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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 135 added, 41 removed, 224 unchanged (44% of the section changed)

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It is suggested that these condensed interim financial statements and notes thereto be read in conjunction with the financial statements and the notes thereto included in the Trust’s latest annual report on Form 10-K.

In the opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the assets, liabilities and trust corpus of the Trust as of March 31, 2024, and the distributable income and the changes in trust corpus for the three months ended March 31, 2024 and 2023, have been included.

In the opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the assets, liabilities and trust corpus of the Trust as of June 30, 2024, and the distributable income and the changes in trust corpus for the three and six months ended June 30, 2024 and 2023, have been included.

The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year.

Unless specified otherwise, all amounts included herein are presented in US dollars.

The condensed interim financial statements as of the three months ended March 31, 2024 and 2023, included herein, have been reviewed by Weaver and Tidwell, L.L.P., an independent registered public accounting firm, as stated in their report appearing herein.

The condensed interim financial statements as of the three-month and six-month periods ended June 30, 2024 and 2023, included herein, have been reviewed by Weaver and Tidwell, L.L.P., an independent registered public accounting firm, as stated in their report appearing herein.

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 410)

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Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the “Trust”) as of March 31, 2024, and the related condensed statements of distributable income and changes in trust corpus for the three month periods ended March 31, 2024 and 2023, and the related notes (collectively referred to as the "condensed interim financial statements" or "interim financial information").

We have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the Trust) as of June 30, 2024 and the related condensed statements of distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 2024 and 2023, and the related notes (collectively referred to as the “condensed interim financial statements”

or “interim financial information”).

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed interim financial statements for them to be in conformity with the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

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Accordingly, we do not express such an opinion.

/s/WEAVER AND TIDWELL, L.L.P.

WEAVER AND TIDWELL, L.L.P.

Dallas, Texas

August 8, 2024

PERMIAN BASIN ROYALTY TRUST

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Net overriding royalty interests in producing oil and gas properties (net of accumulated

amortization of $10,765,591 and $10,753,742 at March 31, 2024 and

amortization of $10,777,591 and $10,753,742 at June 30, 2024 and

December 31, 2023, respectively)

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Distribution payable to Unit holders

Funds received for future distributions (Note 6)

Commitments and reserves for contingencies (Note 7)

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Three Months Ended

March 31, 2024

June 30, 2024

Three Months Ended

March 31, 2023

June 30, 2023

Royalty income

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The accompanying notes are an integral part of these condensed financial statements.

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2023

Royalty income

Interest income

General and administrative expenditures

Distributable income

Distributable income per Unit (46,608,796 Units)

The accompanying notes are an integral part of these condensed financial statements

PERMIAN BASIN ROYALTY TRUST

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Three Months Ended

March 31, 2024

June 30, 2024

Three Months Ended

March 31, 2023

June 30, 2023

Trust corpus, beginning of period

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The accompanying notes are an integral part of these condensed financial statements.

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2023

Trust corpus, beginning of period

Amortization of net overriding royalty interests

Distributable income

Distributions declared

Total Trust Corpus, end of period

Distributions per Unit

The accompanying notes are an integral part of these condensed financial statements

PERMIAN BASIN ROYALTY TRUST

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Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the interest owners.

Royalty income consists of the amounts received by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges and other costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.

Royalty income consists of the amounts received and available for distribution by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges and other costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.

Royalty income for the quarter ended June 30, 2024, for the Waddell Ranch properties includes only the cash received for April and May, since the cash received in June was not disclosed to the Trustee by the NYSE notification deadline and therefore not distributed until subsequent to the end of the quarter, consistent with the policy above.

Trust expenses, consisting principally of routine general and administrative costs, recorded are based on liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.

Distributions to Unit holders are recorded when declared by the Trustee.

Funds received for future distributions in the Condensed Statement of Assets, Liabilities and Trust Corpus reflects the proceeds from Royalties on the Waddell Ranch properties that Blackbeard wires to the Trust after the deadline to notify the NYSE of the current month distribution has passed.

Funds received on June 26, 2024, in the amount of $2,177,289 were held for future distribution as of June 30, 2024, and subsequently included in the July 2024 distribution calculation.

The financial statements of the Trust differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) because revenues are not accrued in the month of production, expenses are recorded when paid and certain cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with GAAP.

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The cash received by the Trustee consists of the amounts received by owners of the interest burdened by the Royalties from the sale of production less the sum of applicable taxes, accrued production costs, development and drilling costs, operating charges and other costs and deductions, multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.

