FALCON MINERALS: 10-Okay / A – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS

You must learn the next dialogue of our historic efficiency and
monetary situation along with Half II, Merchandise 6. "Chosen Monetary Knowledge,"
the outline of the enterprise showing in Half I, Merchandise 1. "Enterprise," and the
consolidated monetary statements and the associated notes in Half II, Merchandise 8. of
this Annual Report.

This dialogue might include forward-looking statements which can be based mostly on the
views and beliefs of our administration, in addition to assumptions and estimates made
by our administration. Precise outcomes may differ materially from such
forward-looking statements because of varied threat components, together with these
that might not be within the management of administration. Components that would trigger or
contribute to those variations embody these mentioned under and elsewhere in
this report, notably in Half I, Merchandise 1A. "Threat Components" and beneath
"Cautionary Assertion Concerning Ahead-Wanting Statements."

Restatement of beforehand revealed consolidated monetary statements

We now have restated our beforehand issued consolidated monetary statements
contained within the Authentic Type 10-Okay. Seek advice from the "Explanatory Notice" previous
Merchandise 1, Enterprise, for background on the restatement, the durations impacted,
management issues, and different info. As well as, we have now restated
sure beforehand reported monetary info as of December 31, 2020 and
2019 and for the fiscal years ended December 31, 2020, 2019 and 2018 on this
Merchandise 7, Administration's Dialogue and Evaluation of Monetary Situation, together with
however not restricted to info inside the Results of Operations and Liquidity and
Capital Sources sections. See Notice 3, Restatement of Beforehand Issued
Consolidated Monetary Statements, in Merchandise 15, Displays and Monetary
Statements, for extra info associated to the restatement, together with
descriptions of the misstatements and the impacts to our consolidated monetary
statements.

Overview

We had been shaped to personal and purchase Royalties in oil and pure fuel properties in
North America, considerably all of that are positioned within the Eagle Ford Shale.
These Royalties entitle the holder to a portion of the manufacturing of oil and
pure fuel from the underlying acreage on the gross sales worth obtained by the
operator, internet of any relevant post-production bills and taxes. The holder
of those pursuits has no obligation to fund exploration and growth prices,
lease working bills or plugging and abandonment prices on the finish of a
effectively's productive life, which we imagine ends in low breakeven prices.

We personal Royalties that entitle us to a portion of the manufacturing of oil, pure
fuel and NGLs from the underlying acreage on the gross sales worth obtained by the
operator, internet of manufacturing bills and taxes. We now have no obligation to fund
discovering and growth prices or pay capital expenditures resembling plugging and
abandonment prices. We now have minimal allotted lease working bills. As such,
we have now traditionally operated with excessive money margins, changing a big
share of income to free money circulation, the vast majority of which may be
distributed to our stockholders.

Latest developments

Nothing.

Components Affecting the Comparability of Our Monetary Outcomes



COVID-19 Pandemic. The COVID-19 pandemic and associated financial repercussions have
resulted in a big discount in demand for and costs of oil, pure fuel
and NGLs. Within the first quarter of 2020 and into the second quarter of 2020, oil
costs fell sharply, due partly to considerably decreased demand because of this
of the COVID-19 pandemic and the announcement by Saudi Arabia of a big
improve in its most oil manufacturing capability in addition to the announcement by
Russia that beforehand agreed upon oil manufacturing cuts between members of the
Group of the Petroleum Exporting Nations and its broader companions
("OPEC+") would expire on April 1, 2020, and the following expiration thereof.
Agreed-upon manufacturing cuts by OPEC+ together with declining U.S. manufacturing have
helped to right the provision and demand imbalance; nonetheless, these reductions are
not anticipated to be sufficient within the near-term to offset the numerous stock
construct brought on by demand destruction from the COVID-19 pandemic. These market
situations have resulted in a decline in drilling exercise as operators revise
their capital budgets downward and regulate their operations in response to decrease
commodity costs. Whereas oil costs have remained depressed, each pure fuel
spot costs and contract future costs for the total 12 months 2021 have improved
considerably from ranges seen within the second quarter of 2020. Given the dynamic
nature of those occasions, we can't moderately estimate the time period that
the COVID-19 pandemic and associated market situations will persist.

Public Firm Bills. We incur direct G&A expense because of being a
publicly traded firm, together with, however not restricted to, prices related to
hiring new personnel, implementation of compensation applications which can be
aggressive with our public firm peer group, annual and quarterly experiences to
stockholders, tax return preparation, impartial auditor charges, investor
relations actions, registrar and switch agent charges, incremental director
and officer legal responsibility insurance coverage prices, impartial director compensation and
different comparable prices. These direct G&A bills weren't included in Royal's
historic monetary outcomes of operations previous to the Transactions.

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Revenue Taxes. Previous to the Transactions, Royal was handled as a partnership for
U.S. federal earnings tax functions and for functions of sure state and native
earnings taxes. Royal was not topic to U.S. federal earnings taxes. Nevertheless, Royal
was topic to the Texas margin tax. Any taxable earnings or loss generated by
Royal was handed by means of to and included within the taxable earnings or lack of its
members. We're an organization and are topic to U.S. federal earnings taxes, in
addition to state and native earnings taxes with respect to our allocable share of
any taxable earnings or lack of OpCo, in addition to any stand-alone earnings or loss
generated by us.

