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Item 1. Financial Statements

2025-08-13 compared with 2025-05-14 · 135 added, 55 removed, 267 unchanged (42% 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, 2025, and the distributable income and the changes in trust corpus for the three months ended March 31, 2025 and 2024, 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, 2025, and the distributable income and the changes in trust corpus for the three and six months ended June 30, 2025 and 2024, 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, 2025 and 2024, 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 unaudited condensed interim financial statements as of the three and six months ended June 30, 2025 and 2024, 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, which does not express an opinion on those condensed financial statements.

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

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Condensed Interim Statements of Changes in Trust Corpus (Unaudited)

Report of Independent Registered Public Accounting Firm

Report of Independent R egistered Public Accounting Firm

To the Unitholders of Permian Basin Royalty Trust

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Results of Review of Condensed 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, 2025 and the related condensed statements of distributable income and changes in trust corpus for the three-month periods ended March 31, 2025 and 2024, and the related notes (collectively referred to as the “condensed 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 June 30, 2025 and the related condensed statements of distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 2025 and 2024, and the related notes (collectively referred to as the “condensed interim financial statements”).

Based on our review, 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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Houston, Texas

August 13, 2025

PERMIAN BASIN ROYALTY TRUST

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

amortization of $10,811,451 and $10,810,809 at March 31, 2025 and

amortization of $10,812,094 and $10,810,809 at June 30, 2025 and

December 31, 2024, respectively)

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Three Months Ended

March 31, 2025

June 30, 2025

Three Months Ended

March 31, 2024

June 30, 2024

Royalty income

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

Six Months Ended

June 30, 2025

Six Months Ended

June 30, 2024

Royalty income

Interest income

General and administrative expenditures

Distributable income

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

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

PERMIAN BASIN ROYALTY TRUST

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Three Months Ended

March 31, 2025

June 30, 2025

Three Months Ended

March 31, 2024

June 30, 2024

Trust corpus, beginning of period

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

Six Months Ended

June 30, 2025

Six Months Ended

June 30, 2024

Trust corpus, beginning of period

Amortization of net overriding royalty interests

Distributable income

Distributions declared

Total Trust Corpus, end of period

Distributions per Unit (46,608,796 Units outstanding)

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

PERMIAN BASIN ROYALTY TRUST

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On January 9, 2014, Bank of America N.A.

(as successor to The First National Bank of Fort Worth) gave notice to Unitholders that it would be resigning as trustee of the Trust subject to certain conditions that included the appointment of Southwest Bank as successor trustee.

(as successor to The First National Bank of Fort Worth) gave notice to the holders of units (the “Unitholders”) that it would be resigning as trustee of the Trust subject to certain conditions that included the appointment of Southwest Bank as successor trustee.

At a Special Meeting of Trust Unitholders, the Unitholders approved the appointment of Southwest Bank as successor trustee of the Trust once the resignation of Bank of America N.A.

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Basis of Accounting

The condensed interim financial statements of the Trust are prepared on the following modified cash basis of accounting and are not intended to present financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"):

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 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 Waddell Ranch properties was not received for the quarter ended March 31, 2025.

Royalty income for the Waddell Ranch properties was not received for the three and six months ended June 30, 2025.

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

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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 Unitholders.

Contingencies related to the properties from which the royalties are carved (“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 Unitholders.

Distributable Income Per Unit

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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.

As a result of excess costs, there was no royalty income received from Blackbeard for the quarter ended March 31, 2025.

As a result of excess costs, there was no royalty income received from Blackbeard for the three and six months ended June 30, 2025.

If monthly costs exceed revenues for the Waddell Ranch properties or Texas Royalty properties, such excess costs must be recovered, with accrued interest, from future net proceeds and cannot reduce net proceeds from the other conveyance.

The Waddell Ranch properties did not contribute to royalty income for the months of October 2024 through February 2025, respectively such that the Waddell Ranch properties remain in a deficit position as of March 31, 2025.