Not withstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, and the fact that Blackbeard has provided this information on a monthly basis since Argent Trust Company has become Trustee of the Trust, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the announcement date for monthly distributions starting in May 2024.

As a result of Blackbeard's failure to provide this information by the NYSE notification date for the monthly distribution, in accordance with the Trust indenture, if Royalty income is received from the Waddell Ranch properties on or prior to the record date, it will be included in the following month's distribution, rather than the current month's distribution.

The Royalty income received from Blackbeard after the NYSE notification deadline is included as a liability on the Condensed Statement of Assets, Liabilities, and Trust Corpus titled, "Funds received for future distributions."

FEDERAL INCOME TAXES

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A grantor trust is not subject to federal income tax at the trust level.

The Unit holders are considered for federal tax purposes to own the Trust’s income and principal as though no trust were in existence.

The Unit holders are considered for federal income tax purposes to own the Trust’s income and principal as though no trust were in existence.

The income of the Trust is deemed to have been received or accrued by each Unit holder at the time such income is received or accrued by the Trust and not when distributed by the Trust.

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Unit holders should consult their tax advisors regarding state tax requirements, if any, applicable to such Unit holder’s ownership of Trust units.

FUNDS RECEIVED FOR FUTURE DISTRIBUTIONS

Funds received on June 26, 2024, in the amount of $2,177,289 were held for future distribution as of June 30, 2024, and subsequently included in the July 2024 distribution calculation

COMMITMENTS AND CONTINGENCIES

Contingencies related to the underlying properties that are unfavorably resolved would generally be reflected by the Trust as reductions to future royalty income payments to the Trust with corresponding reductions to cash distributions to Unit holders.

The Trustee maintains an expense reserve, which reserve is currently $1,1000,000, that allows the Trustee to pay obligations of the Trust in the event there is not sufficient Royalty income to pay such expenses.

SUBSEQUENT EVENTS

Subsequent to March 31, 2024, the Trust declared a distribution on April 19, 2024, of $0.088214 per Unit payable on May 14, 2024 to unitholders of record on April 30, 2024.

Subsequent to June 30, 2024, the Trust declared a distribution on July 19, 2024, of $0.070169 per Unit payable on August 14, 2024 to unitholders of record on July 31, 2024.

This distribution included funds received from Blackbeard on June 26, 2024 in the amount of $2,177,289, which have been presented as a liability on the Condensed Statement of Assets, Liabilities and Trust Corpus, titled "Funds received for future distributions".

Trustee’s Discussion and Analysis

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Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.

Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, litigation, information to be received by operators of the Waddell Ranch properties or Texas Royalty properties, and regulatory matters.

Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove correct.

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The price of oil and gas remained soft from the first quarter through the beginning of the third quarter of 2023 due to continued lower demand resulting from higher than normal inflation and an oversupply of the commodities.

In the latter part of the third quarter of 2023, the price of oil and gas began to increase, due mainly to OPEC cutting oil production and colder weather during the winter months.

As of May 6, 2024 the price of oil was $80.10 per barrel.

It is uncertain how the war in Ukraine, resulting sanctions against Russia, conflict between Israel and Hamas and Israel and Iran, and OPEC production will affect oil prices in the coming months.

In the first half of 2024, the price of oil and gas began to increase, due to tensions in the Middle East and OPEC cutting oil production.

As of July 29, 2024 the price of oil was $77.27 per barrel.

It is uncertain how the war in Ukraine, resulting sanctions against Russia, conflict between Israel and Hamas, and OPEC production will affect oil prices in the coming months.

Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

political conditions in major oil producing regions, especially in the Middle East and Eastern Europe, including the conflicts between Russia and Ukraine, Israel and Hamas and Israel and Iran;

political conditions in major oil producing regions, especially in the Middle East and Eastern Europe, including the conflicts between Russia and Ukraine, Israel and Hamas;

worldwide economic and geopolitical conditions;

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It is impossible to predict future crude oil and natural gas price movements, and this reduces the predictability of future cash distributions to Unit holders.

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

For the quarter ended March 31, 2024, royalty income received by the Trust amounted to $6,005,642 compared to royalty income of $5,206,602 during the first quarter of 2023.

The increase in royalty income is primarily attributable to an increase in oil and gas production.

Average oil and gas prices were $73.17 and $2.05, respectively, for the quarter ending March 31, 2024 compared to $77.63 and $3.19 for the quarter ended March 31, 2023.