Sources of Our Income

Our revenues had been derived from royalty funds we obtained from our operators
based mostly on the sale of oil and pure fuel manufacturing, in addition to the sale of
pure fuel liquids which can be extracted from pure fuel throughout processing. As of
December 31, 2020, our Royalties represented the appropriate to obtain a mean of
1.27% from the manufacturing wells on the underlying acreage on the gross sales worth
obtained by our operators internet of any relevant post-production bills and
taxes. Our revenues might fluctuate considerably from interval to interval because of
adjustments in volumes of manufacturing offered or adjustments in commodity costs. Oil, NGLs
and pure fuel costs have traditionally been unstable subsequently, from time to
time, we have now entered into by-product devices to partially mitigate the
affect of commodity worth volatility on our money generated from operations. Such
devices might embody variable-to-fixed-price swaps, mounted worth contracts,
costless collars, and different contractual agreements. The affect of those
by-product devices may have an effect on the quantity of income we in the end
notice. We intend to constantly monitor the manufacturing from our property and
the commodity worth setting, and can, once in a while, add extra
hedges sooner or later. We don't enter into by-product devices for
speculative functions. Our open commodity by-product contracts as of December 31,
2020 are detailed in "Notice 5-Commodity By-product Monetary Devices" to our
audited consolidated monetary statements included elsewhere on this Annual
Report.

Through the 12 months ended December 31, 2020, the West Texas Intermediate common
month-to-month posted costs ranged from $16.70 to $57.86 per Bbl for crude oil and the
Henry Hub settlement worth of pure fuel ranged from $1.50 to $3.00 per MMBtu
for pure fuel. Through the 12 months ended December 31, 2019, West Texas
Intermediate month-to-month common posted costs ranged from $51.55 to $63.87 per Bbl
for crude oil and the Henry Hub settlement worth of pure fuel ranged from
$2.14 to $3.64 per MMBtu. Through the 12 months ended December 31, 2018, West Texas
Intermediate month-to-month common posted costs ranged from $49.98 to $70.76 per Bbl
for crude oil and the Henry Hub settlement worth of pure fuel ranged from
$2.64 to $4.72 per MMBtu

The next desk presents the breakdown of our income for the next
durations:



                                Yr Ended December 31,
                               2020                2019         2018
Royalty Revenue:
Oil gross sales                            75 %                77 %      81 %
Pure fuel gross sales                    18 %                14 %      12 %
Pure fuel liquids gross sales             7 %                 7 %       7 %
Lease bonus                           0 %                 2 %       0 %
Whole                               100 %               100 %     100 %




Commodity costs are inherently unstable, and adjustments in such costs have
traditionally had an affect on our income.  Decrease costs might not solely lower
our revenues, but additionally doubtlessly the quantity of oil and pure fuel that our
operators can produce economically. Decrease oil and pure fuel costs may
lead to a discount within the borrowing base beneath our credit score settlement, which
could also be redetermined on the discretion of our lenders.

The next desk units forth the common realized costs for oil, pure fuel
and pure fuel liquids for the years ended December 31, 2020, 2019 and 2018:



                                 Yr Ended December 31,
                                 2020               2019          2018
Oil (Bbls)                   $      35.84$      59.85$ 67.14
Pure fuel (Mcf)            $       2.01$       2.62$  3.10

Pure fuel liquids (Bbls) $ 12.28$ 15.45$ 25.62

Important parts of our price construction

Manufacturing taxes and advert valorem taxes

Manufacturing taxes are paid on produced oil and pure fuel based mostly on a share
of revenues from merchandise offered at mounted charges established by federal, state, and
native taxing authorities. The place obtainable, we have now traditionally benefited from
tax credit and exemptions in our varied taxing jurisdictions. We additionally instantly
paid advert valorem taxes within the counties the place our manufacturing was positioned. Advert
valorem taxes had been typically based mostly on the state authorities's appraisal of our
oil and pure fuel properties.

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Advertising and transport

Advertising and transportation bills embody the prices to course of and transport
our manufacturing to relevant gross sales factors. Usually, the phrases of the lease
governing the event of our properties allow the operator to go by means of
these bills to us by deducting a professional rata portion of such bills from our
manufacturing revenues.

Amortization

Our royalties are recorded at price and capitalized as tangible property. Acquisition prices associated to confirmed properties are amortized on the premise of manufacturing models over the time period of the proved reserves.

Common and administrative

Common and administrative bills are prices in a roundabout way related to the
manufacturing of oil, pure fuel and NGLs and embody the price of executives and
workers and associated advantages (together with stock-based compensation bills),
workplace bills and charges for skilled companies. For the reason that completion of the
Transactions in August 2018, we incurred incremental G&A bills referring to
bills related to SEC reporting necessities, together with annual and
quarterly experiences to shareholders, tax return preparation and dividend bills,
Sarbanes-Oxley Act compliance bills, bills related to itemizing our
securities, impartial auditor charges, authorized bills, and investor relations
bills. These incremental G&A bills are usually not mirrored within the historic
monetary statements.

Traditionally these are prices incurred for overhead, together with the allocation of
a portion of the historic price of administration, working and administrative
companies offered beneath a grasp companies settlement (the "MSA") between Royal
and Riverbend Oil & Gasoline, L.L.C. ("Riverbend"), which owned a portion of Royal
by means of an affiliate and whose workers traditionally managed Royal's
predecessor and Royal, audit and different charges for skilled companies and authorized
compliance. On the Closing Date, Royal assigned to the Firm its rights and
duties beneath the present MSA. Riverbend carried out considerably the
identical companies for the Firm as these Riverbend carried out for Royal previous to
the Closing Date in the course of the time period of the MSA, which expired on
December 10, 2018. The Firm has assumed the day-to-day administration of the
Firm for the reason that expiration of the MSA with Riverbend.

Curiosity prices

We finance a portion of our working capital necessities and acquisitions with
borrowings beneath our credit score facility. Consequently, we incur curiosity expense
that's affected by each fluctuations in rates of interest and our financing
selections. We mirror curiosity paid to the lenders beneath our credit score facility in
curiosity expense on our assertion of operations. Please learn "-Liquidity and
Capital Sources-Indebtedness" for additional particulars of our credit score facility.

