{"url_path":"/sec/ectm/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Financial Statements.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1487798/0001104659-26-060242-index.html","accession_number":"0001104659-26-060242","cik":"0001487798","ticker":"ECTM","issuer_name":"ECA Marcellus Trust I","edgar_url":"https://www.sec.gov/Archives/edgar/data/1487798/0001104659-26-060242-index.html","primary_entity_key":"0001487798","primary_entity_name":"ECA Marcellus Trust I"},"word_count":2865,"has_tables":true,"body_markdown":"**Item 1. Financial Statements.**\n\n**ECA Marcellus Trust I**\n\n**Statements of Assets, Liabilities, and Trust Corpus**\n\nMarch 31,\nDecember 31,\n\n2026\n2025\n\n(Unaudited)\n\nASSETS:\n\nCash\n$3,451,035\n$3,234,214\n\nRoyalty income receivable\n1,792,578\n945,495\n\nRoyalty interest in gas properties\n352,100,000\n352,100,000\n\nAccumulated amortization\n(343,232,930)\n(342,957,873)\n\nNet royalty interest in gas properties\n8,867,070\n9,142,127\n\nTotal Assets\n$14,110,683\n$13,321,836\n\nLIABILITIES AND TRUST CORPUS:\n\nLiabilities:\n\nDistributions payable to unitholders\n$1,583,025\n$642,425\n\nTrust Corpus:\n\nTrust corpus; 17,605,000 common units authorized, issued and outstanding\n12,527,658\n12,679,411\n\nTotal Liabilities and Trust Corpus\n$14,110,683\n$13,321,836\n\nSee notes to the unaudited financial statements.\n\n3\n\n**ECA Marcellus Trust I**\n\n**Statements of Distributable Income**\n\n**(Unaudited)**\n\nThree Months Ended\n\nMarch 31,\n\n2026\n2025\n\nRoyalty income\n$1,792,578\n$1,278,647\n\nNet proceeds to Trust\n$1,792,578\n$1,278,647\n\nGeneral and administrative expense\n(126,268)\n(281,522)\n\nInterest income\n31,373\n30,816\n\nIncome available for distribution prior to cash reserves\n$1,697,683\n$1,027,940\n\nCash reserves withheld by Trustee\n(90,000)\n(90,000)\n\nInterest withheld on cash reserves\n(24,658)\n(26,420)\n\nDistributable income available to unitholders\n$1,583,025\n$911,520\n\nDistributable income per common unit\n\n(17,605,000 units authorized and outstanding)\n$0.090\n$0.052\n\nSee notes to the unaudited financial statements.\n\n4\n\n**ECA Marcellus Trust I**\n\n**Statements of Trust Corpus**\n\n**(Unaudited)**\n\nThree Months Ended\n\nMarch 31,\n\n2026\n2025\n\nTrust Corpus, Balance at January 1,\n$12,679,411\n$13,372,881\n\nCash reserves withheld, including interest\n114,658\n116,420\n\nDistributable income\n1,583,025\n911,520\n\nDistributions paid or payable to unitholders\n(1,574,380)\n(916,520)\n\nAmortization of royalty interest in gas properties\n(275,056)\n(291,709)\n\nImpairment of royalty interest in gas properties\n-\n-\n\nTrust Corpus, Balance at March 31,\n$12,527,658\n$13,192,593\n\n5\n\n**ECA MARCELLUS TRUST I**\n\n**NOTES TO FINANCIAL STATEMENTS**\n\n**(Unaudited)**\n\n**NOTE 1. Organization of the Trust**\n\nECA Marcellus Trust I is a Delaware statutory trust\nformed in March 2010 by Energy Corporation of America (“Legacy ECA”) to own royalty interests in 14 producing horizontal\nnatural gas wells producing from the Marcellus Shale formation, all of which are online and are located in Greene County, Pennsylvania\n(the “Producing Wells”), and royalty interests in 52 horizontal natural gas development wells subsequently drilled to the\nMarcellus Shale formation (the “PUD Wells”) within the “Area of Mutual Interest”, or “AMI”, comprising\napproximately 9,300 acres held by Legacy ECA, of which it owned substantially all of the working interests, in Greene County, Pennsylvania.\nThe effective date of the Trust was April 1, 2010; consequently, the Trust received the proceeds of production attributable to the\nPDP Royalty Interest (defined herein) from that date even though the PDP Royalty Interest was not conveyed to the Trust until the closing\nof the initial public offering on July 7, 2010. The total number of units the Trust is authorized to issue is 17,605,000 units, all\nof which are now common units. The royalty interests were conveyed from Legacy ECA’s working interest in the Producing Wells and\nthe PUD Wells limited to the Marcellus Shale formation (the “Underlying Properties”). In November 2017, Greylock Energy,\nLLC and certain of its wholly owned subsidiaries (“Greylock Energy”), including Greylock Production, LLC (“Greylock\nProduction”), which serves as operator of the subject wells, and Greylock Midstream, LLC (“Greylock Midstream”), whose\nsubsidiaries market and gather certain of the gas, acquired substantially of the assets of Legacy ECA, as described in Note 4.\n\nThe royalty interest in the Producing Wells (the\n“PDP Royalty Interest”) entitles the Trust to receive 90% of the proceeds (exclusive of any production or development costs\nbut after deducting post-production costs and any applicable taxes) from the sale of production of natural gas attributable to the Sponsor’s\ninitial interest in the Producing Wells. The royalty interest in the PUD Wells (the “PUD Royalty Interest” and collectively\nwith the PDP Royalty Interest, the “Royalty Interests”) entitles the Trust to receive 50% of the proceeds (exclusive of any\nproduction or development costs but after deducting post-production costs and any applicable taxes) from the sale of production of natural\ngas attributable to the Sponsor’s initial interest in the PUD Wells.