engage in hedging transactions in future periods. Hedging transactions will expose the Partnership to risk of ~~higher~~financial ~~costs~~ loss if a counterparty fails to perform under a derivative contract. Disruptions in the financial markets could ~~reduce~~lead to sudden changes in a counterparty’s liquidity, which could impair its ability to perform under the terms of the derivative contract. The Partnership is unable to predict sudden changes in a counterparty’s ~~profitability~~creditworthiness ~~and~~or ~~cash~~ability ~~flow~~to perform. Even if the Partnership does accurately predict sudden changes, its ability to negate the risk may be limited depending upon market conditions.

~~Historically, capital~~During ~~and operating costs typically rise during~~ periods of ~~sustained~~falling ~~increasing~~commodity ~~oil, natural gas and NGL~~ prices~~. These cost increases result from a variety of factors beyond the Partnership’s control as drilling activity increases~~, such as ~~increases~~those inthat ~~the~~occurred ~~cost of~~in ~~electricity,~~late ~~tubular goods~~2008, ~~water,~~2012 ~~sand~~ and ~~other~~early ~~disposable materials used in fracture stimulation and other raw materials that the Partnership and its vendors will rely upon~~2020, ~~and~~any ~~the~~hedge ~~cost~~receivable ofpositions ~~services~~could ~~and labor especially those required in horizontal drilling and completion. Historically~~increase, ~~oil~~which ~~and~~increases ~~natural gas prices have fluctuated resulting in fluctuating levels of drilling activity in~~ the ~~U.S.~~Partnership’s ~~oil and natural gas industry~~exposure. ~~Lower~~If ~~prices~~the ~~typically~~creditworthiness ~~lead to lower costs~~ of ~~some~~the ~~drilling~~Partnership’s ~~and~~counterparties ~~completion~~deteriorates ~~equipment, services, materials~~ and ~~supplies. As~~results ~~commodity~~in ~~prices~~their ~~rise or stabilize or drilling activity otherwise increases~~nonperformance, ~~these~~the ~~lower~~Partnership ~~cost~~could ~~levels~~incur ~~may not be sustainable over long periods. As~~ a ~~result,~~significant ~~such costs may rise faster than selling prices thereby negatively impacting the Partnership’s profitability and cash flow~~loss.

~~Any future~~Hedging ~~hedging~~activities ~~transactions~~could result in financial losses or could reduce the Partnership’s net income, which may adversely affect the Partnership’s ~~elects~~ability to ~~engage~~pay ~~will~~cash ~~expose~~distributions it to ~~counterparty~~holders ~~credit~~of ~~risk~~its common units.

~~Historically, the~~To ~~Partnership~~achieve ~~has~~more ~~engaged~~predictable incash ~~hedging~~flows ~~transactions~~and to reduce, ~~but~~the ~~not~~Partnership’s ~~eliminate,~~exposure ~~the~~to ~~effect~~fluctuations ofin ~~volatility~~the inprices of oil, natural gas and other ~~hydrocarbon prices.~~hydrocarbons, ~~The~~the Partnership ~~may~~has ~~also~~and ~~engage~~may inenter into hedging ~~transactions~~arrangements infor ~~future~~a ~~periods.~~significant ~~Hedging~~portion ~~transactions will expose the Partnership to risk~~ of ~~financial~~its ~~loss~~estimated iffuture aproduction. ~~counterparty~~If ~~fails~~the toPartnership ~~perform~~experiences ~~under~~ a ~~derivative~~sustained ~~contract.~~material ~~Disruptions~~interruption in its production, the ~~financial~~Partnership ~~markets~~might ~~could~~be ~~lead~~ forced to ~~sudden~~satisfy ~~changes~~all inor a ~~counterparty’s~~portion ~~liquidity,~~of ~~which could impair~~ its ~~ability~~hedging toobligations ~~perform~~without ~~under~~ the ~~terms~~benefit of the ~~derivative~~cash ~~contract. The~~flows ~~Partnership~~from isthe ~~unable to predict sudden changes in a counterparty~~Partnership’s ~~creditworthiness~~sale orof ~~ability to perform. Even if~~ the ~~Partnership does~~underlying ~~accurately~~physical ~~predict sudden changes~~commodity, ~~its~~resulting ~~ability~~in toa ~~negate~~substantial ~~the~~diminution ~~risk~~of ~~may~~its ~~be limited depending upon market conditions~~liquidity.

~~During periods~~The ofPartnership’s ~~falling~~ability ~~commodity~~to ~~prices,~~use ~~such~~hedging astransactions ~~those~~to ~~that~~protect ~~occurred~~it infrom ~~late~~future ~~2008,~~price ~~2012~~declines will be dependent upon oil and ~~early~~natural ~~2020,~~gas prices at the ~~Partnership’s~~time ~~hedge~~the ~~receivable positions~~Partnership ~~will~~enters ~~increase,~~into ~~which~~hedging ~~increases~~transactions and the Partnership’s ~~exposure~~future levels of hedging, and as a result its future net cash flows may be more sensitive to commodity price changes. IfAdditionally, it may not be possible or economic to hedge all of the ~~creditworthiness~~hydrocarbons the Partnership produces because of the lack of a market for such hedges or other reasons. The Partnership’s ~~counterparties deteriorates~~may ~~and~~hedge ~~results~~certain inhydrocarbons ~~their~~it ~~nonperformance~~produces by entering into swaps, collars or other contracts covering hydrocarbons the Partnership considers to be priced similarly to the hydrocarbons it produces, and could ~~incur~~be asubject ~~significant~~to ~~loss~~losses if the prices for the hydrocarbons the Partnership produces do not match the hydrocarbons for which the Partnership contracts.

~~Hedging activities~~The ~~could~~Partnership’s ~~result~~policy is to hedge a portion of its near–term estimated production. The prices at which the Partnership hedges its production in ~~financial~~the ~~losses~~future will be dependent upon commodity prices at the time the Partnership enters into these transactions, which may be substantially higher or ~~could~~lower ~~reduce~~than current oil, natural gas and other hydrocarbon prices. Accordingly, the Partnership’s ~~net~~price ~~income,~~hedging ~~which~~strategy may ~~adversely~~not ~~affect~~ protect it from significant declines in oil and natural gas prices received for its future production. Conversely, the Partnership’s hedging strategy may limit its ability to ~~pay~~realize cash ~~distributions~~flows tofrom ~~holders~~commodity price increases. It is also possible that a substantially larger percentage of the Partnership’s future production will not be hedged as compared with the next few years, which would result in its ~~common~~oil, ~~units~~natural gas and natural gas liquids revenues becoming more sensitive to commodity price changes. The General Partner will not be liable for any losses the Partnership incurs as a result of the Partnership’s hedging policy or the implementation of that policy.

To ~~achieve more predictable cash flows and to reduce the Partnership’s exposure to fluctuations in the prices of oil, natural gas~~ 29 and other hydrocarbons, the Partnership has and may enter into hedging arrangements for a significant portion of its estimated future production. If the Partnership experiences a sustained material interruption in its production, the Partnership might be forced to satisfy all or a portion of its hedging obligations without the benefit of the cash flows from the Partnership’s sale of the underlying physical commodity, resulting in a substantial diminution of its liquidity.

~~The~~ ~~Partnership’s~~ Table ability to use hedging transactions to protect it from future price declines will be dependent upon oil and natural gas prices at the time the Partnership enters into hedging transactions and the Partnership’s future levels of ~~hedging, and as~~Contents a result its future net cash flows may be more sensitive to commodity price changes. Additionally, it may not be possible or economic to hedge all of the hydrocarbons the Partnership produces because of the lack of a market for such hedges or other reasons. The Partnership may hedge certain hydrocarbons it produces by entering into swaps, collars or other contracts covering hydrocarbons the Partnership considers to be priced similarly to the hydrocarbons it produces, and could be subject to losses if the prices for the hydrocarbons the Partnership produces do not match the hydrocarbons for which the Partnership contracts.

The Partnership’s ~~policy~~plans is to ~~hedge~~rely aon ~~portion~~drilling ofto ~~its~~fully ~~near–term~~develop ~~estimated production. The prices at which~~ the ~~Partnership~~properties ~~hedges its production in~~ the ~~future will be dependent upon commodity prices at the time the~~ Partnership ~~enters~~has ~~into these transactions, which may be substantially higher or lower than current oil, natural gas and other hydrocarbon prices~~acquired. ~~Accordingly,~~If ~~the~~drilling ~~Partnership’s price~~is ~~hedging strategy may not protect it from significant declines in oil and natural gas prices received for its future production. Conversely~~unsuccessful, the Partnership’s ~~hedging strategy may limit its ability to realize~~ cash ~~flows~~available ~~from~~for ~~commodity~~distributions price increases. It is also possible that a substantially larger percentage of the Partnership’s future production will not be hedged as compared with the next few years, which would result in its oil, natural gas and ~~natural~~financial ~~gas~~condition ~~liquids revenues becoming more sensitive to commodity price changes. The General Partner~~ will ~~not~~ be ~~liable~~adversely ~~for any losses the Partnership incurs as a result of the Partnership’s hedging policy or the implementation of that policy~~affected.

29The Partnership has acquired oil and natural gas properties that are not fully developed, and require that the Partnership engage in drilling to fully exploit the reserves attributable to the properties. The Partnership’s drilling, completed by its operators, will involve numerous risks, including the risk that the Partnership will not encounter commercially productive oil or natural gas reservoirs. The Partnership may incur significant expenditures to drill and complete wells, including cost overruns. The costs of drilling and completing wells are often uncertain, and it is possible that the Partnership will make substantial expenditures on drilling and not discover reserves in commercially viable quantities. These expenditures will reduce cash available for distribution to holders of the Partnership’s common units and for servicing any debt obligations.

~~Index~~The Partnership’s drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors, including:

~~The Partnership~~● ~~plans~~unexpected todrilling ~~rely~~or onoperating conditions; ● facility or equipment failure or accidents; ● shortages or delays in the availability of drilling rigs and equipment and in hiring qualified personnel; ● adverse weather conditions; ● shortages of water required for hydraulic fracturing or other operations; ● compliance with environmental and governmental requirements; ● reductions in oil or gas prices; ● proximity to ~~fully~~and ~~develop~~capacity ~~the~~of ~~properties~~transportation ~~the~~and ~~Partnership~~processing ~~has~~facilities; ~~acquired.~~● Iftitle ~~drilling~~problems; is● ~~unsuccessful~~encountering abnormal pressures or unusual, ~~the Partnership’s~~unexpected ~~cash~~or ~~available~~irregular ~~for~~geological ~~distributions~~formations; ● pipeline ruptures; ● fires, blowouts, craterings and ~~financial~~explosions; ~~condition~~and ~~will~~● beuncontrollable ~~adversely~~flows ~~affected~~of oil or natural gas or well fluids.

~~The Partnership~~Even ~~has~~if ~~acquired~~drilled, completed wells may not produce quantities of oil ~~and~~or natural gas ~~properties~~ that are ~~not~~economically ~~fully~~viable ~~developed,~~or ~~and require~~ that ~~the~~meet ~~Partnership~~earlier ~~engage~~estimates inof ~~drilling to~~economically ~~fully~~recoverable ~~exploit the~~ reserves. ~~attributable~~A toproductive ~~the~~well ~~properties.~~may ~~The~~become ~~Partnership’s~~uneconomic ~~drilling,~~if ~~completed~~water byor ~~its~~other ~~operators,~~deleterious ~~will~~substances ~~involve numerous~~are ~~risks~~encountered, ~~including~~which ~~the~~impair ~~risk~~or ~~that~~prevent the ~~Partnership~~production ~~will~~of ~~not encounter commercially productive~~ oil and/or natural gas ~~reservoirs.~~from ~~The Partnership~~the ~~may incur significant expenditures to drill and complete wells, including cost overruns~~well. ~~Additionally,~~The ~~current geoscience technology may not allow the~~ Partnership’s tooverall ~~know~~drilling ~~conclusively,~~success ~~prior~~rate toor drilling asuccess ~~well,~~rate ~~that~~for ~~oil~~activity orwithin ~~natural~~a ~~gas~~particular isproject ~~present~~area ormay ~~economically producible~~decline. ~~The~~Unsuccessful ~~costs of~~ drilling ~~and~~activities ~~completing~~could ~~wells~~result ~~are~~in ~~often~~a ~~uncertain,~~significant ~~and~~decline itin ~~is possible that~~ the Partnership’s ~~will~~production ~~make~~and ~~substantial expenditures~~revenues ~~on drilling~~ and ~~not~~materially ~~discover~~harm ~~reserves~~its inoperations ~~commercially~~and ~~viable~~financial ~~quantities.~~condition ~~These~~by ~~expenditures~~reducing ~~will~~available ~~reduce~~ cash ~~available for distribution to holders of the Partnership’s common units~~ and ~~for servicing any debt obligations~~resources.

The Partnership’s ~~drilling~~continued ~~operations~~success ~~may~~depends beupon ~~curtailed,~~its ~~delayed~~ability orto ~~cancelled~~develop asoil aand ~~result~~gas ofreserves athat ~~variety~~are ofeconomically ~~factors, including:~~recoverable.

●In ~~unexpected~~addition, ~~drilling~~the orPartnership’s ~~operating~~future ~~conditions;~~oil ●and ~~facility~~natural orgas ~~equipment~~production ~~failure~~will ordepend ~~accidents;~~on ●the ~~shortages~~Partnership’s orsuccess ~~delays~~developing inits assets to add to its reserves. If the ~~availability~~Partnership ofis unable to replace reserves through drilling, ~~rigs~~the Partnership’s level of production and ~~equipment~~cash flows will be adversely affected. In general, production from oil and innatural ~~hiring~~gas ~~qualified~~properties ~~personnel;~~declines ●as ~~adverse~~reserves ~~weather~~are ~~conditions;~~depleted, ●with ~~shortages~~the rate of ~~water~~decline ~~required~~depending ~~for~~on ~~hydraulic~~reservoir ~~fracturing~~characteristics. orThe ~~other~~Partnership’s ~~operations;~~total ●proved ~~compliance~~reserves ~~with~~decline ~~environmental~~as ~~and~~reserves ~~governmental~~are ~~requirements;~~produced ●unless ~~reductions~~the inPartnership ~~oil~~conducts orother ~~gas~~successful ~~prices;~~development ●activities. ~~proximity~~The Partnership’s ability to make the necessary capital investment to maintain and ~~capacity~~expand its asset base of ~~transportation~~oil and ~~processing~~natural ~~facilities;~~gas ●reserves ~~title~~would ~~problems;~~be ●impaired ~~encountering~~to ~~abnormal~~the ~~pressures~~extent orcash ~~unusual,~~flow ~~unexpected~~from oroperations ~~irregular~~is ~~geological~~reduced ~~formations;~~and ●external ~~pipeline~~sources ~~ruptures;~~of ●capital ~~fires,~~become ~~blowouts,~~limited ~~craterings~~or ~~and~~unavailable. ~~explosions;~~The ~~and~~Partnership ●may ~~uncontrollable~~not ~~flows~~be ofsuccessful ~~oil~~in ordeveloping ~~natural~~its ~~gas~~assets orto ~~well~~increase ~~fluids~~its reserves.

~~Even~~ ~~if drilled, completed wells may not produce quantities of oil or natural gas that are economically viable or that meet earlier estimates~~ 30 of economically recoverable reserves. A productive well may become uneconomic if water or other deleterious substances are encountered, which impair or prevent the production of oil and/or natural gas from the well. The Partnership’s overall drilling success rate or drilling success rate for activity within a particular project area may decline. Unsuccessful drilling activities could result in a significant decline in the Partnership’s production and revenues and materially harm its operations and financial condition by reducing available cash and resources.

~~The~~ ~~Partnership’s~~ Table ~~continued~~of ~~success depends upon its ability to develop oil and gas reserves that are economically recoverable.~~Contents

~~In addition,~~The ~~the~~ Partnership’s ~~future~~business ~~oil~~is ~~and~~subject ~~natural~~to ~~gas~~operational ~~production~~risks that will ~~depend~~not onbe ~~the~~fully ~~Partnership’s~~insured, ~~success~~which, ~~developing~~if ~~its assets~~they towere ~~add~~ to ~~its~~occur, ~~reserves.~~could Ifadversely ~~the~~affect ~~Partnership is unable to replace reserves through drilling,~~ the Partnership’s ~~level~~financial ofcondition ~~production and~~or ~~cash~~results ~~flows~~of ~~will~~operations ~~be adversely affected. In general~~and, ~~production from oil and natural gas properties declines~~ as ~~reserves~~a ~~are depleted~~result, ~~with~~ the ~~rate of decline depending on reservoir characteristics. The~~ Partnership’s ~~total proved reserves decline as reserves are produced unless the Partnership conducts other successful development activities. The Partnership’s~~ ability to ~~make~~pay ~~the~~distributions ~~necessary capital investment~~ to ~~maintain~~holders ~~and~~of ~~expand~~ its ~~asset~~common ~~base~~units ~~of oil~~ and ~~natural~~service ~~gas reserves would be impaired to the extent cash flow from operations is reduced and external sources of capital become limited or unavailable. The Partnership may not be successful in developing~~ its ~~assets~~debt ~~to increase its reserves~~obligations.

30The Partnership’s business activities are subject to operational risks, including:

~~Index~~● damages to equipment caused by natural disasters such as earthquakes, adverse weather conditions, including tornadoes, hurricanes, drought and flooding; ● unexpected formations and pressures; ● facility or equipment malfunctions; ● pipeline ruptures or spills; ● fires, blowouts, craterings and explosions; ● release of toxic gasses; ● uncontrollable flows of oil or natural gas or well fluids; and ● surface fluid spills, saltwater contamination, and surface or ground water contamination from petroleum constituents or hydraulic fracturing chemical additives.

~~The~~ Any of these events could adversely affect the Partnership’s ~~business~~ability isto ~~subject~~conduct operations or cause substantial losses, including personal injury or loss of life, damage to ~~operational~~or ~~risks~~destruction ~~that~~of ~~will~~property, ~~not~~natural beresources ~~fully~~and ~~insured~~equipment, ~~which~~pollution or other environmental contamination, ifloss ~~they~~of ~~were~~wells, toregulatory ~~occur~~penalties, ~~could~~ ~~adversely~~suspension ~~affect~~or ~~the~~cessation ~~Partnership~~of operations, and attorneys’s ~~financial~~fees ~~condition~~and other expenses incurred in the prosecution or ~~results~~defense of ~~operations~~litigation and, ascould aalso result, ~~the~~in ~~Partnership’s ability~~requirements to ~~pay~~remediate, ~~distributions~~regulatory toinvestigations, ~~holders~~and/or the interruption of ~~its~~the ~~common~~Partnership’s ~~units~~business and/or ~~service~~the ~~its~~business ~~debt~~of ~~obligations~~third parties.

As is customary in the industry, the operator of the properties maintains insurance against some but not all of these risks. The Partnership may elect not to obtain insurance if it believes that the cost of available insurance is excessive relative to the perceived risks presented. 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 could have a material adverse impact on the Partnership’s business activities, ~~are~~financial ~~subject~~condition, results of operations and ability to ~~operational~~pay ~~risks,~~distributions ~~including:~~to holders of its common units and service its debt obligations.

●Risks ~~damages~~Related to ~~equipment~~Investment ~~caused~~in bythe natural disasters such as earthquakes, adverse weather conditions, including tornadoes, hurricanes, drought and flooding; ● unexpected formations and pressures; ● facility or equipment malfunctions; ● pipeline ruptures or spills; ● fires, blowouts, craterings and explosions; ● release of toxic gasses; ● uncontrollable flows of oil or natural gas or well fluids; and ● surface fluid spills, saltwater contamination, and surface or ground water contamination from petroleum constituents or hydraulic fracturing chemical additives.Partnership

~~Any of~~The ~~these events could adversely affect the~~ Partnership’s ~~ability~~depends toon ~~conduct~~key ~~operations or cause substantial losses~~personnel, ~~including~~the ~~personal injury or~~ loss of ~~life,~~any ~~damage to or destruction~~ of ~~property,~~whom natural resources and equipment, pollution or other environmental contamination, loss of wells, regulatory penalties, suspension or cessation of operations, and attorneys’ fees and other expenses incurred in the prosecution or defense of litigation and could ~~also~~materially ~~result~~adversely inaffect ~~requirements~~future ~~to remediate, regulatory investigations, and/or the interruption of the Partnership’s business and/or the business of third parties~~operations.

~~As is~~The ~~customary~~Partnership’s insuccess will depend to a large extent upon the ~~industry~~efforts and abilities of Messrs. Knight and McKenney, the ~~operator~~executive officers of the ~~properties~~General ~~maintains~~Partner. ~~insurance~~The ~~against~~loss ~~some~~of ~~but~~the ~~not~~services ~~all~~of either of these ~~risks.~~key ~~The~~employees ~~Partnership may~~could ~~elect~~have ~~not~~a tomaterial ~~obtain~~adverse ~~insurance~~effect ifon itthe ~~believes~~Partnership. ~~that~~Neither the ~~cost~~General ofPartner ~~available~~nor ~~insurance~~the isPartnership ~~excessive~~maintains ~~relative~~key-man tolife ~~the~~insurance ~~perceived~~with ~~risks~~respect ~~presented. Losses~~to ~~could~~any ~~therefore~~employees. ~~occur~~The ~~for~~Partnership’s ~~uninsurable~~business orwill ~~uninsured~~also ~~risks~~be ordependent inupon ~~amounts~~its inability ~~excess~~to ofattract ~~existing~~and ~~insurance~~retain ~~coverage~~qualified personnel. ~~The~~Acquiring ~~occurrence of~~and ankeeping ~~event~~these ~~that~~personnel iscould ~~not~~prove ~~fully~~more ~~covered~~difficult byor ~~insurance~~cost ~~could~~substantially ~~have~~more athan ~~material~~estimated. ~~adverse~~This ~~impact~~could oncause the Partnership’s ~~business~~to ~~activities, financial~~incur ~~condition,~~greater ~~results~~costs ofor ~~operations~~prevent ~~and~~it ~~ability~~from topursuing ~~pay~~its ~~distributions~~acquisition toand ~~holders~~development ofstrategy ~~its~~as ~~common~~quickly ~~units~~as ~~and~~the ~~service~~Partnership ~~its~~would ~~debt~~otherwise ~~obligations~~wish to do.

~~Risks Related~~The common units are not liquid and a limited partner’s ability to ~~Investment~~resell incommon units will be limited by the ~~Partnership~~absence of a public trading market and substantial transfer restrictions.

The common units generally will not be liquid because there is not a readily available market for the sale of common units, and one is not expected to develop. Further, although the Partnership ~~depends~~Agreement contains provisions designed to permit the listing of common units on ~~key~~a ~~personnel~~national securities exchange, the ~~loss~~Partnership ofdoes ~~any~~not ofcurrently ~~whom~~intend ~~could~~to ~~materially~~list ~~adversely~~the ~~affect~~common ~~future~~units ~~operations~~on any exchange or in the over-the-counter market.

~~The~~ ~~Partnership’s success will depend to a large extent upon the efforts and abilities of Messrs. Knight and McKenney, the executive~~ 31 officers of the General Partner. The loss of the services of either of these key employees could have a material adverse effect on the Partnership. Neither the General Partner nor the Partnership maintains key-man life insurance with respect to any employees. The Partnership’s business will also be dependent upon its ability to attract and retain qualified personnel. Acquiring and keeping these personnel could prove more difficult or cost substantially more than estimated. This could cause the Partnership to incur greater costs or prevent it from pursuing its acquisition and development strategy as quickly as the Partnership would otherwise wish to do.

~~The~~ ~~common~~ Table ~~units are not liquid and a limited partner’s ability to resell common units will be limited by the absence~~ of ~~a public trading market and substantial transfer restrictions.~~Contents

~~The common~~Distributions ~~units~~to ~~generally~~the ~~will~~Partnership’s ~~not~~common beunitholders ~~liquid~~may ~~because there is~~ not abe ~~readily~~sourced ~~available~~from ~~market~~its ~~for~~cash ~~the~~generated ~~sale~~from ofoperations ~~common~~but ~~units~~from indebtedness, and ~~one~~therefore isthe ~~not expected~~Partnership’s todistributions ~~develop.~~during ~~Further,~~certain ~~although~~periods ~~the~~may ~~Partnership~~exceed ~~Agreement~~earnings ~~contains~~and ~~provisions~~cash ~~designed~~flows tofrom ~~permit~~operations, ~~the~~and ~~listing~~this ofwill ~~common~~decrease ~~units~~the ~~on a~~Partnership’s ~~national~~distributions ~~securities~~in ~~exchange~~the future; furthermore, the Partnership ~~does~~cannot ~~not~~guarantee ~~currently~~that ~~intend~~investors towill ~~list~~receive ~~the~~any ~~common~~specific ~~units~~return on ~~any~~their ~~exchange or in the over-the-counter market~~investment.

31The General Partner has the right to make distributions from the proceeds of borrowings and capital contributions. Offering proceeds that are returned to investors as part of distributions to them will not be available for investments in oil and natural gas properties. In addition, during certain periods, distributions may exceed the amount of earnings and cash flows from operations. The payment of distributions will decrease the cash available to invest in the Partnership’s oil and natural gas properties and will reduce the amount of distributions the Partnership may make in the future. The Partnership cannot and does not guarantee that investors will receive any specific return on their investment.

~~Index~~Moreover, a portion of the Partnership’s cash flow may be used to pay interest on its BF Credit Facility. Interest and principal payments on the Credit Facility will reduce the cash available to finance the Partnership’s operations and other business activities and could limit the Partnership’s flexibility in planning for or reacting to changes in the Partnership’s business and the industry in which it operates.

~~Distributions to~~If the ~~Partnership’s~~General ~~common~~Partner ~~unitholders~~elects ~~may~~to ~~not~~cause bethe ~~sourced~~Partnership ~~from~~to ~~its~~make ~~cash~~distributions ~~generated~~rather ~~from~~than ~~operations~~reinvesting ~~but~~the ~~from~~cash ~~indebtedness, and~~flow ~~therefore~~in its business, the Partnership’s ~~distributions during certain periods~~ may ~~exceed~~be ~~earnings~~required ~~and~~to ~~cash~~sell ~~flows~~or ~~from~~farm-out ~~operations, and~~properties ~~this~~or ~~will~~to ~~decrease~~elect ~~the~~not ~~Partnership’s~~to ~~distributions~~participate in ~~the~~exploration ~~future;~~or ~~furthermore,~~development ~~the~~drilling ~~Partnership~~activities ~~cannot~~on ~~guarantee that~~its ~~investors~~properties, ~~will~~which ~~receive~~activities ~~any~~could ~~specific~~turn ~~return~~out onto ~~their~~be ~~investment~~profitable.

~~The General~~If ~~Partner~~the ~~has~~Partnership ~~the~~were ~~right~~presented towith ~~make~~a ~~distributions~~development ~~from~~drilling ~~the~~or ~~proceeds~~other ofopportunity ~~borrowings~~on its properties, and ~~capital~~funding ~~contributions.~~the ~~Offering~~opportunity ~~proceeds~~would require the Partnership’s cash that ~~are~~ ~~returned~~is required to ~~investors~~be asdistributed ~~part~~to oflimited ~~distributions~~partners in order to ~~them~~follow ~~will~~its ~~not~~distribution bepolicy ~~available~~or for ~~investments~~other inpurposes ~~oil~~approved ~~and~~by ~~natural~~the ~~gas~~General ~~properties. In addition~~Partner, ~~during~~the ~~certain~~General ~~periods,~~Partner ~~distributions~~ may ~~exceed~~elect to cause the ~~amount~~Partnership ofto ~~earnings~~sell ~~and~~or ~~cash~~farm-out ~~flows~~the ~~from~~opportunity ~~operations~~or ~~during~~decline ~~such~~to ~~periods. The~~participate ~~payment~~in ofthe ~~distributions~~opportunity, ~~will~~even ~~decrease~~if the ~~cash~~General ~~available~~Partner todetermines ~~invest~~that in the ~~Partnership’s~~opportunity ~~oil~~could ~~and~~have ~~natural~~a ~~gas~~favorable ~~properties~~rate ~~and~~ of return. The General Partner will ~~reduce~~have the ~~amount~~right ofto ~~distributions~~cause the Partnership ~~may~~to ~~make~~participate in ~~the~~opportunities ~~future.~~that ~~The~~will use the Partnership’s ~~cannot~~cash ~~and~~otherwise ~~does~~than ~~not~~in ~~guarantee~~accordance with the distribution policy if the General Partner determines that ~~investors will~~pursuing ~~receive~~such ~~any~~opportunity ~~specific~~is ~~return~~in onthe ~~their~~best ~~investment~~interests of the Partnership.