Revenue tax expense

Revenue taxes mirror the tax results of transactions reported within the monetary
statements and include taxes presently payable plus deferred earnings taxes
associated to sure earnings and bills acknowledged in several durations for
monetary and earnings tax reporting functions. Deferred earnings tax property and
liabilities signify the long run tax return penalties of these variations,
which is able to both be taxable or deductible when property are recovered or settled.
Deferred earnings taxes are additionally acknowledged for tax credit which can be obtainable to
offset future earnings taxes. Deferred earnings taxes are measured by making use of
present tax charges to the variations between monetary assertion and earnings tax
reporting. In assessing the conclusion of deferred tax property, we contemplate
whether or not it's extra doubtless than not that some portion or the entire deferred tax
property shall be realized. The final word realization of deferred tax property is
dependent upon the era of future taxable earnings through the durations in
which these short-term variations turn out to be deductible. We contemplate the scheduled
reversal of deferred tax liabilities, obtainable taxes in carryback durations,
projected future taxable earnings based mostly on proved and threat adjusted unproved oil
and fuel reserves and forecasted commodity pricing, and tax planning methods
in making this evaluation. We are going to proceed to guage whether or not the valuation
allowance is required in future reporting durations. We're topic to taxation in
many jurisdictions, and the calculation of our earnings tax liabilities includes
coping with uncertainties within the software of complicated earnings tax legal guidelines and
rules in varied taxing jurisdictions. We acknowledge sure earnings tax
positions that meet a more-likely-than not recognition threshold. If we
in the end decide that the fee of those liabilities shall be pointless,
we'll reverse the legal responsibility and acknowledge an earnings tax profit through the
interval wherein we decide the legal responsibility not applies.

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Overview of our working outcomes

The next desk summarizes our income and expense and manufacturing knowledge for the durations proven (in 1000’s, besides manufacturing knowledge).


                                                              As restated
                                                        Yr Ended December 31,
                                                   2020           2019           2018
Revenues:
Oil and fuel gross sales                               $   40,081$   68,463$   98,655
Achieve (loss) on commodity by-product                 (1,200 )            -         (1,456 )
devices
Whole income                                       38,881         68,463         97,199
Working bills:
Manufacturing and advert valorem taxes                      2,807          4,262   

5 143

Advertising and transportation                         1,993          2,396   

2,368

Amortization of petroleum royalty rights and 14,103 12,737

16 962

pure fuel properties
Common, administrative, and different                  11,997         11,912          9,544
Whole working bills                            30,900         31,307         34,017
Working earnings                                     7,981         37,156         63,182
Different earnings (expense):
Achieve on the sale of property                               -              -         41,382
Change in honest worth of warrant legal responsibility            5,128          6,069         27,800
Different earnings                                           125            165             46
Curiosity expense                                    (2,197 )       (2,489 )       (2,350 )
Whole different earnings (expense)                         3,056          3,745         66,878
Revenue earlier than earnings taxes                          11,037         40,901        130,060
Provision for earnings taxes                             589          3,918          3,292
Revenue from persevering with operations                   10,448         36,983   

126,768

Revenue from discontinued operations                      -              -   

2 139

Web earnings                                          10,448         36,983   

128,907

Web earnings attributable to minority pursuits (2,748) (16,564)

      (10,982 )
pursuits
Web earnings attributable to frequent               $    7,700$   20,419$  117,925
shareholders/unitholders
Different Monetary Knowledge:
Adjusted EBITDA (1)                             $   26,737$   52,682$   80,190

(1) Adjusted EBITDA is a non-GAAP monetary measure. For extra info

relating to our calculation of Adjusted EBITDA in addition to a reconciliation of

       internet earnings to Adjusted EBITDA, please see "Overview of Our Outcomes of
       Operations-Adjusted EBITDA" under.




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                                                    For the Yr Ended
                                                       December 31,
                                           2020            2019            2018
Manufacturing Knowledge:
Oil (Bbls)                                  835,545         879,288       1,237,813
Pure fuel (BOE)                           588,025         598,019         686,279
Pure fuel liquids (Bbls)                  247,536         296,813         293,086
Mixed volumes (BOE)                    1,671,106       1,774,120       2,217,178
Common each day mixed quantity (BOE/d)         4,566           4,861           6,074
% Oil                                            50 %            50 %            56 %

Common gross sales costs:
Oil (Bbls)                              $     35.84$     59.85$     67.14
Pure fuel (Mcf)                       $      2.01$      2.62$      3.10
Pure fuel liquids (Bbls)              $     12.28$     15.45$     25.62
Mixed per (BOE)                      $     23.98$     37.54$     46.63

Common Prices ($/BOE):
Manufacturing and advert valorem taxes         $      1.68$      2.40     $   

2.32

Advertising and transportation prices $ 1.19$ 1.35 $

   1.07
Common and administrative              $      7.18$      6.71$      4.30
Curiosity expense, internet                   $      1.31$      1.40$      1.06
Depletion                               $      8.44$      7.18$      7.65

Yr-end comparability December 31, 2020 on the finish of the 12 months December 31, 2019

Oil and fuel revenues

Oil and fuel revenues decreased $29.6 million, or 43%, to $38.9 million for the
12 months ended December 31, 2020, from $68.5 million for the 12 months ended December 31,
2019. The lower in oil and fuel revenues was attributable to a lower in oil
and pure fuel manufacturing along with a 40% lower in realized oil and a
23% lower in realized pure fuel costs. We obtained a mean worth of
$35.84 per Bbl of oil and $2.01 per Mcf of fuel offered through the 12 months ended
December 31, 2020 in comparison with $59.85 per Bbl of oil and $2.62 per Mcf of fuel
offered through the 12 months ended December 31, 2019. As well as, throughout 2020, we
acknowledged a $1.2 million loss from our commodity by-product devices. We did
not enter into any commodity by-product devices throughout 2019.