The Waddell Ranch properties did not contribute to royalty income for the reporting months of October 2024 through May 2025 (due to Blackbeard’s reporting being one month in arrears), such that the Waddell Ranch properties remain in a deficit position as of June 30, 2025.

The following table summarizes excess costs activity, cumulative excess costs balance, and accrued interest to be recovered as calculated by Blackbeard.

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Net excess costs (recovery) for the quarter ended 3/31/25

Net excess costs (recovery) for the quarter ended 6/30/25

Cumulative excess costs remaining at 6/30/2025

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If the Trust borrows funds to pay liabilities of the Trust, as contemplated in the Trust Indenture, tax-exempt Unitholders could be required to recognize unrelated business taxable income.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

The OBBBA includes significant federal

income tax provisions, such as the permanent extension of the income tax rates set by the Tax Cuts and Jobs Act, the continued

suspension of miscellaneous itemized deductions and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

Unitholders should consult their tax advisors regarding the potential tax consequences of the OBBBA and its impact on such

person’s ownership of Units.

STATE TAX CONSIDERATIONS

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Entities subject to the Texas franchise tax generally include trusts and most other types of entities that provide limited liability protection, unless otherwise exempt.

Trusts that receive at least 90% of their federal gross income from certain passive

sources, including royalties from mineral properties and other non-operated mineral interest income, and do not receive more than 10% of their income from operating an active trade or business, generally are exempt from the Texas franchise tax as “passive entities.”

Trusts that receive at least 90% of their federal gross income from certain passive sources, including royalties from mineral properties and other non-operated mineral interest income, and do not receive more than 10% of their income from operating an active trade or business, generally are exempt from the Texas franchise tax as “passive entities.”

The Trust has been and expects to continue to be exempt from Texas franchise tax as a passive entity.

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This revenue is sourced to Texas under provisions of the Texas Administrative Code providing that such income is sourced according to the principal place of business of the Trust, which is Texas.

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

Unitholders should consult their tax advisors regarding state tax requirements, if any, applicable to such Unitholder’s ownership of Units.

COMMITMENTS AND CONTINGENCIES

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The Trustee maintains an expense reserve, which is currently $1,100,000, that allows the Trustee to pay obligations of the Trust in the event there is not sufficient royalty income to pay such expenses.

Trustee fees for the period ending March 31, 2025, were $31,365.

For the period ending March 31, 2024, Trustee fees were $32,628.

Trustee fees for the three month periods ending June 30, 2025 and June 30, 2024, were $29,136 and $35,922, respectively.

For the six months ended June 30, 2025 and 2024, Trustee fees were $60,501 and $68,549, respectively.

SUBSEQUENT EVENTS

Subsequent events were evaluated through the issuance date of the financial statements.

Subsequent to March 31, 2025, the Trust declared a distribution on April 17, 2025 of $0.019615 per Unit outstanding payable on May 14, 2025 to Unitholders of record on April 30, 2025.

Subsequent to June 30, 2025, the Trust declared a distribution on July 21, 2025 of $0.015311 per Unit outstanding payable on August 14, 2025 to Unitholders of record on July 31, 2025.

Trustee’s Discussion and Analysis

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however, the price began to decrease in the third quarter of 2024 due to lower demand.

The price of oil hit a high price of $79.28 per barrel on January 17, 2025 and has steadily decreased since that time.

As of May 5, 2025 the price of oil was $58.50 per barrel.

The price of oil hit a high price of $79.28 per barrel on January 17, 2025 and steadily decreased through May 2025.

Since that time, the price of oil has increased slightly such that as of July 28, 2025 the price of oil was $67.81 per barrel.

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

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The Trustee has powers to collect and distribute proceeds received by the Trust and pay Trust liabilities and expenses and its actions have been limited to those activities.

The Trust is a passive entity and other than the Trust’s ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the

Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in borrowing transactions.

The Trust is a passive

entity and other than the Trust’s ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in borrowing transactions.

As a result, other than such borrowings, if any, the Trust has no source of liquidity or capital resources other than the Royalties.

Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

For the quarter ended March 31, 2025, royalty income received by the Trust amounted to $3,054,697 compared to royalty income of $6,005,642 during the first quarter of 2024.

Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for December 2024, January and February 2025 (reflecting the period for which proceeds were distributed to Unitholders in the first quarter of 2025).

For the Waddell Ranch properties, the average realized oil and gas prices were $68.83 per barrel (Bbl) and $1.66 per thousand cubic feet (Mcf), respectively for the three months ended February 28, 2025, compared to $73.08 and $2.01 for the three months ended March 31, 2024.

For the Texas Royalty properties, the average realized oil and gas prices were $68.96 per Bbl and $8.61 per Mcf, respectively for the quarter ended March 31, 2025, compared to $75.17 per Bbl and $9.09 per Mcf, respectively for the quarter ended March 31, 2024.

The lower royalty income reported in the three months ended March 31, 2025, compared to the same time period in 2024 is attributable to a deficit position in the first quarter of 2025, resulting in no royalty income being received from the Waddell Ranch properties due to an excess in working interest costs during the first quarter of 2025.

No deficit position existed during the first quarter of 2024, and royalty income was received from the Waddell Ranch properties during such period.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

For the quarter ended June 30, 2025, royalty income received by the Trust amounted to $3,089,889 compared to royalty income of $8,803,389 during the second quarter of 2024.

Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for March, April and May 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the second quarter of 2025).

For the Waddell Ranch properties, the average realized oil and gas prices were $70.27 per barrel (Bbl) and $2.41 per thousand cubic feet (Mcf), respectively for the three months ended May 31, 2025, compared to $73.40 and $1.83 for the months of April and May 2024 (reflecting the two months for which proceeds were distributed to Unitholders in the second quarter of 2024).

The average realized price of gas was calculated by dividing the total gas and plant product sales by the total gas and plant product volumes (converted to an Mcf equivalent).

For the Texas Royalty properties, the average realized oil and gas prices were $68.61 per Bbl and $10.15 per Mcf, respectively for the quarter ended June 30, 2025, compared to $78.00 per Bbl and $10.04 per Mcf, respectively for the quarter ended June 30, 2024.

The lower royalty income reported in the three months ended June 30, 2025, compared to the same time period in 2024 is attributable to a deficit position in the second quarter of 2025, resulting in no royalty income being received from the Waddell Ranch properties due to an excess in working interest costs during the second quarter of 2025.

No deficit position existed during the second quarter of 2024, and royalty income was received from the Waddell Ranch properties during such period.

Blackbeard continues to refuse to provide information regarding monthly net proceeds in time for the monthly distribution announcement.

Interest income for the quarter ended March 31, 2025 was $16,523 compared to $39,048 during the first quarter of 2024.

Interest income for the quarter ended June 30, 2025 was $15,751 compared to $29,106 during the second quarter of 2024.

The decrease in interest income is primarily attributable to decreased amounts of funds available for investment.

Total expenses during the first quarter of 2025 amounted to $475,008 compared to $552,484 during the first quarter of 2024.

The decrease in total expenses can be primarily attributed to the timing of payment of expenses.

These transactions resulted in distributable income for the quarter ended March 31, 2025 of $2,596,212 or $0.06 per Unit outstanding of beneficial interest.

Distributions of $0.020510, $0.017144 and $0.018047 per Unit were made to Unitholders of record as of January 31, 2025, February 28, 2025, and March 31, 2025, respectively.

For the first quarter of 2024, distributable income was $5,492,206 or $0.12 per Unit outstanding of beneficial interest.

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 beginning May 2024 such that royalty income for the Trust for the first quarter of the calendar year is associated with actual oil and gas production for October, November, and December 2024 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the first quarter of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November 2024 through January 2025.

Total expenses during the second quarter of 2025 amounted to $708,385 compared to $395,807 during the second quarter of 2024.

The increase in total expenses can be primarily attributed to increased expenses for professional services associated with legal proceedings with Blackbeard.

These transactions resulted in distributable income for the quarter ended June 30, 2025 of $2,397,255 or $0.05 per Unit outstanding of beneficial interest.

