References to the "Trust" in this document refer to Enduro Royalty Trust while references to "Enduro" in this document refer to Enduro Resource Partners LLC.

The following review of the Trust's financial condition and results of operations should be read in conjunction with the financial statements and notes thereto, as well as Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Trust's 2011 Annual Report on Form 10-K. The Trust's Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all other filings with the SEC are available on the SEC's website at www.sec.gov.

Forward-Looking Statements

This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q, including without limitation the statements under "Trustee's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. Such statements may be influenced by factors that could cause actual outcomes and results to differ materially from those projected. No assurance can be given that such expectations will prove to have been correct. When used in this document, the words "believes," "expects," "anticipates," "intends" or similar expressions are intended to identify such forward-looking statements. The following important factors, in addition to those discussed elsewhere in this Form 10-Q, could affect the future results of the energy industry in general, and Enduro and the Trust in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

• risks associated with the drilling and operation of oil and natural gas wells;

• the amount of future direct operating expenses and development expenses;

• the effect of existing and future laws and regulatory actions;

• the effect of changes in commodity prices or alternative fuel prices;

• the impact of hedge contracts;

• conditions in the capital markets;

• competition from others in the energy industry;

• uncertainty of estimates of oil and natural gas reserves and production; and

• cost inflation.

You should not place undue reliance on these forward-looking statements. All forward-looking statements speak only as of the date of this Form 10-Q. The Trust does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, unless the securities laws require us to do so.

This Form 10-Q describes other important factors that could cause actual results to differ materially from expectations of Enduro and the Trust, including under the caption "Risk Factors." All subsequent written and oral forward-looking statements attributable to Enduro or the Trust or persons acting on behalf of Enduro or the Trust are expressly qualified in their entirety by such factors. The Trust assumes no obligation, and disclaims any duty, to update these forward-looking statements.

Overview

The Trust is a statutory trust created under the Delaware Statutory Trust Act on May 3, 2011. The business and affairs of the Trust are managed by the Trustee. The Trust's purpose is to hold the Net Profits Interest described below, to distribute to the Trust unitholders cash that the Trust receives in respect to the Net Profits Interest after payment of or provision for Trust administrative expenses, and to perform certain administrative functions in respect of the Net Profits Interest and the Trust Units. The Trust does not conduct any operations or activities. The Trust derives substantially all of its income and cash flow from the Net Profits Interest.

The Trustee has no authority over or responsibility for, and no involvement with, any aspect of the oil and gas operations or other activities on the Underlying Properties. The Delaware Trustee has only minimal rights and duties that are necessary to satisfy the requirements of the Delaware Statutory Trust Act.

On November 8, 2011, Enduro conveyed to the Trust, through the merger of a wholly owned subsidiary of Enduro with the Trust, the Net Profits Interest in exchange for 33,000,000 units of beneficial interest in the Trust. Immediately following the conveyance, Enduro completed an initial public offering of 13,200,000 Trust Units. Since the completion of the initial public offering, Enduro has owned 19,800,000 Trust Units, or 60% of the issued and outstanding Trust Units. The Net Profits Interest entitles the Trust to receive 80% of the net profits from the sale and production of oil and natural gas attributable to the Underlying Properties that are produced during the term of the conveyance, which commenced on July 1, 2011. The net profits attributable to the Net Profits Interest will be impacted by the settlement of hedge contracts that Enduro has entered into for 2012 and 2013. See Note 4 of the Notes to Financial Statements for further information regarding the hedge contracts.

The Trust is not subject to any pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage of time. The Trust will dissolve upon the earliest to occur of the following: (1) the Trust, upon approval of the holders of at least 75% of the outstanding Trust Units, sells the Net Profits Interest, (2) the annual cash available for distribution to the Trust is less than $2 million for each of any two consecutive years,
(3) the holders of at least 75% of the outstanding Trust Units vote in favor of dissolution or (4) the Trust is judicially dissolved.

The Trust is required to make monthly cash distributions of substantially all of its monthly cash receipts, after deducting the Trust's administrative expenses, to holders of record (generally the last business day of each calendar month) on or before the 10th business day after the record date.

The amount of Trust revenues and cash distributions to Trust unitholders depends on, among other things:

• oil and natural gas sales prices;

• volumes of oil and natural gas produced and sold attributable to the Underlying Properties;

• production and development costs;

• price differentials;

• potential reductions or suspensions of production; and

• the amount and timing of Trust administrative expenses.

Generally, cash payment is received by Enduro for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after it is produced.

Results of Operations for the Three and Six Months Ended June 30, 2012

Three Months Ended June 30, 2012. For the quarter ended June 30, 2012, net profits income received by the Trust amounted to $15,232,110. As the Trust was not formed until May 3, 2011 and the conveyance of the Net Profits Interest was not completed until November 8, 2011, the Trust did not receive or disburse funds during the quarter ended June 30, 2011.