Interest income for the quarter ended March 31, 2024 was $39,048 compared to $14,107 during the first quarter of 2023.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

For the quarter ended June 30, 2024, royalty income received by the Trust amounted to $8,803,389 compared to royalty income of $6,074,170 during the second quarter of 2023.

For the Texas Royalty Properties, the average oil and gas prices were $78.00 and $10.04, respectively, for the quarter ended June 30, 2024 compared to $73.05 and $4.53 for the quarter ended June 30, 2023.

Production information was not provided by Blackbeard such that pricing of oil and gas for the Waddell Ranch properties could not be calculated.

The Trustee believes that the higher royalty income reported in the three months ended June 30, 2024 compared to the same time period in 2023 may be attributable to the deficit position of the Waddell Ranch properties during a portion of the second quarter of 2023, whereas no deficit position existed during the second quarter of 2024.

The increase in royalty income was partially offset by $2,177,289 of net proceeds being delayed until distribution declared in the third quarter of 2024 due to Blackbeard's refusal to provide information regarding monthly net proceeds in time for the monthly distribution announcement.

Interest income for the quarter ended June 30, 2024 was $29,106 compared to $22,964 during the second quarter of 2023.

The increase in interest income is primarily attributable to increased amounts of funds available for investment.

Total expenses during the first quarter of 2024 amounted to $552,484 compared to $480,094 during the first quarter of 2023.

Total expenses during the second quarter of 2024 amounted to $395,806 compared to $335,992 during the second quarter of 2023.

The increase in total expenses can be primarily attributed to increased expense for professional services, printing expenses and the timing of payment of expenses.

These transactions resulted in distributable income for the quarter ended March 31, 2024 of $5,492,206 or $0.12 per Unit of beneficial interest.

Distributions of $0.031031, $0.045460 and $0.041340 per Unit were made to Unit holders of record as of January 31, 2024, February 29, 2024, and March 28, 2024, respectively.

For the first quarter of 2023, distributable income was $4,740,615 or $0.10 per Unit of beneficial interest.

Royalty income for the Trust for the first quarter of the calendar year is associated with actual oil and gas production for the period of November and December 2023 and January 2024 from the properties from which the Trust’s net overriding royalty interests (“Royalties”) were carved.

These transactions resulted in distributable income for the quarter ended June 30, 2024 of $8,436,688 or $0.18 per Unit of beneficial interest.

Distributions of $0.088214, $0.020052 and $0.072743 per Unit were made to Unit holders of record as of April 30, 2024, May 31, 2024, and June 28, 2024, respectively.

For the second quarter of 2023, distributable income was $5,761,142 or $0.12 per Unit of beneficial interest.

Notwithstanding requests from the Trustee to Blackbeard Operating, LLC ("Blackbeard"), the operator of the Waddell Ranch properties, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date for the monthly distributions beginning May 2024 such that royalty income for the Trust for the second quarter of the calendar year is associated with actual oil and gas production for February and March 2024 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the second quarter of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from February through April 2024.

Beginning in May 2024, Blackbeard has also refused to provide monthly production, product sales, capital expenditure, and development information for the Waddell Ranch properties from which the Trust's Royalties are carved, information Blackbeard has previously provided on on a monthly basis since Argent Trust Company has become Trustee of the Trust.

On July 29, 2024, Blackbeard provided the Trustee a quarterly statement showing the computation of net proceeds to the Trust for each month of the quarter ended June 30, 2024.

However, no production volumes or pricing were provided, information Blackbeard has previously provided monthly since Argent Trust Company has become Trustee of the Trust.

As a result, oil and gas pricing and average daily production is unable to be calculated for the Waddell Ranch properties.

Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:

Three Months Ended March 31,

Three Months Ended June 30,

PROPERTIES (1)

Oil sales (Bbls)

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Average price per Mcf

The average received price of oil decreased to an average price of $73.17 per Bbl in the first quarter of 2024, compared to $77.63 per Bbl in the first quarter of 2023 due to worldwide market variables.

The average price of gas (including natural gas liquids) decreased from $3.19 per Mcf in the first quarter of 2023 to $2.05 per Mcf in the first quarter of 2024 due to change in overall market variables.

(1) Information not made available by Blackbeard

For the Texas Royalty Properties, the average received price of oil increased to an average price of $78.00 per Bbl in the second quarter of 2024, compared to $73.05 per Bbl in the second quarter of 2023 due to worldwide market variables.