Manufacturing taxes and advert valorem taxes

Manufacturing and advert valorem taxes decreased $1.5 million, or 34%, to $2.8 million
for the 12 months ended December 31, 2020, from $4.3 million for the 12 months ended
December 31, 2019. The lower in manufacturing and advert valorem taxes was
attributable to the lower in manufacturing. As a share of oil and fuel
revenues, manufacturing and advert valorem taxes had been 7% for the 12 months ended December
31, 2020 in comparison with 6% for the 12 months ended December 31, 2019. This improve, as
a share of income, was partially as a result of roughly 40% and 23%
lower, respectively, within the common realized worth of oil and pure fuel as
in comparison with 2019.

Advertising and transportation prices

Advertising and transportation expense decreased $0.4 million or 17%, to $2.0
million for the 12 months ended December 31, 2020, from $2.4 million for the 12 months
ended December 31, 2019. As a share of revenues, advertising and
transportation expense was 5% through the 12 months ended December 31, 2020 as
in comparison with 4% for the prior 12 months. The rise in advertising and transportation
expense as a share of revenues throughout 2020 was attributable to mounted
transportation prices incurred beneath our leases that don't lower together with
the realized worth on the sale of oil and pure fuel.

Amortization of royalties on prices associated to grease and fuel properties

Amortization of royalty pursuits in oil and pure fuel properties expense
elevated $1.4 million, or 11%, to $14.1 million for the 12 months ended December 31,
2020, from $12.7 million for the 12 months ended December 31, 2019. The rise in
amortization of royalty pursuits in oil and fuel properties expense was
primarily attributable to the affect of upper depletion charges which was
partially offset by decrease manufacturing. The upper depletion charges had been primarily
pushed by decreases in estimated proved developed producing reserve portions
within the Eagle Ford as adjusted in our 2020 year-end reserve experiences.

Common, administrative and different bills

Common, administrative, and different expense elevated by $0.1 million, or 1%, to
$12.0 million for the 12 months ended December 31, 2020, from $11.9 million for the
12 months ended December 31, 2019. The rise generally, administrative, and different
expense was attributable to $0.8 million of bills incurred as part of the
strategic evaluate course of which administration had begun through the

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third quarter of 2020 and a rise of $0.9 million in stock-based
compensation. These will increase had been partially offset by price reducing measures
applied by administration through the first quarter of 2020 as a result of results of
the pandemic.

Change in honest worth of legal responsibility for warrants

The change within the honest worth of warrant legal responsibility decreased by $0.9 million, or
16% to $5.1 million for the 12 months ended December 31, 2020, from $6.1 million for
the 12 months ended December 31, 2019. The lower within the honest worth of the warrant
legal responsibility is attributable to the lower within the Firm's inventory worth that was
utilized in figuring out the honest worth of the warrant legal responsibility.

Curiosity prices

Curiosity expense decreased by $ 0.3 million, or 12%, to $ 2.2 million for the 12 months ended December 31, 2020, of $ 2.5 million for the 12 months ended December 31, 2019. The lower in curiosity expense is attributable to decrease common excellent borrowings beneath our credit score facility in addition to decrease common rates of interest.

Revenue taxes

Revenue tax expense decreased to $0.6 million for the 12 months ended December 31,
2020, in comparison with $3.9 million for the 12 months ended December 31, 2019. The
lower in earnings taxes was attributed to a lower in taxable earnings throughout
the 12 months ended December 31, 2020 as in comparison with the identical interval throughout 2019
attributable to decrease manufacturing and decrease common realized costs throughout
2020.

Yr-end comparability December 31, 2019 on the finish of the 12 months December 31, 2018

Oil and fuel revenues

Oil and fuel revenues decreased $30.2 million, or 31%, to $68.5 million for the
12 months ended December 31, 2019, from $98.7 million for the 12 months ended December 31,
2018. The lower in oil and fuel revenues was attributable to a lower in oil
and pure fuel manufacturing along with a lower in realized oil and pure
fuel costs. In March 2018, six wells on sure oil and fuel properties positioned
within the Eagle Ford shale, which the Firm has a big curiosity in, got here
on line and the next pure decline in manufacturing after they got here on line
by means of December 31, 2019 was the primary trigger for the lower in oil and pure
fuel manufacturing. The lower in income was partially offset by a $1.5 million
improve in lease bonus income in 2019. We obtained a mean worth of $59.85
per Bbl of oil and $2.62 per Mcf of fuel offered through the 12 months ended December 31,
2019 in comparison with $67.14 per Bbl of oil and $3.10 per Mcf of fuel offered through the
12 months ended December 31, 2018.

Manufacturing taxes and advert valorem taxes

Manufacturing and advert valorem taxes decreased $0.9 million, or 17%, to $4.3 million
for the 12 months ended December 31, 2019, from $5.1 million for the 12 months ended
December 31, 2018. The lower in manufacturing and advert valorem taxes was
attributable to the lower in manufacturing. As a share of oil and fuel
income, manufacturing and advert valorem taxes was 6% for the 12 months ended December 31,
2019 in comparison with 5% for the 12 months ended December 31, 2018. The rise throughout
the 12 months ended December 31, 2019 was partially associated to roughly $0.7
million improve in advert valorem taxes assessed on our properties in comparison with the
prior 12 months.

Advertising and transportation prices

Advertising and transportation expense decreased by lower than $0.1 million or 1%,
to $2.4 million for the 12 months ended December 31, 2019, from $2.4 million for the
12 months ended December 31, 2018. As a share of income, advertising and
transportation expense was 3% through the 12 months ended December 31, 2019 as
in comparison with 2% for identical interval within the prior 12 months. Advertising and transportation
expense as a share of income was decrease through the 12 months ended December 31,
2018 on account of sure oil and fuel pursuits that the Firm owns within the Eagle
Ford that contributed a big quantity of manufacturing however contractually are
not charged for any advertising and transportation bills.

Amortization of royalties on prices associated to grease and fuel properties

Amortization of royalty pursuits in oil and pure fuel properties expense
decreased $4.2 million, or 25%, to $12.7 million for the 12 months ended December 31,
2019, from $17.0 million for the 12 months ended December 31, 2018. The lower in
amortization of royalty pursuits in oil and fuel properties expense was
attributable to a portion of our pursuits in sure oil and pure fuel
properties offered throughout Q1 2018 having had the next amortization price as well as
to a lower in manufacturing through the 12 months ended December 31, 2019.

Common, administrative and different bills

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Common, administrative, and different expense elevated by $2.4 million, or 25%, to
$11.9 million for the 12 months ended December 31, 2019, from $9.5 million for the
12 months ended December 31, 2018. The rise generally, administrative, and different
expense was attributable to the change in administration associated to the Transactions
and the extra prices incurred associated to being a publicly traded firm. In
addition, the Firm incurred $2.5 million in non-cash stock-based compensation
expense throughout 2019 in reference to the implementation of our long-term
incentive plan.

Change in honest worth of legal responsibility for warrants

The change within the honest worth of warrant legal responsibility decreased by $21.7 million, or
78% to $6.1 million for the 12 months ended December 31, 2019, from $27.8 million for
the 12 months ended December 31, 2018. The lower within the honest worth of the warrant
legal responsibility is attributable to the lower within the Firm's inventory worth that was
utilized in calculating the honest worth of the warrant legal responsibility.

Curiosity prices

Curiosity expense elevated by $0.1 million, or 6%, to $2.5 million for the 12 months
ended December 31, 2019, from $2.4 million for the 12 months ended December 31,
2018. The rise in curiosity expense was attributable to higher common
excellent borrowings partially offset by decrease rates of interest beneath our Credit score
Facility.

Revenue Taxes

Revenue tax expense elevated to $3.9 million for the 12 months ended December 31,
2019, in comparison with $3.3 million for the 12 months ended December 31, 2018. The
improve in earnings taxes was attributable to the Firm solely incurring earnings
taxes for a portion of the prior 12 months as a result of the Transactions didn't take
place till August 23, 2018. Previous to the Transactions, Royal was handled as a
partnership and was not topic to earnings taxes.

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP monetary measure utilized by administration
and exterior customers of our monetary statements, resembling business analysts,
traders, lenders, and ranking companies. We imagine Adjusted EBITDA is helpful
as a result of it permits us to guage our efficiency and evaluate the outcomes of our
operations interval to interval with out regard to our financing strategies or capital
construction. As well as, administration makes use of Adjusted EBITDA to guage money circulation
obtainable to pay dividends to our frequent stockholders.

We outline Adjusted EBITDA as internet earnings earlier than curiosity expense, internet, depletion
expense, provision for earnings taxes, depreciation, unrealized beneficial properties and losses
on commodity by-product devices, non-cash beneficial properties and losses on revaluation of
warrant legal responsibility, and non-cash equity-based compensation. Adjusted EBITDA is
not a measure of internet earnings as decided by GAAP. We exclude the objects listed
above from internet earnings in arriving at Adjusted EBITDA as a result of these quantities can
fluctuate considerably from firm to firm inside our business relying upon
accounting strategies and ebook values of property, capital constructions and the strategy
by which the property had been acquired. Sure objects excluded from Adjusted EBITDA
are important parts in understanding and assessing an organization's monetary
efficiency, resembling an organization's price of capital and tax construction, in addition to
historic prices of depreciable property, none of that are parts of Adjusted
EBITDA.

Adjusted EBITDA shouldn't be thought of a substitute for, or extra significant
than, internet earnings, royalty earnings, money circulation from working actions or any
different measure of monetary efficiency offered in accordance with GAAP. Our
computations of Adjusted EBITDA might not be corresponding to different equally titled
measures of different corporations.

The next desk presents a reconciliation of internet earnings to Adjusted EBITDA,
our most instantly comparable GAAP monetary measure for the durations indicated
(in 1000's).



                                                                  As restated
                                                            Yr Ended December 31,
                                                        2020         2019         2018
Web earnings                                            $ 10,448$ 36,983$ 128,907
Revenue attributable to discontinued operations               -            -        (2,139 )
Curiosity expense, internet                                    2,197        2,489         2,350
Depletion                                               14,103       12,737        16,962
Revenue taxes                                               589        3,918         3,292
Depreciation                                               104           75             -
Unrealized loss on commodity by-product devices        944            -             -
Change in honest worth of warrant legal responsibility               (5,128 )     (6,069 )     (27,800 )
Achieve on the sale of property                                   -            -       (41,382 )
Share-based compensation                                 3,480        2,549             -
Adjusted EBITDA                                       $ 26,737$ 52,682$  80,190




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Liquidity and capital assets

Overview

Our main sources of liquidity have traditionally been money flows from
operations and fairness and debt financings, and our main makes use of of money are for
dividends and for the acquisition of extra Royalties.  We intend to finance
potential future acquisitions by means of a mixture of money readily available, borrowings
beneath our Credit score Facility and, topic to market situations and different components,
proceeds from a number of capital market transactions, which can embody debt or
fairness choices. Our potential to generate money is topic to a lot of
components, a few of that are past our management, together with commodity costs and
basic financial, monetary, aggressive, legislative, regulatory, and different
components, together with climate.

Our shareholders settlement doesn't require us to distribute any of the money we
generate from operations. Money dividends are made to the frequent stockholders of
report on the relevant report date, typically inside 60 days after the top of
every quarter. Accessible money for every quarter's dividend is set by the
Board of Administrators following the top of such quarter. Accessible money for every
quarter typically equals Adjusted EBITDA diminished for money wanted for debt
service, earnings tax necessities and different contractual obligations and stuck
prices that the Board of Administrators deems essential or applicable, if any.