Distributions of $0.019615, $0.018841 and $0.012976 per Unit were made to Unitholders of record as of April 30, 2025, May 31, 2025, and June 30, 2025, respectively.

For the second quarter of 2024, distributable income was $8,436,688 or $0.18 per Unit outstanding of beneficial interest.

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 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 January, February, and March 2025 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, March, and April 2025.

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

Blackbeard has opted to provide this information quarterly, approximately 30 days after the end of each fiscal quarter.

On April 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended March 31, 2025.

On July 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended June 30, 2025.

For the quarter ended June 30, 2024, only the months of April and May are shown below, as those were the only two months for which the Trust received information in time to distribute proceeds for the Waddell Ranch properties during the second quarter of 2024.

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

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Pricing and Production Discussion

For the Waddell Ranch properties, the average realized price of oil decreased to $68.83 per Bbl for the period December 2024 through February 2025 compared to $73.08 per Bbl for the period January through March of 2024 due to worldwide market variables.

The average realized price of gas decreased to $1.66 per Mcf for the period December 2024 through February 2025 from $2.01 per Mcf for the period January through March of 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.96 per Bbl in the first quarter of 2025, compared to $75.17 per Bbl in the first quarter of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties decreased from $9.09 per Mcf in the first quarter of 2024 to $8.61 per Mcf in the first quarter of 2025 in part due to change in overall market variables.

For the Waddell Ranch properties, the average realized price of oil decreased to $70.27 per Bbl for the production months of January through March 2025 compared to $73.40 per Bbl for February and March of 2024 due to worldwide market variables.

The average realized price of gas increased to $2.41 per Mcf for the production months of January through March 2025 from $1.83 per Mcf for the production months of February and March of 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.61 per Bbl in the second quarter of 2025, compared to $78.00 per Bbl in the second quarter of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties increased from $10.04 per Mcf in the second quarter of 2024 to $10.15 per Mcf in the second quarter of 2025 in part 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.

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Blackbeard Capital Expense Discussion

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first quarter of 2025 totaled $47.9 million (gross) as compared to $28.3 million (gross) for the first quarter of 2024.

The three months ended March 31, 2025, for the Waddell Ranch properties includes October through December 2024 expenditures only.

Blackbeard has not provided updated 2025 capital expenditures budget information and has revoked its consent with respect to previously provided 2024 budget information.

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 2025 totaled $61.3 million (gross) as compared to $15.6 million (gross) for the second quarter of 2024.

The three months ended June 30, 2025, for the Waddell Ranch properties includes January through March 2025 expenditures, whereas the three months ended June 30, 2024 includes April and May 2024 expenditures only.

Blackbeard has not provided updated 2025 capital expenditures budget information.

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 until May 2024.

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $21.4 million (gross) for the first quarter of 2025, compared to $22.8 million (gross) for the same period in 2024 on the Waddell Ranch properties.

The quarter ended March 31, 2025, for the Waddell Ranch properties includes October through December 2024 expenses only.

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $19.8 million (gross) for the second quarter of 2025, compared to $14.7 million (gross) for the same period in 2024 on the Waddell Ranch properties.

The quarter ended June 30, 2025, for the Waddell Ranch properties includes January through March 2025 expenditures, whereas the three months ended June 30, 2024 includes April and May 2024 expenditures only.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

For the six months ended June 30, 2025, royalty income received by the Trust amounted to $6,144,586 compared to royalty income of $14,809,031 for the six months ended June 30, 2024.

Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for the six month period of December 2024 through May 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the first six months of 2025).

The average realized oil and gas prices for the Waddell Ranch properties were $69.55 per Bbl and $2.06 per Mcf, respectively for the six months ended June 30, 2025 compared to $74.75 per Bbl and $1.87 per Mcf for the six months ended June 30, 2024.

For the Texas Royalty properties, the average realized oil and gas prices were $68.78 per Bbl and $9.36 per Mcf, respectively for the six months ended June 30, 2025 compared to $76.53 per Bbl and $9.35 per Mcf, respectively for the six months ended June 30, 2024.