The average price of gas (including natural gas liquids) for the Texas Royalty properties increased from $4.53 per Mcf in the second quarter of 2023 to $10.04 per Mcf in the second quarter of 2024 due to change in overall market variables.

Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), the production amounts in the Royalties section of the above table do not always provide a meaningful comparison.

However, both oil and gas sales volumes increased from the Underlying Properties (as defined in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2023) for the applicable period in 2024 compared to 2023.

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first quarter of 2024 totaled $28.4 million (gross) as compared to $35.2 million (gross) for the first quarter of 2023.

Blackbeard has previously informed the Trustee that the 2024 capital expenditures budget has not been finalized;

However, for the Texas Royalty Properties, both oil and gas sales volumes decreased from the Underlying Properties (as defined in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2023) for the applicable period in 2024 compared to 2023.

Production information was not provided by Blackbeard for the Waddell Ranch properties.

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 2024 totaled $15.6 million (gross) as compared to $29.7 million (gross) for the second quarter of 2023.

The three months ended June 30, 2024, for the Waddell Ranch properties includes April and May expenditures only, since the cash received in June was not disclosed to the Trustee by the NYSE notification deadline and therefore not distributed until subsequent to the end of the quarter.

Blackbeard previously informed the Trustee that the 2024 capital expenditures budget has not been finalized;

however, Blackbeard provided the Trustee with a preliminary capital expenditures budget of approximately $301.4 million (gross), $106.1 million (net) for the Waddell Ranch properties.

The total amount of capital expenditures for 2023 with regard to the Waddell Ranch Properties totaled $135.3 million (net).

The Trustee has been advised that there were 8.7 workover wells completed, 6.0 new wells completed, 5.3 new wells in progress and 8.7 workover wells in progress during the three months ended March 31, 2024, as compared to 6.8 (net to the Trust) workover wells completed and 11.3 new wells completed, 10.9 new wells in progress, and 8.0 workover wells in progress for the three months ended March 31, 2023 on the Waddell Ranch properties.

Lease operating expenses and property taxes totaled $22.8 million (gross) for the first quarter of 2024, compared to $16.4 million (gross) for the same period in 2023 on the Waddell Ranch properties due to increased maintenance work.

Development information for the Waddell Ranch properties such as well completions, workovers, remedial activities, and plugging and abandonment, was not provided by Blackbeard.

This information has previously been provided monthly since Argent Trust Company has become Trustee of the Trust.

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $14.7 million (gross) for the second quarter of 2024, compared to $16.2 million (gross) for the same period in 2023 on the Waddell Ranch properties.

The quarter ended June 30, 2024, for the Waddell Ranch properties includes April and May expenses only, since the cash received in June was not disclosed to the Trustee by the NYSE notification deadline and therefore not distributed until subsequent to the end of the quarter.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

For the six months ended June 30, 2024, royalty income received by the Trust amounted to $14,809,031 compared to royalty income of $11,280,772 for the six months ended June 30, 2023.

For the Texas Royalty Properties, the average received price of oil decreased to an average of $76.53 per Bbl in the first half of 2024 from $76.61 per Bbl in the first half of 2023.

The average received price of gas increased from $5.02 per Mcf in the first half of 2023 to $9.35 per Mcf for the first half of 2024.

Production information was not provided by Blackbeard such that pricing of oil and gas for the Waddell Ranch properties could not be calculated.

The Trustee believes that the higher royalty income reported in the six months ended June 30, 2024 compared to the same time period in 2023 may be attributable the deficit position of the Waddell Ranch properties during a portion of the first six months of 2023, whereas no deficit position existed during the first six months of 2024.

Interest income for the six months ended June 30, 2024, was $68,153 compared to $37,071 during the six months ended June 30, 2023.

The increase in interest income is primarily attributable to a substantial increase in the amounts of funds available for investment and the length of time of such investment due mainly to the fact that beginning in May 2024, funds received from Blackbeard were included in the following month's distribution calculation and held for investment for a longer period of time than was historically held.

Total expenses during the six months ended June 30, 2024, amounted to $948,290 compared to $816,086 during the six months ended June 30, 2023.

The increase in total expenses can be primarily attributed to increased expenses for professional services, printing costs and the timing of payment of expenses.

These transactions resulted in distributable income for the six months ended June 30, 2024 of $13,928,894, or $0.30 per Unit.

