Sabine Royalty Trust

Crude oil and natural gas prices are volatile and fluctuate in response to a number of factors; Lower prices could reduce the net proceeds payable to the Trust and Trust distributions

Trust reserve estimates depend on many assumptions that may prove to be inaccurate, which could cause both estimated reserves and estimated future net revenues to be too high, leading to write-downs of estimated reserves

The assets of the Trust are depleting assets and, if the operators developing the Royalty Properties do not perform additional development projects, the assets may deplete faster than expected. Eventually, the assets of the Trust will cease to produce in commercial quantities and the Trust will cease to receive proceeds from such assets. In addition, a reduction in depletion tax benefits may reduce the market value of the Units

The market price for the Units may not reflect the value of the royalty interests held by the Trust

Terrorism and continued hostilities in Eastern Europe and the Middle East could decrease Trust distributions or the market price of the Units

Government action, policies or regulations designed to discourage production of, reduce demand for, or promote alternatives to oil and natural gas could impact the price of oil and natural gas produced on the Royalty Properties, directly as intended or through unintended consequences

Trustee may be subject to attempted cybersecurity disruptions from a variety of sources including state- sponsored actors

Future royalty income may be subject to risks related to the creditworthiness of third parties

Unit holders and the Trustee have no influence over the operations on, or future development of, the Royalty Properties

The operator developing any Royalty Property may abandon the property, thereby terminating the royalties payable to the Trust

The Royalty Properties can be sold and the Trust would be terminated

Unit holders have limited voting rights and have limited ability to enforce the Trust’s rights against the current or future operators developing the Royalty Properties

Financial information of the Trust is not prepared in accordance with GAAP

The limited liability of the Unit holders is uncertain

The tax treatment of an investment in Trust Units could be affected by recent and potential legislative changes, possibly on a retroactive basis

1. Volatility of oil prices: Oil prices can be volatile and subject to abrupt swings. This can have a negative impact on the trust’s income and will affect the amount it pays out to its trustors.

2. Tax implications: The IRS taxes distributions from the trust as ordinary income, and tax rates may be higher than other investment options.

3. Declining reserves: The royalties paid to the trust depend on the success of the oil and natural gas wells the trust owns. If the wells produce less over time, or production from the wells decline unexpectedly, the amount of money paid out by the trust could be reduced.

4. Royalty payments: The trust may be responsible for a portion of the development costs or the specific royalties required by its oil and gas leases. This cost could potentially reduce the amount of income generated by the trust.