\n\nThe Trust’s cash receipts in respect of\nthe Royalty Interests are determined after deducting post-production costs and any applicable taxes associated with the Perpetual Royalty\nInterests. The Trust’s cash available for distribution is reduced by Trust administrative expenses. Post-production costs generally\nconsist of costs incurred to gather, compress, transport, process, treat, dehydrate and market the natural gas produced. Charges (the\n“Post-Production Services Fee”) for such post-production costs on the Greene County Gathering System (“GCGS”)\nwere limited to $0.52 per MMBtu gathered until Legacy ECA fulfilled its drilling obligation in 2011; since then, the Sponsor has been\npermitted to increase the Post-Production Services Fee to the extent necessary to recover certain capital expenditures in the GCGS. Additionally,\nif electric compression is utilized in lieu of gas as fuel in the compression process, royalty proceeds will be reduced for the electric\nusage as provided for in the Trust conveyance documents.\n\nGross proceeds to the Trust attributable to the\nRoyalty Interests during the three-month period ended March 31, 2026 were $1.8 million and totaled approximately $4.3 million for\nthe four consecutive quarters ended March 31, 2026. The gross proceeds attributable to the Royalty Interests are dependent upon both\nthe volume of hydrocarbons extracted and sold from the Underlying Properties and the price realized on those sales. The Trust has no control\nor influence over either the volumes sold or the proceeds realized from those sales. In periods of declining prices, the gross proceeds\nattributable to the Royalty Interests can be subject to declines. For example, the royalty income to which the Trust is entitled experienced\na substantial decline beginning in late 2022, which was driven by lower realized prices and, to a lesser extent, volume declines that\nare primarily related to the natural production decline inherent in the Underlying Properties. Future volumes or realized pricing or both\nmay not be sufficient to maintain gross proceeds attributable to the Royalty Interests over any four consecutive quarters in excess of\n$1.5 million.\n\nThe trust agreement provides that the Trust will\nterminate if gross proceeds to the Trust attributable to the Royalty Interests over any four consecutive quarters are less than $1.5 million.\nIf this early termination event occurs, the trust agreement will require the Trustee to sell the Royalty Interests, either by private\nsale or public auction, subject to Greylock Energy's right of first refusal to purchase the Royalty Interests. After the sale of\nall of the Royalty Interests, payment of all Trust liabilities and establishment of reasonable provisions for the payment of additional\nanticipated or contingent Trust expenses or liabilities, the Trustee will distribute the net proceeds of the sale to the Trust unitholders.\n\n6\n\nThe Trust makes quarterly cash distributions of\nsubstantially all of its cash receipts, after deducting Trust administrative expenses, including the costs incurred as a result of being\na publicly traded entity, on or about the 60th day following the completion of each quarter. Unless sooner terminated, the\nTrust will begin to liquidate on or about March 31, 2030 (the “Termination Date”) and will soon thereafter wind up its\naffairs and terminate. At the termination of the Trust, 50% of each of the PDP Royalty Interest and the PUD Royalty Interest will revert\nautomatically to Greylock Production. The remaining 50% of each of the PDP Royalty Interest and the PUD Royalty Interest will be sold,\nand the net proceeds will be distributed pro rata to the unitholders soon after the termination of the Trust. Greylock Production will\nhave a right of first refusal to purchase the remaining 50% of the Royalty Interests at the termination of the Trust.\n\nThe business and affairs of the Trust are administered\nby The Bank of New York Mellon Trust Company, N.A., as Trustee. Although Greylock Production operates all of the Producing Wells and all\nof the PUD Wells, Greylock Production has no ability to manage or influence the management of the Trust. Neither the Trust nor the Trustee\nhas any authority or responsibility for, or any involvement with or influence over, any aspect of the operations on or relating to the\nproperties to which the Royalty Interests relate.\n\n**NOTE 2. Basis of Presentation**\n\nThe preparation of financial statements requires\nthe Trust to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets\nand liabilities at the date of the financial statements and the reported amounts of royalty income and expenses during the reporting period.\nWithout limiting the foregoing statement, the information furnished is based upon certain estimates of the royalty income attributable\nto the Trust from natural gas production for the three months ended March 31, 2026 and 2025 and is therefore subject to adjustment\nin future periods to reflect actual production for the periods presented.\n\nThe information furnished reflects all normal and\nrecurring adjustments which are, in the opinion of the Trustee, necessary for a fair presentation of the results for the interim period\npresented. The accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements\nand notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2025. The December 31,\n2025 condensed balance sheet data was derived from audited financial statements, but does not include all applicable financial statement\ndisclosures.\n\n**NOTE 3. Significant Accounting Policies**\n\nThe accompanying unaudited financial information\nhas been prepared by the Trustee in accordance with the instructions to Form 10-Q. The financial statements of the Trust differ from\nfinancial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”)\nbecause certain cash reserves may be established for contingencies, which would not be accrued in financial statements prepared in accordance\nwith GAAP. Amortization of the investment in overriding royalty interests calculated on a unit-of-production basis is charged directly\nto Trust Corpus. This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by\nthe U.S. Securities and Exchange Commission (“SEC”) as specified by Accounting Standard Codification (“ASC”) Topic\n932, Extractive Activities—Oil and Gas: Financial Statements of Royalty Trusts. Income determined on the basis of GAAP would include\nall expenses incurred for the period presented. However, the Trust serves as a pass-through entity, with expenses for depreciation, depletion,\nand amortization, interest and income taxes being based on the status and elections of the Trust unitholders. General and administrative\nexpenses, production taxes or any other allowable costs are charged to the Trust only when cash has been paid for those expenses. In addition,\nthe Royalty Interests are not burdened by field and lease operating expenses. Thus, the statement of distributable income shows distributable\nincome, defined as income of the Trust available for distribution to the Trust unitholders before application of those additional expenses,\nif any, for depreciation, depletion, and amortization, interest and income taxes. The royalty income is presented net of existing royalties\nand overriding royalties and have been reduced by gathering/post-production expenses.\n\n7\n\n*Cash:*\n\nCash may include highly liquid instruments maturing\nin three months or less from the date acquired.\n\n*Use of Estimates in the Preparation of Financial\nStatements:*\n\nThe preparation of financial statements requires\nthe Trust to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of royalty\nincome and expenses during the reporting period. Actual results could differ from those estimates.\n\n*Royalty Income and Expenses:*\n\nThe Trust serves as a pass-through entity, with\nitems of depletion, interest income and expense, and income tax attributes being based upon the status and election of the unitholders.\nThus, the Statements of Distributable Income show Income available for distribution before application of those unitholders’ additional\nexpenses, if any, for depletion, interest income and expense, and income taxes.\n\nThe Trust uses the accrual basis to recognize royalty\nincome, which is recorded as reserves are extracted from the Underlying Properties and sold. Expenses are recognized when paid.\n\n*Royalty Interest in Gas Properties:*\n\nThe conveyance of the Royalty Interest to the Trust\nwas accounted for as a purchase transaction. The $352,100,000 reflected in the Statements of Assets, Liabilities and Trust Corpus as Royalty\ninterests in gas properties represents 17,605,000 Trust units valued at $20.00 per unit. The carrying value of the Trust’s investment\nin the Royalty Interests is not necessarily indicative of the fair value of such Royalty Interests.