For the six months ended June 30, 2023, distributable income was $10,501,757 or $0.23 per Unit.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date for the monthly distributions beginning May 2024 such that royalty income for the Trust for the first half of the calendar year is associated with actual oil and gas production for November 2023 through March 2024 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the first half of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November 2023 through April 2024.

On July 29, 2024, Blackbeard provided the Trustee a quarterly statement showing the computation of net proceeds to the Trust for each month of the quarter ended June 30, 2024.

However, no production volumes or pricing were provided, information Blackbeard has previously provided monthly since Argent Trust Company has become Trustee of the Trust.

As a result, oil and gas pricing and

average daily production is unable to be calculated for the Waddell Ranch properties.

Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:

Six Months Ended June 30,

PROPERTIES (1)

Oil sales (Bbls)

Gas sales (Mcf)

Properties From Which The Royalties Were Carved:

Total oil sales (Bbls)

Average per day (Bbls)

Average price per Bbl

Total gas sales (Mcf)

Average per day (Mcf)

Average price per Mcf

(1) Information not made available by Blackbeard

For the Texas Royalty Properties, the average received price of oil decreased to an average price of $76.53 per Bbl in the first half of 2024, compared to $76.61 per Bbl in the first half of 2023 due to worldwide market variables.

The average price of gas (including natural gas liquids) for the Texas Royalty properties increased from $5.02 per Mcf in the first half of 2023 to $9.35 per Mcf in the first half of 2024 due to change in overall market variables.

However, for the Texas Royalty Properties, both oil and gas sales volumes from the properties from which the Royalties are carved have decreased for the applicable period of 2024 compared to 2023.

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the six months ended June 30, 2024 totaled $ 43.9 million (gross) compared to $64.9 million (gross) to the Trust for the same period in 2023.

The six months ended June 30, 2024, for the Waddell Ranch properties includes January through May expenditures only, since the cash received in June was not disclosed to the Trustee by the NYSE notification deadline and therefore not distributed until subsequent to the end of the quarter.

Blackbeard previously informed the Trustee that the 2024 capital expenditures budget has not been finalized;

however, Blackbeard provided the Trustee with a preliminary capital expenditures budget of approximately $301.4 million (gross), $106.1 million (net) for the Waddell Ranch properties.

Development information for the Waddell Ranch properties, such as well activity, completions, workovers, remedial activities, and plugging and abandonment, was not provided by Blackbeard.

This information has previously been provided on a monthly basis since Argent Trust Company has become Trustee of the Trust.

Lease operating expenses and property taxes totaled $37.5 million (gross) for the six months ended June 30, 2024, compared to $32.3 million (gross) for the same period in 2023.

The six months ended June 30, 2024, for the Waddell Ranch properties includes January through May expenses and taxes, since the cash received in June was not disclosed to the Trustee by the NYSE notification deadline and therefore not distributed until subsequent to the end of the quarter.

Calculation of Royalty Income

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These percentages of net profits are 75% and 95% in the case of the Waddell Ranch properties and the Texas Royalty properties, respectively.

Royalty income received by the Trust for the three months ended March 31, 2024 and 2023, respectively, was computed as shown in the table below:

Three Months Ended March 31,

Royalty income received and available for distribution by the Trust for the three months ended June 30, 2024 and 2023, respectively, was computed as shown in the table below:

Three Months Ended June 30,

PROPERTIES (1)

Gross proceeds of sales from the Underlying Properties

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Severance tax:

Gathering and Transportation Costs

Lease operating expense and property tax:

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Royalty income

(1) In March 2023, the Waddell Ranch properties were in a deficit position.

As of March 31, 2023, the cumulative NPI deficit was $411,735 for the underlying property (at 75%).

The NPI deficit had to be recovered from future proceeds of the Waddell Ranch properties prior to any other proceeds being paid to the Trust.

(1) Royalty income for the Waddell Ranch properties in 2024 includes only April and May, as the funds for June 2024 were received after the deadline to report to the NYSE for the June 2024 distribution and therefore not distributed until subsequent to the end of the quarter.

(2) Due to a NPI deficit, the Waddell Ranch properties did not contribute to Royalty income from March 2023 through April 2023

(3) Oil and gas severance taxes were not reported separately by Blackbeard.

Critical Accounting Policies and Estimates

A disclosure of critical accounting policies and the more significant judgments and estimates used in the preparation of the Trust’s financial statements is included in Item 7 of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no significant changes to the critical accounting policies during the three months ended March 31, 2024.

There have been no significant changes to the critical accounting policies during the six months ended June 30, 2024.

Distributable Income Per Unit

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements