Torch Energy Royalty Trust (the Trust) was formed pursuant to a trust agreement (Trust Agreement) among Wilmington Trust Company, as trustee (Trustee), Torch Royalty Company (TRC), Velasco Gas Company Ltd. (Velasco) and Torch Energy Advisors Incorporated (Torch) as grantor. TRC and Velasco contracted to sell the oil and gas production from certain oil and gas properties (Underlying Properties) to Torch Energy Marketing Inc. (TEMI), a subsidiary of Torch, under a purchase contract. TRC and Velasco receive payments reflecting the proceeds of oil and gas sold and aggregate these payments, deduct applicable costs and make payments to the Trustee each quarter for the amounts due to the Trust. The Underlying Properties constitute working interests in the Chalkley Field in Louisiana (Chalkley Field), the Robinson's Bend Field in the Black Warrior Basin in Alabama (Robinson's Bend Field), Cotton Valley formations in Texas (Cotton Valley Fields) and Austin Chalk formation in Texas.(Source: 10-K)