~~Moreover, a~~The ~~portion~~General ofPartner ~~the~~will ~~Partnership’s cash flow may~~ be ~~used~~subject to ~~pay~~conflicts of interest onin ~~its~~operating BFthe ~~Credit~~Partnership, ~~Facility.~~including ~~Interest~~conflicts ~~and~~of ~~principal~~interest ~~payments on~~arising ~~the~~out ~~Credit~~of ~~Facility will reduce~~ the ~~cash~~General ~~available~~Partner’s toownership ~~finance~~of the ~~Partnership’s~~incentive ~~operations~~distribution ~~and~~rights. ~~other~~The ~~business~~Partnership ~~activities~~Agreement ~~and could~~limits ~~limit~~ the ~~Partnership~~General Partner’s ~~flexibility~~fiduciary induties ~~planning for or reacting~~ to ~~changes in~~ the Partnership’s ~~business~~in ~~and~~connection ~~the~~with ~~industry in~~these ~~which~~conflicts itof ~~operates~~interest.

~~If the~~The General Partner ~~elects~~is tosubject ~~cause the Partnership~~ to ~~make~~conflicts ~~distributions~~of ~~rather~~interest ~~than~~in ~~reinvesting~~operating the ~~cash~~Partnership’s ~~flow in its~~ business,. ~~the Partnership~~These ~~may~~conflicts ~~be required to sell or farm-out properties or to elect not to participate in exploration or development drilling activities on its properties, which activities could turn out to be profitable.~~include:

~~If the~~● ~~Partnership~~Conflicts ~~were~~caused ~~presented~~by ~~with~~the anincentive ~~exploration~~distribution orrights ~~development~~held ~~drilling~~by orthe ~~other~~General ~~opportunity on its properties~~Partner, ~~and~~which ~~funding~~may ~~the~~cause ~~opportunity would~~it ~~require~~to ~~the~~conduct ~~Partnership’s~~operations ~~cash~~ that isare ~~required~~riskier to bethe ~~distributed~~Partnership, or to ~~limited~~sell ~~partners~~properties, in order to ~~follow~~generate ~~its~~distributions ~~distribution policy~~from orthe ~~for~~incentive ~~other~~distribution ~~purposes~~rights; ~~approved~~● byConflicts ~~the~~caused ~~General~~by ~~Partner,~~ the ~~General~~sale ~~Partner~~of ~~may~~properties ~~elect~~ to ~~cause~~programs ~~the~~that ~~Partnership~~have ~~to sell~~ or ~~farm-out the~~may ~~opportunity~~be orformed ~~decline~~by ~~to participate in~~ the ~~opportunity, even if the~~ General Partner ~~determines~~and ~~that~~its ~~the~~affiliates ~~opportunity~~in ~~could~~the ~~have a~~future; ~~favorable~~and ~~rate~~● ofConflicts ~~return.~~caused ~~The~~by ~~General~~competition ~~Partner~~for ~~will~~management ~~have~~time ~~the~~and ~~right~~attention towith ~~cause~~other ~~the~~oil ~~Partnership~~and togas ~~participate~~partnerships inand ~~opportunities~~with ~~that~~other ~~will use~~business ~~the~~activities ~~Partnership’s cash otherwise than~~ in ~~accordance~~which ~~with~~management ~~the~~of ~~distribution policy if~~ the General Partner ~~determines~~are ~~that~~or ~~pursuing such~~may ~~opportunity~~be ~~is in the best interests of the Partnership~~involved.

The Partnership Agreement provides that the General Partner will behave ~~subject~~no liability to ~~conflicts~~the Partnership or the holders of ~~interest~~the common units for decisions made, if such decisions are made in ~~operating~~good ~~the~~faith. ~~Partnership~~In addition, ~~including~~the ~~conflicts~~Partnership ofAgreement ~~interest~~provides ~~arising~~that ~~out~~if of the General Partner’s ~~ownership~~receives ofa fairness opinion regarding the ~~incentive~~sale ~~distribution~~price ~~rights.~~of ~~The~~a ~~Partnership~~property ~~Agreement~~or ~~limits~~in connection with a merger or the ~~General Partner~~listing of the Partnership’s ~~fiduciary~~common ~~duties~~units toon ~~the~~a ~~Partnership~~national insecurities ~~connection~~exchange, ~~with~~including ~~these~~transactions ~~conflicts~~that involve affiliates of ~~interest~~the General Partner, the General Partner will be deemed to have acted in good faith.

~~The~~ ~~General Partner is subject to conflicts of interest in operating the Partnership’s business. These conflicts include:~~ 32

● Table Conflicts caused by the incentive distribution rights held by the General Partner, which may cause it to conduct operations that are riskier to the Partnership, or to sell properties, in order to generate distributions from the incentive distribution rights; ● Conflicts caused by the sale of properties to programs that have or may be formed by the General Partner and its affiliates in the future; and ● Conflicts caused by competition for management time and attention with other oil and gas partnerships and with other business activities in which management of the General Partner are or may be involved.Contents

The ~~Partnership~~ ~~Agreement provides that the~~ General Partner ~~will~~has ~~have~~sole noresponsibility ~~liability~~for toconducting the Partnership’s orbusiness ~~the~~and ~~holders~~managing ofits ~~the~~operations. ~~common~~The ~~units for~~General ~~decisions~~Partner ~~made,~~and ifits ~~such~~affiliates ~~decisions~~will ~~are~~have ~~made~~conflicts inof ~~good faith. In addition~~interest, ~~the~~which ~~Partnership~~may ~~Agreement~~permit ~~provides~~them ~~that~~to iffavor ~~the~~their ~~General~~own ~~Partner receives~~interests ato ~~fairness opinion regarding~~ the ~~sale~~detriment ~~price~~ of aholders ~~property or in connection with a merger or the listing~~ of the Partnership’s common units ~~on a national securities exchange, including transactions that involve affiliates of the General Partner, the General Partner will be deemed to have acted in good faith~~.

32Conflicts of interest may arise between the General Partner and its respective affiliates on the one hand, and the Partnership and the holders of its common units, on the other hand. In resolving these conflicts of interest, the General Partner may favor its own interests and the interests of its owners over the interests of holders of the Partnership’s common units. These conflicts include, among others, the following situations:

~~Index~~● neither the Partnership Agreement nor any other agreement requires affiliates of the General Partner to pursue a business strategy that favors the Partnership or to refer any business opportunity to the Partnership; ● the General Partner determines the amount and timing of its asset purchases and sales, capital expenditures and borrowings, each of which can affect the amount of cash that is distributed to holders of the Partnership’s common units or used to service its debt obligations; ● the General Partner controls the enforcement of obligations owed to the Partnership by the General Partner and its affiliates; and ● the General Partner decides whether to retain separate counsel, accountants or others to perform services for the Partnership.

~~The General~~Amounts ~~Partner~~paid ~~has~~to ~~sole responsibility for conducting~~ the ~~Partnership’s business and managing its operations. The~~ General Partner, ~~and~~regardless ~~its~~of ~~affiliates~~success ~~will~~of ~~have~~the ~~conflicts~~Partnership’s ~~of interest~~activities, ~~which~~will ~~may~~reduce ~~permit them to favor their own interests to~~ the ~~detriment of~~cash ~~holders of~~ the Partnership’s ~~common~~has ~~units~~available for distribution.

~~Conflicts of~~The ~~interest~~General ~~may~~Partner ~~arise~~and ~~between~~its ~~the~~affiliates ~~General~~have ~~Partner~~ and ~~its~~will ~~respective~~receive ~~affiliates~~reimbursement onof ~~the~~third-party ~~one~~costs ~~hand,~~incurred ~~and~~in connection with the Partnership’s business activities. The fees and ~~the~~direct ~~holders of~~costs ~~its~~to ~~common~~be ~~units,~~paid onto the ~~other~~General ~~hand.~~Partner Inwill ~~resolving~~reduce ~~these~~the ~~conflicts~~amount of ~~interest,~~cash ~~the~~distributions ~~General~~to ~~Partner~~investors. ~~may~~With ~~favor~~respect ~~its~~to ~~own~~third-party ~~interests~~costs, ~~and~~ the ~~interests~~General ofPartner ~~its~~has ~~owners~~sole ~~over~~discretion ~~the~~on ~~interests~~behalf of ~~holders~~the ofPartnership to select the ~~Partnership’s~~provider ~~common~~of ~~units.~~the ~~These~~services ~~conflicts~~or ~~include,~~goods ~~among~~and ~~others,~~ the ~~following~~provider’s ~~situations:~~compensation.

●Because ~~neither~~ the ~~Partnership Agreement nor any other agreement requires affiliates of the~~ General Partner tohas ~~pursue~~discretion ~~a business strategy that favors the Partnership or~~ to ~~refer~~determine ~~any business opportunity to~~ the ~~Partnership; ● the General Partner determines the~~ amount and timing of ~~its~~any ~~asset~~distribution ~~purchases~~the ~~and~~Partnership ~~sales,~~may ~~capital expenditures and borrowings~~make, ~~each~~there ofis ~~which~~no ~~can~~guarantee ~~affect~~that ~~the amount of~~ cash ~~that~~distributions iswill ~~distributed~~be topaid ~~holders~~by of the Partnership’s ~~common~~in ~~units~~any amount or ~~used~~frequency toeven ~~service~~if its ~~debt~~operations ~~obligations;~~generate ● the General Partner controls the enforcement of obligations owed to the Partnership by the General Partner and its affiliates; and ● the General Partner decides whether to retain separate counsel, accountants or others to perform services for the Partnershiprevenues.

~~Amounts paid~~The totiming and amount of distributions will be determined in the sole discretion of the General Partner,. ~~regardless~~The level of ~~success~~distributions, ofwhen made, will primarily be dependent upon the Partnership’s ~~activities~~levels of revenue, ~~will~~among ~~reduce~~other factors. Distributions may be reduced or deferred, in the ~~cash~~discretion of the General Partner, to the extent that the Partnership ~~has~~’s ~~available~~revenues are used or reserved for ~~distribution.~~any of the following:

~~The~~ ● third-party expense reimbursements paid to the General Partner and its affiliates ~~have~~as ~~and~~described ~~will~~above ~~receive~~in ~~reimbursement~~“— ofAmounts ~~third-party~~paid ~~costs~~to ~~incurred~~the inGeneral ~~connection~~Partner ~~with~~regardless of success of the Partnership’s ~~business~~ activities ~~and~~ will bereduce ~~reimbursed~~the cash available for ~~general~~distribution;” ● repayment of borrowings and ~~administrative~~regularly ~~costs~~scheduled ofdebt ~~the~~service ~~General~~payments; ~~Partner~~● ~~allocable~~drilling toand ~~the~~completing ~~Partnership~~new ~~as described~~wells; in● ~~“Compensation”~~cost ~~within~~overruns ~~the~~on ~~Partnership’s~~drilling, ~~prospectus~~completion ~~for~~or ~~the~~operating ~~Partnership’s~~activities; ~~best-efforts~~● ~~offering, regardless~~remedial ofwork ~~the~~to ~~Partnership~~improve a well’s ~~success~~producing incapability; ~~acquiring,~~● ~~developing~~uninsured ~~and~~losses ~~operating~~from ~~properties.~~operational ~~The~~risks ~~fees~~including ~~and~~liability for environmental damages; ● direct costs toand begeneral ~~paid to~~and administrative expenses of the ~~General~~Partnership; ~~Partner~~● ~~will~~reserves, ~~reduce~~including a reserve for the ~~amount~~estimated costs of ~~cash~~eventually ~~distributions~~plugging toand ~~investors.~~abandoning ~~With~~the ~~respect~~wells; toor ~~third-party~~● ~~costs,~~indemnification of the General Partner ~~has~~ ~~sole~~and ~~discretion~~its onaffiliates ~~behalf~~by of the Partnership tofor ~~select~~losses ~~the~~or ~~provider~~liabilities ofincurred ~~the~~in ~~services~~connection orwith ~~goods and~~ the ~~provider~~Partnership’s ~~compensation~~activities.

~~Because~~ Further, because the ~~General~~Partnership’s ~~Partner~~investments ~~has~~will ~~discretion~~be toin ~~determine~~depleting ~~the~~assets, ~~amount~~unless reinvested, Partnership revenues and ~~timing~~the ofamount ~~any~~available for distribution to partners will decline with the ~~Partnership~~passage ~~may~~of ~~make~~time. Accordingly, there iscan be no ~~guarantee~~ assurance that ~~cash~~the ~~distributions~~Partnership will be ~~paid~~able byto ~~the~~make ~~Partnership~~regular indistributions ~~any~~or ~~amount~~that ordistributions ~~frequency~~will ~~even~~be ifmade ~~its~~at ~~operations~~any ~~generate~~consistent ~~revenues~~rate or frequency.

~~The~~ ~~timing and amount of distributions will be determined in the sole discretion of the General Partner. The level of distributions, when~~ 33 made, will primarily be dependent upon the Partnership’s levels of revenue, among other factors. Distributions may be reduced or deferred, in the discretion of the General Partner, to the extent that the Partnership’s revenues are used or reserved for any of the following:

● Table ~~compensation and fees paid to the General Partner and its affiliates as described above in “— Amounts paid to the General Partner regardless~~ of success of the Partnership’s activities will reduce the cash available for distribution;” ● repayment of borrowings and regularly scheduled debt service payments; ● drilling and completing new wells; ● cost overruns on drilling, completion or operating activities; ● remedial work to improve a well’s producing capability; ● the acquisition of producing and non-producing oil and gas leasehold interests considered in the best interest of the Partnership by the General Partner; ● uninsured losses from operational risks including liability for environmental damages; ● direct costs and general and administrative expenses of the Partnership; ● reserves, including a reserve for the estimated costs of eventually plugging and abandoning the wells; or ● indemnification of the General Partner and its affiliates by the Partnership for losses or liabilities incurred in connection with the Partnership’s activities.Contents

~~Further, because~~The ~~the~~ Partnership’s ~~investments~~may ~~will~~ be inunable ~~depleting~~to ~~assets,~~sell ~~unless~~its ~~reinvested~~properties, ~~Partnership~~merge ~~revenues~~with ~~and~~another ~~the~~entity ~~amount~~or ~~available for~~list ~~distribution to partners will decline with~~ the ~~passage~~common ofunits ~~time.~~on ~~Accordingly,~~a ~~there~~national ~~can~~securities beexchange nowithin ~~assurance~~its ~~that~~planned ~~the~~timeline ~~Partnership will be able to make regular distributions~~ or ~~that distributions will be made~~ at ~~any consistent rate or frequency~~all.

33The decision to sell the Partnership’s properties or merge with another entity will be based on a number of factors, including the domestic and foreign supply of and demand for oil, natural gas and other hydrocarbons, commodity prices, demand for oil and natural gas assets in general, the value of the Partnership’s assets, the projected amount of the Partnership’s oil and gas reserves, general economic conditions and other factors that are out of the Partnership’s control. In addition, the ability to list the Partnership’s common units on a national securities exchange will depend on a number of factors, including the state of the U.S. securities markets, the Partnership’s ability to meet the listing requirements of national securities exchanges, securities laws and regulations and other factors. If the Partnership is unable to either sell its properties, merge or list the common units on a national securities exchange in accordance with its current plans, limited partners may be unable to sell or otherwise transfer common units and limited partners may lose some or all of their investment. The Partnership Agreement does not obligate the General Partner to cause a liquidity event within a particular timeline. The timing of a liquidity event will be dependent upon many factors, including prevailing market conditions, and the Partnership Agreement gives the Partnership flexibility on timing so that the Partnership is not forced to act during periods of low oil and gas prices, or other disadvantageous situations.

~~Index~~The General Partner may cause the Partnership not to participate with the operator in the drilling of wells on the Partnership’s properties.

~~The~~ If the Partnership ~~may~~has bethe ~~unable~~opportunity to participate in wells, the General Partner may decide to sell ~~its~~or farmout the well. Also, if a well is proposed under an operating agreement for one of the properties the Partnership owns, ~~merge~~the ~~with~~General ~~another~~Partner ~~entity~~may orcause ~~list~~the Partnership to “non-consent” the ~~common~~well ~~units~~under onthe applicable operating agreement. Non-consenting a ~~national~~well ~~securities~~will ~~exchange within~~generally ~~its~~cause ~~planned~~the ~~timeline~~Partnership not to be obligated to pay the costs of the well, but the Partnership will not be entitled to the proceeds of production from the well until a penalty is received by the parties that drilled the well. If the General Partner makes the decision to sell, farmout or atnon-consent ~~all~~a well or other development activity, the Partnership Agreement provides that the General Partner will have no liability to the Partnership so long as the decision is made in good faith.

~~The decision~~Risks toRelated sell the Partnership’s properties or merge with another entity will be based on a number of factors, including the domestic and foreign supply of and demand for oil, natural gas and other hydrocarbons, commodity prices, demand for oil and natural gas assets in general, the value of the Partnership’s assets, the projected amount of the Partnership’s oil and gas reserves, general economic conditions and other factors that are out of the Partnership’s control. In addition, the ability to ~~list the Partnership’s common units on a national securities exchange will depend on a number of factors~~Laws, ~~including the state of the U.S. securities markets~~Regulations, ~~the~~ ~~Partnership’s~~Cybersecurity ~~ability to meet the listing requirements of national securities exchanges, securities laws~~ and ~~regulations~~Other ~~and other~~External factors. If the Partnership is unable to either sell its properties, merge or list the common units on a national securities exchange in accordance with its current plans, limited partners may be unable to sell or otherwise transfer common units and limited partners may lose some or all of their investment. The Partnership Agreement does not obligate the General Partner to cause a liquidity event within a particular timeline. The timing of a liquidity event will be dependent upon many factors, including prevailing market conditions, and the Partnership Agreement gives the Partnership flexibility on timing so that the Partnership is not forced to act during periods of low oil and gas prices, or other disadvantageous situations.Factors

The ~~General~~ ~~Partner~~Partnership ~~may~~is ~~cause~~subject ~~the~~to ~~Partnership~~complex ~~not~~federal, tostate, ~~participate~~local ~~with~~and ~~the~~other ~~operator~~laws inand regulations that could adversely affect the ~~drilling~~cost, ofmanner ~~wells~~or onfeasibility of conducting the Partnership’s ~~properties~~ operations.

~~If the~~The Partnership’s ~~has~~business ~~the~~is ~~opportunity~~subject to ~~participate~~complex inand ~~wells,~~stringent laws and regulations governing the ~~General~~acquisition, ~~Partner~~development, ~~may~~operation, ~~decide~~production toand ~~sell~~marketing orof ~~farmout~~oil ~~the~~and ~~well.~~gas, ~~Also~~taxation, ifsafety amatters ~~well is~~and ~~proposed~~the ~~under~~discharge anof ~~operating~~materials ~~agreement~~into ~~for~~the ~~one~~environment. ofIn ~~the~~order ~~properties~~to conduct the Partnership’s ~~owns,~~operations ~~the~~in ~~General~~compliance ~~Partner~~with ~~may~~these ~~cause~~laws and regulations, the ~~Partnership to~~operator(s) ~~“non-consent”~~of the ~~well~~Partnership’s ~~under~~properties ~~the~~must ~~applicable~~obtain ~~operating~~and ~~agreement.~~maintain ~~Non-consenting~~numerous apermits, ~~well~~approvals ~~will~~and ~~generally~~certificates ~~cause~~from ~~the~~various ~~Partnership not~~federal, tostate beand ~~obligated~~local togovernmental ~~pay~~authorities. ~~the~~Failure ~~costs~~or ofdelay ~~the~~in ~~well,~~obtaining ~~but~~and ~~the~~maintaining ~~Partnership~~regulatory ~~will~~approvals ~~not~~or bedrilling ~~entitled~~permits tocould ~~the~~have ~~proceeds~~a ofmaterial ~~production~~adverse ~~from~~effect on the ~~well until~~Partnership’s aability ~~penalty~~to isdevelop ~~received~~its byproperties, ~~the~~and ~~parties~~receipt ~~that~~of ~~drilled~~drilling ~~the~~permits ~~well.~~with Ifonerous ~~the~~conditions ~~General~~could ~~Partner~~increase ~~makes~~ the ~~decision~~Partnership’s tocompliance ~~sell~~costs. In addition, ~~farmout~~regulations or ~~non-consent a~~executive ~~well~~orders orregarding ~~other~~resource ~~development~~conservation ~~activity,~~practices and the ~~Partnership~~protection ~~Agreement~~of ~~provides~~correlative ~~that~~rights may affect the ~~General~~Partnership’s ~~Partner~~operations ~~will~~by ~~have~~limiting nothe ~~liability~~quantity toof ~~the~~oil, ~~Partnership so~~natural ~~long~~gas asand ~~the~~natural ~~decision~~gas isliquids ~~made~~the inPartnership ~~good~~may ~~faith~~produce and sell.

~~Fees~~ ~~and cost reimbursements that must be paid to the General Partner and the Dealer Manager regardless of success of the Partnership’s~~ 34 ~~activities will reduce the cash the Partnership has available for distribution.~~

~~The~~ ~~General~~ Table ~~Partner and its affiliates have and will receive reimbursement~~ of ~~third-party costs incurred in connection with the Partnership’s~~Contents business activities and will be reimbursed for general and administrative costs of the General Partner allocable to the Partnership regardless of the Partnership’s success in acquiring, developing and operating properties. The Dealer Manager is eligible to receive the contingent, incentive fee after Payout, as defined in the Prospectus for the Partnership’s best-efforts offering. The fees and direct costs to be paid to the General Partner and the Dealer Manager will reduce the amount of cash distributions to investors.

~~Risks Related~~The Partnership is subject to ~~Laws~~federal, ~~Regulations~~state and local laws and regulations as interpreted and enforced by governmental authorities possessing jurisdiction over various aspects of the exploration, ~~Cybersecurity~~production and ~~Other~~transportation ~~External~~of ~~Factors~~oil, natural gas and natural gas liquids. While the cost of compliance with these laws is not expected to be material to the Partnership’s operations, the possibility exists that new laws, regulations, executive orders or enforcement policies could be more stringent and significantly increase the Partnership’s compliance costs. If the Partnership is not able to recover the resulting costs through insurance or increased revenues, the Partnership’s ability to pay distributions to holders of the Partnership’s common units and service the Partnership’s debt obligations could be adversely affected.

~~The Partnership~~Federal isand ~~subject~~state tolegislative ~~complex~~initiatives ~~federal,~~and ~~state,~~executive ~~local~~orders ~~and~~relating ~~other~~to ~~laws~~hydraulic fracturing and ~~regulations~~oil ~~that~~and natural gas lease sales could ~~adversely~~result ~~affect~~in ~~the~~increased ~~cost,~~costs ~~manner~~and additional operating restrictions or ~~feasibility~~ ofdelays, ~~conducting~~and even could result in the Partnership’s ceasing business operations.

~~The Partnership’s~~Hydraulic ~~business~~fracturing is ~~subject~~used to ~~complex~~stimulate ~~and~~production ~~stringent~~of ~~laws~~hydrocarbons, ~~and~~particularly ~~regulations~~natural ~~governing~~gas, ~~the~~from ~~acquisition,~~dense ~~development,~~rock ~~operation, production~~formations. ~~and~~The ~~marketing~~hydraulic offracturing ~~oil~~process ~~and~~involves ~~gas,~~the ~~taxation,~~injection ~~safety~~of ~~matters~~water, sand and ~~the~~chemicals ~~discharge~~under ofpressure ~~materials~~ into the ~~environment.~~formation ~~In order~~ to ~~conduct~~ fracture the ~~Partnership’s~~surrounding ~~operations~~rock inand ~~compliance~~stimulate ~~with~~production. ~~these~~The ~~laws~~operators ~~and~~of ~~regulations,~~ the ~~operator(s)~~properties of the Partnership’s ~~properties must~~owns ~~obtain~~will ~~and~~routinely ~~maintain~~use ~~numerous~~hydraulic ~~permits,~~fracturing ~~approvals~~techniques ~~and~~in ~~certificates~~most ~~from~~drilling ~~various~~and ~~federal,~~completion ~~state~~programs. ~~and~~In ~~local~~past ~~governmental~~legislative ~~authorities. Failure~~sessions, orlegislation ~~delay~~was inintroduced ~~obtaining~~before ~~and~~Congress ~~maintaining~~to ~~regulatory~~provide ~~approvals~~for orfederal ~~drilling~~regulation ~~permits~~of ~~could~~hydraulic ~~have~~fracturing ausing ~~material~~materials ~~adverse~~other ~~effect~~than ondiesel under the ~~Partnership’s ability~~Safe toDrinking ~~develop~~Water ~~its~~Act ~~properties,~~ and ~~receipt~~to require disclosure of ~~drilling~~the ~~permits~~chemicals ~~with~~used ~~onerous~~in ~~conditions~~the ~~could~~fracturing ~~increase~~process; ~~the~~this ~~Partnership’s~~legislation ~~compliance costs~~has not passed. InAt ~~addition,~~the ~~regulations~~state orand ~~executive~~local ~~orders~~levels, ~~regarding~~some ~~resource~~jurisdictions ~~conservation~~have ~~practices~~adopted, and ~~the~~others ~~protection~~are ofconsidering ~~correlative~~adopting, ~~rights may~~requirements ~~affect~~that ~~the~~could ~~Partnership’s~~impose ~~operations~~more bystringent ~~limiting~~permitting, ~~the~~public ~~quantity~~disclosure of ~~oil,~~fracturing ~~natural~~chemicals ~~gas~~or ~~and~~well ~~natural~~construction ~~gas~~requirements ~~liquids~~on ~~the~~hydraulic ~~Partnership~~fracturing ~~may produce~~activities, ~~and~~as ~~sell~~well as bans on hydraulic fracturing activities.

34A significant percentage of oil and natural gas operations in the United States is conducted on federal lands, and the Biden administration took actions to limit future oil and gas operations on federal lands and to increase costs of operations. On January 27, 2021, the Biden administration signed an executive order directing the Secretary of the Interior to temporarily stop issuing new oil and gas leases on federal lands, allowing time to review and reset the federal government’s oil and gas leasing program. The Partnership’s existing leases and permits are operational and held by production, and were therefore not impacted by this executive order. However, the Biden administration proceeded to recommend an overhaul of the federal oil and gas leasing program to limit areas available for energy development and raise costs for companies to drill on public land. In June 2022, the Biden administration resumed oil and natural gas lease sales, but limited it to only 20% of the total acreage originally nominated for leasing and increased the royalty rate. In September 2023, the Biden administration approved three offshore oil and gas lease sales through 2029, but the sale is limited to the Gulf of Mexico and is the smallest offshore oil drilling plan in the program’s history. In January 2025, the Biden administration withdrew more than 625 million acres of federal waters from offshore drilling, including areas along the Atlantic Coast, Eastern Gulf of Mexico, and Pacific Outer Continental Shelf. Then President-elect Trump announced that he would reverse the withdrawal.

~~Index~~In the event that new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where the Partnership owns producing properties, the Partnership could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development, or production activities, and perhaps even be precluded from participating in drilling wells. More widespread or prolonged moratoriums on lease sales or prohibitions of hydraulic fracturing could, depending on the makeup of the Partnership’s assets, cause the Partnership to cease business operations.