The following table displays oil and natural gas sales volumes and average prices (excluding the effects of the hedging arrangements discussed in Note 4 of the Notes to Financial Statements) from the Underlying Properties, representing the amounts included in the net profits calculation for distributions paid during the second quarter of 2012.

                                           Underlying Sales Volumes                  Average Price
                                            Oil            Natural Gas           Oil           Natural Gas
Month of Distribution                      (Bbls)             (Mcf)           (per Bbl)         (per Mcf)
April                                         86,314            843,318      $     94.88      $        3.75
May                                           83,735            799,759      $     97.30      $        3.51
June                                          79,914            819,095      $     98.62      $        3.31

Total - Second Quarter 2012                  249,963          2,462,172      $     96.88      $        3.52

The average received price of oil was $96.88 per Bbl in the second quarter of 2012 compared to an average NYMEX oil price of approximately $100.29 for the relevant production months, while the average received price of natural gas was $3.52 in the second quarter of 2012 compared to an average NYMEX natural gas price of approximately $3.32 for the relevant production months.

Six Months Ended June 30, 2012. For the six months ended June 30, 2012, net profits income received by the Trust amounted to $29,701,330. As the Trust was not formed until May 3, 2011 and the conveyance of the Net Profits Interest was not completed until November 8, 2011, the Trust did not receive or disburse funds during the six months ended June 30, 2011.

The following table displays oil and natural gas sales volumes and average prices (excluding the effects of the hedging arrangements discussed in Note 4 of the Notes to Financial Statements) from the Underlying Properties, representing the amounts included in the net profits calculation for distributions paid during the first six months of 2012.

                                             Underlying Sales Volumes                  Average Price
                                              Oil            Natural Gas           Oil           Natural Gas
Month of Distribution                        (Bbls)             (Mcf)           (per Bbl)         (per Mcf)
January                                         90,717            755,809      $     82.77      $        4.74
February                                        91,431            817,344      $     83.24      $        4.11
March                                           83,844            950,978      $     93.99      $        3.93
April                                           86,314            843,318      $     94.88      $        3.75
May                                             83,735            799,759      $     97.30      $        3.51
June                                            79,914            819,095      $     98.62      $        3.31

Total - Six Months Ended June 30, 2012         515,955          4,986,303      $     91.51      $        3.88

The average received price of oil was $91.51 per Bbl in the first six months of 2012 compared to an average NYMEX oil price of approximately $94.96 for the relevant production months, while the average received price of natural gas was $3.88 in the first six months of 2012 compared to an average NYMEX natural gas price of approximately $3.66 for the relevant production months.

Computation of Net Profits Income Received by the Trust

The Trust's net profits income consists of monthly net profits attributable to
the Net Profits Interest. Net profits income for the three and six months ended
June 30, 2012 was determined as shown in the following table:



                                                 Three Months Ended            Six Months Ended
                                                     June  30,                    June  30,
                                                        2012                         2012
Gross profits:
Oil sales                                       $         24,217,356          $       47,216,491
Natural gas sales                                          8,675,977                  19,350,873

Total                                                     32,893,333                  66,567,364

Costs:
Direct operating expenses:
Lease operating expenses                                   8,013,716                  16,463,716
Compression, gathering and transportation                  1,068,270                   2,228,270
Production, ad valorem and other taxes                     2,864,989                   5,209,989
Development expenses                                       4,697,640                  10,291,660

Total                                                     16,644,615                  34,193,635

Settlement of hedge contracts                              2,791,420                   4,752,934

Net profits                                     $         19,040,138          $       37,126,663
Percentage allocable to Net Profits
Interest                                                          80 %                        80 %

Income from Net Profits Interest                $         15,232,110          $       29,701,330
Trust general and administrative expenses
and cash withheld for expenses                               374,982                     624,997

Distributable income                            $         14,857,128          $       29,076,333

Three Months Ended June 30, 2012. Excess of revenues over direct operating expenses and development expenses from the Underlying Properties was approximately $19.0 million for the three months ended June 30, 2012. This amount includes settlements of approximately $2.8 million related to hedge contracts. Applying the net profits interest percentage of 80% to the excess of revenues over direct operating expenses and development expenses results in income from the Net Profits Interest to the Trust of approximately $15.2 million for the second quarter of 2012.

Total capital expenditures included in the net profits calculation during the quarter ended June 30, 2012 were approximately $4.7 million.

Total lease operating expenses included in the net profits calculation during the second quarter of 2012 were approximately $8.0 million as workover projects continue on the Underlying Properties.

The Trustee paid general and administrative expenses of $359,518 during the second quarter of 2012. Expenses paid during the second quarter primarily consisted of fees related to the preparation and printing of the Trust's 2011 Annual Report on Form 10-K, the 2011 year-end financial statement audit, Trustee fees, and the 2012 annual listing fees for the Trust on the New York Stock Exchange.