The consequences of the COVID-19 outbreak and the current oil worth decline may have
important opposed penalties for basic financial, monetary and enterprise
situations, in addition to for our enterprise and monetary place and the enterprise
and monetary place of the operators of our mineral pursuits and will, amongst
different issues, affect our potential to generate money flows from operations, entry
the capital markets on acceptable phrases or in any respect, and have an effect on our future want or
potential to borrow beneath our Credit score Facility.  Along with our potential
sources of funding, the consequences of such international occasions might affect our liquidity
or want to change our allocation or sources of capital, implement additional price
discount measures, and alter our monetary technique.  Though the COVID-19
outbreak and the current oil worth decline may have a broad vary of results on
our sources and makes use of of liquidity, the final word impact thereon, if any, will
rely upon future developments, which can't be predicted at the moment.

The next desk exhibits the money distributions accredited by the board of administrators of our basic associate for the durations offered.

                                Whole
                              Quarterly
                              Dividend        Whole Money                            Shareholders
      Quarter Ended           Per Share       Dividends         Fee Date         Document Date
December 31, 2020            $    0.0750$      3,458     March 8, 2021       February 25, 2021
September 30, 2020           $    0.0650$      2,997     December 8, 2020    November 24, 2020
June 30, 2020                $    0.0300$      1,383     September 8, 2020   August 25, 2020
March 31, 2020               $    0.0250$      1,150     June 8, 2020        Could 25, 2020
December 31, 2019            $    0.1350$      6,205     March 9, 2020       February 25, 2020
September 30, 2019           $    0.1350$      6,203     December 3, 2019    November 20, 2019
June 30, 2019                $    0.1500$      6,879     September 6, 2019   August 26, 2019
March 31, 2019               $    0.1750$      8,026     Could 29, 2019        Could 17, 2019
December 31, 2018            $    0.2000     $      9,171     February 28, 2019   February 21, 2019
September 30, 2018(1)        $    0.0950$      4,356     November 15, 2018   November 8, 2018



(1) Represents the preliminary distribution in proportion to our quarterly dividend for

       the interval from August 23, 2018 by means of September 30, 2018.




Indebtedness

Falcon Credit score Facility

On the Closing Date, we entered right into a credit score facility with Citibank, N.A., as
administrative agent and collateral agent for the lenders from time-to-time
social gathering thereto (the "Credit score Facility"). The Credit score Facility gives for a
most credit score quantity of $500.0 million and a borrowing base based mostly on our oil
and pure fuel reserves and different components of $70.0 million, topic to
scheduled semi-annual and different borrowing base redeterminations and expires on
the fifth anniversary of the Closing Date. As of December 31, 2020, the Firm
had borrowings of $39.8 million beneath the Credit score Facility at an rate of interest of
2.65% and $30.2 million obtainable for future borrowings beneath the Credit score
Facility.

Principal quantities borrowed are payable on the maturity date. We now have a alternative of
borrowing on the base price or LIBOR, with such borrowings bearing curiosity,
payable quarterly in arrears for base price loans and one month, two-month, three
month or six-month durations for LIBOR loans. LIBOR loans bear curiosity at a price
every year equal to the speed showing on the Reuters Reference LIBOR01 or
LIBOR02 web page because the LIBOR, for deposits in {dollars} at 12:00 midday (London,
England time) for one, two, three, or six months plus an relevant margin
starting from 200 to 300 foundation factors. Base price loans bear curiosity at a price
every year equal to the best of (i) the agent financial institution's reference price, (ii) the
federal funds efficient price plus 50 foundation factors and (iii) the speed for
one-month

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LIBOR loans plus 1%, plus an relevant margin starting from 100 to 200 foundation
factors. The scheduled redeterminations of our borrowing base happen on April
1st and October 1st of every 12 months.

The obligations beneath the Credit score Facility are assured by us and every of our current and future direct and oblique home subsidiaries (the “Credit score Events”) and are secured by all current and future property of the Credit score Events, topic to of the standard structure. the exits.

The Credit score Facility incorporates sure customary representations and warranties,
affirmative covenants, unfavourable covenants, and occasions of default. As of December
31, 2020, the Firm was in compliance with such covenants. The unfavourable
covenants embody restrictions on the Firm's potential to incur extra
indebtedness, purchase and promote property, create liens, enter into sure lease
agreements, make investments, and make distributions.

On July 27, 2017, the U.Okay. Monetary Conduct Authority introduced that it intends
to cease persuading or compelling banks to submit LIBOR charges after 2021. Our
Credit score Facility consists of provisions to find out a substitute price for LIBOR if
essential throughout its time period, which require that we and our lenders agree upon a
substitute price based mostly on the then-prevailing market conference for comparable
agreements. We presently don't count on the transition from LIBOR to have a
materials affect on us. Nevertheless, if clear market requirements and substitute
methodologies haven't developed as of the time LIBOR turns into unavailable, we
might have problem reaching settlement on acceptable substitute charges beneath our
Credit score Facility. Within the occasion that we don't attain settlement on a suitable
substitute price for LIBOR, excellent borrowings beneath the Credit score Facility
would revert to a floating price equal to the choice base price (which, as of
the time that LIBOR turns into unavailable, is the same as the higher of the agent
financial institution's reference price and the federal funds efficient price plus 0.50%) plus the
relevant margin for the choice base price which ranges between 1.00% and
2.00%. If we're unable to barter substitute charges on favorable phrases, it
may have a cloth opposed impact on our monetary situation, outcomes of
operations, and money distributions to unitholders.

Money circulation

Finish of 12 months December 31, 2020 In comparison with the top of the 12 months December 31, 2019

A abstract of the adjustments in money circulation knowledge for the years ended December 31, 2020
and 2019 are set forth within the following desk (in 1000's, besides
percentages):

                                             Yr Ended December 31,
                                               2020             2019        $ Change        % Change
Web money flows offered by (utilized in):
Working actions                       $     27,434$  55,229$ (27,795 )       -50%
Investing actions                             (2,431 )       (23,353 )      20,922         -90%
Financing actions                            (24,822 )       (36,650 )      11,828         -32%




Money Movement from Working Actions. Our working money circulation has traditionally
been delicate to many variables, essentially the most important of which is the
volatility of costs for the oil and pure fuel for which we obtain royalty
income. Costs for these commodities are decided primarily by prevailing
market situations. Regional and worldwide financial exercise, climate and different
considerably variable components affect market situations for these merchandise.
These components are past our management and are troublesome to foretell.

The lower in money circulation offered by working actions for the 12 months ended
December 31, 2020 as in comparison with the 12 months ended December 31, 2019 was primarily
associated to a 5% lower in oil manufacturing, a 2% lower in pure fuel
manufacturing coupled with a 40% lower in realized oil costs and a 23% lower
in realized pure fuel costs interval over interval. As well as, the Firm
skilled a lower in working capital primarily pushed by the timing of
assortment of accounts receivables and the timing of funds of accounts
payable and accrued bills.

Money Movement from Investing Actions. Investing actions are primarily associated
to the acquisition and disposition of oil and pure fuel pursuits. Money used
in investing actions for the 12 months ended December 31, 2020 was $2.4 million
and the bulk was associated to the acquisition of sure royalty pursuits in
oil and pure fuel properties. Money utilized in investing actions for the 12 months
ended December 31, 2019 was $23.4 million and the bulk was associated to the
acquisition of sure royalty pursuits in oil and pure fuel properties.

Money Movement from Financing Actions. Money utilized in financing actions for the
12 months ended December 31, 2020 was $24.8 million, primarily associated to dividends
and distributions totaling $21.9 million and a internet lower in borrowings beneath
our Credit score Facility of $2.7 million. The reimbursement of borrowings beneath our
Credit score Facility was paid from money circulation generated by our operations through the
interval. Money utilized in financing actions for the 12 months ended December 31, 2019
was $36.7 million, primarily associated to dividends and distributions totaling
$58.0 million partially offset by a internet improve in borrowings beneath our Credit score
Facility of $21.5 million. The borrowings beneath our Credit score Facility had been
primarily used to fund the acquisition of sure royalty pursuits in oil and
fuel properties through the interval.

                                       47

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Finish of 12 months December 31, 2019 In comparison with the top of the 12 months December 31, 2018

A abstract of the adjustments in money circulation knowledge for the years ended December 31, 2019
and 2018 are set forth within the following desk (in 1000's, besides
percentages):

                                             Yr Ended December 31,
                                               2019             2018         $ Change       % Change
Web money flows offered by (utilized in):
Working actions                       $     55,229$   77,886$  (22,657 )          -29 %
Investing actions                            (23,353 )       122,312       (145,665 )         -119 %
Financing actions                            (36,650 )      (203,378 )      166,728            -82 %


Money Movement from Working Actions. Our working money circulation has traditionally
been delicate to many variables, essentially the most important of which is the
volatility of costs for the oil and pure fuel for which we obtain royalty
income. Costs for these commodities are decided primarily by prevailing
market situations. Regional and worldwide financial exercise, climate and different
considerably variable components affect market situations for these merchandise.
These components are past our management and are troublesome to foretell.

The lower in money circulation offered by working actions for the 12 months ended
December 31, 2019 as in comparison with the 12 months ended December 31, 2018 was primarily
associated to a 29% lower in oil manufacturing, a 13% lower in pure fuel
manufacturing coupled with a 11% lower in realized oil costs and a 15% lower
in realized pure fuel costs interval over interval partially offset by an
improve in working capital primarily pushed by the timing of assortment of
accounts receivables and the timing of funds of accounts payable and accrued
bills.

Money Movement from Investing Actions. Investing actions are primarily associated
to the acquisition and disposition of oil and pure fuel pursuits. Money used
in investing actions for the 12 months ended December 31, 2019 was $23.4 million
and the bulk was associated to the acquisition of sure royalty pursuits in
oil and pure fuel properties. Money offered by investing actions for the
12 months ended December 31, 2018 was $122.3 million and the bulk was associated to
the sale of sure pursuits in our oil and pure fuel properties in February
2018.

Money Movement from Financing Actions. Money utilized in financing actions for the
12 months ended December 31, 2019 was $36.7 million, primarily associated to dividends
and distributions totaling $58.0 million partially offset by a internet improve in
borrowings beneath our Credit score Facility of $21.5 million. The borrowings beneath our
Credit score Facility had been primarily used to fund the acquisition of sure royalty
pursuits in oil and fuel properties through the interval.  Money utilized in financing
actions for the 12 months ended December 31, 2018 was $203.4 million, primarily
associated to dividends and distributions totaling $159.4 million and debt
repayments of $44.0 million.

Contractual obligations

We now have contractual obligations which can be required to be settled in money. Our
contractual obligations as of December 31, 2020 had been as follows (in 1000's):

                                                   Funds Due by Interval
                                            Lower than       1 to three       3 to five      Greater than
                               Whole         1 12 months         years        years        5 years
Lengthy-term debt obligations    $ 39,800     $         -     $ 39,800     $      -     $        -
Working lease obligations      1,329             609          424          257             39
Whole                         $ 41,129$       609$ 40,224$    257$       39

Off-balance sheet preparations

We should not have off-balance sheet preparations.

Lately revealed accounting statements

For a dialogue of not too long ago issued accounting pronouncements that may have an effect on
us, see "Notice 2-Abstract of Vital Accounting Insurance policies-Lately Issued
Accounting Pronouncements" to our accompanying consolidated monetary statements
for the fiscal 12 months ended December 31, 2020.

                                       48

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Accounting insurance policies and demanding estimates

Administration estimates

The preparation of the consolidated monetary statements in conformity with GAAP
requires administration to make estimates and assumptions that have an effect on the reported
quantities of property and liabilities, disclosure of contingent property and
liabilities on the date of the consolidated monetary statements, and the
reported quantities of revenues and bills through the reporting interval. The extra
important areas requiring using administration estimates and assumptions
relate to amortization calculations, and estimates of honest worth for long-lived
property, and reserves for contingencies and litigation. Administration based mostly its
estimates on historic expertise and on varied different assumptions that had been
believed to be cheap beneath the circumstances. Precise outcomes may differ
from these estimates.