~~The Partnership~~Additional isregulatory ~~subject~~scrutiny ~~to federal, state and local laws and regulations as interpreted and enforced~~ by ~~governmental~~the ~~authorities~~EPA ~~possessing jurisdiction~~could ~~over~~make ~~various~~it ~~aspects~~difficult ofto ~~the~~perform ~~exploration,~~hydraulic ~~production and transportation of oil~~fracturing, ~~natural~~impact ~~gas and natural gas liquids. While~~ the ~~cost of compliance with these laws is not expected to be material to the~~ Partnership’s ~~operations,~~ability ~~the~~to ~~possibility~~conduct ~~exists that new laws~~business, ~~regulations, executive orders or enforcement policies could be more stringent~~ and ~~significantly~~ increase the Partnership’s ~~compliance~~ costs. ~~If the Partnership is not able to recover the resulting costs through insurance or increased revenues, the Partnership’s ability to pay distributions to holders~~ of ~~the~~compliance ~~Partnership’s common units~~ and ~~service~~doing ~~the Partnership’s debt obligations could be adversely affected~~business.

~~Federal and~~Hydraulic ~~state~~fracturing ~~legislative~~is ~~initiatives~~typically regulated by state oil and ~~executive~~natural ~~orders~~gas ~~relating~~commissions, but the EPA has asserted federal regulatory authority pursuant to the Safe Drinking Water Act over certain hydraulic fracturing activities involving the use of diesel. The EPA has announced an initiative under the Toxic Substance Control Act to develop regulations governing the disclosure and evaluation of hydraulic fracturing chemicals. The EPA also issued a pretreatment standard for the discharge of wastewater resulting from hydraulic fracturing activities, prohibiting the discharges of wastewater pollutants from onshore unconventional oil and ~~natural~~ gas ~~lease~~extraction ~~sales~~to ~~could~~publicly ~~result~~ owned treatment works. In December 2016, the EPA concluded that hydraulic fracturing can impact drinking water resources in ~~increased~~certain ~~costs~~circumstances but also noted that certain data gaps and uncertainties limited the EPA’s assessment. Although the second Trump administration has voiced support for deregulation on environmental matters, the historic trend of more expansive and stricter environmental regulation may continue for the long term. Any additional regulatory actions taken by the EPA could increase the costs of the Partnership’s operations or result in additional operating restrictions or delays,. ~~and~~Restrictions ~~even~~on hydraulic fracturing could ~~result~~reduce inthe amount of oil and natural gas that the Partnership ~~ceasing~~ultimately ~~business~~is ~~operations~~able to produce.

~~Hydraulic~~ ~~fracturing is used to stimulate production of hydrocarbons, particularly natural gas, from dense rock formations. The hydraulic fracturing~~ 35 process involves the injection of water, sand and chemicals under pressure into the formation to fracture the surrounding rock and stimulate production. The operators of the properties the Partnership owns will routinely use hydraulic fracturing techniques in most drilling and completion programs. In past legislative sessions, legislation was introduced before Congress to provide for federal regulation of hydraulic fracturing using materials other than diesel under the Safe Drinking Water Act and to require disclosure of the chemicals used in the fracturing process; this legislation has not passed. At the state and local levels, some jurisdictions have adopted, and others are considering adopting, requirements that could impose more stringent permitting, public disclosure of fracturing chemicals or well construction requirements on hydraulic fracturing activities, as well as bans on hydraulic fracturing activities.

A ~~significant~~ Table ~~percentage~~ of ~~oil and natural gas operations in the United States is conducted on federal lands, and the Biden administration~~Contents took actions to limit future oil and gas operations on federal lands and to increase costs of operations. On January 27, 2021, the Biden administration signed an executive order directing the Secretary of the Interior to temporarily stop issuing new oil and gas leases on federal lands, allowing time to review and reset the federal government’s oil and gas leasing program. The Partnership’s existing leases and permits are operational and held by production, and were therefore not impacted by this executive order. However, the Biden administration proceeded to recommend an overhaul of the federal oil and gas leasing program to limit areas available for energy development and raise costs for companies to drill on public land. In June 2022, the Biden administration resumed oil and natural gas lease sales, but limited it to only 20% of the total acreage originally nominated for leasing and increased the royalty rate. In September 2023, the Biden administration approved three offshore oil and gas lease sales through 2029, but the sale is limited to the Gulf of Mexico and is the smallest offshore oil drilling plan in the program’s history. In January 2025, the Biden administration withdrew more than 625 million acres of federal waters from offshore drilling, including areas along the Atlantic Coast, Eastern Gulf of Mexico, and Pacific Outer Continental Shelf. Then President-elect Trump announced that he would reverse the withdrawal.

~~In the~~The ~~event~~Partnership’s ~~that~~financial ~~new~~condition orand ~~more~~results ~~stringent~~of ~~federal,~~operations ~~state,~~may orbe ~~local~~materially ~~legal~~adversely ~~restrictions~~affected ~~relating~~if to the ~~hydraulic fracturing process are adopted in areas where the~~ Partnership ~~owns~~incurs ~~producing~~costs ~~properties,~~and ~~the~~liabilities ~~Partnership~~due ~~could~~to ~~incur~~a ~~potentially~~failure ~~significant added costs~~ to comply with ~~such~~ ~~requirements,~~environmental ~~experience~~regulations ~~delays~~ or ~~curtailment~~a inrelease ~~the pursuit~~ of ~~exploration,~~hazardous ~~development,~~substances orinto production activities, and perhaps even be precluded from participating in drilling wells. More widespread or prolonged moratoriums on lease sales or prohibitions of hydraulic fracturing could, depending on the ~~makeup of the Partnership’s assets, cause the Partnership to cease business operations~~environment.

~~Additional regulatory~~The ~~scrutiny~~Partnership bymay ~~the~~incur ~~EPA~~significant ~~could~~costs ~~make~~and itliabilities ~~difficult~~as toa ~~perform~~result ~~hydraulic~~of ~~fracturing,~~environmental ~~impact~~requirements applicable to the ~~Partnership’s ability~~operation toof ~~conduct~~its ~~business~~wells, gathering systems and ~~increase~~other ~~the~~facilities. ~~Partnership’s~~These costs and liabilities could arise under a wide range of ~~compliance~~federal, state and ~~doing~~local ~~business.~~environmental laws and regulations, including, for example:

~~Hydraulic fracturing~~● isthe ~~typically~~Clean ~~regulated~~Air byAct, ~~state~~or ~~oil~~the CAA, and ~~natural~~comparable ~~gas~~state ~~commissions,~~laws ~~but~~and ~~the~~regulations ~~EPA~~that ~~has~~impose ~~asserted~~obligations ~~federal~~related ~~regulatory~~to ~~authority~~emissions ~~pursuant to~~of ~~the~~air ~~Safe~~pollutants; ~~Drinking~~● The Clean Water Act ~~over~~and ~~certain~~comparable ~~hydraulic~~state ~~fracturing~~laws ~~activities~~and ~~involving~~regulations ~~the~~that ~~use~~impose ofobligations ~~diesel.~~related ~~The~~to ~~EPA~~discharges ~~has~~of ~~announced~~pollutants aninto ~~initiative under~~regulated waters; ● the ~~Toxic~~Resource ~~Substance~~Conservation ~~Control~~and Recovery Act, toor ~~develop~~RCRA, ~~regulations~~and ~~governing~~comparable state laws that impose requirements for the ~~disclosure~~handling and ~~evaluation~~disposal of ~~hydraulic~~waste ~~fracturing~~from ~~chemicals. The~~the ~~EPA~~Partnership’s ~~also~~facilities; ~~issued~~● athe ~~pretreatment~~Comprehensive ~~standard~~Environmental ~~for~~Response, ~~the~~Compensation, ~~discharge~~and ofLiability ~~wastewater~~Act, ~~resulting~~or ~~from~~CERCLA, ~~hydraulic~~and ~~fracturing~~comparable ~~activities,~~state ~~prohibiting~~ laws that regulate the ~~discharges~~cleanup of ~~wastewater~~hazardous ~~pollutants~~substances ~~from~~that ~~onshore~~may ~~unconventional~~have ~~oil~~been ~~and~~released ~~gas~~at ~~extraction~~properties tocurrently ~~publicly~~or previously owned ~~treatment~~or ~~works.~~operated Inby ~~December 2016,~~the Partnership or at locations to which the ~~EPA~~Partnership ~~concluded~~has ~~that~~sent waste for disposal; ● the Safe Drinking Water Act and state or local laws and regulations related to underground injection (including hydraulic fracturing); ~~can~~● ~~impact~~the ~~drinking~~Endangered ~~water~~Species ~~resources~~Act inand ~~certain~~comparable ~~circumstances~~state ~~but~~and ~~also~~local ~~noted~~laws ~~that~~and ~~certain data~~regulations ~~gaps~~which protect endangered and ~~uncertainties~~threatened ~~limited~~species and the ~~EPA’s~~ecosystems ~~assessment.~~on ~~Although~~which they depend; ● the ~~second~~National ~~Trump~~Environmental ~~administration~~Policy ~~has~~Act ~~voiced~~and ~~support~~comparable ~~for~~state ~~deregulation on~~statutes which ensure that environmental ~~matters,~~issues ~~the~~are ~~historic~~adequately ~~trend~~addressed ofin ~~more~~decisions ~~expansive~~involving ~~and~~major ~~stricter~~governmental ~~environmental~~actions ~~regulation~~(including ~~may~~the ~~continue~~leasing ~~for~~of government land); ● the ~~long~~Oil ~~term. Any~~Pollution ~~additional~~Act, ~~regulatory~~or ~~actions~~OPA, ~~taken~~which bysubject ~~the~~responsible ~~EPA~~parties ~~could~~to ~~increase~~liability ~~the~~for removal costs ofand ~~the~~damages ~~Partnership’s~~arising ~~operations~~from oran ~~result~~oil spill in ~~additional operating~~waters ~~restrictions~~of orthe ~~delays~~U.S.; ~~Restrictions~~and on● ~~hydraulic~~emergency ~~fracturing~~planning ~~could~~and ~~reduce~~community right to know regulations under the ~~amount~~Title III of ~~oil~~CERCLA and ~~natural~~similar ~~gas~~state statutes require that the Partnership ~~ultimately~~ isorganizes ~~able~~and/or todiscloses ~~produce~~information about hazardous materials used or produced in its operations.

35Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of orders enjoining future operations. Certain environmental statutes, including CERCLA, OPA and analogous state laws and regulations, impose strict joint and several liability for costs required to clean up and restore sites where hazardous substances or other waste products have been disposed of or otherwise released. More stringent laws and regulations, including any related to climate change and greenhouse gases, may be adopted in the future. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other waste products into the environment.

~~Index~~Climate change legislation or regulations restricting emissions of greenhouse gases, or GHGs, could result in increased operating costs and reduced demand for the oil, natural gas and natural gas liquids the Partnership produces.

~~The Partnership~~In the absence of comprehensive federal legislation on GHG emission control, the EPA attempted to require the permitting of GHG emissions. Although the Supreme Court struck down the permitting requirements, it upheld the EPA’s ~~financial~~authority ~~condition~~to ~~and~~control ~~results~~GHG emissions when a permit is required due to emissions of ~~operations~~other ~~may~~pollutants. beThese ~~materially~~permitting ~~adversely~~provisions, ~~affected~~to ifthe extent applicable to the Partnership ~~incurs~~’s ~~costs~~operations, could require the operator(s) of the Partnership’s properties to implement emission controls or other measures to reduce GHG emissions and ~~liabilities~~the ~~due~~Partnership could incur additional costs to asatisfy ~~failure~~those requirements. Further, the EPA has issued rules to ~~comply~~significantly ~~with~~reduce ~~environmental~~methane ~~regulations~~emissions orfrom new and existing oil and natural gas production sources and natural gas processing and transmission sources. The broader recent trend of more expansive and stricter climate change regulation could stall at the federal level in a ~~release~~second Trump administration, but the long-term trend of ~~hazardous~~more ~~substances~~expansive ~~into~~and stricter regulation, including at the ~~environment~~ state level, may continue for the long term.

~~The Partnership~~In ~~may~~addition, ~~incur~~the ~~significant~~EPA ~~costs~~requires the reporting of GHG emissions from specified large GHG emission sources including onshore and ~~liabilities~~offshore asoil aand ~~result~~natural ofgas ~~environmental~~production ~~requirements~~facilities ~~applicable~~and toonshore ~~the~~oil ~~operation~~and ofnatural ~~its wells~~gas processing, ~~gathering~~transmission, ~~systems~~storage and ~~other~~distribution facilities, which may include facilities the Partnership owns. ~~These~~Reporting ~~costs~~of ~~and~~GHG ~~liabilities~~emissions ~~could~~from ~~arise~~such ~~under~~facilities ais ~~wide~~required ~~range~~on an annual basis. Should the operator(s) of ~~federal,~~the ~~state~~Partnership’s ~~and~~properties ~~local environmental~~trigger ~~laws~~the ~~and~~reporting ~~regulations~~requirement, ~~including,~~the ~~for~~Partnership ~~example:~~will incur costs associated with the reporting obligation.

● the Clean Air Act, or the CAA, and comparable state laws and regulations that impose obligations related to emissions of air pollutants; ● The Clean Water Act and comparable state laws and regulations that impose obligations related to discharges of pollutants into regulated waters; ● the Resource Conservation and Recovery Act, or RCRA, and comparable state laws that impose requirements for the handling and disposal of waste from the Partnership’s facilities; ● the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, and comparable state laws that regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by the Partnership or at locations to which the Partnership has sent waste for disposal; ● the Safe Drinking Water Act and state or local laws and regulations related to underground injection (including hydraulic fracturing); ● the Endangered Species Act and comparable state and local laws and regulations which protect endangered and threatened species and the ecosystems on which they depend; ● the National Environmental Policy Act and comparable state statutes which ensure that environmental issues are adequately addressed in decisions involving major governmental actions (including the leasing of government land); ● the Oil Pollution Act, or OPA, which subject responsible parties to liability for removal costs and damages arising from an oil spill in waters of the U.S.; and ● emergency planning and community right to know regulations under the Title III of CERCLA and similar state statutes require that the Partnership organizes and/or discloses information about hazardous materials used or produced in its operations. 36

~~Failure~~ to Table ~~comply with these laws and regulations may trigger a variety~~ of ~~administrative, civil and criminal enforcement measures, including~~Contents the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of orders enjoining future operations. Certain environmental statutes, including CERCLA, OPA and analogous state laws and regulations, impose strict joint and several liability for costs required to clean up and restore sites where hazardous substances or other waste products have been disposed of or otherwise released. More stringent laws and regulations, including any related to climate change and greenhouse gases, may be adopted in the future. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other waste products into the environment.

~~Climate change~~In past legislative sessions, Congress considered comprehensive federal legislation to reduce emissions of GHGs and many states and regions meanwhile have adopted or ~~regulations~~have ~~restricting~~considered measures to reduce GHG emission reduction levels, often involving the planned development of GHG emission inventories and/or cap and trade programs. Most of these cap and trade programs work by requiring major sources of emissions or major producers of ~~greenhouse~~fuels ~~gases~~to acquire and surrender emission allowances. Federal efforts at a cap and trade program have not moved forward in Congress. The adoption and implementation of any legislation or regulatory programs imposing reporting obligations on, or limiting emissions of GHGs from, equipment and operations on the Partnership’s properties could ~~result~~require inthe ~~increased~~Partnership ~~operating~~to incur costs ~~and~~to ~~reduced~~ reduce emissions of GHGs associated with the Partnership’s operations or could adversely affect demand for the oil, natural gas and natural gas liquids that the Partnership produces.

~~In the~~Significant ~~absence~~physical effects of ~~comprehensive~~climatic ~~federal~~change ~~legislation~~have ~~on GHG emission control,~~ the ~~EPA~~potential ~~attempted~~ to ~~require~~damage the ~~permitting of GHG emissions. Although the Supreme Court struck down the permitting requirements, it upheld the EPA~~Partnership’s ~~authority to control GHG emissions when a permit is required due to emissions of other pollutants. These permitting provisions~~facilities, todisrupt the ~~extent applicable to the~~ Partnership’s ~~operations,~~ ~~could~~production ~~require~~activities ~~the~~and ~~operator(s)~~cause of the Partnership’s ~~properties~~ to ~~implement emission controls or other measures to reduce GHG emissions and the Partnership could~~ incur ~~additional~~significant costs toin ~~satisfy~~preparing ~~those~~for ~~requirements.~~or ~~Further,~~responding ~~the EPA has issued rules~~ to ~~significantly reduce~~those ~~methane emissions from new and existing oil and natural gas production sources and natural gas processing and transmission sources~~effects. The broader recent trend of more expansive and stricter climate change regulation could stall at the federal level in a second Trump administration, but the long-term trend of more expansive and stricter regulation, including at the state level, may continue for the long term.

In ~~addition~~ an interpretative guidance on climate change disclosures, the ~~EPA~~SEC ~~requires~~indicated ~~the~~that ~~reporting~~climate ofchange ~~GHG~~could ~~emissions~~have ~~from~~an ~~specified~~effect ~~large~~on ~~GHG~~the ~~emission~~severity ~~sources~~of weather (including ~~onshore~~hurricanes and ~~offshore~~floods), ~~oil and~~sea ~~natural~~levels, ~~gas~~the ~~production~~arability ~~facilities~~of farmland, and ~~onshore~~water ~~oil~~availability and ~~natural~~quality. ~~gas~~If ~~processing,~~such ~~transmission~~effects were to occur, ~~storage~~the ~~and~~operations ~~distribution~~that ~~facilities, which~~the Partnership plans to engage in may be adversely affected. Potential adverse effects could include damages to the Partnership’s facilities from powerful winds or rising waters in low lying areas, disruption of the Partnership’s ~~owns.~~production ~~Reporting~~activities either because of ~~GHG~~climate-related ~~emissions~~damages to the Partnership’s facilities or the Partnership’s costs of operation potentially arising from such ~~facilities~~climatic iseffects, ~~required~~less onefficient anor ~~annual~~non-routine ~~basis.~~operating ~~Should~~ practices necessitated by climate effects or increased costs for insurance coverages in the ~~operator(s)~~aftermath of such effects. Significant physical effects of climate change could also have an indirect effect on the Partnership’s ~~properties~~financing ~~trigger~~and operations by disrupting the ~~reporting~~transportation ~~requirement~~or process related services provided by midstream companies, service companies or suppliers with whom the Partnership ~~will~~has ~~incur~~a business relationship. The Partnership may not be able to recover through insurance some or any of the damages, losses or costs ~~associated with~~that may result from potential physical effects of climate change. Should drought conditions occur, the ~~reporting~~Partnership’s ~~obligation~~ability to obtain water in sufficient quality and quantity could be impacted and in turn, the Partnership’s ability to perform hydraulic fracturing operations could be restricted or made more costly.

36Cyber-attacks targeting systems and infrastructure used by the oil and gas industry may adversely impact the Partnership’s operations.

~~Index~~The Partnership’s business has become increasingly dependent on digital technologies to conduct certain exploration, development, production and financial activities. The Partnership depends on digital technology to estimate quantities of oil and gas reserves, process and record financial and operating data, analyze seismic and drilling information, and communicate with the general partner and third-party partners. Unauthorized access to the Partnership’s seismic data, reserves information or other proprietary information could lead to data corruption, communication interruption, or other operational disruptions in the Partnership’s exploration or production operations. Also, computers control nearly all of the oil and gas distribution systems in the United States and abroad, which are necessary to transport the Partnership’s production to market. A cyber-attack involving the Partnership’s information systems and related infrastructure, or that of the Partnership’s business associates, could negatively impact the Partnership’s operations in a variety of ways, including but not limited to, the following:

~~In past~~● ~~legislative~~Unauthorized ~~sessions,~~access ~~Congress~~to ~~considered~~seismic ~~comprehensive~~data, ~~federal~~reserves ~~legislation~~information, tostrategic ~~reduce~~information, ~~emissions~~or ofother ~~GHGs~~sensitive ~~and~~or ~~many~~proprietary ~~states~~information ~~and~~could ~~regions meanwhile~~ have ~~adopted~~a ornegative ~~have~~impact ~~considered~~on ~~measures~~the toPartnership’s ~~reduce~~ability ~~GHG~~to ~~emission~~compete ~~reduction~~for ~~levels,~~oil ~~often~~and ~~involving~~gas ~~the~~resources; ~~planned~~● ~~development~~Data ~~of GHG~~corruption, ~~emission~~communication ~~inventories~~interruption, ~~and/~~or ~~cap~~other ~~and~~operational ~~trade~~disruption ~~programs.~~during ~~Most~~drilling ofactivities ~~these~~could ~~cap~~result ~~and~~in ~~trade~~failure ~~programs~~to ~~work~~reach bythe ~~requiring~~intended ~~major~~target ~~sources~~or ofa ~~emissions~~ drilling incident; ● Data corruption or ~~major~~operational ~~producers~~disruptions of ~~fuels~~production-related toinfrastructure ~~acquire~~could ~~and~~result ~~surrender~~in ~~emission~~a ~~allowances.~~loss ~~Federal~~of ~~efforts~~production, ator aaccidental ~~cap~~discharge; ~~and~~● ~~trade~~A ~~program~~cyber-attack ~~have~~on ~~not~~a ~~moved~~vendor ~~forward in~~or ~~Congress.~~service ~~The~~provider ~~adoption~~could ~~and~~result ~~implementation~~in ofsupply ~~any~~chain ~~legislation~~disruptions which could delay or ~~regulatory~~halt ~~programs~~the ~~imposing~~Partnership’s ~~reporting~~major ~~obligations~~development projects; ● A cyber-attack on third party gathering, pipeline, or ~~limiting emissions~~rail oftransportation ~~GHGs~~systems ~~from,~~could ~~equipment~~delay ~~and~~or ~~operations~~prevent on the Partnership’s ~~properties~~from ~~could~~transporting ~~require~~and ~~the~~marketing ~~Partnership~~its toproduction, ~~incur~~resulting ~~costs~~in ~~to reduce~~a ~~emissions~~loss of ~~GHGs~~revenues; ~~associated~~● ~~with~~A ~~the~~cyber-attack ~~Partnership’s~~involving ~~operations~~commodities exchanges or financial institutions could ~~adversely~~slow ~~affect~~or ~~demand~~halt ~~for~~commodities trading, thus preventing the ~~oil,~~Partnership ~~natural~~from ~~gas and~~marketing ~~natural~~its ~~gas~~production ~~liquids~~or ~~that~~engaging ~~the~~in ~~Partnership~~hedging ~~produces.~~activities, resulting in a loss of revenues;

~~Significant~~ ~~physical effects of climatic change have the potential to damage the Partnership’s facilities, disrupt the Partnership’s~~ 37 ~~production activities and cause the Partnership to incur significant costs in preparing for or responding to those effects.~~

In an Table ~~interpretative guidance on climate change disclosures, the SEC indicated that climate change could have an effect on the severity~~ of ~~weather (including hurricanes and floods), sea levels, the arability of farmland, and water availability and quality. If such effects~~Contents were to occur, the operations that the Partnership plans to engage in may be adversely affected. Potential adverse effects could include damages to the Partnership’s facilities from powerful winds or rising waters in low lying areas, disruption of the Partnership’s production activities either because of climate-related damages to the Partnership’s facilities or the Partnership’s costs of operation potentially arising from such climatic effects, less efficient or non-routine operating practices necessitated by climate effects or increased costs for insurance coverages in the aftermath of such effects. Significant physical effects of climate change could also have an indirect effect on the Partnership’s financing and operations by disrupting the transportation or process related services provided by midstream companies, service companies or suppliers with whom the Partnership has a business relationship. The Partnership may not be able to recover through insurance some or any of the damages, losses or costs that may result from potential physical effects of climate change. Should drought conditions occur, the Partnership’s ability to obtain water in sufficient quality and quantity could be impacted and in turn, the Partnership’s ability to perform hydraulic fracturing operations could be restricted or made more costly.

~~Cyber~~● A cyber-~~attacks targeting~~attack which halts activities at a power generation facility or refinery using natural gas as feed stock could have a significant impact on the natural gas market, resulting in reduced demand for the Partnership’s production, lower natural gas prices, and reduced revenues; ● A cyber-attack on a communications network or power grid could cause operational disruption resulting in loss of revenues; ● A cyber-attack on the Partnership’s automated and surveillance systems could cause a loss in production and ~~infrastructure~~potential ~~used~~environmental byhazards; ● A deliberate corruption of the ~~oil~~Partnership’s financial or operating data could result in events of non-compliance which could then lead to regulatory fines or penalties; and ~~gas~~● ~~industry~~A ~~may~~cyber-attack ~~adversely~~resulting ~~impact~~in the loss or disclosure of, or damage to, the Partnership’s ~~operations~~or any of its customer’s or supplier’s data or confidential information could harm the Partnership’s business by damaging its reputation, subjecting it to potential financial or legal liability, and requiring it to incur significant costs, including costs to repair or restore its systems and data or to take other remedial steps.

~~The Partnership’s~~All ~~business~~of ~~has~~the ~~become~~above ~~increasingly~~could ~~dependent~~negatively onimpact ~~digital~~the ~~technologies~~Partnership’s tooperational ~~conduct certain exploration, development, production~~ and financial ~~activities~~results. ~~The Partnership depends on digital technology to estimate quantities of oil and gas reserves~~Additionally, ~~process~~certain ~~and~~cyber ~~record financial and operating data~~incidents, ~~analyze~~such ~~seismic~~as ~~and drilling information~~surveillance, ~~and~~may ~~communicate~~remain ~~with~~undetected ~~the~~for ~~general~~an ~~partner~~extended ~~and~~period. ~~third-party~~As ~~partners. Unauthorized~~cyber ~~access~~threats continue to evolve, the Partnership’s ~~seismic~~may ~~data,~~be ~~reserves~~required ~~information~~to orexpend ~~other~~significant ~~proprietary~~additional ~~information~~resources ~~could~~to ~~lead~~continue to ~~data corruption,~~modify ~~communication interruption,~~ or ~~other~~enhance ~~operational~~its ~~disruptions~~protective inmeasures ~~the Partnership’s exploration~~ or ~~production~~to ~~operations. Also,~~investigate ~~computers control nearly all of the oil~~ and ~~gas~~remediate ~~distribution~~any ~~systems~~information insecurity ~~the~~vulnerabilities. ~~United States and abroad~~Additionally, ~~which are necessary to transport~~ the ~~Partnership’s~~growth ~~production~~of ~~to market. A~~ cyber-~~attack~~attacks ~~involving~~has ~~the~~resulted ~~Partnership’s~~in ~~information~~evolving ~~systems~~legal and ~~related~~compliance ~~infrastructure, or~~matters ~~that~~which ofimpose ~~the~~significant ~~Partnership’s~~costs ~~business~~that ~~associates,~~are ~~could~~likely ~~negatively impact the Partnership’s operations in a variety of ways, including but not limited~~ to, ~~the~~increase ~~following:~~over time.

●Loss ~~Unauthorized~~of ~~access~~Partnership ~~to seismic data, reserves~~ information, ~~strategic information, or other sensitive or proprietary information could have a negative impact on the Partnership’s ability to compete for oil~~ and ~~gas~~computer ~~resources;~~systems ~~● Data corruption, communication interruption, or other operational disruption during drilling activities~~ could ~~result~~adversely inaffect ~~failure to reach~~ the intended target or a drilling incident; ● Data corruption or operational disruptions of production-related infrastructure could result in a loss of production, or accidental discharge; ● A cyber-attack on a vendor or service provider could result in supply chain disruptions which could delay or halt the Partnership’s major development projects; ● A cyber-attack on third party gathering, pipeline, or rail transportation systems could delay or prevent the Partnership from transporting and marketing its production, resulting in a loss of revenues; ● A cyber-attack involving commodities exchanges or financial institutions could slow or halt commodities trading, thus preventing the Partnership from marketing its production or engaging in hedging activities, resulting in a loss of revenues;business.

37The Partnership will be heavily dependent on information systems and computer-based programs of its operators, including well operations information, seismic data, electronic data processing and accounting data. If any of such programs or systems were to fail or create erroneous information in the hardware or software network infrastructure, possible consequences include the Partnership’s loss of communication links, inability of the Partnership’s operators to find, produce, process and sell oil and natural gas and inability to automatically process commercial transactions or engage in similar automated or computerized business activities. Any such consequence could have a material adverse effect on the Partnership’s business.

