What changed in this filing

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Item 1. Financial Statements

2021-05-17 compared with 2020-11-09 · 104 added, 194 removed, 232 unchanged (56% of the section changed)

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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 Trusts latest annual report on Form

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 Permian Basin Royalty Trust as

of September 30, 2020, the distributable income and the changes in trust corpus for the three-month and nine-month periods ended September 30, 2020 and 2019, have been included.

The distributable income for such interim periods is not

necessarily indicative of the distributable income for the full year.

The condensed interim financial statements as of September 30, 2020 and for

the three-month and nine-month periods ended September 30, 2020 and 2019, 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.

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,

2021, and the distributable income and the changes in trust corpus for the three-month period ended March 31, 2021 and 2020, 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 March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020, 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

The Unit Holders of Permian Basin Royalty Trust and

Bank, Trustee

To the Unit Holders of Permian Basin Royalty Trust and Simmons Bank, Trustee

Dallas, Texas

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 September 30, 2020 and the related condensed statements of distributable income and changes in trust corpus for the three-month and nine-month periods ended September 30, 2020 and 2019, and the related

notes (collectively referred to as the condensed interim financial statements or interim financial information).

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.

Results of Review of Interim Financial

We have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the Trust)

as of March 31, 2021, and the related condensed statements of distributable income and changes in trust corpus for the three-month periods ended March 31, 2021 and 2020, 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.

As described in Note 2 to the condensed interim financial statements, these condensed interim financial statements were prepared on a modified cash basis of

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These condensed interim financial statements are the responsibility of the Trustee.

We conducted our review in accordance with the standards of the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB.

are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S.

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Commission and the PCAOB.

A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.

It is substantially less in scope than an

audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.

A review of interim financial information consists principally of applying analytical procedures and making

inquiries of persons responsible for financial and accounting matters.

It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the

financial statements taken as a whole.

Accordingly, we do not express such an opinion.

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

November 9, 2020

WEAVER AND TIDWELL, L.L.P.

Dallas, Texas

PERMIAN BASIN ROYALTY TRUST

CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

September 30,

Cash and short-term investments

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

amortization of $10,585,776 and $10,550,709 at September 30, 2020 and December 31, 2019, respectively)

amortization of $10,602,161 and $ $10,592,340 at March 31, 2021 and December 31, 2020, respectively)

LIABILITIES AND TRUST CORPUS

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THREE MONTHS ENDED

September 30, 2020

March 31, 2021

THREE MONTHS ENDED

September 30, 2019

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

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

NINE MONTHS ENDED

September 30, 2020

NINE MONTHS ENDED

September 30, 2019

March 31, 2020

Royalty income

Interest income

Reserve for expenses

General and administrative expenditures

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THREE MONTHS ENDED

September 30, 2020

March 31, 2021

THREE MONTHS ENDED

September 30, 2019

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

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

NINE MONTHS ENDED

September 30, 2020

NINE MONTHS ENDED

September 30, 2019

March 31, 2020

Trust corpus, beginning of period

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The Units are traded on the New York Stock Exchange.

Burlington Resources Oil & Gas Company LP (BROG), a subsidiary of ConocoPhillips, is the interest owner for the Waddell

Burlington Resources Oil & Gas Company LP (BROG), a subsidiary of ConocoPhillips, was the interest owner for the Waddell

Ranch properties and Riverhill Energy Corporation (Riverhill Energy), formerly a wholly owned subsidiary of Riverhill Capital Corporation (Riverhill Capital) and formerly an affiliate of Coastal Management Corporation

(CMC), is the interest owner for the Texas Royalty properties.

BROG currently conducts all field, technical and accounting operations on behalf of BROG with regard to the Waddell Ranch properties.

BROG notified the Trust that on

November 1, 2019, the Waddell Ranch properties that are subject to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust-Waddell Ranch) dated November 1, 1980, were sold to Blackbeard Operating, LLC (Blackbeard) of

Fort Worth, Texas.

Blackbeard became the operator effective as of April 1, 2020.

Riverhill Energy currently conducts the accounting operations for the Texas Royalty properties.

In February 1997, BROG sold its interest in the Texas Royalty properties to Riverhill Energy.

BROG notified the Trust that on November 1, 2019, the Waddell Ranch

properties that are subject to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust Waddell Ranch) dated November 1, 1980, were sold to Blackbeard Operating, LLC (Blackbeard) of Fort Worth, Texas.

became the operator effective as of April 1, 2020.

Riverhill Energy currently conducts the accounting operations for the Texas Royalty properties.

The Trustee was advised that in the first quarter of 1998, Schlumberger Technology Corporation (STC) acquired all of the shares of

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The Trustee was further advised that in connection with STCs acquisition of Riverhill Capital, the

shareholders of

Riverhill Capital acquired ownership of all of the shares of stock of Riverhill Energy.

Thus, the ownership in the Texas Royalty properties referenced above remained in Riverhill Energy, the

stock ownership of which was acquired by the former shareholders of Riverhill Capital.

shareholders of Riverhill Capital acquired ownership of all of the shares of stock of Riverhill Energy.

Thus, the ownership in the Texas Royalty properties referenced above remained in Riverhill Energy, the stock ownership of which was acquired by

the former shareholders of Riverhill Capital.

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

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

Meeting of Trust Unit holders, the Unit holders approved the appointment of Southwest Bank as successor trustee of the Trust once the resignation of Bank of America N.A.

(as successor to The First National Bank of

Fort Worth) gave notice to Unit holders 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 Unit holders, the Unit

holders approved the appointment of Southwest Bank as successor trustee of the Trust once the resignation of Bank of America N.A.

took effect and also approved certain amendments to the Trust Indenture.

effective date of Bank of America N.A.s resignation and the effective date of Southwest Banks appointment as successor trustee was August 29, 2014.

Effective October 19, 2017, Simmons First National Corporation

(SFNC) completed its acquisition of First Texas BHC, Inc., the parent company of Southwest Bank.

The effective date of Bank of America

N.A.s resignation and the effective date of Southwest Banks appointment as successor trustee was August 29, 2014.

Effective October 19, 2017, Simmons First National Corporation (SFNC) completed its acquisition of

First Texas BHC, Inc., the parent company of Southwest Bank.

SFNC is the parent company of Simmons Bank.

SFNC merged Southwest Bank with Simmons Bank effective February 20, 2018.

The defined term

Trustee as used herein shall refer to Bank of America N.A.

for periods prior to August 29, 2014, and shall refer to Southwest Bank for periods from August 29, 2014 through February 19, 2018 and shall refer to Simmons Bank

for periods on and after February 20, 2018.

The defined term Trustee as used herein shall refer

to Bank of America N.A.

for periods prior to August 29, 2014, and shall refer to Southwest Bank for periods from August 29, 2014 through February 19, 2018 and shall refer to Simmons Bank for periods on and after February 20,

The terms of the Trust Indenture provide, among other things, that:

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comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the U.S.

Securities and Exchange Commission as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty

Securities and Exchange Commission as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Use of Estimates

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subject to federal income tax at the trust level.

holders are considered for federal tax purposes to own the Trusts income and principal as though no trust were in existence.

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

The income of the Trust is deemed to have been received or

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SUBSEQUENT EVENTS

Subsequent to September 30, 2020, the Trust declared a distribution on October 20, 2020 of $0.012620 per Unit payable on

November 16, 2020 to Unit holders of record on October 30, 2020.

Subsequent to March 31, 2021, the Trust declared a distribution on April 20, 2021 of $0.018156 per Unit payable on

May 14, 2021 to Unit holders of record on April 30, 2021.

Trustees Discussion and Analysis

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variety of additional factors that are beyond the Trustees control.

Recently, there has been a substantial decrease in oil and natural gas prices due in part to significantly decreased demand as a result of the novel coronavirus (COVID-19) pandemic, which is discussed below under Item 1A- Risk Factors.

A combination of these factors resulted in the price of oil falling below

zero to $(37.63) per barrel of oil on April 20, 2020, recovering the following day to $10.01 per barrel of oil.

As of October 30, 2020, the price of oil was $35.56.

Factors that may impact future commodity prices, including the price of

oil and natural gas, include but are not limited to:

Recently, there has been a substantial decrease in oil and natural gas prices due in part to significantly decreased demand as a result of the novel coronavirus (COVID-19) pandemic.

A combination of these factors resulted in the price of oil falling below zero to $(37.63) per barrel of oil on April 20, 2020, recovering the following day to $10.01 per barrel

As of May 3, 2021, the price of oil was $64.46.

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;

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trade barriers;

public health concerns;

public health concerns, including the COVID-19 pandemic;

the supply and price of domestic and foreign crude oil or natural gas;

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this reduces the predictability of future cash distributions to Unit holders.

Three Months Ended September 30, 2020 Compared to Three Months

Ended September 30, 2019

For the quarter ended September 30, 2020, royalty income received by the Trust amounted to $1,358,890 compared to

royalty income of $6,060,272 during the third quarter of 2019.

The decrease in royalty income is primarily attributable to a severe decrease in oil and gas pricing worldwide, a decrease in oil and gas production due to Blackbeard, after assuming the

role of operator of the Waddell Ranch properties, immediately instituting a workover of specific wells, which caused the Trust not to receive any royalty income from the Waddell Ranch properties in the quarter ended September 2020, as compared to

the quarter ended September 30, 2019.

Average oil and gas prices were $28.55 and $1.74, respectively, for the quarter ended September 30, 2020 compared to $54.30 and $1.82 for the quarter ended September 30, 2019.

Interest income for the quarter ended September 30, 2020 was $1,280 compared to $6,753 during the third

Three Months Ended March 31, 2021 Compared to Three Months Ended

March 31, 2020

For the quarter ended March 31, 2021, royalty income received by the Trust amounted to $2,124,157 compared to royalty income

of $6,254,509 during the first quarter of 2020.

The decrease in royalty income is primarily attributable to increased drilling costs on the Waddell Ranch properties resulting in a deficiency for the NPI, therefore, no royalties were paid, despite an

increase in oil production and an increase in the price of gas for the quarter ended March 31, 2021, as compared to the quarter ended March 31, 2020.

Average oil and gas prices were $44.08 and $2.67, respectively, for the quarter ending

March 31, 2021 compared to $58.13 and $1.60 for the quarter ended March 31, 2020.

Interest income for the quarter ended March 31, 2021, was $1,313 compared to $4,361 during the first

quarter of 2020.

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

Total expenses during the third quarter of 2020 amounted to $105,830 compared to $118,549 during the

third quarter of 2019.

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 September 30, 2020 of $1,254,340 or $0.03 per Unit of beneficial interest.

Distributions of $0.005702, $0.008863 and $0.012354 per Unit were made to Unit holders of record as of July 31, 2020,

August 31, 2020, and September 30, 2020, respectively.

For the third quarter of 2019, distributable income was $5,948,476 or $0.13 per Unit of beneficial interest.

Royalty income for the Trust for the third quarter of the calendar year is associated with actual oil and

gas production for the period of May, June and July 2020 from the properties from which the Trusts net overriding royalty interests (Royalties) were carved.

Oil and gas sales attributable to the Royalties and the properties from

which the Royalties were carved are as follows:

Three Months Ended

September 30,

Total expenses during the first quarter of 2021 amounted to $285,740 compared to $328,863 during the

first quarter of 2020.

The decrease in total expenses can be primarily attributed to decreased expense for professional services and the timing of payment of expenses.

These transactions resulted in distributable income for the quarter ended March 31, 2021, of $1,839,730 or $0.04 per Unit of beneficial interest.

Distributions of $0.011453, $0.016492 and $0.011525 per Unit were made to Unit holders of record as of January 29, 2021, February 26, 2021, and March 31, 2021, respectively.

For the first quarter of 2020, distributable income was

$5,930,007 or $.13 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 2020 and January 2021 from the properties from which the Trusts net overriding royalty interests (Royalties) were carved.

Oil and gas sales attributable to

the Royalties and the properties from which the Royalties were carved are as follows:

First Quarter

Oil sales (Bbls)

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Average price per Mcf

The average received price of oil decreased to an average price per barrel of $28.55 per Bbl in the third quarter of 2020,

compared to $54.30 per Bbl in the third quarter of 2019 due to worldwide market variables.

The Trustee has been advised by the operator of the Waddell Ranch properties that for the period of August 1, 1993, through September 30, 2020, the

oil from the Waddell Ranch properties was being sold under a competitive bid to a third party.

The average price of gas (including natural gas liquids) decreased from $1.82 per Mcf in the third quarter of 2019 to $1.74 per Mcf in the third quarter

of 2020 due to change in overall market variables.

The average received price of oil decreased to an average price per barrel of $44.08 per Bbl in the first quarter of 2021,

compared to $58.13 per Bbl in the first quarter of 2020 due to worldwide market variables.

The Trustee has been advised by the operator of the Waddell Ranch properties that for the period of August 1, 1993, through March 31, 2021, the oil

from the Waddell Ranch properties was being sold under a competitive bid to a third party.

The average price of gas (including natural gas liquids) increased from $1.60 per Mcf in the first quarter of 2020 to $2.67 per Mcf in the first quarter of

2021 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 provide a meaningful comparison.

Both oil and gas sales volumes decreased from the Underlying

Properties (as defined in the Trusts Annual Report on Form 10-K for the year ended December 31, 2019) for the applicable period in 2020 compared to 2019.

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the third quarter of 2020 totaled

$2.8 million as compared to $351,706 for the third quarter of 2019.

ConocoPhillips has previously informed the Trustee that the 2020 capital expenditures budget has

been approved at $1.35 million (gross) for the Waddell Ranch properties.

The foregoing capital expenditures budget has been revised since Blackbeard assumed the role of operator of the

Waddell Ranch properties on April 1, 2020.

Blackbeards 2020 budget for the remainder of the year will be approximately $7 million for drilling and completion, $3 million for recompletions, plug and abandonments, and

infrastructure of facilities.

The additional expenditures should occur later in the year 2020.

Oil and gas (including natural gas liquids) sales volumes

increased from the Underlying Properties (as defined in the Trusts Annual Report on Form 10-K for the year ended December 31, 2020) for the applicable period in 2021 compared to

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first

quarter of 2021 totaled $9.5 million as compared to $528,000 for the first quarter of 2020.

Blackbeard has previously informed the Trustee that the 2021 capital expenditures budget has been approved at $88.6 million (gross)

($32.5 million net to the Trust) for the Waddell Ranch properties.

The total amount of capital expenditures for 2020 with regard to the Waddell Ranch properties totaled $10.4 million (gross).

The Trustee has been advised that there were 5 vertical drill wells started and 3 were completed, 2 new wells in progress and 5 workover wells in progress

during the three months ended September 30, 2020, as compared to 0 workover wells completed, 0 new wells completed, 0 new wells in progress and 0 workover wells in progress for the three months ended September 30, 2019, on the Waddell

Ranch properties.

There were various facility projects in progress for the third quarter of 2020.

Lease operating expenses and property taxes totaled

$5.197 million (gross) for the third quarter of 2020, compared to $5.538 million (gross) for the same period in 2019 on the Waddell Ranch properties due to increased maintenance work.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

For the nine months ended September 30, 2020, royalty income received by the Trust amounted to $10,059,901 compared to royalty income of

$15,357,784 for the nine months ended September 30, 2019.

The decrease in royalty income is primarily attributable to a decrease in oil pricing, a decrease in oil and gas production, for the nine months ended September 30, 2020, as

compared to the nine months ended September 30, 2019.

Average oil and gas prices were $40.05 and $1.38 for the nine months ended September 30, 2020 compared to $51.25 and $2.68 for the nine months ended September 30,

Interest income for the nine months ended September 30, 2020, was $8,064 compared to $18,174 during the nine months ended

September 30, 2019.

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

Total expenses during the nine months ended September 30, 2020, amounted to $955,281

compared to $876,098 during the nine months ended September 30, 2019.

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

These transactions resulted in distributable income for the nine months ended September 30, 2020 of $9,112,684, or $0.20 per Unit.

For the nine months ended September 30, 2019, distributable income was $14,499,860, or $0.31 per Unit.

Royalty income for the Trust for the nine months ended September 30, 2020, is associated with actual

oil and gas production for the period November 2019 through July 2020 from the properties from which the Royalties were carved.

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

Nine Months Ended

September 30,

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

The average received price of oil decreased during the nine months ended September 30, 2020 to $40.05 per barrel

compared to $51.25 per barrel for the same period in 2019 due to worldwide market variables.

The decrease in the average price of gas (including natural gas liquids) from $2.68 per Mcf for the nine months ended September 30, 2019, to

$1.38 per Mcf for the nine months ended September 30, 2020 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 provide a meaningful comparison.

Oil gas sales volumes decreased from the properties from which the Royalties are carved for the applicable period of 2020 compared to 2019.

expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the nine months ended September 30, 2020 totaled $3.8 million (gross) compared to $2.9 million (gross)

to the Trust for the same period in 2019.

ConocoPhillips has previously advised the Trust that the 2020 capital expenditures budget for the Waddell Ranch properties is $1.35 million (gross).

The foregoing capital expenditures budget has been revised since Blackbeard assumed the role of operator of the Waddell Ranch properties on April 1, 2020.

Blackbeards 2020 budget for the remainder of the year will be approximately

$0 million for drilling and completion, $3 million for recompletions, plug and abandonments, and infrastructure of facilities.

The additional expenditures should occur later in the year.

The foregoing capital expenditures budget may be

subject to revision since Blackbeard assumed the role of operator of the Waddell Ranch properties on April 1, 2020.

Blackbeard, after assuming the role of operator of the Waddell Ranch properties, instituted a workover well capital budget for

the immediate future.

The Trustee has been advised that 5 vertical drill wells were started and 3 were completed and 5 workover wells were in progress on

the Waddell Ranch properties during the nine months ended September 30, 2020, as compared to 1 workover well completed and 2 new drill wells (2 vertical) completed on the Waddell Ranch properties during the nine months ended September 30,

There were various facility projects in progress for the third quarter of 2020.

The Trustee has been advised that there were 27 workover wells completed, 8 new wells completed, 8 new wells in progress and 9 workover wells in progress

during the three months ended March 31, 2021, as compared to no workover wells completed, no new wells completed, no new wells in progress and no workover wells in progress for the three months ended March 31, 2020, on the Waddell Ranch

There were various facility projects in progress for the first quarter of 2021.

Lease operating expenses and property taxes totaled

$15.7 million for the nine months ended September 30, 2020, compared to $17.6 million for the same period in 2019.

The decrease in lease operating expense is primarily attributable to decreased spending on facilities and

$2.3 million (gross) for the first quarter of 2021, compared to $5.2 million (gross) for the same period in 2020 on the Waddell Ranch properties due to decreased maintenance work.

Calculation of Royalty Income

The Trusts royalty income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding

royalty interests.

The Trusts royalty

income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding royalty interests.

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 by the Trust for the three months ended September 30, 2020 and 2019, respectively, were computed as shown in the table below:

THREE MONTHS ENDED

SEPTEMBER 30,

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, 2021 and 2020, respectively,

were computed as shown in the table below:

THREE MONTHS ENDED MARCH 31

Gross proceeds of sales from the Underlying Properties

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Due to the NPI deficit, the Waddell Ranch properties did not contribute to Royalty income for the three months

ended September 30, 2020.

As of September 30, 2020, the cumulative NPI deficit is $3,374,635 for the underlying property (at 75%).

The NPI deficit must be recovered from future proceeds of the Waddell Ranch properties prior to any other

proceeds being paid to the Trust.

ended March 31, 2021.

As of March 31, 2021, the cumulative NPI deficit is $7,645,016 for the underlying property (at 75%).

The NPI deficit must be recovered from future proceeds of the Waddell Ranch properties prior to any other proceeds

being paid to the Trust.

Critical Accounting Policies and Estimates

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is included in Item 7 of the Trusts Annual Report on Form 10-K for the year ended December 31, 2020.

There have been no significant changes to the critical accounting policies during the nine months

ended September 30, 2020.

There have been no significant changes to the critical accounting policies during the three

months ended March 31, 2021.

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