Six Months Ended June 30, 2012. Excess of revenues over direct operating expenses and development expenses from the Underlying Properties was approximately $37.1 million for the six months ended June 30, 2012. This amount includes settlements of approximately $4.8 million related to hedge contracts. Applying the net profits interest percentage of 80% to the excess of revenues over direct operating expenses and development expenses results in income from the Net Profits Interest to the Trust of approximately $29.7 million for the first six months of 2012.

Total capital expenditures included in the net profits calculation during the six months ended June 30, 2012 were approximately $10.3 million.

Total lease operating expenses included in the net profits calculation during the first six months of 2012 were approximately $16.5 million.

The Trustee paid general and administrative expenses of $704,136 during the first six months of 2012. Expenses paid during the first six months primarily consisted of fees for the preparation of 2011 tax information for unitholders, preparation of the Trust's reserve report and Annual Report on Form 10-K for 2011, 2011 financial statement audit fees, and New York Stock Exchange listing fees.

Liquidity and Capital Resources

The Trust's principal sources of liquidity are cash flow generated from the Net Profits Interest and borrowing capacity under the letter of credit and loan commitment described below. Other than Trust administrative expenses, including any reserves established by the Trustee for future liabilities, the Trust's only use of cash is for distributions to Trust unitholders. Available funds are the excess cash, if any, received by the Trust from the Net Profits Interest and other sources (such as interest earned on any amounts reserved by the Trustee) in that month, over the Trust's expenses paid for that month. Available funds are reduced by any cash the Trustee decides to hold as a reserve against future expenses.

The Trustee may create a cash reserve to pay for future liabilities of the Trust. If the Trustee determines that the cash on hand and the cash to be received are, or will be, insufficient to cover the Trust's liabilities, the Trustee may authorize the Trust to borrow money to pay administrative or incidental expenses of the Trust that exceed cash held by the Trust. The Trustee may authorize the Trust to borrow from any person, including the Trustee or the Delaware Trustee or an affiliate thereof. The Trustee may also cause the Trust to mortgage its assets to secure payment of the indebtedness. Enduro has provided the Trust with a $1 million letter of credit to be used by the Trust in the event that its cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses. Further, if the Trust requires more than the $1 million under the letter of credit to pay administrative expenses, Enduro has agreed to loan funds to the Trust necessary to pay such expenses. If the Trust borrows funds, draws on the letter of credit or Enduro loans funds to the Trust, no further distributions will be made to Trust unitholders until such amounts borrowed or drawn are repaid. Except for the foregoing, the Trust has no source of liquidity or capital resources. The Trustee has no current plans to authorize the Trust to borrow money. During the quarter and six months ended June 30, 2012 there were no borrowings.

Any amounts received by Enduro from the hedge contract counterparty upon settlement of the hedge contracts will reduce the operating expenses related to the Underlying Properties in calculating the net profits. However, if the hedge payments received by Enduro under the hedge contracts and other non-production revenue exceed operating expenses during a period, the ability to use such excess amounts to offset operating expenses will be deferred, with interest accruing on such amounts at the prevailing prime rate, until the next period where the hedge payments and the other non-production revenue are less than such expenses. Any amounts paid by Enduro on settlement of the hedge contracts will reduce the amount of net profits paid to the Trust.

The Trust pays the Trustee an administrative fee of $200,000 per year. The Trust pays the Delaware Trustee a fee of $2,000 per year. The Trust also incurs, either directly or as a reimbursement to the Trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that are deducted by the Trust before distributions are made to Trust unitholders. The Trust also is responsible for paying other expenses incurred as a result of being a publicly traded entity, including costs associated with annual and quarterly reports to Trust unitholders, tax return and Form 1099 preparation and distribution, NYSE listing fees, independent auditor fees and registrar and transfer agent fees.

The Trust does not have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the Trust's liquidity or the availability of capital resources.

Distributions Declared After Quarter End

On July 20, 2012, the Trust declared a distribution of $0.150535 per unit to unitholders of record as of July 31, 2012. The distribution is expected to be paid to unitholders on August 14, 2012.

Off-Balance Sheet Arrangements

The Trust has no off-balance sheet arrangements. The Trust has not guaranteed the debt of any other party, nor does the Trust have any other arrangements or relationships with other entities that could potentially result in unconsolidated debt, losses or contingent obligations other than the commodity hedge contracts disclosed in the section "Quantitative and Qualitative Disclosures About Market Risk."

New Accounting Pronouncements

As the Trust's financial statements are prepared on the modified cash basis, most accounting pronouncements are not applicable to the Trust's financial statements. No new accounting pronouncements have been adopted or issued that would impact the financial statements of the Trust.

Critical Accounting Policies and Estimates

Please read "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates" of the Trust's 2011 Annual Report on Form 10-K for additional information regarding the Trust's critical accounting policies and estimates. There were no material changes to the Trust's critical accounting policies or estimates during the quarter ended June 30, 2012.