~~Index~~Tax Risks to Limited Partners

●The APartnership’s ~~cyber-attack~~tax ~~which~~treatment ~~halts~~depends ~~activities~~on atits astatus ~~power generation facility or refinery using natural gas~~ as ~~feed stock could have~~ a ~~significant~~partnership ~~impact on the natural gas market, resulting in reduced demand~~ for ~~the~~U.S. ~~Partnership’s~~federal ~~production,~~income ~~lower~~tax ~~natural~~purposes ~~gas prices,~~ and ~~reduced~~not ~~revenues;~~being ●subject Ato ~~cyber-attack on~~ a ~~communications~~material ~~network~~amount orof ~~power~~entity-level ~~grid~~taxation ~~could~~by ~~cause~~individual ~~operational~~states. ~~disruption~~If ~~resulting~~the inInternal ~~loss~~Revenue ofService ~~revenues;~~treats ~~● A cyber-attack on~~ the Partnership’s ~~automated~~as ~~and surveillance systems could cause~~ a ~~loss~~corporation inor ~~production and potential environmental hazards; ● A deliberate corruption of~~ the Partnership’s ~~financial~~becomes orsubject ~~operating~~to ~~data~~a ~~could~~material ~~result~~amount ~~in events~~ of ~~non~~entity-~~compliance~~level ~~which~~taxation ~~could~~for ~~then~~state ~~lead~~tax ~~to regulatory fines or penalties; and ● A cyber-attack resulting in the loss or disclosure of~~purposes, orit ~~damage~~would ~~to,~~reduce the ~~Partnership’s~~amount ~~or any~~ of ~~its~~cash ~~customer’s~~available orfor ~~supplier’s~~distribution ~~data~~to ~~or confidential information could harm~~ the Partnership’s ~~business~~limited by damaging its reputation, subjecting it to potential financial or legal liability, and requiring it to incur significant costs, including costs to repair or restore its systems and data or to take other remedial stepspartners.

~~All of~~The ~~the~~anticipated ~~above~~after-tax ~~could~~economic ~~negatively~~benefit ~~impact~~of an investment in the ~~Partnership’s~~common ~~operational~~units ~~and~~depends ~~financial~~largely ~~results.~~on ~~Additionally,~~the ~~certain~~Partnership ~~cyber~~being ~~incidents, such~~treated as ~~surveillance,~~a ~~may~~partnership ~~remain~~for ~~undetected~~U.S. ~~for~~federal anincome ~~extended~~tax ~~period~~purposes. AsDespite ~~cyber~~being ~~threats~~organized ~~continue~~as toa ~~evolve~~partnership under state law, the Partnership ~~may~~will be ~~required to~~treated ~~expend~~as ~~significant~~a ~~additional~~corporation ~~resources~~for toU.S. ~~continue~~federal toincome ~~modify~~tax orpurposes ~~enhance~~unless ~~its~~it ~~protective~~satisfies ~~measures~~the or“qualifying toincome” ~~investigate~~requirement. ~~and~~Based ~~remediate~~on ~~any information~~the ~~security~~Partnership’s ~~vulnerabilities.~~current ~~Additionally~~operations, the ~~growth~~Partnership ofbelieves ~~cyber-attacks~~it ~~has~~satisfies ~~resulted~~the inqualifying ~~evolving~~income ~~legal~~requirement. ~~and~~The ~~compliance~~Partnership ~~matters which~~has ~~impose~~not ~~significant~~requested, ~~costs~~and ~~that~~does ~~are~~not ~~likely~~plan to ~~increase~~request, ~~over~~a ~~time~~ruling from the Internal Revenue Service (“IRS”) on this or any other tax matter affecting it.

~~Loss~~ If the Partnership was treated as a corporation for U.S. federal income tax purposes, the Partnership would pay federal income tax on the Partnership’s taxable income at the corporate tax rate, which, effective January 1, 2018, is currently a maximum of 21% and likely would pay state income tax at varying rates. Distributions to a limited partner would generally be taxed again as corporate distributions, and no income, gains, losses or deductions would flow through to a limited partner. Because a tax would be imposed upon the Partnership ~~information~~as a corporation, cash available for distribution to a limited partner would be substantially reduced. Therefore, treatment of the Partnership as a corporation would result in a material reduction in the anticipated cash flows and ~~computer~~after-tax ~~systems~~return ~~could~~to ~~adversely~~the ~~affect~~limited partners, likely causing a substantial reduction in the value of the Partnership’s ~~business~~common units.

~~The Partnership~~Current ~~will~~law bemay ~~heavily~~change ~~dependent~~so onas ~~information~~to ~~systems~~cause ~~and~~the ~~computer-based~~Partnership ~~programs~~to ofbe ~~its~~treated ~~operators,~~as ~~including~~a ~~well~~corporation ~~operations information,~~for ~~seismic data, electronic data processing and accounting data~~U.S. Iffederal ~~any~~income oftax ~~such~~purposes ~~programs~~ or ~~systems~~otherwise ~~were~~subject tothe ~~fail~~Partnership orto ~~create erroneous~~entity-level ~~information~~taxation. inIn ~~the~~addition, ~~hardware~~because orof ~~software~~widespread ~~network~~state ~~infrastructure,~~budget ~~possible~~deficits ~~consequences~~and ~~include~~other ~~the~~reasons, ~~Partnership’s~~several ~~loss of~~states ~~communication~~have ~~links,~~ways ~~inability~~to ofsubject ~~the~~partnerships ~~Partnership’s operators~~ to ~~find,~~entity-level ~~produce,~~taxation ~~process~~through ~~and~~the ~~sell~~imposition ~~oil~~of ~~and~~state ~~natural~~income, ~~gas~~franchise and ~~inability to~~other ~~automatically~~forms ~~process~~of ~~commercial~~taxation. ~~transactions~~Imposition orof ~~engage~~such intaxes ~~similar~~on ~~automated~~the orPartnership ~~computerized~~will ~~business~~reduce ~~activities.~~the ~~Any~~cash ~~such~~available ~~consequence could~~for ~~have~~distribution to a ~~material~~limited ~~adverse effect on the Partnership’s business~~partner.

~~Tax Risks to Limited Partners~~ 38

~~The Partnership’s tax treatment depends on~~ ~~its~~ Table ~~status as a partnership for U.S. federal income tax purposes and not being subject to a material amount~~ of ~~entity-level taxation by~~Contents individual states. If the Internal Revenue Service treats the Partnership as a corporation or the Partnership becomes subject to a material amount of entity-level taxation for state tax purposes, it would reduce the amount of cash available for distribution to the Partnership’s limited partners.

~~The~~An ~~anticipated~~IRS ~~after-tax~~contest ~~economic benefit~~ of ~~an investment in~~ the ~~common units depends largely on the~~ Partnership’s ~~being treated as a partnership for~~ U.S. federal income tax ~~purposes. Despite~~positions ~~being~~may ~~organized~~adversely asaffect ~~a partnership under state law,~~ the ~~Partnership~~value ~~will be treated as a corporation~~ for ~~U.S. federal income tax purposes unless it satisfies~~ the ~~“qualifying income” requirement. Based on the~~ Partnership’s ~~current~~common ~~operations~~units, and the ~~Partnership~~ ~~believes~~cost itof ~~satisfies~~any ~~the~~IRS ~~qualifying~~contest ~~income~~will ~~requirement.~~reduce ~~The~~the Partnership’s ~~has~~cash ~~not~~available ~~requested,~~for ~~and~~distribution ~~does not plan~~ to ~~request, a ruling from~~ the ~~Internal~~Partnership’s ~~Revenue~~limited ~~Service (“IRS”) on this or any other tax matter affecting it~~partners.

IfThe Partnership has not requested a ruling from the ~~Partnership~~IRS ~~was~~with ~~treated~~respect to its treatment as a ~~corporation~~ partnership for U.S. federal income tax purposes, or any other matter affecting the Partnership. ~~would~~It ~~pay~~may ~~federal~~be ~~income~~necessary ~~tax~~to onresort ~~the~~to ~~Partnership’s~~administrative ~~taxable~~or ~~income~~court atproceedings ~~the~~to ~~corporate tax~~sustain ~~rate,~~some ~~which,~~or ~~effective~~all ~~January~~of 1,the ~~2018,~~Partnership’s iscounsel’s ~~currently~~conclusions aor ~~maximum~~the ofpositions ~~21%~~the ~~and~~Partnership ~~likely~~takes. ~~would~~A ~~pay~~court ~~state~~may ~~income~~not ~~tax~~agree atwith ~~varying~~all ~~rates.~~of ~~Distributions to~~the aPartnership’s ~~limited~~counsel’s ~~partner~~conclusions ~~would~~or ~~generally~~positions bethe ~~taxed~~Partnership ~~again~~takes. asAny ~~corporate~~contest ~~distributions,~~with ~~and~~the noIRS ~~income,~~may ~~gains,~~materially ~~losses~~and oradversely ~~deductions~~impact ~~would~~the ~~flow through~~value toof athe ~~limited~~Partnership’s ~~partner~~units. ~~Because~~In aaddition, ~~tax~~costs ~~would~~incurred bein ~~imposed~~any ~~upon~~contest with the ~~Partnership~~IRS aswill abe ~~corporation,~~borne ~~cash~~indirectly ~~available~~by ~~for~~limited ~~distribution~~partners ~~to a~~and ~~limited~~the ~~partner~~General ~~would~~Partner bebecause ~~substantially~~the ~~reduced.~~costs ~~Therefore,~~will ~~treatment~~reduce of the Partnership’s ascash aavailable ~~corporation~~for ~~would~~distribution. ~~result~~In inaddition, a ~~material reduction~~successful inIRS challenge to the ~~anticipated~~Partnership’s ~~cash~~U.S. ~~flows~~federal ~~and~~income ~~after-~~tax ~~return~~positions tocould ~~the~~adversely ~~limited~~affect ~~partners~~the amount, ~~likely~~character ~~causing~~and atiming ~~substantial~~of ~~reduction~~taxable inincome ~~the~~or ~~value of~~loss ~~the~~allocated ~~Partnership’s~~to ~~common~~limited ~~units~~partners.

~~Current~~If ~~law~~the ~~may~~IRS ~~change~~makes soaudit asadjustments to ~~cause~~ the Partnership to’s ~~be treated as a corporation for U.S. federal~~ income tax ~~purposes or otherwise subject the Partnership to entity-level taxation. In addition~~returns, ~~because~~it ~~of widespread state budget deficits~~ (and ~~other~~some ~~reasons, several~~ states) ~~have~~may ~~ways~~assess toand ~~subject~~collect ~~partnerships~~any totaxes ~~entity-level taxation~~(including ~~through~~any ~~the~~applicable ~~imposition~~penalties ~~of state income, franchise~~ and ~~other~~interest) ~~forms~~resulting offrom ~~taxation.~~such ~~Imposition~~audit ofadjustment ~~such~~directly ~~taxes~~from on the Partnership, ~~will reduce~~in ~~the~~which case cash available for distribution to a limited ~~partner~~partners might be substantially reduced.

38If the IRS makes audit adjustments to the Partnership’s income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from the Partnership. To the extent possible under these rules, the General Partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if the Partnership is eligible, issue a revised Schedule K-1 to each limited partner with respect to an audited and adjusted return. Although the General Partner may elect to have limited partners take such audit adjustment(s) into account in accordance with their interests in the Partnership during the tax year under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances. As a result, the Partnership’s current limited partners may bear some or all of the tax liability resulting from such audit adjustment(s), even if such limited partners did not own units in the Partnership during the tax year under audit. If, as a result of any such audit adjustment, the Partnership is required to make payments of taxes, penalties and interest, cash available for distribution to limited partners might be substantially reduced. These rules are not applicable for tax years beginning on or prior to December 31, 2017.

~~Index~~Tax-exempt entities and foreign persons face unique tax issues from owning common units that may result in adverse tax consequences to them.

AnInvestment ~~IRS~~in ~~contest~~Partnership common units by tax-exempt entities, such as individual retirement accounts (“IRAs”), and non-U.S. persons raises issues unique to them. For example, much of the Partnership’s income allocated to organizations that are exempt from federal income tax, including IRAs, will be unrelated business income and will be taxable to them. Similarly, much of the Partnership’s income allocable to non-U.S. ~~federal~~ persons will constitute effectively connected U.S. trade or business income, and non-U.S. persons will be required to file U.S. federal tax ~~positions~~returns ~~may~~and ~~adversely~~pay ~~affect~~tax ~~the~~on ~~value~~their ~~for~~share of the Partnership’s taxable income. Cash distributions on Partnership common units paid to foreign persons will be reduced by withholding taxes at the highest applicable effective U.S. tax rate, and foreign persons that hold Partnership common units will be required to file U.S. federal tax returns and pay tax on their share of our taxable income allocated to them. Upon the ~~cost~~sale, exchange or other disposition of a common unit by a foreign person, the transferee is generally required to withhold 10% of the amount realized on such sale, exchange or other disposition if any ~~IRS~~ ~~contest~~portion ~~will~~of ~~reduce~~the gain on such sale, exchange or other disposition would be treated as effectively connected with a U.S. trade or business. Beginning in 2023, the ~~Partnership’s~~IRS ~~cash~~has ~~available~~clarified that brokers generally are responsible for withholding 10% of the gross proceeds upon sale of an investment in a publicly traded partnership by a foreign investor. Distributions to foreign persons may also be subject to additional withholding of 10% under these rules to the extent a portion of a distribution is attributable to an amount in excess of Partnership cumulative net income that has not previously been distributed. Non-U.S. and tax-exempt limited partners should consult their tax advisors regarding the tax implications to them of on an investment in the Partnership’s ~~limited~~ ~~partners~~common units.

~~The~~A ~~Partnership~~limited ~~has~~partner ~~not requested a ruling from the IRS with respect to its treatment as a partnership for U.S. federal income tax purposes or any other matter affecting the Partnership. It~~ may be ~~necessary~~required to ~~resort~~pay totaxes ~~administrative~~on orincome ~~court~~from ~~proceedings to sustain some or all of~~ the Partnership’s ~~counsel’s conclusions~~even orif ~~the~~a ~~positions~~limited ~~the~~partner ~~Partnership~~did ~~takes. A court may~~ not ~~agree~~receive with all of the Partnership’s counsel’s conclusions or positions the Partnership takes. Any contest with the IRS may materially and adversely impact the value of the Partnership’s units. In addition, costs incurred in any ~~contest~~sufficient ~~with the IRS will be borne indirectly by limited partners and the General Partner because the costs will reduce the Partnership’s~~ cash ~~available~~distributions ~~for~~from ~~distribution. In addition, a successful IRS challenge to~~ the Partnership~~’s U~~.~~S. federal income tax positions could adversely affect the amount, character and timing of taxable income or loss allocated to limited partners.~~

IfBecause holders of the ~~IRS~~Partnership’s ~~makes~~common ~~audit~~units ~~adjustments~~will be treated as partners to whom the Partnership’s will allocate taxable income ~~tax~~which ~~returns~~could be different in amount than the cash the Partnership distributes, ita ~~(and~~limited ~~some~~partner ~~states)~~will ~~may~~be ~~assess~~required ~~and~~to ~~collect~~pay any federal income taxes ~~(including~~and, ~~any~~in ~~applicable~~some ~~penalties~~cases, state and ~~interest)~~local ~~resulting from~~income ~~such~~taxes ~~audit~~on ~~adjustment~~its ~~directly~~share of the Partnership’s taxable income even if a limited partner receives no cash distributions from the Partnership,. inA ~~which~~limited ~~case~~partner may not receive cash ~~available~~distributions ~~for~~from ~~distribution~~the Partnership equal to ~~limited~~its ~~partners~~share ~~might~~of bethe ~~substantially reduced~~Partnership’s taxable income or even equal to the tax liability that results from that income.

~~If the IRS makes audit adjustments to the Partnership’s~~ ~~income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting~~ 39 from such audit adjustment directly from the Partnership. To the extent possible under these rules, the General Partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if the Partnership is eligible, issue a revised Schedule K-1 to each limited partner with respect to an audited and adjusted return. Although the General Partner may elect to have limited partners take such audit adjustment(s) into account in accordance with their interests in the Partnership during the tax year under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances. As a result, the Partnership’s current limited partners may bear some or all of the tax liability resulting from such audit adjustment(s), even if such limited partners did not own units in the Partnership during the tax year under audit. If, as a result of any such audit adjustment, the Partnership is required to make payments of taxes, penalties and interest, cash available for distribution to limited partners might be substantially reduced. These rules are not applicable for tax years beginning on or prior to December 31, 2017.

~~Tax-exempt entities and foreign persons face unique tax issues~~ ~~from~~ Table ~~owning~~of ~~common units that may result in adverse tax consequences to them.~~Contents

~~Investment~~A inlimited ~~Partnership~~partner ~~common~~may ~~units~~not byqualify ~~tax-exempt entities,~~for ~~such~~percentage asdepletion ~~individual retirement accounts (“IRAs”)~~deductions, and ~~non-U.S.~~even ~~persons~~if ~~raises~~a ~~issues~~limited ~~unique~~partner todoes ~~them.~~so ~~For example~~qualify, ~~much~~ ofa ~~the~~limited ~~Partnership’s~~partner ~~income allocated to organizations that are exempt from federal income tax, including IRAs,~~ will be unrelated business income and will be taxable to them. Similarly, much of the Partnership’s income allocable to non-U.S. persons will constitute effectively connected U.S. trade or business income, and non-U.S. persons will be required to file U.S. federal tax returns and pay tax on their share of the Partnership’s taxable income. Cash distributions on Partnership common units paid to foreign persons will be reduced by withholding taxes at the highest applicable effective U.S. tax ratedetermine, and ~~foreign~~maintain ~~persons~~records ~~that hold Partnership common units will be required to file U.S. federal tax returns and pay tax on their share of our taxable income allocated to them. Upon the sale~~supporting, ~~exchange or other disposition of a common unit by a foreign person,~~ the transferee is generally required to withhold 10% of the amount realized on such sale, exchange or other disposition if any portion of the gain on such sale, exchange or other disposition would be treated as effectively connected with a Udeduction.S. trade or business. Beginning in 2023, the IRS has clarified that brokers generally are responsible for withholding 10% of the gross proceeds upon sale of an investment in a publicly traded partnership by a foreign investor. Distributions to foreign persons may also be subject to additional withholding of 10% under these rules to the extent a portion of a distribution is attributable to an amount in excess of Partnership cumulative net income that has not previously been distributed. Non-U.S. and tax-exempt limited partners should consult their tax advisors regarding the tax implications to them of on an investment in the Partnership’s common units.

APercentage ~~limited~~depletion ~~partner~~ may be ~~required~~available with respect to ~~pay~~limited ~~taxes~~partners onwho ~~income~~qualify ~~from~~ under the independent producer exemption contained in Internal Revenue Code (“Code”) Section 613A(c). For this purpose, an independent producer is a person not directly or indirectly involved in the retail sale of oil, natural gas, or derivative products or the operation of a major refinery. The Partnership ~~even~~cannot determine whether, or provide any assurance that, a limited partner will qualify as an independent producer. Further, if a limited partner ~~did~~does ~~not~~qualify ~~receive~~as ~~any~~an ~~sufficient~~independent ~~cash~~producer, ~~distributions~~the ~~from~~limited partner is required to determine the ~~Partnership~~amount of the allowed percentage depletion deduction and maintain records supporting such determination.

~~Because~~The ~~holders of the~~ Partnership’s ~~common units~~cannot ~~will~~assure beits ~~treated~~limited as partners tothat ~~whom~~it ~~the Partnership~~ will ~~allocate~~meet ~~taxable income which could be different in amount than~~ the ~~cash the~~requirements ~~Partnership~~for ~~distributes,~~its a limited ~~partner~~partners ~~will be required~~ to ~~pay~~deduct ~~any~~intangible ~~federal~~drilling ~~income taxes~~ and, indevelopment ~~some cases, state and local income taxes on its share of the Partnership’s taxable income even if a limited partner receives no cash distributions from the Partnership~~costs. ~~A limited partner may not receive cash distributions from the Partnership equal to its share of the Partnership’s taxable income or even equal to the tax liability that results from that income.~~

39Federal tax law places substantial limits on taxpayers’ ability to deduct intangible drilling and development costs (“IDCs”). Generally speaking, an “operator” is permitted to elect to currently deduct, or capitalize and deduct ratably over a 60-month period, costs that are properly characterized as IDCs that the operator incurs in connection with the drilling and development of oil and natural gas wells. For purposes of deducting IDCs, an “operator” is generally defined as one that owns a working or an operating interest in an oil or gas well. If the Partnership determines that it is an “operator” with respect to its oil and gas wells, the Partnership’s determination is not binding on the IRS. The IRS may assert that the Partnership is not an “operator” with respect to one or more of its oil or gas wells at the time that IDCs are incurred. If the IRS were successful in such a challenge, the Partnership and, therefore, its limited partners, would not be entitled to deduct the IDCs incurred in connection with such wells.

~~Index~~If the Partnership is eligible to deduct IDCs, the Partnership cannot assure its limited partners that IDCs will be deductible in any given year.

AIf ~~limited~~the ~~partner~~Partnership ~~may~~is ~~not~~deemed ~~qualify~~to ~~for~~be ~~percentage~~an ~~depletion~~operator ~~deductions, and~~with ~~even~~respect ifto aone ~~limited~~or ~~partner~~more ~~does~~of soits ~~qualify~~oil or gas wells, its classification of a ~~limited~~cost ~~partner~~as ~~will~~an beIDC ~~required~~is tonot ~~determine,~~binding ~~and~~on ~~maintain~~the ~~records~~IRS. ~~supporting,~~The IRS may reclassify an item classified by the ~~deduction~~Partnership as an IDC as a cost that must be capitalized or that is not deductible.

~~Percentage~~The ~~depletion~~IRS ~~may~~could bechallenge ~~available with respect to limited partners who qualify under~~ the ~~independent~~timing ~~producer exemption contained in Internal Revenue Code (“Code”) Section 613A(c). For this purpose, an independent producer is a person not directly or indirectly involved in the retail sale~~ of ~~oil, natural gas, or derivative products or~~ the ~~operation of a major refinery. The~~ Partnership’s ~~cannot~~deductions ~~determine~~of ~~whether~~IDCs, orwhich ~~provide~~could ~~any~~result ~~assurance~~in ~~that, a limited partner will qualify as~~ an ~~independent~~increase ~~producer.~~to ~~Further, if a~~ limited ~~partner~~partners’ ~~does~~tax ~~qualify as an independent producer, the limited partner is required to determine the amount of the allowed percentage depletion deduction and maintain records supporting such determination~~liabilities.

~~The~~IDCs ~~Partnership~~are ~~cannot~~generally ~~assure~~deductible ~~its~~when ~~limited~~the ~~partners~~well to which the costs relate is drilled. In some cases, IDCs may be paid in one year for a well that is not drilled until the following year. In those cases, the prepaid IDCs will not be deductible until the year when the well is drilled unless (i) drilling on the well to which the prepayment relates starts within 90 days after the end of the year the prepayment is made or (ii) it is reasonable to expect that the well will ~~meet~~ be fully drilled within 3-1/2 months of the ~~requirements~~prepayment. ~~for~~All ~~its~~of ~~limited~~the ~~partners~~Partnership’s wells may not be drilled during the year when the Partnership pays IDCs pursuant to a drilling contract. As a result, the Partnership could fail to satisfy the requirements to deduct ~~intangible~~the ~~drilling~~IDCs in the year when paid and/or ~~development~~the ~~costs~~IRS may challenge the timing of the Partnership’s deduction of prepaid IDCs.

~~Federal~~The ~~tax law places substantial limits on taxpayers’~~ ability toof ~~deduct~~a ~~intangible~~limited ~~drilling~~partner ~~and development costs (“IDCs”). Generally speaking, an “operator” is permitted~~ to ~~elect to currently~~ deduct, orits ~~capitalize~~share ~~and deduct ratably over a 60-month period, costs that are properly characterized as IDCs that the operator incurs in connection with the drilling and development~~ of ~~oil~~our ~~and~~losses natural gas wells. For purposes of deducting IDCs, an “operator” is generally defined as one that owns a working or an operating interest in an oil or gas well. If the Partnership determines that it is an “operator” with respect to its oil and ~~gas~~deductions ~~wells, the Partnership’s determination is not binding on the IRS. The IRS~~ may assert that the Partnership is not an “operator” with respect to one or more of its oil or gas wells at the time that IDCs are incurred. If the IRS were successful in such a challenge, the Partnership and, therefore, its limited partners, would not be ~~entitled~~ ~~to deduct the IDCs incurred in connection with such wells~~limited.

IfVarious limitations may apply to the ability of a holder of the Partnership’s iscommon ~~eligible~~units to deduct its share of its losses and deductions, including the limited partner’s share of the Partnership’s deduction for IDCs. For example, in the case of taxpayers subject to the passive activity loss rules (generally, individuals and closely held corporations), any losses and deductions generated by the Partnership ~~cannot~~ ~~assure~~will only be available to offset its ~~limited~~future ~~partners~~income ~~that~~and ~~IDCs~~cannot ~~will~~be used to offset income from other activities, including other passive activities or investments. Such unused losses and deductions may be ~~deductible~~deducted when the taxpayer disposes of its entire investment in the Partnership in a fully taxable transaction with an unrelated party, such as a sale of all of its common units in the open market. A unit holder’s share of any ~~given~~net ~~year~~passive income may be offset by unused losses from the Partnership carried over from prior years, but not by losses from other passive activities.

~~If the Partnership is deemed to be an operator~~ ~~with respect to one or more of its oil or gas wells, its classification of a cost as an IDC is not binding on the IRS. The IRS may reclassify~~ 40 ~~an item classified by the Partnership as an IDC as a cost that must be capitalized or that is not deductible.~~

~~The IRS could challenge the timing of the Partnership’s~~ ~~deductions~~ Table of ~~IDCs, which could result in an increase to limited partners’ tax liabilities.~~Contents

~~IDCs~~Certain ~~are~~federal ~~generally~~income ~~deductible~~tax ~~when~~deductions ~~the~~currently ~~well~~available ~~to which~~with ~~the~~respect costs relate is drilled. In some cases, IDCs may be paid in one year for a well that is not drilled until the following year. In those cases, the prepaid IDCs will not be deductible until the year when the well is drilled unless (i) drilling on the well to ~~which the~~oil ~~prepayment~~and ~~relates~~natural ~~starts~~gas ~~within~~exploration 90and ~~days~~development ~~after the end of the year the prepayment is made or (ii) it is reasonable to expect that the well will be fully drilled within 3-1/2 months of the prepayment. All of the Partnership’s wells~~ may ~~not~~ be ~~drilled~~eliminated ~~during~~as ~~the year when the Partnership pays IDCs pursuant to~~ a ~~drilling contract. As a~~ result, ~~the Partnership could fail to satisfy the requirements to deduct the IDCs in the year when paid and/or the IRS may challenge the timing~~ of ~~the~~future ~~Partnership’s deduction of prepaid IDCs~~legislation.

The ~~ability~~U.S. oflegislature aregularly ~~limited~~considers ~~partner~~budget toproposals ~~deduct~~that ~~its~~may ~~share~~impact ofmany ~~our~~tax ~~losses~~ incentives and deductions that are currently used by U.S. oil and gas companies. Among others, budget provisions may beinclude: ~~limited~~repeal of the deduction of IDC; repeal of the percentage depletion deduction for oil and natural gas properties; repeal of the domestic manufacturing tax deduction for oil and gas companies; and an increase in the amortization period for geological and geophysical costs of independent producers.