The decrease in royalty income reported in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is attributable to the deficit position of the Waddell Ranch properties due to an excess in working interest costs during the first six months of 2025.

No deficit position existed during the first six months of 2024 and royalty income was received from the Waddell Ranch properties for the months of January through May of 2024.

Interest income for the six months ended June 30, 2025, was $32,274 compared to $68,153 during the six months ended June 30, 2024.

The decrease in interest income is primarily attributable to a decrease in the amounts of funds available for investment and the length of time of such investment.

Total expenses during the six months ended June 30, 2025, amounted to $1,183,393 compared to $948,290 during the six months ended June 30, 2024.

The increase in total expenses can be primarily attributed to increased expenses for professional services associated with legal proceedings with Blackbeard.

These transactions resulted in distributable income for the six months ended June 30, 2025 of $4,993,467, or $0.11 per Unit.

For the six months ended June 30, 2024, distributable income was $13,928,894 or $0.30 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 beginning May 2024 such that royalty income for the Trust for the first six months of the calendar year is associated with actual oil and gas production for October 2024 through March 2025 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the first six months of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November 2024 through April 2025.

Blackbeard has opted to provide this information quarterly, approximately 30 days after the end of each fiscal quarter.

On July 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended June 30, 2025.

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

For the 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) Due to the timing of information received from Blackbeard, information reflects Royalty income received by the Trust during the six-month period of December 2024 through May 2025.

See Note 2 to the Condensed Financial Statements.

Pricing and Production Discussion

Production and pricing information for the Waddell Ranch properties is shown for the months of December 2024 through May 2025.

The average realized price of oil decreased to $69.55 per Bbl for December 2024 through May 2025 compared to $74.75 per Bbl for the five month period ended May 31, 2024 due to worldwide market variables.

The average realized price of gas for the six months ended May 31, 2025, was $2.06 per Mcf an increase from $1.87 for the five month period ending May 31, 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.78 per Bbl for the six months ended June 30, 2025, compared to $76.53 per Bbl for the same period of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties increased from $9.35 per Mcf in the six months ended June 30, 2024 to $9.36 per Mcf in the same period of 2025 due to change in overall market variables.

However, for the Texas Royalty properties, oil sales volumes decreased slightly and gas sales volumes increased for the properties from which the Royalties are carved for the applicable period of 2025 compared to 2024, while for the Waddell Ranch properties, oil and natural gas volumes (including plant products) increased for the applicable period in 2025 compared to 2024.

Blackbeard Capital Expense Discussion

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the six months ended June 30, 2025 totaled $109.2 million (gross).

For the six months ended June 30, 2024, capital expenditures were $43.9 million (gross) to the Trust.

The six months ended June 30, 2025 for the Waddell Ranch properties includes December 2024 through May 2025 expenditures and the six months ended June 30, 2024 include the five months of January through May 2024.

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 until May 2024.

Lease operating expenses and property taxes totaled $41.2 million (gross) for the six months ended June 30, 2025, compared to $37.5 million (gross) for the same period in 2024.

The six months ended June 30, 2025, for the Waddell Ranch properties only includes December 2024 through May 2025 expenses and taxes and the 2024 expenses and taxes include the months of January through May 2024.

Calculation of Royalty Income

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The royalty income received and recorded by the Trust was determined by the operator as noted below.

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 and available for distribution by the Trust for the three months ended March 31, 2025 and 2024, respectively, was computed as shown in the table below:

Three Months Ended March 31,

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 and available for distribution by the Trust for the three months ended June 30, 2025 and 2024, respectively, was computed as shown in the table below:

Three Months Ended June 30,

PROPERTIES (1)

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Royalty income

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through March 2025.

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through June 2025.

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, 2024.

There have been no significant changes to the critical accounting policies during the three months ended March 31, 2025.

There have been no significant changes to the critical accounting policies during the six months ended June 30, 2025.

Distributable Income Per Unit

13 unchanged sentences

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