\n\nThe Royalty interest in gas properties is assessed\nto determine whether the net capitalized cost is impaired, whenever events or changes in circumstances indicate that its carrying amount\nmay not be recoverable, pursuant to ASC Topic 360, Property, Plant and Equipment. The Trust determines whether an impairment charge is\nnecessary to its investment in the Royalty interest in gas properties if total capitalized costs, less accumulated amortization, exceed\nundiscounted future net revenues attributable to proved gas reserves of the Underlying Properties. If required, the Trust will recognize\nan impairment charge to the extent that the net capitalized costs exceed the discounted fair value of the investment in net profits interests\nattributable to proved gas reserves of the Underlying Properties. Any such impairment charge would not reduce Distributable Income, although\nit would reduce Trust Corpus. If an impairment is present, the measurement of an impairment loss involves estimates of fair value, which\nare determined based on discounted cash flow techniques using assumptions including projected revenues, future commodity prices, production\ncosts, and market-specific average cost of capital. Estimates of undiscounted future net revenues attributable to proved gas reserves\nutilize estimates of future pricing, which are generally developed based on NYMEX forward pricing curves. No impairment in the Underlying\nProperties was recognized during 2025 or during the three months ended March 31, 2026. Significant dispositions or abandonment of\nthe Underlying Properties would be charged to Royalty Interests and the Trust Corpus; however, no such dispositions or abandonments occurred\nduring the three-month period ended March 31, 2026.\n\nAmortization of the Royalty interest in gas properties\nis calculated on a units-of-production basis, whereby the Trust’s cost basis in the properties is divided by Trust total proved\nreserves to derive an amortization rate per reserve unit. Such amortization does not reduce Distributable Income, rather it is charged\ndirectly to Trust Corpus. Revisions to estimated future units-of-production are treated on a prospective basis beginning on the date significant\nrevisions are known.\n\n8\n\n**NOTE 4.****Reaffirmation\nAgreement**\n\nOn November 29, 2017, Greylock Energy acquired\nsubstantially all of the gas production and midstream assets of Legacy ECA, including Legacy ECA’s interests in certain natural\ngas properties that are subject to royalty interests held by the Trust.\n\nIn connection with\nthe transaction, Greylock Production assumed all of Legacy ECA’s obligations under the Amended and Restated Trust Agreement\namong the Trust, Legacy ECA and the Trustee (the “Trust Agreement”), and other instruments to which Legacy ECA and the Trustee\nwere parties, including (1) the Administrative Services Agreement by and among Legacy ECA, the Trust and the Trustee dated July 7,\n2010, and (2) a letter agreement between Legacy ECA and the Trustee regarding certain loans to be made by Legacy ECA to the Trust\nas necessary to enable the Trust to pay its liabilities as they become due (the “Letter Agreement”). In addition, Legacy ECA,\nGreylock Production, and the Trustee entered into a Reaffirmation and Amendment of Mortgage, Assignment of Leases, Security Agreement,\nFixture Filing and Financing Statement (the “Reaffirmation Agreement”), pursuant to which, among other things, Greylock Production\n(1) reaffirmed the liens and the security interest granted pursuant to the existing mortgage securing the interests in the subject\nproperties, as well as the mortgage and the obligations of Legacy ECA under the mortgage, and (2) assumed the obligations of Legacy\nECA under the Letter Agreement. As of March 31, 2026, no amounts have been loaned to the Trust pursuant to the Letter Agreement.\n\n**NOTE 5. Income Taxes**\n\nThe Trust is a Delaware statutory trust, which\nis taxed as a partnership for federal and state income taxes. Accordingly, no provision for federal or state income taxes has been made.\nUncertain tax positions are accounted for under ASC Topic 740, *Income Taxes* (“ASC 740”), which prescribes a recognition\nthreshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return.\nAdditionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure,\nand transition. The Trust has not identified any uncertain tax positions through the period ended March 31, 2026.\n\n**NOTE 6. Related Party Transactions**\n\n*Trustee Administrative Fee:*\n\nUnder the terms of the Trust Agreement, the Trustee\ncharges an annual administrative fee, subject to adjustment each year. The annual fee was $182,202 in 2025 and is $187,668 in 2026. The\nTrust records these costs, as well as those to be paid to Greylock Production pursuant to the Administrative Services Agreement referred\nto below, in the period paid.\n\n*Administrative Services Fee:*\n\nThe Trust and Greylock Production are parties to\nan Administrative Services Agreement that obligates the Trust to pay Greylock Production an administrative services fee for accounting,\nbookkeeping and informational services performed by Greylock Production on behalf of the Trust relating to the Royalty Interests. The\nannual fee of $60,000 is payable in equal quarterly installments. Under certain circumstances, Greylock Production and the Trustee each\nmay terminate the Administrative Services Agreement at any time following delivery of notice no less than 90 days prior to the date of\ntermination.\n\n9"}