~~Various~~The ~~limitations~~passage ~~may~~of ~~apply~~any tolegislation ~~the~~as ~~ability of~~ a ~~holder~~result of ~~the~~these ~~Partnership’s~~proposals ~~common~~or ~~units~~any toother ~~deduct~~similar ~~its~~changes ~~share~~in ofU.S. ~~its~~federal ~~losses~~income ~~and~~tax ~~deductions,~~laws ~~including~~could increase the ~~limited~~amount ~~partner’s share~~ of the Partnership’s ~~deduction~~taxable ~~for~~income ~~IDCs.~~allocable ~~For~~to ~~example,~~a inlimited ~~the~~partner. ~~case~~The ofPartnership ~~taxpayers~~is ~~subject~~unable to ~~the~~predict ~~passive~~whether ~~activity~~any ~~loss~~of ~~rules (generally~~these changes, ~~individuals~~or ~~and~~other ~~closely held corporations)~~proposals, ~~any~~will ~~losses~~ultimately ~~and~~be ~~deductions~~enacted. ~~generated~~Any bymodifications ~~the Partnership will only be available~~ to ~~offset~~the ~~its~~federal ~~future~~ income ~~and~~tax ~~cannot~~laws beor ~~used~~interpretations tothereof ~~offset~~may ~~income~~or ~~from~~may ~~other~~not ~~activities,~~be ~~including~~applied ~~other passive activities or investments~~retroactively. ~~Such~~ ~~unused~~Any ~~losses~~such ~~and~~changes ~~deductions~~could ~~may~~negatively beimpact ~~deducted when~~ the ~~taxpayer~~value ~~disposes~~ of ~~its~~an ~~entire~~ investment in the Partnership’s ~~in a fully taxable transaction with an unrelated party, such as a sale of all of its~~ common units ~~in the open market~~. ~~A unit holder’s share of any net passive income may be offset by unused losses from the Partnership carried over from prior years, but not by losses from other passive activities.~~

40Limited partners may be subject to a limit on the ability to deduct interest expense incurred by the Partnership.

~~Index~~In general, holders of the Partnership’s common units are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to the Partnership’s trade or business during its taxable year. However, for taxable years beginning after December 31, 2017, the deduction for “business interest” is limited to the sum of the Partnership’s business interest income and 30% of “adjusted taxable income.” For the purposes of this limitation, the Partnership’s adjusted taxable income is computed without regard to any business interest expense or business interest income, and in the case of taxable years beginning before January 1, 2022, or after December 31, 2024, any deduction allowable for depreciation, amortization, or depletion is added back to taxable income in computing adjusted taxable income. Any disallowed business interest expense is then generally carried forward as a deduction in a succeeding taxable year at the partner level. These limitations might cause interest expense to be deducted by Partnership unit holders in a later period than recognized in the GAAP financial statements.

~~Certain~~A ~~federal~~limited ~~income~~partner ~~tax~~will ~~deductions~~likely ~~currently~~be ~~available~~subject ~~with respect~~ to ~~oil~~state and ~~natural~~local ~~gas~~taxes ~~exploration~~ and ~~development~~tax ~~may~~return befiling ~~eliminated~~requirements in states where they do not live as a result of ~~future~~investing ~~legislation~~in the Partnership’s common units.

~~The~~In ~~U.S.~~addition ~~legislature~~to ~~regularly~~federal ~~considers~~income ~~budget proposals~~taxes, ~~that~~a ~~may~~limited ~~impact~~partner ~~many~~will ~~tax~~likely ~~incentives~~be subject to other taxes, including state and ~~deductions~~local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are ~~currently~~imposed ~~used~~ by ~~U.S.~~the ~~oil~~various ~~and~~jurisdictions ~~gas~~in ~~companies.~~which ~~Among~~the ~~others~~Partnership does business or owns property, ~~budget provisions~~even ~~may~~if ~~include:~~a ~~repeal~~limited ofpartner ~~the~~does ~~deduction~~not oflive ~~IDC;~~in ~~repeal~~any of ~~the~~those ~~percentage~~jurisdictions. ~~depletion~~A ~~deduction~~limited ~~for~~partner ~~oil~~will likely be required to file state and ~~natural~~local ~~gas~~income ~~properties; repeal~~tax returns and pay state and local income taxes in some or all of ~~the~~these ~~domestic~~jurisdictions. ~~manufacturing~~Further, ~~tax~~a ~~deduction~~limited partner may be subject to penalties for ~~oil~~failure ~~and~~to ~~gas~~comply ~~companies;~~with ~~and~~those anrequirements. ~~increase~~It inis the ~~amortization~~responsibility ~~period~~of ~~for~~each ~~geological~~ limited partner to file its own federal, state and ~~geophysical~~local ~~costs~~tax ofreturns, ~~independent~~as ~~producers~~applicable.

The ~~passage of any legislation as a result of these proposals or any other similar changes in U.S. federal income tax laws could increase the amount of the~~ Partnership’s ~~taxable~~may ~~income allocable to a limited partner. The Partnership is unable to predict whether any of these changes, or other proposals, will ultimately~~ be ~~enacted.~~required ~~Any modifications~~ to ~~the~~remit ~~federal~~state income ~~tax~~taxes ~~laws~~to orapplicable ~~interpretations~~taxing ~~thereof~~authorities ~~may~~on orbehalf ~~may not be applied retroactively. Any such changes could negatively impact the value~~ of anits ~~investment~~limited ~~in the Partnership’s common units~~partners.

~~Limited~~Many states require that partnerships make tax payments on behalf of partners who are non-residents of the state. Although many states have exceptions for publicly traded partnerships, the Partnership may benot ~~subject~~qualify for these exceptions based upon the precise legal definitions involved. If the Partnership is required to aremit ~~limit~~income tax on behalf of its limited partners, the ~~ability~~Partnership Agreement permits such withholdings to ~~deduct~~ ~~interest~~be ~~expense~~treated ~~incurred~~as bya distribution to the ~~Partnership~~affected partners, since the amounts remitted represent a payment of income tax on behalf of the affected partners.

In ~~general~~mid-2022, ~~holders~~the Partnership was contacted by the state of North Dakota, which asserted that the Partnership~~’s common~~ ~~units~~has ~~are~~an ~~entitled~~obligation to amake ~~deduction~~tax ~~for~~payments ~~interest~~on ~~paid~~behalf orof ~~accrued~~certain onnon-resident ~~indebtedness~~partners. ~~properly~~In ~~allocable~~accordance towith its settlements with the state of North Dakota, the Partnership’s ~~trade or~~has ~~business~~made ~~during~~payments ~~its~~of ~~taxable~~(i) ~~year.~~approximately ~~However~~$243,000 ~~for~~(approximately ~~taxable~~$0.013 ~~years~~per ~~beginning~~common ~~after~~unit) ~~December~~in ~~31,~~May ~~2017,~~2023 ~~the~~for ~~deduction~~tax ~~for~~year ~~“business~~2021; ~~interest” is~~(ii) ~~limited~~approximately to$353,000 ~~the~~(approximately ~~sum~~$0.019 ofper ~~the~~common ~~Partnership’s~~unit) ~~business~~in ~~interest~~April ~~income~~2024 ~~and~~for ~~30%~~tax ofyear ~~“adjusted~~2022; (iii) ~~taxable~~approximately ~~income~~$869,000 (approximately $0.”046 ~~For~~per ~~the~~common ~~purposes of~~unit) ~~this~~in ~~limitation,~~April ~~the~~2024 ~~Partnership’s~~for ~~adjusted~~tax ~~taxable~~year ~~income~~2023; isand ~~computed~~(iv) ~~without~~approximately ~~regard~~$400,000 to(approximately ~~any~~$0.021 ~~business~~per ~~interest~~common ~~expense~~unit) orin ~~business interest~~April ~~income,~~2025 ~~and~~for intax ~~the~~year ~~case~~2024. ofThe ~~taxable~~Partnership ~~years~~recorded ~~beginning~~an ~~before~~estimate ~~January~~at 1December 31, ~~2022~~2025 of approximately $675,000 ~~any~~(approximately ~~deduction~~$0.036 ~~allowable~~per common unit) for ~~depreciation,~~the ~~amortization, or~~2025 ~~depletion~~tax year. ~~Any~~If ~~disallowed~~a ~~business~~payment ~~interest~~of ~~expense~~taxes is ~~then~~made ~~generally~~on ~~carried~~behalf ~~forward~~of aslimited apartners, ~~deduction~~the inaffected apartners ~~succeeding~~should ~~taxable~~be ~~year~~able ~~at the~~to ~~partner~~claim ~~level.~~the ~~These~~amounts ~~limitations~~remitted ~~might~~as ~~cause~~a ~~interest~~tax ~~expense~~payment toon betheir ~~deducted~~originally byfiled ~~Partnership~~or ~~unit~~amended ~~holders~~income intax areturns ~~later~~to ~~period~~the ~~than~~state ~~recognized in~~of ~~the~~North ~~GAAP~~Dakota, ~~financial~~as ~~statements~~appropriate.

ATax ~~limited~~gains ~~partner~~or ~~will~~losses ~~likely~~on bethe ~~subject~~disposition toof ~~state~~Partnership ~~and~~common ~~local~~units ~~taxes and~~could ~~tax~~be ~~return~~more ~~filing~~or ~~requirements~~less inthan ~~states where they do not live as a result of investing in the Partnership’s common units~~expected.

InIf ~~addition~~limited topartners ~~federal~~sell ~~income~~their ~~taxes~~common units, athey ~~limited partner~~ will ~~likely~~recognize bea ~~subject~~gain or loss equal to ~~other~~the ~~taxes,~~difference ~~including~~between ~~state~~the ~~and~~amount ~~local~~realized ~~taxes,~~and ~~unincorporated~~their ~~business~~tax ~~taxes~~basis ~~and~~in ~~estate,~~those ~~inheritance or~~common ~~intangible~~units. ~~taxes~~Because ~~that~~distributions ~~are~~in ~~imposed~~excess byof ~~the~~a ~~various~~limited ~~jurisdictions~~partner’s inallocated ~~which~~share ~~the~~of Partnership ~~does~~net ~~business~~taxable orincome ~~owns~~decreases ~~property,~~the ~~even~~limited ifpartner’s atax basis in the limited partner’s ~~does~~common ~~not~~units, ~~live~~the inamount, if any, of ~~those~~such ~~jurisdictions.~~prior Aexcess distributions with respect to the common units a limited partner sells will, ~~likely~~in beeffect, ~~required~~become taxable income to ~~file~~the ~~state~~limited ~~and~~partner ~~local~~if ~~income~~the ~~tax~~limited ~~returns and~~partner ~~pay~~sells ~~state~~such ~~and~~common ~~local~~units ~~income~~at ~~taxes~~a inprice ~~some~~greater orthan ~~all~~the oflimited ~~these~~partner’s ~~jurisdictions.~~tax ~~Further~~basis in those common units, aeven if the price received is less than the limited partner’s original cost. A substantial portion of the amount realized, whether or not representing gain, may be ~~subject~~taxed toas ~~penalties~~ordinary ~~for failure~~income due to ~~comply~~potential ~~with~~recapture ~~those~~items ~~requirements~~such as depreciation. ItIn isaddition, because the ~~responsibility~~amount ofrealized ~~each~~may include a limited partner’s toshare ~~file~~of ~~its~~Partnership ~~own~~nonrecourse ~~federal~~liabilities, ~~state~~a ~~and~~limited ~~local~~partner that sells common units may incur a tax ~~returns,~~ asliability ~~applicable~~in excess of the amount of the cash received from the sale.

~~The Partnership may be required to remit state income taxes to~~ ~~applicable taxing authorities on behalf of its limited partners.~~ 41

~~Many states require that partnerships make tax~~ ~~payments~~ Table ~~on behalf~~ of ~~partners who are non-residents of the state. Although many states have exceptions for publicly traded partnerships,~~Contents the Partnership may not qualify for these exceptions based upon the precise legal definitions involved. If the Partnership is required to remit income tax on behalf of its limited partners, the Partnership Agreement permits such withholdings to be treated as a distribution to the affected partners, since the amounts remitted represent a payment of income tax on behalf of the affected partners.

In mid-2022, the Partnership was contacted by the state of North Dakota, which asserted that the Partnership has an obligation to make tax payments on behalf of certain non-resident partners. In accordance with its settlements with the state of North Dakota, the Partnership has made payments of (i) approximately $243,000 (approximately $0.013 per common unit) in May 2023 for tax year 2021; (ii) approximately $353,000 (approximately $0.019 per common unit) in April 2024 for tax year 2022; and (iii) approximately $869,000 (approximately $0.046 per common unit) in April 2024 for tax year 2023. The Partnership recorded an estimate at December 31, 2024 of approximately $400,000 for the 2024 tax year. If a payment of taxes is made on behalf of limited partners, the affected partners should be able to claim the amounts remitted as a tax payment on their originally filed or amended income tax returns to the state of North Dakota, as appropriate.

Tax gains or losses on the disposition of Partnership common units could be more or less than expected.

If limited partners sell their common units, they will recognize a gain or loss equal to the difference between the amount realized and their tax basis in those common units. Because distributions in excess of a limited partner’s allocated share of Partnership net taxable income decreases the limited partner’s tax basis in the limited partner’s common units, the amount, if any, of such prior excess distributions with respect to the common units a limited partner sells will, in effect, become taxable income to the limited partner if the limited partner sells such common units at a price greater than the limited partner’s tax basis in those common units, even if the price received is less than the limited partner’s original cost. A substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items such as depreciation. In addition, because the amount realized may include a limited partner’s share of Partnership nonrecourse liabilities, a limited partner that sells common units may incur a tax liability in excess of the amount of the cash received from the sale.

Index

Item 1B. Unresolved Staff Comments

None

Item 1C. Cybersecurity

As a part of its risk management strategy, the Board of Directors of the General Partner is actively engaged in overseeing and reviewing the Partnership’s strategic direction and objectives, taking into account, among other considerations, the Partnership’s risk profile and exposure. Only five individuals are involved in the Partnership’s day-to-day operations, so the Partnership’s direct business operations are limited. Therefore, the Partnership and the General Partner depend on technology systems to operate its business that are operated and managed by third parties. The Partnership has relationships with a number of third-party business partners and operators who have their own procedures and tools to assist with cybersecurity risk management as well as cybersecurity incident containment and recovery efforts.

The Partnership’s cybersecurity risk management program includes consulting with its third parties to monitor the Partnership’s internal and external systems and networks for vulnerabilities, threats and intrusions, and then coordinating a response if a cybersecurity incident is identified. The risk management program also includes facilitating information regarding cybersecurity incidents to the General Partner, so the General Partner can assess necessary action and disclosures.

Cybersecurity Risks

The Partnership has not experienced any material cybersecurity incidents to date that have resulted in an interruption to Partnership operations or otherwise had a material impact on Partnership strategy, financial condition or results of operations. For more information about the cybersecurity risks the Partnership faces, see the risk factor entitled “Cyber-attacks targeting systems and infrastructure used by the oil and gas industry may adversely impact the Partnership’s operations” in Item IA. Risk Factors of this Form 10-K.

Item 2. Properties

Information regarding the Partnership’s properties is contained in Item 1 – Business, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8 – Financial Statements and Supplementary Data: “Note 3. Oil and Gas Investments”, appearing elsewhere within this Annual Report on Form 10-K.

Item 3. Legal Proceedings

The Partnership may be a party to various legal proceedings that arise in the ordinary course of business. At the end of the period covered by this Annual Report on Form 10-K, the Partnership was not a party to any material, pending legal proceedings, or involved in any litigation nor, to management’s knowledge, is any litigation threatened against the Partnership where the outcome would, in management’s judgment based on information currently available to the Partnership, have a material adverse effect on the Partnership’s consolidated financial position or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

~~Index~~ Table of Contents

Part II

Item 5. Market For Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Common Units

As of December 31, ~~2024~~2025, there were approximately 19.0 million common units outstanding, which were held by approximately 4,800 limited partners. There is currently no established public trading market in which the Partnership’s common units are traded.

Solely to assist trustees and custodians of individual retirement accounts (“IRAs”) containing an investment in the Partnership’s common units and to assist broker-dealers in meeting their customer account statement reporting obligations under Financial Industry Regulatory Authority (“FINRA”) rules for investments in the Partnership, the Partnership is providing an estimated per common unit value of the Partnership’s common units as of December 31, ~~2024~~2025 of $1511.6228 per common unit, as further described below. There can be no assurance that this estimated value per common unit, or the method used to estimate such value, complies with requirements applicable to a trustee’s, custodian’s or broker-dealer’s obligations with respect to IRAs or FINRA’s reporting requirements.

The fair value estimate of the Partnership’s common units was based upon a third-party valuation, performed by Pinnacle Energy Services of Oklahoma City, Oklahoma, of the Partnership’s oil and natural gas properties and management’s estimate of the fair value of the Partnership’s other assets and liabilities as of December 31, ~~2024~~2025. The developed per common unit value range is $149.1292 – $1712.1757. The Partnership utilized the mid-point of the assumptions discussed below to determine the estimated value per common unit above. The following is a summary of the details of the fair value estimate:

(in thousands, except per common unit data)	Estimate at 12/31/24
	Estimate at
	(unaudited)
(in thousands, except per common unit data)	12/31/25
Estimated fair value of oil and gas properties	$	~~296~~206,~~372~~141
Estimated fair value of cash and cash equivalents		~~228~~6,897
Estimated fair value of other assets and liabilities, net		~~4,728~~945
Estimated fair value of outstanding debt		~~(5,000~~-	)
Estimated fair value of equity	$	~~296~~213,~~328~~983
Common units outstanding		18,973
Estimated value per common unit	$	1511.6228

Since the Partnership’s common units are not listed on a national securities exchange, no material public market exists for the Partnership’s common units. As a result, although not prepared for generally accepted accounting purposes, the value estimate of the Partnership’s oil and gas properties was derived from unobservable inputs and was based on the income approach as outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures. In the income approach, the estimated value of the Partnership’s oil and gas properties was calculated from a discounted cash flow model using consolidated projected cash flows of the Partnership’s reserves, as well as a discount rate based on market conditions at December 31, ~~2024~~2025. An additional market-based adjustment was made to reflect the probability of successful future development of the Partnership’s oil and gas reserves at December 31, ~~2024~~2025. The Partnership’s cash and cash equivalents are all highly liquid with maturities of three months or less and the fair market value approximates the carrying value. The Partnership’s other assets and liabilities include receivables from the sale of oil, natural gas and natural gas liquids, accounts payable and accrued expenses, which are short-term in nature, and the carrying value of these assets and liabilities approximates fair value at December 31, ~~2024~~2025. The ~~carrying~~Partnership ~~value~~had ofno ~~the Partnership’s~~ outstanding debt ~~was considered to approximate fair value~~ at December 31, ~~2024 based on general market conditions and its maturity~~2025. The valuation methodology and calculations were reviewed by management of the Partnership and considered reasonable. The estimated value was not based on an appraisal of the Partnership’s assets.

~~Index~~ Table of Contents

As with any methodology used to estimate value, the methodology employed by the Partnership was based upon a number of estimates and assumptions that may not be accurate or complete and may not accurately reflect future conditions. The estimates and assumptions underlying the estimated value involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described in the periodic reports filed by the Partnership with the Securities and Exchange Commission (“SEC”), all of which are difficult to predict and many of which are beyond the control of the Partnership. Further, different parties using different assumptions and estimates could derive a different estimated value per common unit, which could be significantly different from the Partnership’s estimated value per common unit.

The estimated per common unit value does not represent: (i) the amount at which the Partnership’s common units would trade on a national securities exchange, (ii) the amount a limited partner would obtain if he or she tried to sell his or her common units or (iii) the amount limited partners would receive if the Partnership liquidated its assets and distributed the proceeds after paying all expenses and liabilities. Accordingly, with respect to the estimated value per common unit, the Partnership can give no assurance that:

	●	a limited partner would be able to resell his or her common units at this estimated value;
	●	a limited partner would ultimately realize distributions per common unit equal to the estimated value per common unit upon liquidation of the Partnership’s assets and settlement of its liabilities or a sale of the Partnership (in part because estimated values do not necessarily indicate the price at which individual assets or the Partnership could be sold, oil and gas property values fluctuate and change, and the estimated value may not take into account the expenses associated with such a sale);
	●	the Partnership’s common units would trade at a price equal to or greater than the estimated value per common unit if they were listed on a national securities exchange;
	●	the methodology used to estimate the value per common unit would be acceptable to FINRA or for compliance with requirements applicable to a trustee’s or custodian’s obligations with respect to IRAs; or
	●	any or all of the assumptions used in estimating the value per common unit will prove to be accurate or complete.

The estimated value reflects the fact that the estimate was calculated as of a point in time. The value of the Partnership’s common units will likely change over time and will be influenced by changes to the value of individual assets, changes in the oil and gas industry, as well as changes and developments in the energy and capital markets. The Partnership does not intend to update or otherwise revise the above information to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the information are no longer appropriate.

As discussed above, the estimated value of the Partnership’s oil and gas properties was determined based on various market level assumptions, including but not limited to commodity market prices, discount rates and processing and transportation costs. The following is a list of key assumptions used in the calculation of the estimated value of the Partnership’s oil and gas properties, a component of the estimated value per common unit:

● NYMEX oil strip pricing as of January 1, ~~2025~~2026, which ranges from $6956.8682 per barrel to $6360.0777 per barrel as of January 1, ~~2025~~2026 to December 31, ~~2029~~2030, and then an increase of 3% thereafter with price cap at $85.00 per barrel ● NYMEX gas strip pricing as of January 1, ~~2025~~2026, which ranges from $3.5361 per Mcf to $3.5861 per Mcf as of January 1, ~~2025~~2026 to December 31, ~~2029~~2030, and then ~~held~~an ~~flat~~increase of 3% thereafter at a price cap of $4.50 per Mcf ● Differentials to NYMEX strip pricing due to product processing, transportation or contract terms

- Weighted average oil differential of -$01.7535 per barrel of oil - Weighted average natural gas differential of -$01.5606 per Mcf of natural gas - Natural gas liquids (NGL) pricing determined using 1214.0% of NYMEX oil price - Weighted average natural gas shrink of 3139.0% - NGL yield of ~~109~~100.7498 barrels per MMcf of wet gas

●

Additional gathering and processing (G&P) expenses subsequently applied after differentials to NYMEX strip pricing

- Weighted average G&P expense on the production and sale of oil of $3.7745 per barrel - Weighted average G&P expense on the production and sale of natural gas of $1.1555 per Mcf - Weighted average G&P expense on the production and sale of NGL of $2220.4539 per barrel of oil equivalent

~~Index~~ Table of Contents

● Total gross fixed lease operating expenses per well estimated at $56,500 per month ● Total net variable lease operating and workover expenses per well estimated at $46.7500 per barrel of oil ● Gross capital expenditures to drill and complete future development locations estimated at approximately $10 million per well ● Discount rate – 10.0% ● Risk adjustments to calculated present value

	-	Proved developed producing (PDP) assets – 5.0%
	-	Proved developed non-producing (PDNP) assets – 10.0%
	-	Proved undeveloped (PUD) assets to be drilled within five years – 15.0%
	-	Proved undeveloped (PROB) assets to be drilled between five and ten years – 25.0%
	-	Proved undeveloped (POSS) assets to be drilled after ten years – 35.0%

A change in any of the assumptions would likely produce a different estimated value per common unit. For example:

● An increase in the discount rate assumption of 100 basis points would decrease the per common unit value range by approximately $1.3410 per common unit, all other assumptions remaining the same; ● A decrease in the discount rate assumption of 100 basis points would increase the per common unit value range by approximately $1.5529 per common unit, all other assumptions remaining the same; ● An increase in the average NYMEX oil and natural gas strip pricing assumptions of 500 basis points would increase the per common unit value range by approximately $1.3928 per common unit, all other assumptions remaining the same; ● A decrease in the average NYMEX oil and natural gas strip pricing assumptions of 500 basis points would decrease the per common unit value range by approximately $1.5036 per common unit, all other assumptions remaining the same; ● An increase of 500 basis points in the risk adjustment percentage to calculated present value per reserve category would decrease the per common unit value range by approximately $0.9164 per common unit, all other assumptions remaining the same; and ● A decrease of 500 basis points in the risk adjustment percentage to calculated present value per reserve category would increase the per common unit value range by approximately $0.9064 per common unit, all other assumptions remaining the same.

Class B Units

As of December 31, ~~2024~~2025 and ~~2023~~2024, the outstanding Class B units totaled 62,500. The Partnership may issue up to 37,500 additional Class B units. The Class B units provide for certain distribution rights described below.

Incentive Distribution Rights and Contingent Incentive Fee

The General Partner received the Incentive Distribution Rights upon closing of the minimum offering in August 2015. Under the agreement with the Dealer Manager, the Dealer Manager will be paid a contingent incentive fee, which is a cash payment of up to an amount equal to 4% of gross proceeds of the common units sold based on the performance of the Partnership. Based on the common units sold in the Partnership’s offering, the total contingent fee is approximately $15.0 million. The Partnership will not make any distributions with respect to the Incentive Distribution Rights or the contingent, incentive payments to the Dealer Manager, until Payout occurs, as described below.

~~Index~~ Table of Contents

Distribution Policy

Prior to “Payout,” which is defined below, all of the distributions made by the Partnership, if any, will be paid to the holders of common units. Accordingly, the Partnership will not make any distributions with respect to the Incentive Distribution Rights or with respect to Class B units and will not make the contingent, incentive payments to the Dealer Manager, until Payout occurs.

	●	First, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) to the Dealer Manager, as the Dealer Manager contingent incentive fee paid under the Dealer Manager Agreement, 30%, and (iv) the remaining amount, if any (currently 13.125%), to the Record Holders of outstanding common units, pro rata based on their percentage interest until such time as the Dealer Manager receives the full amount of the Dealer Manager contingent incentive fee under the Dealer Manager Agreement;
	●	Thereafter, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) the remaining amount to the Record Holders of outstanding common units, pro rata based on their percentage interest (currently 43.125%).

All items of income, gain, loss and deduction will be allocated to each Partner’s capital account in a manner generally consistent with the distribution procedures outlined above.

~~Index~~ Table of Contents

In January 2024, the General Partner declared a special distribution of $0.05 per common unit that reduced the accumulated unpaid distribution total described below; the $0.05 special distribution to limited partners was paid in February 2024. For the year ended December 31, ~~2024~~2025, the Partnership paid distributions of $1.45 40 per common unit, or $2726.5 6 million. In addition, the Partnership declared a monthly cash distribution to its holders of common units of $0.12 per common unit for the month of December ~~2024~~2025. The declared distribution of approximately $2.3 million, which is included in Accounts payable and accrued expenses on the Partnership’s balance sheet as of December 31, ~~2024~~2025, was paid on January 6, ~~2025~~ 2026 to the common unit holders on record as of December 31, ~~2024~~2025.

For the year ended December 31, ~~2023~~2024, the Partnership paid distributions of $1.~~425753~~45 per common unit, or $27.1 5 million.

Neither the Partnership nor the General Partner has adopted an equity compensation plan.

Item 6. [Reserved]

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with Item 8 – the Consolidated Financial Statements and Notes thereto, the introduction of Part I regarding “Forward-Looking Statements,” and Item 1A – Risk Factors appearing elsewhere in this Annual Report on Form 10-K.

Overview

Energy 11, L.P. (the “Partnership”) was formed as a Delaware limited partnership. The General Partner is Energy 11 GP, LLC (the “General Partner”). The initial capitalization of the Partnership of $1,000 occurred on July 9, 2013. The Partnership began offering common units of limited partner interest (the “common units”) on a best-efforts basis on January 22, 2015, the date the Partnership’s initial Registration Statement on Form S-1 (File No. 333-197476) was declared effective by the SEC. The Partnership completed its best-efforts offering on April 24, 2017. Total common units sold were approximately 19.0 million for gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million.

The Partnership has no officers, directors or employees. Instead, the General Partner manages the day-to-day affairs of the Partnership, and all decisions regarding the management of the Partnership are made by the Board of Directors of the General Partner and its officers.

The Partnership was formed to acquire and develop oil and natural gas properties located onshore in the United States. On December 18, 2015, the Partnership completed its first purchase in the Sanish field, acquiring an approximate 11% non-operated working interest in the Sanish Field Assets for approximately $159.6 million. On January 11, 2017, the Partnership closed on its second purchase in the Sanish field, acquiring an additional approximate 11% non-operated working interest in the Sanish Field Assets for approximately $128.5 million. On March 31, 2017, the Partnership closed on its third purchase in the Sanish field, acquiring an additional approximate average 10.5% non-operated working interest in 82 of the Partnership’s then 216 existing producing wells and 150 of the Partnership’s then 253 future development locations in the Sanish Field Assets for approximately $52.4 million.