Royalty curiosity in Oil and fuel properties

Royalty pursuits embody acquired pursuits in manufacturing, growth, and
exploration stage properties. We observe the profitable efforts methodology of
accounting. Below this methodology, prices to amass mineral and royalty pursuits in
oil and pure fuel properties are capitalized when incurred.

Acquisition prices of confirmed royalty pursuits are amortized utilizing the models of
manufacturing methodology over the lifetime of the property, which is estimated utilizing confirmed
reserves. Acquisition prices of royalty pursuits on exploration stage
properties, the place there aren't any confirmed reserves, are usually not amortized. At such time
because the related unproved pursuits are transformed to confirmed reserves, the fee
foundation is amortized utilizing the models of manufacturing methodology over the lifetime of
the property, utilizing confirmed reserves. For functions of amortization, pursuits in
oil and pure fuel properties are grouped in an inexpensive aggregation of
properties with frequent geological structural options or stratigraphic
situation.

Portions of oil and pure fuel reserves

Our impartial engineers and technical workers put together our estimates of oil and
pure fuel reserves and related future internet money flows. The SEC has outlined
proved reserves because the estimated portions of oil and pure fuel that
geological and engineering knowledge exhibit with cheap certainty to be
recoverable in future years from recognized reservoirs beneath current financial and
working situations. The method of estimating oil and pure fuel reserves is
complicated, requiring important selections within the analysis of accessible
geological, geophysical, engineering, and financial knowledge. The info for a given
property may change considerably over time because of quite a few
components, together with extra growth exercise, evolving manufacturing historical past
and a continuous reassessment of the viability of manufacturing beneath altering
financial situations. Consequently, materials revisions to current reserve
estimates happen once in a while. Though each cheap effort is made to
be sure that reserve estimates reported signify essentially the most correct assessments
attainable, the subjective selections and variances in obtainable knowledge for varied
properties improve the chance of great adjustments in these estimates. If
such adjustments are materials, they might considerably have an effect on future amortization
of capitalized prices and lead to impairment of property that could be materials.

There are quite a few uncertainties inherent in estimating portions of proved oil
and pure fuel reserves. Oil and pure fuel reserve engineering is a
subjective technique of estimating underground accumulations of oil and pure
fuel that can't be exactly measured and the accuracy of any reserve estimate
is a operate of the standard of accessible knowledge and of engineering and geological
interpretation and judgment. Outcomes of drilling, testing and manufacturing
subsequent to the date of the estimate might justify revision of such estimate.
Accordingly, reserve estimates are sometimes completely different from the portions of oil
and pure fuel which can be in the end recovered.

Depreciation of royalty rights in Oil and fuel properties

We evaluate and consider our royalty pursuits in oil and pure fuel properties
for impairment when occasions or adjustments in circumstances point out that the associated
carrying quantities might not be recoverable. When such occasions or adjustments in
circumstances happen, we estimate the undiscounted future money flows anticipated in
reference to the properties and evaluate such future money flows to the
carrying quantities of the properties to find out if the carrying quantities are
recoverable. If the carrying worth of the properties is set to not be
recoverable based mostly on the undiscounted money flows, an impairment cost is
acknowledged by evaluating the carrying worth to the estimated honest worth of the
properties. The components used to find out honest worth embody, however are usually not
restricted to, estimates of proved, possible and attainable reserves, future
commodity costs, the timing of future manufacturing and a reduction price
commensurate with the danger reflective of the lives remaining for the respective
oil and fuel properties. No such impairment expense was recorded for the years
ended December 31, 2020 or 2019.

Monetary by-product devices on commodities

Our ongoing operations expose us to adjustments available in the market worth for oil and
pure fuel. To mitigate the value threat related to our operations, we, use
commodity by-product monetary devices. Occasionally, such devices
might embody variable-to-fixed worth swaps, costless collars, fixed-price
contracts, and different contractual preparations. We don't enter into by-product
devices for speculative functions. The affect of those by-product devices
may have an effect on the quantity of income we in the end report.

                                       49

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By-product devices are acknowledged at honest worth. If a proper of offset exists
beneath grasp netting preparations and sure different standards are met, by-product
property and liabilities with the identical counterparty are netted on the consolidated
stability sheets. Good points and losses arising from adjustments within the honest worth of
derivatives are acknowledged on a internet foundation within the accompanying consolidated
statements of operations inside acquire (loss) on commodity by-product devices.
Though these by-product devices might expose us to credit score threat, we mitigate
that threat by monitoring the creditworthiness of our counterparties.

Duty for the mandate

We account for the Warrants issued in reference to our IPO and personal
placement in accordance with the steering contained in ASC 815-40 beneath which
the Warrants don't meet the standards for fairness remedy and have to be recorded
as liabilities. Accordingly, we classify the warrants as liabilities at their
honest worth and regulate the warrants to honest worth at every reporting interval. This
legal responsibility is topic to re-measurement at every stability sheet date till
exercised, and any change in honest worth is acknowledged in our assertion of
operations. The honest worth of the warrants was estimated using a binomial
lattice mannequin.

Income Recognition

Revenues from our Royalties signify the appropriate to obtain revenues from oil,
pure fuel and NGL gross sales obtained by the operator of the wells wherein the
Firm owns a royalty curiosity. Royalty earnings is acknowledged on the level
management of the product is transferred to the purchaser. Just about the entire
pricing provisions within the Firm's contracts are tied to a market index.
Royalty curiosity and income recognition associated accounting insurance policies are outlined
and described extra absolutely in Notice 2-Abstract of Vital Accounting Insurance policies to
our consolidated monetary statements included elsewhere on this Annual Report
on Type 10-Okay.

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