~~Index~~ Table of Contents

The Partnership has drilled and completed 86101 new wells ~~from~~ ~~2018~~since tothe ~~2023~~beginning of 2018; the Partnership’s estimated share of capital expenditures for the drilling and completion of these 86101 wells totaled approximately $~~120~~148 million. The Partnership incurred ~~drilled~~approximately ~~and~~$3.3 million ~~completed~~in ~~15 new wells that were turned to sales during the summer of 2024; the Partnership’s estimated share of~~ capital expenditures ~~for~~during the ~~drilling~~twelve ~~and~~months ~~completion~~ended ofDecember ~~these~~31, ~~15 wells is approximately $27 million~~2025. See additional detail in “Oil and Natural Gas Properties” below.

As a result of these acquisitions and completed drilling during the period of ownership, as of December 31, ~~2024~~2025, the Partnership owns an approximate 24% non-operated working interest in ~~312~~309 producing wells and future development sites in the Sanish field located in Mountrail County, North Dakota (collectively, the “Sanish Field Assets”). Chord Energy Corporation (“Chord”) is , one of the largest producers in the basin ~~and~~ , operates substantially all of the Sanish Field Assets.

Current Price Environment

Oil, natural gas and natural gas liquids (“NGL”) prices are determined by many factors outside of the Partnership’s control. Historically, world-wide oil and natural gas prices and markets have been subject to significant change and may continue to be in the future. Global macroeconomic factors contributing to uncertainty within the industry include real or perceived geopolitical risks in oil-producing regions of the world, particularly Russia and the Middle East; forecasted levels of global economic growth combined with forecasted global supply; supply levels of oil and natural gas due to exploration and development activities in the United States; environmental and climate change regulation; actions taken by the Organization of the Petroleum Exporting Countries (“OPEC”) and certain non-member oil-producing countries, including Russia ("OPEC+"); and the strength of the U.S. dollar in international currency markets.

The ~~length~~Partnership’s oil and ~~outcome~~natural ofgas ~~the~~revenues ~~military~~are ~~conflict between~~heavily ~~Ukraine~~weighted ~~and~~to ~~Russia~~oil, asso ~~well~~any asmaterial ~~continued~~change ~~unrest~~to inmarket pricing for oil has a more significant impact to the ~~Middle~~Partnership’s ~~East~~operational ~~are~~performance. ~~highly~~While ~~unpredictable,~~full-year ~~and~~2025 ~~further~~oil ~~escalation~~prices ofaveraged ~~these~~in ~~conflicts could~~the ~~lead~~mid to$60s ~~significant~~per barrel, market ~~and~~prices ~~other~~trended ~~disruptions,~~downward ~~such~~throughout asthe ~~volatility~~year. Oil prices closed in ~~commodity~~mid-December 2025 at approximately $55 per barrel, the lowest level since the first quarter of 2021. Factors negatively weighing down oil prices in 2025 include (i) continued uncertainty regarding U.S. trade policies and ~~supply~~tariffs and the related concern of ~~energy~~increased ~~resources,~~inflation; ~~instability~~ (ii) the decision by OPEC+ to increase its production quotas starting in ~~financial~~May ~~markets,~~2025 ~~supply~~(which ~~chain~~continued ~~interruptions,~~through ~~political~~year-end); and ~~social~~(iii) ~~instability~~global ~~and~~economic ~~other~~growth ~~material~~projections and ~~adverse~~the ~~effects~~impact on ~~macroeconomic conditions~~global oil consumption. Oil ~~The~~prices ~~short-~~had rebounded ~~and~~to ~~long-term~~above ~~impact~~$60 ofper ~~these~~barrel ~~conflicts~~in the first quarter of 2026 on the ~~operations~~heels of higher seasonal demand and ~~financial~~global ~~condition~~supply ofrestraint. In late February and early March 2026, military conflict involving the ~~Partnership~~United States, Israel and Iran escalated in the Middle East, increasing geopolitical uncertainty in global ~~economy~~ isenergy ~~uncertain~~markets. Concerns over disruptions to oil production and shipping routes in the region are anticipated to contribute to market price volatility for an undeterminable period of time.

~~The~~Natural ~~following~~gas ~~table~~prices ~~lists~~benefited ~~average~~from ~~NYMEX~~a ~~prices for~~tighter ~~oil~~domestic market, as lower production growth, stronger LNG exports and ~~natural~~declining ~~gas~~storage ~~for~~inventories ~~the~~led ~~years~~to ~~ended~~higher average ~~December~~prices ~~31,~~in ~~2024~~2025 ~~and~~over ~~2023~~2024.

	Year Ended December 31,				Percent
	2024		2023		Change
Average market closing prices (1)
Oil (per Bbl)	$	75.76	$	77.60		-2.4	%
Natural gas (per Mcf)	$	2.37	$	2.53		-6.3	%

Significant reductions in commodity prices along with inflationary costs could impact the Partnership and its financial performance. Future growth is dependent on the Partnership’s ability to add reserves in excess of production. In addition to commodity price fluctuations, the Partnership faces the challenge of natural production volume declines. As reservoirs are depleted, oil and natural gas production from Partnership wells will decrease.

The following table lists average NYMEX prices for oil and natural gas for the years ended December 31, 2025 and 2024.

	Year Ended December 31,				Percent
	2025		2024		Change
Average market closing prices (1)
Oil (per Bbl)	$	64.78	$	75.76		-14.5	%
Natural gas (per Mcf)	$	3.52	$	2.37		48.5	%

(1)	Based on average NYMEX futures closing prices (oil) and NYMEX/Henry Hub spot prices (natural gas)

As specified by the SEC, the prices for oil, natural gas and NGL used to calculate the Partnership’s reserves are based on the unweighted arithmetic average prices as of the first day of each of the twelve months during the years ended December 31, ~~2024~~2025 and ~~2023~~2024. The average realized oil, natural gas and NGL prices, including the effect of price differential adjustments, used in computing the Partnership’s reserves as of December 31, ~~2024~~2025 were $7463.72 99 per barrel of oil, $12.57 33 per MMcf of natural gas and $929.06 40 per barrel of NGL. The average realized oil, natural gas and NGL prices, including the effect of price differential adjustments, used in computing the Partnership’s reserves as of December 31, ~~2023~~2024 were $7874.25 72 per barrel of oil, $21.51 57 per MMcf of natural gas and $139.30 06 per barrel of NGL. See “Note 98. Supplementary Information on Oil, Natural Gas and Natural Gas Liquid Reserves (Unaudited)” in Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K for more information on the oil, natural gas and NGL prices used in computing the Partnership’s reserves as of December 31, ~~2024~~2025 and ~~2023~~2024.

~~Index~~ Table of Contents

Results of Operations for Years ~~2024~~2025 and ~~2023~~2024

In evaluating financial condition and operating performance, the most important indicators on which the Partnership focuses are (1) total sold production in barrel of oil equivalent (“BOE”) units, (2) average sales price per unit for oil, natural gas and natural gas liquids, (3) production costs per BOE and (4) capital expenditures.

The following is a summary of the results from operations, including production, of the Partnership’s non-operated working interest for the years ended December 31, ~~2024~~2025 and ~~2023~~2024.

	Year Ended December 31,
	Year Ended Ended December 31,
	2024		Percent of Revenue			2023		Percent of Revenue			Percent Change
	2025		Percent of Revenue			2024		Percent of Revenue			Percent Change
Total revenues	$	8566,~~806~~282,~~754~~748		100.0	%	$	9985,~~792~~806,~~852~~754		100.0	%		-1422.08	%
Production expenses		2123,~~981~~318,~~337~~978		2535.62	%		2621,~~529~~981,~~445~~337		2625.6	%		~~-17~~6.1	%
Production taxes		64,~~836~~565,~~284~~154		86.09	%		76,~~923~~836,~~679~~284		78.90	%		-1333.72	%
Depreciation, depletion, amortization and accretion		28,~~970~~030,~~690~~927		3342.83	%		2728,~~204~~970,~~990~~690		2733.38	%		6-3.52	%
General and administrative expenses		1,~~167~~360,~~232~~321		12.41	%		1,~~686~~167,~~577~~232		1.74	%		~~-30~~16.85	%
Sold production (BOE):
Oil		1844,~~010,751~~717					1,~~128~~010,~~242~~751					-1016.4	%
Natural gas		~~257~~294,~~067~~667					~~273~~257,~~795~~067					-614.16	%
Natural gas liquids		~~265~~276,~~272~~311					265,~~002~~272					04.12	%
Total		1,~~533~~415,~~090~~695					1,~~667~~533,~~039~~090					-87.07	%
Average sales price per unit:
Oil (per Bbl)	$	7363.9685				$	7873.1496					-513.37	%
Natural gas (per Mcf)		12.5660					21.3556					~~-33~~66.67	%
Natural gas liquids (per Bbl)		3228.5804					2932.3358					11-13.19	%
Combined (per BOE)		5546.9782					5955.8697					-616.53	%
Average unit cost per BOE:
Production expenses		1416.3447					1514.9134					-914.9	%
Production taxes		43.4622					4.7546					-627.18	%
Depreciation, depletion, amortization and accretion		1819.9080					1618.3290					154.8	%
Capital expenditures	$	303,~~512~~308,~~123~~449				$	1230,~~137~~512,~~862~~123

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Oil, natural gas and NGL revenues

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, revenues for oil, natural gas and NGL sales were $8566.8 3 million and $9985.8 million, respectively. Revenues for the sale of oil were $7453.8 9 million and $8874.2 8 million, which resulted in realized prices of $7363.9685 and $7873.1496 per barrel, respectively. Revenues for the sale of natural gas were $2.4 .6 million and $32.9 4 million, which resulted in realized prices of $12.5660 and $21.3556 per Mcf, respectively. Revenues for the sale of NGL were $87.6 8 million and $7.8 .6 million, which resulted in realized prices of $3228.5804 and $2932.3358 per barrel of oil equivalent (“BOE”) of production, respectively. Average realized prices in the fourth quarter of ~~2024~~2025 were approximately $6957.3583 per barrel of oil, $12.43 52 per Mcf of natural gas and $3124.8825 per BOE of NGL, compared to fourth quarter of ~~2023~~ 2024 realized prices of approximately $7869.9535 per barrel of oil, $21.1843 per Mcf of natural gas and $2931.6088 per BOE of NGL.

The Partnership's ~~completed~~sold ~~over~~oil 30production ~~wells~~in 2024 ~~during the~~benefited ~~second~~from ~~half~~the ofboost ~~2022~~in ~~and~~production ~~first~~upon ~~half~~the ofcompletion ~~2023,~~and ~~which~~turning ~~provided~~to asales ~~boost~~of in15 ~~total~~new ~~production,~~wells ~~especially~~during ~~natural~~the ~~gas~~summer ~~and~~of ~~NGLs~~2024. ~~volumes,~~The ~~throughout 2023.~~production ~~During~~from the new ~~second~~wells ~~and~~contributed ~~third~~to ~~quarters~~sold ofproduction ~~2024,~~for the ~~Partnership~~Sanish ~~turned~~Field anAssets ~~additional~~of 15approximately 5,200 ~~wells~~BOE toper ~~sales~~day and 4,200 ~~which~~BOE ~~helped~~per today ~~offset~~for ~~natural production~~the ~~decline~~quarter and ~~the~~year ~~ongoing~~ended ~~impacts~~December of31, ~~adverse~~2024. ~~weather~~With ~~conditions~~no innew ~~North~~completions ~~Dakota~~in ~~during~~2025, asold ~~multi-day~~oil ~~stretch~~production indeclined ~~mid-January~~steadily ~~2024 that~~throughout ~~has~~the ~~led~~year toas ~~suspended~~natural production ~~from~~decline ~~nearly~~is ~~20%~~expected ofas ~~the~~wells ~~Sanish~~age. ~~Field~~However, ~~Asset~~improved ~~wells~~technology ~~during~~and ~~2024.~~infrastructure ~~Sold~~at ~~production for~~ the ~~Sanish~~operator ~~Field Assets~~level ~~was~~contributed ~~approximately~~to ~~5,200~~higher capture ~~BOE~~rates ~~per~~of ~~day~~natural ~~and~~gas 4in 2025,~~200~~ ~~BOE~~which ~~per~~led ~~day~~to ~~for~~increased ~~the~~natural ~~quarter~~gas and ~~year~~NGL ~~ended December 31, 2024, respectively~~production. Sold production for the Sanish Field Assets ~~was~~ of approximately 4 3,~~300~~500 BOE per day and 43,~~600~~ 900 BOE per day for the quarter and year ended December 31, ~~2023~~2025, respectively.

InThe ~~conjunction~~downward ~~with~~pressure ~~commodity~~on oil market ~~pricing,~~prices during 2025 continued to negatively impact the Partnership’'s ~~results~~revenues ~~for~~compared to the year ended December 31, 2024. ~~were~~Supply ~~negatively~~constraints ~~impacted~~and byheightened ~~lower~~demand ~~realized~~did ~~sales~~have ~~prices~~a ~~for~~positive ~~oil~~effect ~~(see Oil~~on ~~differentials below) and~~ natural gas ~~compared~~prices tofor the year ended December 31, ~~2023~~2025, which resulted in higher natural gas and NGL revenue and helped offset lower oil prices. The Partnership’s realized sales prices for NGLs are influenced by the components extracted, including ethane, propane and butane and natural gasoline, among others, and the respective market pricing for each component.

If the operators of the Sanish Field Assets are unable to produce, process and sell oil and natural gas at economical prices, these operators may curtail daily production, shut-in producing wells or seek other cost-cutting measures, and could continue so long as producing is uneconomical. Consequently, any of these measures could significantly impact the Partnership’s oil, natural gas and NGL production. Further, production is dependent on the investment in existing wells and the development of new wells. See further discussion of the Partnership’s investment in new wells in “Liquidity and Capital Resources” below.

Oil differentials

The realized prices per barrel of oil above are based upon the NYMEX benchmark price less a cost to distribute the oil, or the differential. Oil price differentials primarily represent the transportation costs in moving produced oil at the wellhead to a refinery and are based on the availability of pipeline, rail and other transportation methods out of the Sanish field. Oil price differentials to the NYMEX benchmark price vary by operator based upon operator-specific contracts. On average, the Partnership’s realized oil differential has increased by approximately $10.50 per barrel of oil during ~~2024~~2025 in comparison to ~~2023~~2024, which ~~has~~contributed ~~resulted in~~ to lower realized oil sales prices.

The Dakota Access Pipeline is a significant pipeline that transports oil and natural gas from North Dakota fields. Its use by operators in the region is currently in ongoing litigation in the United States. If use of the Dakota Access Pipeline or any other region pipelines is suspended at a future date, the disruption of transporting the Partnership’s production out of North Dakota could negatively impact the Partnership’s oil differentials, realized sales prices, results of operations and/or cash flows.

Operating costs and expenses

Production expenses

Production expenses are daily costs incurred by the Partnership to bring oil and natural gas out of the ground and to market, along with the daily costs incurred to maintain producing properties. Such costs include field personnel compensation, saltwater disposal, utilities, maintenance, repairs and servicing expenses related to the Partnership’s oil and natural gas properties, along with the gathering and processing contract in effect for the extraction, transportation and treatment of natural gas.

~~Index~~ Table of Contents

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, production expenses were $2223.0 3 million and $2622.5 0 million, respectively, and production expenses per BOE of sold production were $1416.34 47 and $1514.9134, respectively. Production expenses for the fourth quarters of ~~2024~~2025 and ~~2023~~2024 were $65.1 million and $56.9 1 million, respectively, and production expenses per BOE of sold production were $1216.8110 and $1412.9181, respectively. ~~The~~Production ~~Partnership’s~~expenses ~~lease~~per ~~operating~~BOE ~~and~~of ~~workover expenses~~sold production have ~~been~~increased ~~lower~~in ~~during~~2025 ~~2024,~~as ~~and~~a ~~due~~result toof ~~lower~~(i) increased sold production ofvolumes for natural gas and NGLs, ~~compared~~ contributing to ~~2023,~~higher ~~marketing~~gathering and ~~selling costs~~processing ~~have~~expenses; ~~also~~(ii) ~~decreased~~increased inLOE ~~2024.~~and ~~Lower~~workover ~~expenses~~activity to ~~coupled~~service ~~with~~and maintain ~~production~~well ~~volumes~~productivity; ~~have~~and ~~resulted in~~ (iii) lower sold production ~~expenses per BOE for the year ended December 31~~volumes, ~~2024,~~which asdecreases the production base over which fixed operating costs are spread ~~has increased~~.

Production taxes

Taxes on the production and extraction of oil and gas are regulated and set by North Dakota tax authorities. Taxes on the sale of gas and NGL products are less than taxes levied on the sale of oil. Therefore, production taxes as a percentage of revenue may fluctuate dependent upon the ratio of sales of natural gas and NGLs to total sales. Production taxes for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 were $64.8 6 million (86.9% of revenue) and $76.9 8 million (8.0% of revenue), respectively. Production taxes for the fourth quarters of ~~2024~~2025 and ~~2023~~2024 were $2.0 .9 million (86.7% of revenue) and $12.9 0 million (98.0% of revenue), respectively. Oil production comprised approximately 6660% and 6866%, ofrespectively, of the Partnership’s sold production volumes for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, and approximately 57% and 66%, respectively, for the three-month periods ended December 31, ~~2024~~2025 and ~~2023, respectively~~2024.

General and administrative expenses

General and administrative costs for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 were $1.2 4 million and $1.7 2 million, respectively. The principal components of general and administrative expense are accounting, legal and consulting fees. ~~The~~Higher ~~Partnership~~legal ~~saw~~and aprofessional ~~decrease~~fees inhave ~~personnel-related~~contributed ~~costs~~to ~~and~~the ~~legal~~increase ~~expenses~~in ~~during the~~general ~~year~~and ~~ended~~administrative ~~December~~expenses ~~31,~~in ~~2024~~2025.

Depreciation, depletion, amortization and accretion (“DD&A”)

DD&A of capitalized drilling and development costs of producing oil, natural gas and NGL properties are computed using the unit-of-production method on a field basis based on total estimated proved developed oil, natural gas and NGL reserves. Costs of acquiring proved properties are depleted using the unit-of-production method on a field basis based on total estimated proved developed and undeveloped reserves. DD&A for the years ended December 31, ~~2024~~ 2025 and ~~2023~~2024 was $2928.0 million and $2729.2 0 million, and DD&A per BOE of sold production was $1819.90 80 and $1618.3290, respectively. DD&A for the fourth quarters of ~~2024~~2025 and ~~2023~~2024 was $96.0 4 million and $79.2 0 million, and DD&A per BOE of sold production was $1820.81 16 and $18.1681, respectively. The increase in DD&A expense per BOE of production for the year ended December 31, ~~2024~~2025 is primarily due to the decrease of the Partnership’s estimated proved undeveloped reserves during the most recent reserves analyses (as of December 31, ~~2024~~2025 and June 30, ~~2024~~2025) resulting from ~~changes in~~ well production performance and future forecasts.

Gain on derivatives, net

Participation in the oil and gas industry exposes the Partnership to risks associated with potentially volatile changes in energy commodity prices, and therefore, the Partnership’s future earnings are subject to these risks. Periodically, the Partnership utilizes derivative contracts to manage the commodity price risk on the Partnership’s future oil production it will produce and sell and to reduce the effect of volatility in commodity price changes to provide a base level of cash flow from operations. In September 2023, the Partnership settled its final future oil production contract that was required under the original terms and conditions of the BF Loan Agreement.

Index

The Partnership did not designate its 2023 derivative instruments as hedges for accounting purposes and did not enter into such instruments for speculative trading purposes. As a result, when derivatives do not qualify or are not designated as a hedge, the changes in the fair value are recognized on the Partnership’s consolidated statements of operations as a gain or loss on derivative instruments. The following table presents settlements of its matured derivative instruments and the non-cash, mark-to-market gains or losses recorded during the periods presented.

	Year Ended December 31, 2023
Settlements on matured derivatives	$	(1,780,610	)
Gain on mark-to-market of derivatives, net		3,033,037
Gain on derivatives, net	$	1,252,427

The Partnership’s oil production contracts that expired during 2023 represented 224,000 barrels of oil. The Partnership’s realized loss on its oil contracts of approximately $1.8 million equated to an approximate loss of $7.95 per barrel on hedged oil production. The Partnership’s natural gas production contracts that expired during 2023 represented 275,000 MMBtu of produced natural gas; however, these natural gas production contracts were settled at no cost or benefit to the Partnership, as contract prices on settlement dates were within the established floor and ceiling prices.

The mark-to-market (non-cash, unrealized) net gains recorded for the years ended December 31, 2023 represent the change in fair value of the Partnership’s derivative instruments held at period-end. Unrealized gains and losses do not represent actual settlements or payments made to or from the counterparty. The Partnership did not have any outstanding derivative contracts as of December 31, 2023 or 2024.

Index

Interest expense, net

Interest expense, net, for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 was $~~0.2~~152,000 ~~million~~ and $~~1.2 million~~180,000, respectively. The ~~primary~~Partnership ~~component~~carried oflittle ~~Interest~~to ~~expense,~~no ~~net,~~outstanding ~~during~~credit balance on the ~~years~~BF ~~ended December~~Credit ~~31,~~Facility ~~2024~~during 2025 and ~~2023~~2024, so ~~was~~in addition to interest expense on the ~~BancFirst Credit Facility (“~~BF Credit Facility~~”).~~, ~~The~~the ~~Partnership~~expense during ~~carried little~~these toperiods noalso ~~outstanding~~includes amortization ~~credit~~of ~~balance~~capitalized onloan ~~the~~costs BFand ~~Credit~~non-use ~~Facility~~fees inunder ~~2024,~~the ~~which~~BF ~~led~~Loan ~~to reduced interest expense throughout 2024~~Agreement.

See more information on the Partnership’s credit facility in “Note 4. Debt” in Part II, Item 8 – Financial Statements and Supplementary Data appearing elsewhere in this Annual Report on Form 10-K.

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Supplemental Non-GAAP Measure

The Partnership uses “Adjusted EBITDAX”, defined as earnings before (i) interest expense, net; (ii) income taxes; (iii) depreciation, depletion, amortization and accretion~~, (iv) exploration expenses~~; and (viv) ~~(gain)/loss~~exploration ~~on the mark-to-market of derivative instruments~~expenses, as a key supplemental measure of its operating performance. This non-GAAP financial measure should be considered along with, but not as alternatives to, net income, operating income, cash flow from operating activities or other measures of financial performance presented in accordance with GAAP. Adjusted EBITDAX is not necessarily indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions. Although Adjusted EBITDAX, as calculated by the Partnership, may not be comparable to Adjusted EBITDAX as reported by other companies that do not define such terms exactly as the Partnership defines such terms, the Partnership believes this supplemental measure is useful to investors when comparing the Partnership’s results between periods and with other energy companies.

The Partnership believes that the presentation of Adjusted EBITDAX is important to provide investors with additional information (i) to provide an important supplemental indicator of the operational performance of the Partnership’s business without regard to financing methods and capital structure, and (ii) to measure the operational performance of the Partnership’s operators.

The following table reconciles the Partnership’s GAAP net income to Adjusted EBITDAX for the years ended December 31, ~~2024~~2025 and ~~2023~~2024.

	Year Ended December 31, 2024		Year Ended December 31, 2023
	Year Ended		Year Ended
Net income	$	26,670,865	$	36,515,080
	December 31, 2025		December 31, 2024
Interest expense, net		180,346		1,185,508
Net income	$	8,855,771	$	26,670,865
Depreciation, depletion, amortization and accretion		28,970,690		27,204,990
Interest expense, net		151,597		180,346
Depreciation, depletion, amortization and accretion		28,030,927		28,970,690
Exploration expenses		-		-
Non-cash gain on mark-to-market of derivatives		-		(3,033,037	)
Adjusted EBITDAX	$	37,038,295	$	55,821,901
Adjusted EBITDAX	$	55,821,901	$	61,872,541

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Liquidity and Capital Resources

Historically, the Partnership’s principal sources of liquidity have been cash on -hand, the cash flow generated from the Sanish Field Assets, and availability under the Partnership’s revolving credit facility, if any. The Partnership had approximately $4.6.9 million inof cash on -hand at ~~the~~December ~~time~~31, ~~of filing of this Form 10-K~~2025, and the Partnership generated approximately $5343.7 million and $6653.3 7 million in cash flow from operating activities for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. InEffective ~~February~~March ~~2024~~1, 2026, the Partnership ~~successfully~~extended ~~renewed~~the maturity of its BF Credit Facility to March 1, 2027 and currently has $2010 million in of availability under the BF Credit Facility (see “"Subsequent Events”" below). At December 31, 2024, the Partnership had an outstanding balance of $5 million on its BF Credit Facility. Using operational cash proceeds from its Sanish Field Assets received subsequent to year-end, the Partnership paid off the outstanding $5 million balance in full during February 2025.

The Partnership anticipates its cash on-hand, cash flow from operations and availability under the BF Credit Facility will be adequate to meet its liquidity requirements for at least the next 12 months~~, including completing the outstanding capital expenditures discussed below (see “Oil and Natural Gas Properties”)~~. Based on the terms and conditions of the BF Loan Agreement, the Partnership is permitted to make distributions to limited partners regardless of BF Credit Facility utilization so long as the Partnership is in compliance with the applicable covenants and no other event of default has occurred. The Partnership was in compliance with all applicable covenants for the year ended December 31, 2025. The General Partner will monitor payment of future monthly Partnership distributions in conjunction with the Partnership’s projected cash requirements for operations, capital expenditures for new wells and payments on the BF credit facility, as necessary based on usage.

The Partnership’s revenues and cash flow from operations are highly sensitive to changes in oil and natural gas prices and to levels of production. If commodity prices significantly drop and remain low, the Partnership’s cash flow from operations may decline. This could have a significant impact on the Partnership’s available cash on-hand, the Partnership’s ability to participate in future drilling programs as proposed by the operators of the Sanish Field Assets and/or to fund any future distributions to its limited partners. Future growth is dependent on the Partnership’s ability to add reserves in excess of production. In addition to commodity price fluctuations, the Partnership faces the challenge of natural production volume declines. As reservoirs are depleted, oil and natural gas production from Partnership wells will decrease.

Financing

See further discussion on the Partnership’s BF Credit Facility in “Note 4 – Debt” in Part II, Item 8 – Financial Statements and Supplementary Data appearing elsewhere in this Annual Report on Form 10-K.

Partners Equity

The Partnership completed its best-efforts offering of common units on April 24, 2017. As of the conclusion of the offering on April 24, 2017, the Partnership sold approximately 19.0 million common units for total gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million.

Under the agreement with the Dealer Manager, the Dealer Manager received a total of 6% in selling commissions and a marketing expense allowance based on gross proceeds of the common units sold. The Dealer Manager will also be paid a contingent incentive fee, which is a cash payment of up to an amount equal to 4% of gross proceeds of the common units sold based on the performance of the Partnership. Based on the common units sold in the offering, the total contingent fee is a maximum of approximately $15.0 million, which will only be paid if Payout occurs, as defined in “Distributions” below.

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Distributions

See the definition and discussion of “Payout” in “Note 65. Capital Contribution and Partners’ Equity” in Part II, Item 8 – Financial Statements and Supplementary Data.

In January 2024, the General Partner declared a special distribution of $0.05 per common unit that reduced the accumulated unpaid distribution total described below; the $0.05 special distribution to limited partners was paid in February 2024. For the year ended December 31, ~~2024~~2025, the Partnership paid distributions of $1.45 40 per common unit, or $2726.5 6 million. In addition, the Partnership declared a monthly cash distribution to its holders of common units of $0.12 per common unit for the month of December ~~2024~~2025. The declared distribution of approximately $2.3 million, which is included in Accounts payable and accrued expenses on the Partnership’s balance sheet as of December 31, ~~2024~~2025, was paid on January 6, ~~2025~~ 2026 to the common unit holders on record as of December 31, ~~2024~~2025.

For the year ended December 31, ~~2023~~2024, the Partnership paid distributions of $1.~~425753~~45 per common unit, or $27.1 5 million.

The General Partner monitors monthly Partnership distributions in conjunction with the Partnership’s projected cash requirements for operations and capital expenditures for new wells. There can be no assurance as to the classification or duration of distributions at the current distribution rate. As discussed above, if distributions are not paid or are reduced, the difference to the current distribution rate of $1.40 per common unit will be deferred and is required to be paid before final Payout occurs.

Oil and Natural Gas Properties

The Partnership incurred approximately $303.5 3 million and $1230.1 5 million in capital expenditures for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. During the summer of 2024, Chord substantially completed the drilling of 15 new wells, in which the Partnership had an average approximate non-operated working interest of 18%. The Partnership’s proportionate share of the related capital expenditures was approximately $28 million.

~~Since~~ The ~~October 2023, the~~ Partnership ~~elected~~anticipates ~~to participate~~that init ~~the~~may ~~drilling~~be ~~and~~obligated ~~completion~~to ofinvest 15up ~~new wells, of which all have been completed and were turned~~ to ~~sales during 2024. The Partnership has~~ an ~~approximate~~additional ~~18% non-operated working interest in these 15 wells, and the Partnership has incurred approximately~~ $26 120 million infrom ~~capital~~2026 ~~expenditures~~through to2030 ~~date related~~ to ~~these~~participate 15in ~~wells~~new aswell ofdevelopment ~~December~~in ~~31,~~the ~~2024.~~Sanish ~~The~~Field ~~Partnership~~without ~~estimates~~becoming ~~approximately~~subject ~~$1 million remains in capital expenditures~~ to ~~fully~~non-consent ~~pay~~penalties ~~for~~under the ~~completion~~joint ofoperating ~~these~~agreements 15governing ~~wells. Many factors outside~~ the ~~Partnership’s control~~Sanish ~~make~~Field ~~it difficult to predict the timing of capital expenditures~~Assets. ~~Estimated capital expenditures could be significantly different~~ ~~from amounts actually invested.~~

InAs ~~addition~~described toabove, the ~~wells~~Partnership’s inliquidity ~~which~~is currently dependent upon cash on-hand, cash from operations and availability under the BF Credit Facility. If the Partnership ~~has~~ ~~already~~is ~~elected~~not able to ~~participate,~~generate sufficient cash flows from operations or there is no availability under the ~~Partnership~~BF ~~anticipates~~Credit ~~that~~Facility to fund capital expenditures, it may not be ~~obligated~~able to ~~invest~~complete upits tocapital obligations presented by its operators or participate fully in future wells. If an ~~additional~~operator ~~$120~~elects ~~million~~to ~~from 2025~~complete ~~through~~drilling ~~2029~~or other significant capital expenditure activity and the Partnership is unable to ~~participate~~fund inthe ~~new~~capital expenditures, the General Partner may decide to farmout the well. ~~development~~Also, inif a well is proposed under the ~~Sanish~~operating ~~Field~~agreement ~~without~~for ~~becoming~~one ~~subject~~of the properties the Partnership owns, the General Partner may elect to “non-consent” ~~penalties~~the ~~under~~well. Non-consenting a well will generally cause the ~~joint~~ ~~operating~~Partnership ~~agreements~~not ~~governing~~to be obligated to pay the ~~Sanish~~costs ~~Field~~of ~~Assets~~the well, but the Partnership will not be entitled to the proceeds of production from the well until a penalty is received by the parties that drilled the well.

~~As described above, the Partnership’s liquidity~~ ~~is currently dependent upon cash on-hand, cash from operations and availability under the BF Credit Facility. If the Partnership is not~~ 54 able to generate sufficient cash from operation or there is no availability under the BF Credit Facility to fund capital expenditures, it may not be able to complete its capital obligations presented by its operators or participate fully in future wells. If an operator elects to complete drilling or other significant capital expenditure activity and the Partnership is unable to fund the capital expenditures, the General Partner may decide to farmout the well. Also, if a well is proposed under the operating agreement for one of the properties the Partnership owns, the General Partner may elect to “non-consent” the well. Non-consenting a well will generally cause the Partnership not to be obligated to pay the costs of the well, but the Partnership will not be entitled to the proceeds of production from the well until a penalty is received by the parties that drilled the well.

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Index

Oil, Natural Gas and NGL Reserves

The Partnership continually updates its proved undeveloped reserves (“PUD”) during its semi-annual review based on current market conditions and future capital investment information provided by operators of the Sanish Field Assets as these factors may change the planned timing of drilling and completing PUD reserve locations within the SEC five-year window. See “Note 98. Supplementary Information on Oil, Natural Gas and Natural Gas Liquid Reserves (Unaudited)” in Part II, Item 8 – Financial Statements and Supplementary Data for complete information on the Partnership’s reserves as of December 31, ~~2024~~2025 and ~~2023~~2024.

Transactions with Related Parties

The Partnership has, and is expected to continue to engage in, significant transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Partnership’s operations may be different than if conducted with non-related parties. The General Partner’s Board of Directors oversees and reviews the Partnership’s related party relationships and is required to approve any significant modifications to existing related party transactions, as well as any new significant related party transactions.

See further discussion in “Note 7. Related Parties” in Part II, Item 8 – Financial Statements and Supplementary Data and in Part III, Item 13 — Certain Relationships and Related Transactions, and Director Independence, appearing elsewhere in this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

The discussion and analysis of the Partnership’s financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires the Partnership to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent assets and liabilities. Certain of the Partnership’s accounting policies involve estimates and assumptions to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions or if different assumptions had been used. The Partnership bases these estimates and assumptions on historical experience and on various other information and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as the Partnership’s operating environment changes and as new events occur.

The Partnership’s critical accounting policies are important to the portrayal of both its financial condition and results of operations and require the Partnership to make difficult, subjective or complex assumptions or estimates about matters that are uncertain. The Partnership would report different amounts in its consolidated financial statements, which could be material, if the Partnership used different assumptions or estimates. The Partnership believes that the following are the critical accounting policies used in the preparation of its consolidated financial statements.

Oil and Natural Gas Properties

The Partnership accounts for its oil and natural gas properties using the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. Oil and natural gas lease acquisition costs are also capitalized. Exploration costs, including personnel costs, certain geological and geophysical expenses and delay rentals for oil and natural gas leases, are charged to expense during the period the costs are incurred. Exploratory drilling costs are initially capitalized but charged to expense if and when the well is determined not to have found reserves in commercial quantities.

No gains or losses are recognized upon the disposition of proved oil and natural gas properties except in transactions such as the significant disposition of an amortizable base that significantly affects the unit–of–production amortization rate. Sales proceeds are credited to the carrying value of the properties.

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The application of the successful efforts method of accounting requires managerial judgment to determine the proper classification of wells designated as development or exploratory which will ultimately determine the proper accounting treatment of the costs incurred. The results from a drilling operation can take considerable time to analyze and the determination that commercial reserves have been discovered requires both judgment and industry experience. Wells may be completed that are assumed to be productive and actually deliver oil, natural gas and natural gas liquids in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. Wells are drilled that have targeted geologic structures that are both developmental and exploratory in nature, and an allocation of costs is required to properly account for the results. Delineation seismic incurred to select development locations within an oil and natural gas field is typically considered a development cost and capitalized, but often these seismic programs extend beyond the reserve area considered proved and management must estimate the portion of the seismic costs to expense. The evaluation of oil and natural gas leasehold acquisition costs requires managerial judgment to estimate the fair value of these costs with reference to drilling activity in a given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions.

The successful efforts method of accounting can have a significant impact on the operational results reported when the Partnership is entering a new exploratory area in hopes of finding an oil and natural gas field that will be the focus of future developmental drilling activity. The initial exploratory wells may be unsuccessful and will be expensed. Seismic costs can be substantial, which will result in additional exploration expenses when incurred.

Impairment

The Partnership assesses its proved oil and natural gas properties for possible impairment whenever events or circumstances indicate that the recorded carrying value of the properties may not be recoverable. Such events include a projection of future reserves that will be produced from a field, the timing of this future production, future costs to produce the oil, natural gas and natural gas liquids and future inflation levels. If the carrying amount of the properties exceeds the sum of the estimated undiscounted future net cash flows, the Partnership recognizes an impairment expense equal to the difference between the carrying value and the fair value of the properties, which is estimated to be the expected present value of the future net cash flows. Estimated future net cash flows are based on existing reserves, forecasted production and cost information and management’s outlook of future commodity prices. The underlying commodity prices used in the determination of the Partnership’s estimated future net cash flows are based on NYMEX forward strip prices at the end of the period, adjusted by field or area for estimated location and quality differentials, as well as other trends and factors that management believes will impact realizable prices. Future operating costs estimates are also developed based on a review of actual costs by field or area. Downward revisions in estimates of reserve quantities or expectations of falling commodity prices or rising operating costs could result in a reduction in undiscounted future cash flows and could indicate a property impairment.

Estimates of Oil, Natural Gas and Natural Gas Liquids Reserves

The Partnership’s estimates of proved reserves are based on the quantities of oil, natural gas and natural gas liquids which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimate. Reserves for proved developed producing wells were estimated using production performance and material balance methods. Certain new producing properties with little production history were forecast using a combination of production performance and analogy to offset production, both of which provide accurate forecasts. Non–producing reserve estimates for both developed and undeveloped properties were forecast using either volumetric and/or analogy methods. These methods provide accurate forecasts due to the mature nature of the properties targeted for development and an abundance of subsurface control data.

The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. For example, the Partnership must estimate the amount and timing of future operating costs, severance taxes, development costs and workover costs, all of which may vary considerably from actual results. In addition, as prices and cost levels change from year to year, the estimate of proved reserves also changes. Any significant variance in these assumptions could materially affect the estimated quantity and value of the Partnership’s reserves. Independent reserve engineers prepare the Partnership’s reserve estimates at the end of each year.

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Despite the inherent imprecision in these engineering estimates, the Partnership’s reserves are used throughout the Partnership’s financial statements. For example, since the Partnership uses the units–of–production method to amortize the costs of its oil and natural gas properties, the quantity of reserves could significantly impact its depreciation, depletion and amortization expense. The Partnership’s reserves are also the basis of the Partnership’s supplemental oil and natural gas disclosures.

Revenue Recognition

The Partnership is bound by a joint operating agreement with the operator of each of its producing wells. Under the joint operating agreement, the Partnership’s proportionate share of production is marketed at the discretion of the operators. The Partnership typically satisfies its performance obligations upon transfer of control of its products and records the related revenue in the month production is delivered to the purchaser. As the Partnership does not operate its properties, it receives actual oil, natural gas, and NGL sales volumes and prices, net of costs incurred by the operators, two to three months after the date production is delivered by the operator. At the end of each month when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from the Partnership’s operators are accrued in Oil, natural gas and natural gas liquids revenue receivable in the consolidated balance sheets. Variances between the Partnership’s estimated revenue and actual payments are recorded in the month the payment is received; differences have been and are insignificant. As a result, the variable consideration is not constrained. The Partnership has elected to utilize the practical expedient in ASC 606 that states the Partnership is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Each delivery of product represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

Virtually all of the Partnership’s contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of oil, natural gas and natural gas liquids and prevailing supply and demand conditions, so that prices fluctuate to remain competitive with other available suppliers.

Subsequent Events

In January ~~2025~~2026, the General Partner of the Partnership declared a monthly cash distribution to its holders of common units of $0.11 per outstanding common unit for the month of January ~~2025~~2026. The distribution of approximately $2.1 million was paid on February 54, ~~2025~~2026 to common unit holders on record as of January 31, ~~2025~~2026.

In February ~~2025~~2026, the General Partner of the Partnership declared a monthly cash distribution to its holders of common units of $0.12 per outstanding common unit for the month of February ~~2025~~2026. The distribution of approximately $2.3 million was paid on March 54, ~~2025~~2026 to common unit holders on record as of February 28, ~~2025~~2026.

~~During~~In February ~~2025~~2026, the Partnership ~~paid~~and ~~off~~ its lender entered in an amendment ("Seventh Amendment") to the ~~$5.0~~BF ~~million~~Loan ~~balance~~Agreement, ~~outstanding~~effective onMarch 1, 2026 ("Effective Date"), that renewed and extended the BF Credit Facility asfor one additional year to March 1, 2027. As of ~~December~~the 31Effective Date, ~~2024~~the ~~using~~borrowing ~~proceeds~~base ~~from~~of the ~~Sanish~~BF ~~Field~~Credit ~~Assets~~Facility is $10 million and the incremental borrowing fee decreased from 50 basis points to 25 basis points. The Partnership’s ~~full~~paid ~~borrowing~~a ~~capacity~~loan fee to the Lender of $2025,000. ~~million~~All isassociated ~~therefore~~loan ~~now~~costs ~~available~~with ~~under~~ the BFSeventh ~~Credit~~Amendment ~~Facility~~were expensed as of the Effective Date.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

The Partnership also has a variable interest rate on its BF Credit Facility that is subject to market changes in interest rates. Information regarding the Partnership’s current, and prior, credit facilities is contained in Item 1 – Business, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8 – Financial Statements and Supplementary Data: “Note 4. Debt”, appearing elsewhere within this Annual Report on Form 10-K.

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Item 8. Financial Statements and Supplementary Data

Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Unitholders and the General Partner of Energy 11, L.P.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Energy 11, L.P. (the Partnership) as of December 31, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of operations, partners’ equity and cash flows for each of the two years in the period ended December 31, ~~2024~~2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2024~~2025, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Board of Directors and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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		Depreciation, Depletion, and Amortization of oil and natural gas properties
Description of the Matter		As of December 31, ~~2024~~2025, the net book value of the Partnership’'s oil and gas properties was $~~340~~315.25 million, and depreciation, depletion and amortization (DD&A) expense was $28.90 million for the year then ended. As more fully described in Note 2, capitalized costs of oil and natural gas properties are depleted using the unit-of-production method based on estimates of proved oil and natural gas reserves, as calculated by petroleum engineers with the assistance of management. Proved oil and natural gas reserve estimates are based on geological and petroleum engineering evaluations. Estimating proved oil and gas reserves also requires the selection of ~~subjective~~ inputs, including ~~future~~historical ~~operating~~production, oil and ~~capital~~gas ~~costs~~pricing assumptions, ~~among others. Significant judgment is required by management including the Partnership’s petroleum engineering staff in evaluating the geological~~ and ~~engineering~~future ~~data~~operating and incapital ~~determining~~costs ~~the~~assumptions, ~~appropriate~~among ~~cost assumptions~~others. Auditing the Partnership’s DD&A expense is ~~especially~~ complex because of the ~~significant~~use ~~judgement~~of ~~by management in developing~~ the ~~estimate~~work of ~~proved~~the ~~oil~~petroleum engineers and ~~natural~~the ~~gas~~evaluation ~~reserves~~of ~~and~~management’s ~~subjectivity~~determination of certain inputs described above used by the petroleum engineers in estimating ~~unit-of-production~~proved ~~method~~oil ~~based~~and ~~upon~~gas ~~those~~ reserves.
How We Addressed the Matter in Our Audit		Our audit procedures over the Partnership’s calculation of DD&A expense included, among others, evaluating the professional qualifications of the petroleum engineers and the Partnership’s management who performed the detailed preparation and review of the reserve estimates, respectively. We evaluated the completeness and accuracy of the ~~financial~~ data and inputs described above used by the petroleum engineers in estimating proved oil and natural gas reserves by agreeing them to source documentation, when available, and by identifying and evaluating corroborative and contrary evidence. For proved undeveloped reserves, we evaluated management's development plan for compliance with SEC requirements. We also tested the mathematical accuracy of the unit-of-production calculations and compared the proved oil and natural gas reserves amounts used to calculate DD&A expense to the Partnership’s reserve report.

/s/ Ernst & Young LLP

We have served as the Partnership’s auditor since 2021.

Richmond, Virginia

March 1413, ~~2025~~2026

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Energy 11, L.P.

Consolidated Balance Sheets

	December 31,			December 31,
	2024			2023
	2025			2024
Assets
Cash and cash equivalents	$	~~227~~6,~~859~~897,207		$	1227,~~209,813~~859
Accounts receivable		136,~~152~~216,~~609~~739			1113,~~451~~152,~~882~~609
Other current assets, net		~~155~~101,~~581~~020			~~127~~155,~~298~~581
Total Current Assets		13,~~536~~214,~~049~~966			1213,~~788~~536,~~993~~049
Oil and natural gas properties, successful efforts method, net of accumulated depreciation, depletion and amortization of $175,017,198 and $146,161,010, respectively		340,222,534			338,545,992
Oil and natural gas properties, successful efforts method, net of accumulated depreciation, depletion and amortization of $203,009,147 and $175,017,198, respectively		315,539,034			340,222,534
Other assets		~~10,064~~-			-10,064
Total Assets	$	~~353~~328,~~768~~754,~~647~~000		$	~~351~~353,~~334~~768,~~985~~647
Liabilities
Accounts payable and accrued expenses	$	76,~~731~~021,~~188~~436		$	97,~~285~~731,~~194~~188
Total Current Liabilities		76,~~731~~021,~~188~~436			97,~~285~~731,~~194~~188
Revolving credit facility		~~5,000,000~~-			-5,000,000
Asset retirement obligations		2,~~195~~234,~~629~~607			2,~~060~~195,~~520~~629
Total Liabilities		148,~~926~~256,~~817~~043			1114,~~345~~926,~~714~~817
Partners’ Equity
Limited partners’ interest (18,973,474 common units issued and outstanding, respectively)		338,843,557			339,990,998
Limited partners' interest (18,973,474 common units issued and outstanding, respectively)		320,499,684			338,843,557
General partner’s interest		(1,727	)		(1,727	)
General partner's interest		(1,727	)		(1,727	)
Class B units (62,500 units issued and outstanding, respectively)		-			-
Total Partners’ Equity		~~338~~320,~~841~~497,~~830~~957			~~339~~338,~~989~~841,~~271~~830
Total Liabilities and Partners’ Equity	$	~~353~~328,~~768~~754,~~647~~000		$	~~351~~353,~~334~~768,~~985~~647

See notes to consolidated financial statements.

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Energy 11, L.P.

Consolidated Statements of Operations

	Year Ended			Year Ended
	December 31, 2024			December 31, 2023
	December 31, 2025			December 31, 2024
Revenues
Oil	$	7453,~~756~~931,~~507~~941		$	8874,~~162~~756,~~777~~507
Natural gas		24,~~408~~602,~~371~~117			32,~~857~~408,~~572~~371
Natural gas liquids		87,~~641~~748,~~876~~690			78,~~772~~641,~~503~~876
Total revenue		8566,~~806~~282,~~754~~748			9985,~~792~~806,~~852~~754
Operating costs and expenses
Production expenses		2123,~~981~~318,~~337~~978			2621,~~529~~981,~~445~~337
Production taxes		64,~~836~~565,~~284~~154			76,~~923~~836,~~679~~284
General and administrative expenses		1,~~167~~360,~~232~~321			1,~~686~~167,~~577~~232
Depreciation, depletion, amortization and accretion		28,~~970~~030,~~690~~927			2728,~~204~~970,~~990~~690
Total operating costs and expenses		5857,~~955~~275,~~543~~380			6358,~~344~~955,~~691~~543
Operating income		269,~~851~~007,~~211~~368			3626,~~448~~851,~~161~~211
Gain on derivatives, net		-			1,252,427
Interest expense, net		(151,597	)		(180,346	)
Interest expense, net		(180,346	)		(1,185,508	)
Total other expense, net		(151,597	)		(180,346	)
Total other expense, net		(180,346	)		66,919
Net income	$	8,855,771		$	26,670,865
Net income	$	26,670,865		$	36,515,080
Basic and diluted net income per common unit	$	0.47		$	1.41
Basic and diluted net income per common unit	$	1.41		$	1.92
Weighted average common units outstanding - basic and diluted		18,973,474			18,973,474

See notes to consolidated financial statements.

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Energy 11, L.P.

Consolidated Statements of Partners’ Equity

	Limited Partner					Class B Units				General Partner			Total Partners'
	Common Units		Amount			Units		Amount		~~Partner~~ Amount			~~Partners’~~ Equity
Balance December 31, 2022		18,973,474		331,177,765			62,500		-		(1,727	)		331,176,038
Distributions declared to common units ($1.407671 per unit)		-		(26,708,409	)		-		-		-			(26,708,409	)
State tax withholding payments made on behalf of limited partners		-		(243,438	)		-		-		-			(243,438	)
Reversal of estimated state tax withholding for limited partners				250,000										250,000
Estimated state tax withholding for limited partners for tax year 2023		-		(1,000,000	)		-		-		-			(1,000,000	)
Net income		-		36,515,080			-		-		-			36,515,080
Balance December 31, 2023		18,973,474	$	339,990,998			62,500	$	-	$	(1,727	)	$	339,989,271
Distributions declared to common units ($1.45 per unit)		-		(27,511,538	)		-		-		-			(27,511,538	)
State tax withholding payments made on behalf of limited partners		-		(1,221,768	)		-		-		-			(1,221,768	)
Reversal of estimated state tax withholding for limited partners		-		1,315,000			-		-		-			1,315,000
Estimated state tax withholding for limited partners for tax year 2024		-		(400,000	)		-		-		-			(400,000	)
Net income		-		26,670,865			-		-		-			26,670,865
Balance December 31, 2024		18,973,474	$	338,843,557			62,500	$	-	$	(1,727	)	$	338,841,830
Distributions declared to common units ($1.40 per unit)		-		(26,562,864	)		-		-		-			(26,562,864	)
State tax withholding payments made on behalf of limited partners, net		-		(361,780	)		-		-		-			(361,780	)
Reversal of estimated state tax withholding for limited partners		-		400,000			-		-		-			400,000
Estimated state tax withholding for limited partners for tax year 2025		-		(675,000	)		-		-		-			(675,000	)
Net income		-		8,855,771			-		-		-			8,855,771
Balance December 31, 2025		18,973,474	$	320,499,684			62,500	$	-	$	(1,727	)	$	320,497,957

See notes to consolidated financial statements.

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Energy 11, L.P.

Consolidated Statements of Cash Flows

	Year Ended			Year Ended
	December 31, 2024			December 31, 2023
	December 31, 2025			December 31, 2024
Cash flow from operating activities:
Net income	$	268,~~670~~855,~~865~~771		$	3626,~~515~~670,~~080~~865
Adjustments to reconcile net income to cash from operating activities:
Depreciation, depletion, amortization and accretion		28,~~970~~030,~~690~~927			2728,~~204~~970,~~990~~690
Gain on mark-to-market of derivatives, net		-			(3,033,037	)
Non-cash expenses, net		-			70,526
Non-cash expenses, net		70,526			141,924
Changes in operating assets and liabilities:
Accounts receivable		(16,~~700~~935,~~727~~870	)		5(1,~~721~~700,~~667~~727	)
Other assets		1164,~~898~~625			7111,~~680~~898
Accounts payable and accrued expenses		(~~338~~149,~~455~~444	)		(80338,~~689~~455	)
Net cash flow provided by operating activities		5343,~~684~~737,~~797~~749			6653,~~541~~684,~~615~~797
Cash flow from investing activities:
Additions to oil and natural gas properties		(305,~~812~~143,~~674~~757	)		(1830,~~489~~812,~~997~~674	)
Net cash flow used in investing activities		(305,~~812~~143,~~674~~757	)		(1830,~~489~~812,~~997~~674	)
Cash flow from financing activities:
Cash paid for loan costs		~~(120,771~~-	)		-(120,771	)
Proceeds from BancFirst revolving credit facility		~~6,300,000~~-			-6,300,000
Payments on BancFirst revolving credit facility		(15,~~300~~000,000	)		(221,~~600~~300,000	)
Payments for state withholding taxes on behalf of limited partners		(1,221,768	)		(243,438	)
Payments for state withholding taxes on behalf of limited partners, net		(361,780	)		(1,221,768	)
Distributions paid to limited partners		(2726,~~511~~562,~~538~~864	)		(27,~~051~~511,~~487~~538	)
Net cash flow used in financing activities		(2331,~~854~~924,~~077~~644	)		(4923,~~894~~854,~~925~~077	)
Decrease in cash and cash equivalents		(981,954	)		(1,843,307	)
Increase (decrease) in cash and cash equivalents		6,669,348			(981,954	)
Cash and cash equivalents, beginning of period		1227,~~209,813~~859			31,~~053~~209,~~120~~813
Cash and cash equivalents, end of period	$	~~227~~6,~~859~~897,207		$	1227,~~209,813~~859
Interest paid	$	51110,~~435~~874		$	~~999~~51,~~634~~435
Supplemental non-cash information:
Accrued capital expenditures related to additions to oil and natural gas properties	$	156,~~891,501~~192		$	21,~~192~~891,~~052~~501

See notes to consolidated financial statements.

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Energy 11, L.P.

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025

Note 1. Partnership Organization

Energy 11, L.P. (together with its wholly-owned subsidiary, the “Partnership”) is a Delaware limited partnership formed to acquire producing and non-producing oil and natural gas properties onshore in the United States and to develop those properties. The initial capitalization of the Partnership of $1,000 occurred on July 9, 2013. The Partnership completed its best-efforts offering on April 24, 2017 with a total of approximately 19 million common units sold for gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million.

As of December 31, ~~2024~~2025, the Partnership owns an approximate 24% non-operated working interest in ~~312~~ 309 producing wells and future development sites in the Sanish field located in Mountrail County, North Dakota (collectively, the “Sanish Field Assets”). Chord Energy Corporation (“Chord”), is one of the largest producers in the basin ~~and~~ , operates substantially all of the Sanish Field Assets.

The general partner of the Partnership is Energy 11 GP, LLC (the “General Partner”). The General Partner manages and controls the business affairs of the Partnership.

The Partnership’s fiscal year ends on December 31.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of the Partnership have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”). The consolidated financial statements include the accounts of the Partnership and its subsidiaries.

Segment Information

The Partnership has identified only one reportable business segment, which as a non-operated interest owner of the Sanish Field Assets, is the production and sale of oil, natural gas and NGLs. All of the Partnership’s operations and assets are located in North Dakota, and substantially all of its revenues are attributable to United States customers.

The operating results of the Partnership’s single reportable segment are evaluated by the General Partner’s Chief Executive Officer, who has been determined to be the Partnership’s Chief Operating Decision Maker (“CODM”), to make key operating decisions, such as the allocation of resources and the evaluation of operating segment performance. The primary measure of profit and loss evaluated by the Partnership’s CODM for its single reportable segment is net income. Net income, total assets and all significant segment expense items are presented in the Partnership’s consolidated financial statements and notes to the consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. The fair market value of cash and cash equivalents approximates their carrying value. Cash balances may at times exceed federal depository insurance limits.

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Property and Depreciation, Depletion and Amortization

The Partnership accounts for its oil and natural gas properties using the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. Oil and natural gas lease acquisition costs are also capitalized. Exploration costs, including personnel costs, certain geological and geophysical expenses and delay rentals for oil and natural gas leases, are charged to expense during the period the costs are incurred. Exploratory drilling costs are initially capitalized but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The capitalized costs of oil and natural gas properties are depleted using the unit-of-production method on a field basis based on estimated proved developed and/or undeveloped oil, natural gas and NGL reserves.

The application of the successful efforts method of accounting requires managerial judgment to determine the proper classification of wells designated as development or exploratory which will ultimately determine the proper accounting treatment of the costs incurred. The results from a drilling operation can take considerable time to analyze and the determination that commercial reserves have been discovered requires both judgment and industry experience. Wells may be completed that are assumed to be productive and actually deliver oil, natural gas and natural gas liquids in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. Wells are drilled that have targeted geologic structures that are both developmental and exploratory in nature, and an allocation of costs is required to properly account for the results. Delineation seismic incurred to select development locations within an oil and natural gas field is typically considered a development cost and capitalized, but often these seismic programs extend beyond the reserve area considered proved and management must estimate the portion of the seismic costs to expense. The evaluation of oil and natural gas leasehold acquisition costs requires managerial judgment to estimate the fair value of these costs with reference to drilling activity in a given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions.

Impairment

The Partnership assesses its proved oil and natural gas properties for possible impairment whenever events or circumstances indicate that the recorded carrying value of the properties may not be recoverable. Such events include a projection of future reserves that will be produced from a field, the timing of this future production, future costs to produce the oil, natural gas and natural gas liquids and future inflation levels. If the carrying amount of the properties exceeds the sum of the estimated undiscounted future net cash flows, the Partnership recognizes an impairment expense equal to the difference between the carrying value and the fair value of the properties, which is estimated to be the expected present value of the future net cash flows. Estimated future net cash flows are based on existing reserves, forecasted production and cost information and management’s outlook of future commodity prices. Where probable and possible reserves exist, an appropriately risk adjusted amount of these reserves is included in the impairment evaluation. The underlying commodity prices used in the determination of our estimated future net cash flows are based on NYMEX forward strip prices at the end of the period, adjusted by field or area for estimated location and quality differentials, as well as other trends and factors that management believes will impact realizable prices. Future operating costs estimates are also developed based on a review of actual costs by field or area. Downward revisions in estimates of reserve quantities or expectations of falling commodity prices or rising operating costs could result in a reduction in undiscounted future cash flows and could indicate a property impairment.

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Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Of these estimates and assumptions, management considers the estimation of oil, natural gas and NGL reserves to be the most significant. These estimates affect the unaudited standardized measure disclosures, as well as depreciation, depletion and amortization (“DD&A”) and impairment calculations. On an annual basis, the Partnership’s independent consulting petroleum engineer, with assistance from the Partnership, prepares estimates of oil, natural gas and NGL reserves based on available geologic and seismic data, reservoir pressure data, core analysis reports, well logs, analogous reservoir performance history, production data and other available sources of engineering, geological and geophysical information. For DD&A purposes, and as required by the guidelines and definitions established by the Securities and Exchange Commission (“SEC”), the reserve estimates were based on average individual product prices during the 12-month period prior to December 31, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period excluding escalations based upon future conditions. For impairment purposes, projected NYMEX forward strip prices for oil, natural gas and NGL as estimated by management are used. Oil, natural gas and NGL prices are volatile and largely affected by worldwide production and consumption and are outside the control of management. Projected future oil, natural gas and NGL pricing assumptions are used by management to prepare estimates of oil, natural gas and NGL reserves used in formulating management’s overall operating decisions.

The Partnership does not operate its oil and natural gas properties and, therefore, receives actual oil, natural gas and NGL sales volumes and prices (in the normal course of business) more than a month later than the information is available to the operators of the wells. This being the case, the most current available production data is gathered from the appropriate operators, and oil, natural gas and NGL index prices local to each well are used to estimate the accrual of revenue on these wells. The oil, natural gas and NGL sales revenue accrual can be impacted by many variables including rapid production decline rates, production curtailments by operators, the shut-in of wells with mechanical problems and rapidly changing market prices for oil, natural gas and NGLs. These variables could lead to an over or under accrual of oil, natural gas and NGL sales at the end of any particular quarter. However, the Partnership adjusts the estimated accruals of revenue to actual production in the period actual production is determined.

Revenue Recognition

The Partnership is bound by a joint operating agreement with the operator of each of its producing wells. Under the joint operating agreement, the Partnership’s proportionate share of production is marketed at the discretion of the operators. The Partnership typically satisfies its performance obligations upon transfer of control of its products and records the related revenue in the month production is delivered to the purchaser. As the Partnership does not operate its properties, it receives actual oil, natural gas, and NGL sales volumes and prices, net of costs incurred by the operators, two to three months after the date production is delivered by the operator. At the end of each month when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from the Partnership’s operators are accrued in Oil, natural gas and natural gas liquids revenue receivable in the consolidated balance sheets. Variances between the Partnership’s estimated revenue and actual payments are recorded in the month the payment is received; differences have been and are insignificant. As a result, the variable consideration is not constrained. The Partnership has elected to utilize the practical expedient in ASC 606 that states the Partnership is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Each delivery of product represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

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Accounts Receivable and Concentration of Credit Risk

For the year ended December 31, ~~2024~~2025, the Partnership’s oil, natural gas and NGL sales were through two operators. Substantially all the Partnership’s accounts receivable is due from Chord, the largest operator of the Partnership’s oil and natural gas properties in North Dakota (operators have accounts receivable from purchasers of oil, natural gas and NGLs). Oil, natural gas and NGL sales receivables are generally unsecured. This industry and location concentration has the potential to impact the Partnership’s overall exposure to credit risk, in that the purchasers of the Partnership’s oil, natural gas and NGLs and the operators of the properties in which the Partnership has an interest may be similarly affected by changes in economic, industry or other conditions. At December 31, ~~2024~~2025, the Partnership did not reserve for bad debt expense, as all amounts are deemed collectible. Chord is the current operator of 99% of the Partnership’s producing properties. All oil and natural gas producing activities of the Partnership are in North Dakota and represent substantially all of the business activities of the Partnership.

Asset Retirement Obligation

The Partnership has significant obligations to remove tangible equipment and facilities and restore land at the end of oil and natural gas production operations. The removal and restoration obligations are primarily associated with site reclamation, dismantling facilities and plugging and abandoning wells. Estimating the future restoration and removal costs is difficult and requires management to make estimates and judgments because most of the removal obligations are many years in the future and contracts and regulations often have vague descriptions of what constitutes removal. Asset removal technologies and costs are constantly changing, as are regulatory, political, environmental, safety and public relations considerations.

The Partnership records an asset retirement obligation (“ARO”) and capitalizes the asset retirement cost in oil and natural gas properties in the period in which the retirement obligation is incurred based upon the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells. After recording these amounts, the ARO is accreted to its future estimated value using an assumed cost of funds and the additional capitalized costs are depreciated on a unit-of-production basis.

Inherent in the present value calculation are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions of these assumptions impact the present value of the existing asset retirement obligation, a corresponding adjustment is made to the oil and natural gas property balance.

The following table shows the activity for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, relating to the Partnership’s asset retirement obligations:

Balance as of December 31, 2022	$	1,966,738
Balance as of December 31, 2023	$	2,060,520
Well additions		4,748
Accretion		107,855
Revisions in estimated cash flows		(18,821	)
Balance as of December 31, 2023		2,060,520
Well additions		20,607
Accretion		114,502
Revisions in estimated cash flows		-
Balance as of December 31, 2024	$	2,195,629
Well additions		-
Accretion		168,190
Revisions in estimated cash flows		(129,212	)
Balance as of December 31, 2025	$	2,234,607

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Income Tax

The Partnership is taxed as a partnership for federal and state income tax purposes. Typically, the Partnership has not recorded a provision for income taxes since the liability for such taxes is that of each of the partners rather than the Partnership. In mid-2022, the Partnership was contacted by the state of North Dakota, which asserted that the Partnership has an obligation to make tax payments on behalf of certain non-resident partners. In accordance with its settlements with the state of North Dakota, the Partnership has made payments of (i) approximately $243,000 (approximately $0.013 per common unit) in May 2023 for tax year 2021; (ii) approximately $353,000 (approximately $0.019 per common unit) in April 2024 for tax year 2022; ~~and~~ (iii) approximately $869,000 (approximately $0.046 per common unit) in April 2024 for tax year 2023; and (iv) approximately $400,000 (approximately $0.021 per common unit) in April 2025 for tax year 2024. The Partnership recorded an estimate at December 31, ~~2024~~2025 of approximately $~~400~~675,000 (approximately $0.036 per common unit) for the 2025 ~~2024~~ tax year.

The Partnership’s income tax returns are subject to examination by the federal and state taxing authorities, and changes, if any, could adjust the individual income tax of the partners. The Partnership has evaluated whether any material tax position taken will more likely than not be sustained upon examination by the appropriate taxing authority and believes that all such material tax positions taken are supportable by existing laws and related interpretations.

Environmental Costs

As the Partnership is directly involved in the extraction and use of natural resources, it is subject to various federal, state and local provisions regarding environmental and ecological matters. Compliance with these laws may necessitate significant capital outlays. The Partnership does not believe the existence of current environmental laws or interpretations thereof will materially hinder or adversely affect the Partnership’s business operations; however, there can be no assurances of future effects on the Partnership of new laws or interpretations thereof. Since the Partnership does not operate any wells where it owns an interest, actual compliance with environmental laws is controlled by the well operators, with the Partnership being responsible for its proportionate share of the costs involved.

Environmental liabilities are recognized when it is probable that a loss has been incurred and the amount of that loss is reasonably estimable. Environmental liabilities, when accrued, are based upon estimates of expected future costs. At December 31, ~~2024~~2025 and ~~2023~~2024, there were no such costs accrued.

Fair Value of Other Financial Instruments

The carrying value of the Partnership’s other financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, reflect these items’ cost, which approximates fair value based on the timing of the anticipated cash flows, current market conditions and short-term maturity of these instruments.

Reclassifications

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation with no effect on previously reported net income, partners’ equity or cash flows.

Net Income Per Common Unit

Basic net income per common unit is computed as net income divided by the weighted average number of common units outstanding during the period. Diluted net income per unit is calculated after giving effect to all potential common units that were dilutive and outstanding for the period. There were no common units with a dilutive effect for the years ended December 31, ~~2024~~2025 and ~~2023~~2024. As a result, basic and diluted outstanding common units were the same. The Class B Units and Incentive Distribution Rights are not included in net income per common unit until such time that it is probable Payout (as discussed in Note 65) would occur.

Recently Adopted Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires significant segment disclosures on an annual and interim basis. Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) and requires a public entity that has a single reportable segment to provide all disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 280. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this ASU only impacted disclosures with no impact on the Partnership’s consolidated financial statements. The Partnership adopted this ASU effective December 31, 2024; see Segment Information above.

Index

Recently Issued Accounting Standards

In November 2024, the ~~FASB~~Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Partnership is currently evaluating this ASU to determine its impact on the Partnership’s financial statements and related disclosures.

Table of Contents

Note 3. Oil and Gas Investments

On December 18, 2015, the Partnership completed its first purchase in the Sanish field, acquiring an approximate 11% non-operated working interest in the Sanish Field Assets for approximately $159.6 million. On January 11, 2017, the Partnership closed on its second purchase in the Sanish field, acquiring an additional approximate 11% non-operated working interest in the Sanish Field Assets for approximately $128.5 million. On March 31, 2017, the Partnership closed on its third purchase in the Sanish field, acquiring an additional approximate average 10.5% non-operated working interest in 82 of the Partnership’s then 216 existing producing wells and 150 of the Partnership’s then 253 future development locations in the Sanish Field Assets for approximately $52.4 million.

~~From~~The ~~2018 through 2023, the~~ Partnership ~~drilled and~~incurred ~~completed~~approximately 86$3.3 million in ~~new wells; the Partnership’s estimated share of~~ capital expenditures for the ~~drilling~~year ~~and~~ended December ~~completion of these 86 wells totaled approximately $120 million. Since October 2023~~31, ~~the Partnership elected to participate in 15 more wells, of which all were completed during the second and third quarters of 2024~~2025. The Partnership has andrilled ~~approximate~~and ~~18%~~completed ~~non-operated~~101 ~~working~~new ~~interest in these 15~~ wells. ~~The~~since ~~total estimated cost to~~ the ~~Partnership~~beginning toof ~~drill~~2018, ~~and~~with ~~complete these 15 wells is approximately $27 million;~~ the Partnership ~~has~~’s ~~incurred~~share ~~approximately~~of ~~$26~~the ~~million~~related in capital ~~expenditures~~drilling toand ~~date~~completion ~~related~~costs tototaling approximately ~~these wells as of December 31, 2024~~$148 million.

The Partnership estimates the remaining capital expenditures to fully pay for these new wells will be incurred in the first quarter of 2025 based on the best available information from its operators. However, many factors outside the Partnership’s control make it difficult to predict the amount and timing of capital expenditures, and estimated capital expenditures could be significantly different from amounts actually invested.

Note 4. Debt

On May 13, 2021, the Partnership and its wholly-owned subsidiary, as borrowers, entered into a loan agreement (“BF Loan Agreement”) with BancFirst, as administrative agent for the lenders (the “Lender”), which provided for a revolving credit facility (“BF Credit Facility”) with an approved maximum credit amount (“Maximum Credit Amount”) of $60 million, subject to borrowing base restrictions. ~~The~~On February 27, 2024, the Partnership ~~paid~~ and its Lender entered into an ~~origination~~ ~~fee~~amendment of(“Fifth ~~0.50%~~Amendment”) ofto the ~~Maximum~~BF ~~Credit~~Loan ~~Amount~~Agreement, oreffective March ~~$300~~1,~~000.~~ 2024, ~~Total~~that ~~capitalized~~renewed ~~loan~~and ~~costs,~~extended ~~which~~the ~~were~~BF ~~approximately $400,000,~~Credit ~~were~~Facility ~~recorded~~for astwo ~~Other~~additional ~~assets~~years onto March ~~the~~1, ~~Partnership’s~~2026. ~~balance~~Under ~~sheets~~the terms and ~~were~~conditions ~~amortized~~of inthe ~~full~~Fifth ~~through~~Amendment, ~~February~~the ~~2024. The~~ Partnership ~~also~~ paid ana ~~annual~~loan fee to the Lender of $30100,000, and anthe borrowing ~~unused~~base ~~facility~~of ~~fee~~the ofBF 0Credit Facility was $20 million.~~25%~~ onTotal ~~the~~loan ~~unused~~costs ~~portion~~associated ofwith the BFFifth ~~Credit Facility~~Amendment, ~~based~~which ontotaled ~~borrowings~~approximately ~~outstanding~~$121,000, ~~during~~were acapitalized ~~quarter~~and approximately $10,000 of those costs had yet to be amortized as of December 31, 2025.

OnThe ~~February~~Partnership ~~27,~~was ~~2024, the~~in ~~Partnership~~compliance ~~and~~ with its ~~Lender~~applicable ~~entered~~covenants ~~into~~and anhad ~~amendment~~no ~~(“Fifth~~outstanding ~~Amendment”)~~borrowings toon the BF ~~Loan~~Credit ~~Agreement~~Facility at December 31, ~~effective~~2025, and through the maturity date of March 1, ~~2024~~2026. ~~(“Effective Date”),~~See ~~that~~Note ~~renewed~~7. ~~and~~Subsequent ~~extended~~Events ~~the~~for BFdetails ~~Credit~~on ~~Facility~~the ~~for~~seventh ~~two~~amendment ~~additional~~to ~~years~~the toBF ~~March~~Loan 1Agreement, ~~2026~~which ~~(“Revised~~renews ~~Maturity~~and ~~Date”). Key~~extends ~~terms~~the ~~and~~BF ~~conditions~~Credit ofFacility ~~the~~for ~~Fifth~~one ~~Amendment~~year to March ~~include:~~1, 2027.

●Under Asthe ofBF Loan Agreement, the ~~Effective~~Partnership ~~Date,~~is subject to an unused facility fee of 0.25% on the ~~borrowing~~unused ~~base~~portion of the BF Credit Facility, isbased ~~$20,000,000.~~on ●borrowings Asoutstanding ~~amended,~~during ~~the~~a quarter. The Partnership ~~remains~~is subject to a semi-annual redetermination of its borrowing base, but the Partnership is only required to perform an annual analysis of its proven oil and natural gas reserves as of January 1 of each year. ● The ~~Partnership~~interest ~~paid~~rate ais ~~loan~~equal ~~fee~~ to the ~~Lender~~Wall ~~associated~~Street ~~with~~Journal ~~the~~Prime ~~Fifth~~Rate ~~Amendment of $100,000~~plus 0. ~~● Previously under the BF Loan Agreement~~50%, ~~the~~with ~~Partnership was required to pay~~ a ~~$30,000~~floor ~~annual administrative fee to the Lender~~of 4. ~~Because BancFirst will be the only Lender effective March 1, 2024, the administrative fee has been waived through the Revised Maturity Date~~00%.

Index

Loan costs associated with the Fifth Amendment, which totaled approximately $121,000, were capitalized and will be amortized through the Revised Maturity Date. The interest rate is equal to the Wall Street Journal Prime Rate plus 0.50%, with a floor of 4.00%.

Any advances under the BF Credit Facility are to be used to fund capital expenditures for the development of the Partnership’s undrilled acreage. Under the terms of the BF Loan Agreement, the Partnership may make voluntary prepayments, in whole or in part, at any time with no penalty. The BF Credit Facility is secured by a mortgage and first lien position on certain of the Partnership’s producing wells.

~~The BF Loan Agreement requires the Partnership~~ ~~to maintain a risk management program to manage the commodity price risk of the Partnership’s future oil and gas production under~~ 69 certain conditions. As amended in August 2022, the Partnership is not required to enter into future hedging transactions as long as the Partnership maintains a BF Credit Facility utilization rate of less than or equal to 20% of the Partnership’s PV-9 (defined as the net present value, discounted at 9% per annum), as calculated by the Lender during the Lender’s scheduled redeterminations. However, the Partnership must hedge at least 50% of its rolling 12-month projected future production if the Partnership’s utilization of the BF Credit Facility is greater than 20% but less than or equal to 30% of PV-9, and at least 50% of its rolling 24-month projected future production if the Partnership’s utilization of the Revolving Credit Facility is greater than 30% of PV-9. Based on the Partnership’s utilization of the BF Credit Facility and Lender’s current calculation of PV-9, the Partnership was not subject to any hedging requirements under the amended BF Loan Agreement as of December 31, 2024.

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The BF Loan Agreement requires the Partnership to maintain a risk management program to manage the commodity price risk of the Partnership’s future oil and gas production under certain conditions. As amended in August 2022, the Partnership is not required to enter into future hedging transactions as long as the Partnership maintains a BF Credit Facility utilization rate of less than or equal to 20% of the Partnership’s PV-9 (defined as the net present value, discounted at 9% per annum), as calculated by the Lender during the Lender’s scheduled redeterminations. However, the Partnership must hedge at least 50% of its rolling 12-month projected future production if the Partnership’s utilization of the BF Credit Facility is greater than 20% but less than or equal to 30% of PV-9, and at least 50% of its rolling 24-month projected future production if the Partnership’s utilization of the Revolving Credit Facility is greater than 30% of PV-9. Based on the Partnership’s utilization of the BF Credit Facility and Lender’s current calculation of PV-9, the Partnership was not subject to any hedging requirements under the amended BF Loan Agreement as of December 31, 2025.

The BF Loan Agreement contains prepayment requirements, customary affirmative and negative covenants and events of default. Certain of the financial covenants include:

	●	A minimum ratio of trailing 12-month EBITDAX to debt service coverage of 1.20 to 1.000
	●	A minimum ratio of current assets to current liabilities of 1.00 to 1.00

The Partnership is permitted to make distributions to its limited partners so long as the Partnership is in compliance with its debt service coverage ratio and no other event of default has occurred. In addition, the Sixth Amendment to the BF Loan Agreement allows the Partnership to include any unused amount of BF Credit Facility in its calculation of current assets, which began with the quarter ended September 30, 2024. ~~The Partnership was in compliance with all covenants as of December 31, 2024.~~

As of December 31, 2024, the outstanding balance on the BF Credit Facility of approximately $5.0 million approximated the fair market value. The Partnership estimated the fair value of its credit facility by discounting the future cash flows of the instrument at estimated market rates consistent with the maturity of a debt obligation with similar credit terms and credit characteristics, which are Level 3 inputs under the fair value hierarchy. Market rates take into consideration general market conditions and maturity.

Note 5. ~~Risk~~Capital ~~Management~~Contribution and Partners’ Equity

Participation in the oil and gas industry exposes the Partnership to risks associated with potentially volatile changes in energy commodity prices, and therefore, the Partnership’s future earnings are subject to these risks. Therefore, the Partnership periodically utilizes derivative contracts to manage the commodity price risk on the Partnership’s future oil production it will produce and sell and to reduce the effect of volatility in commodity price changes to provide a base level of cash flow from operations.

In July 2021, the Partnership began its risk management program required under the BF Loan Agreement (see “Note 4. Debt”). To meet BF Loan Agreement requirements, the Partnership entered into two-way costless collar derivative contracts for the period from July 2021 to September 2023. Two-way collars are designed to establish a minimum price (floor) and a maximum price (ceiling) for the future production volumes under contract. The Partnership did not pay or receive a premium related to the costless collars into which it entered to remain compliant with the BF Loan Agreement, and the contracts were settled monthly. The Partnership had no outstanding derivative contracts at December 31, 2024 and 2023, and the Partnership is not currently required to hedge future production under the BF Loan Agreement.

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The Partnership did not designate its derivative instruments as hedges for accounting purposes and did not enter into such instruments for speculative trading purposes. As a result, when derivatives do not qualify or are not designated as a hedge, the changes in the fair value are recognized on the Partnership’s consolidated statements of operations as a gain or loss on derivative instruments. The following table presents the settlement losses of matured derivative instruments and non-cash mark-to-market gains (losses) for the periods presented.

	Year Ended December 31, 2023
Settlements on matured derivatives	$	(1,780,610	)
Gain on mark-to-market of derivatives, net		3,033,037
Gain on derivatives, net	$	1,252,427

Settlements on matured derivatives above reflect realized losses on derivative contracts which matured during the periods presented, calculated as the difference between the contract price and the market settlement price. The mark-to-market (non-cash, unrealized) gains or losses above represent the change in fair value of derivative instruments which were held at period-end. Unrealized gains or losses do not represent actual settlements or payments made to or from the counterparty.

The Partnership’s derivative instruments were covered by an International Swap Dealers Association Master Agreement (“ISDA”) entered into with the counterparty. The ISDA may provide that as a result of certain circumstances, such as cross-defaults, a counterparty may require all outstanding derivative instruments under an ISDA to be settled immediately. The Partnership had netting arrangements with the counterparty that provided for offsetting payables against receivables from separate derivative instruments. The use of derivative instruments involved the risk that the Partnership’s counterparty may have been unable to meet the financial terms of such instruments.

Note 6. Capital Contribution and Partners’ Equity

At inception, the General Partner and organizational limited partner made initial capital contributions totaling $1,000 to the Partnership. Upon closing of the minimum offering the organizational limited partner withdrew its initial capital contribution of $990, the General Partner received Incentive Distribution Rights (defined below), and was reimbursed for its documented third-party out-of-pocket expenses incurred in organizing the Partnership and offering the common units.

The Partnership completed its best-efforts offering of common units on April 24, 2017. As of the conclusion of the offering on April 24, 2017, the Partnership had completed the sale of approximately 19.0 million common units for total gross proceeds of $374.2 million and proceeds net of offerings costs of $349.6 million.

Under the agreement with the Dealer Manager, the Dealer Manager received a total of 6% in selling commissions and a marketing expense allowance based on gross proceeds of the common units sold. The Dealer Manager will also be paid a contingent incentive fee, which is a cash payment of up to an amount equal to 4% of gross proceeds of the common units sold based on the performance of the Partnership. Based on the common units sold in the best-efforts offering, the total contingent fee is approximately $15.0 million.

Prior to “Payout,” which is defined below, all of the distributions made by the Partnership, if any, will be paid to the holders of common units. Accordingly, the Partnership will not make any distributions or record any liability with respect to the Incentive Distribution Rights (owned by the General Partner), the Class B units or the contingent, incentive payments to the Dealer Manager until an event that triggers Payout occurs.

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All distributions made by the Partnership after Payout, which may include all or a portion of the proceeds of the sale of all or substantially all of the Partnership’s assets, will be made as follows:

●

First, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) to the Dealer Manager, as the Dealer Manager contingent incentive fee paid under the Dealer Manager Agreement, 30%, and (iv) the remaining amount, if any (currently 13.125%), to the Record Holders of outstanding common units, pro rata based on their percentage interest until such time as the Dealer Manager receives the full amount of the Dealer Manager contingent incentive fee under the Dealer Manager Agreement;

●

Thereafter, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) the remaining amount to the Record Holders of outstanding common units, pro rata based on their percentage interest (currently 43.125%).

All items of income, gain, loss and deduction will be allocated to each Partner’s capital account in a manner generally consistent with the distribution procedures outlined above.

In January 2024, the General Partner declared a special distribution of $0.05 per common unit that reduced the accumulated unpaid distribution total described below; the $0.05 special distribution to limited partners was paid in February 2024. For the year ended December 31, ~~2024~~2025, the Partnership paid distributions of $1.45 40 per common unit, or $2726.5 6 million. In addition, the Partnership declared a monthly cash distribution to its holders of common units of $0.12 per common unit for the month of December ~~2024~~2025. The declared distribution of approximately $2.3 million, which is included in Accounts payable and accrued expenses on the Partnership’s balance sheet as of December 31, ~~2024~~2025, was paid on January 6, ~~2025~~ 2026 to the common unit holders on record as of December 31, ~~2024~~2025.

For the year ended December 31, ~~2023~~2024, the Partnership paid distributions of $1.~~425753~~45 per common unit, or $27.1 5 million.

Note 76. Related Parties

The members of the General Partner are affiliates of Glade M. Knight, Chairman and Chief Executive Officer, and David S. McKenney, Chief Financial Officer. Mr. Knight and Mr. McKenney are also the Chief Executive Officer and Chief Financial Officer of Energy Resources 12 GP, LLC, the general partner of Energy Resources 12, L.P. (“ER12”), a limited partnership that also invests in producing and non-producing oil and natural gas properties on-shore in the United States.

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The Partnership has, and is expected to continue to engage in, significant transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Partnership’s operations may be different than if conducted with non-related parties. The General Partner’s Board of Directors oversees and reviews the Partnership’s related party relationships and is required to approve any significant modifications to any existing related party transactions, as well as any new significant related party transactions.

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, approximately $~~379~~384,000 and $~~291~~379,000 of general and administrative costs were incurred by a member of the General Partner and have been or will be reimbursed by the Partnership. At December 31, ~~2024~~2025 and ~~2023~~2024, approximately $~~131~~139,000 and $~~119~~131,000, respectively, was due to a member of the General Partner; these costs are included in Accounts payable and accrued expenses in the consolidated balance sheets.

OnE11 ~~December~~Incentive 1Holdings, ~~2020,~~LLC (“Incentive Holdings”) was the ~~Partnership~~owner ~~entered~~of ~~into~~all ~~an Administrative~~Class ~~Services~~B ~~Agreement~~units ~~(the~~outstanding ~~“ASA”~~(62,500) ~~with~~as ~~Regional~~of March ~~Energy Investors~~31, L2017.P. ~~d/b/a~~During ~~Regional~~the ~~Energy~~second ~~Management~~quarter ~~(the~~of ~~“Administrator”~~2017, Incentive Holdings transferred substantially all of its assets: (1) ~~and~~ ~~ER12~~on April 5, ~~whereby~~2017, Incentive Holdings transferred 18,125 of the ~~Administrator~~62,500 ~~was~~Class B units to ~~provide~~E11 ~~administrative~~Incentive Carry Vehicle, ~~operating~~LLC, ~~and~~an ~~professional~~affiliate ~~services~~of ~~necessary~~Incentive Holdings, for de minimis consideration; and ~~useful~~(2) toon April 6, 2017, the ~~Partnership. The~~remaining ~~Administrator~~44,375 ~~also~~Class ~~was~~B tounits ~~assist~~were ~~the~~acquired ~~General~~by ~~Partner~~Regional ~~with~~Energy ~~the~~Incentives, ~~day-to-day~~LP ~~operations~~in ofexchange ~~the~~for ~~Partnership~~approximately $98,000. ~~The~~Regional ~~Administrator~~Energy isIncentives, LP was a partnership owned by entities ~~that are~~ controlled by Mr. McKenney, Anthony F. Keating, ~~III~~ and Michael J. Mallick,. ~~the~~Messrs. ~~now~~Keating and Mallick were former Co-Chief Operating Officers of the General Partner. ~~The~~Messrs. ~~ASA~~Keating ~~became~~and ~~effective~~Mallick ~~January~~resigned 1from the General Partner in April 2023, ~~2021~~and upon resignation, their share of Class B units was sold to an affiliate of Mr. Knight. As of April 5, 2023, affiliates of Messrs. Knight and McKenney now own 44,375 Class B units, and E11 Incentive Carry Vehicle, LLC owns the remaining 18,125 outstanding Class B units.

OnThe

Filing Compare · Energy 11, L.P.