What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-17 · 182 added, 98 removed, 238 unchanged (54% 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 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.

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,

2021, and the distributable income and the changes in trust corpus for the three-month and six-month periods ended June 30, 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.

The condensed interim financial statements as of June 30, 2021 and for the three-month and six-month periods

ended June 30, 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

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

To the Unit Holders of Permian Basin Royalty Trust and

Bank, Trustee

Dallas, Texas

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

Results of Review of Interim Financial Statements

have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the Trust) as of June 30, 2021, and the related condensed statements of distributable income and changes in

trust corpus for the three-month and six-month periods ended June 30, 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.

previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the statement of assets, liabilities, and trust corpus as of December 31, 2020, and the related

statements of distributable income and changes in trust corpus for the year then ended (not presented herein);

described in Note 2 to the condensed interim financial statements, these condensed interim financial statements were prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles

generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting

Oversight Board (United States) (PCAOB), the statement of assets, liabilities, and trust corpus as of December 31, 2020, and the related statements of distributable income and changes in trust corpus for the year then ended (not

presented herein);

and in our report dated March 31, 2021 we expressed an unqualified opinion on those financial statements.

In our opinion, the

information set forth in the accompanying condensed statement of assets, liabilities and trust corpus as of December 31, 2020, is fairly stated, in all material respects, in relation to the statement of assets, liabilities, and trust corpus

from which it has been derived.

In our opinion, the information set forth in the accompanying condensed statement of assets, liabilities and trust

corpus as of December 31, 2020, is fairly stated, in all material respects, in relation to the statement of assets, liabilities, and trust corpus from which it has been derived.

Basis for Review Results

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

These condensed interim

financial statements are the responsibility of the Trustee.

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.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We 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.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

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WEAVER AND TIDWELL, L.L.P.

Dallas, Texas

August 16, 2021

PERMIAN BASIN ROYALTY TRUST

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

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

amortization of $10,613,883 and $10,592,340 at June 30, 2021 and December 31, 2020, respectively)

LIABILITIES AND TRUST CORPUS

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THREE MONTHS ENDED

March 31, 2021

June 30, 2021

THREE MONTHS ENDED

March 31, 2020

June 30, 2020

Royalty income

Interest income

Reserve for expenses

General and administrative expenditures

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PERMIAN BASIN ROYALTY TRUST

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

SIX MONTHS ENDED

June 30, 2021

SIX MONTHS ENDED

June 30, 2020

Royalty income

Interest income

Reserve for expenses

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 CHANGES IN TRUST CORPUS (UNAUDITED)

THREE MONTHS ENDED

March 31, 2021

June 30, 2021

THREE MONTHS ENDED

March 31, 2020

June 30, 2020

Trust corpus, beginning of period

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PERMIAN BASIN ROYALTY TRUST

CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

SIX MONTHS ENDED

June 30, 2021

SIX MONTHS ENDED

June 30, 2020

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

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

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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.

Riverhill Energy currently conducts the accounting operations for the Texas

Royalty 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 TrustWaddell 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.

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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subject to federal income tax at the trust level.

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

accrued by each Unit holder at the time such income is received or accrued by the Trust and not when distributed by the Trust.

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

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 accrued by each Unit holder at the time such income is received or accrued by the Trust and not when

distributed by the Trust.

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

STATE TAX CONSIDERATIONS

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SUBSEQUENT EVENTS

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.

Subsequent to June 30, 2021, the Trust declared a distribution on July 20, 2021 of $0.021355 per Unit paid on August 13, 2021 to

Unit holders of record on July 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.

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:

In 2020, there was 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 of oil.

More recently, prices of oil and natural gas have rebounded.

As of July 26, 2021, the price of oil was $72.15.

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

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

Three Months Ended June 30, 2021 Compared to Three Months Ended

June 30, 2020

For the quarter ended June 30, 2021, royalty income received by the Trust amounted to $2,941,146 compared to royalty income of

$2,446,502 during the second quarter of 2020.

The increase in royalty income is primarily attributable to an increase in oil and gas pricing, an increase in oil and gas production for the quarter ending June 30, 2021, as compared to the quarter

ended June 30, 2020.

Average oil and gas prices were $59.35 and $2.69, respectively, for the quarter ending June 30, 2021, compared to $32.31 and $0.80 for the quarter ended June 30, 2020.

Interest income for the quarter ended June 30, 2021, was $1,273 compared to $2,423 during the second

quarter of 2020.

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

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

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

Total expenses during the second quarter of 2021 amounted to $284,304 compared to $520,893 during the second quarter

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

These transactions resulted in distributable income for the quarter ended June 30, 2021, of $2,658,115 or $0.06 per Unit of beneficial interest.

Distributions of $0.018156, $0.021243 and $0.017630 per Unit were made to Unit holders of record as of April 30, 2021, May 28, 2021, and June 30, 2021, respectively.

For the second quarter of 2020, distributable income was $1,928,032

or $0.04 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

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

production for the period of February, March and April 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:

Three Months Ended

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 $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.

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 average received price of oil increased to an average price per barrel of $59.35 per Bbl in the second

quarter of 2021, compared to $32.21 per Bbl in the second 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

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) increased from $0.80 per Mcf in the second quarter of 2020 to $2.69

per Mcf in the second 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.

Oil sales volumes decreased and

gas 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 second quarter of 2021 totaled

about $10 million (gross) as compared to $706,723 for the second quarter of 2020.

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

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 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

$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 Trustee has

been advised that there were 34 workover wells (gross) completed, 22 new wells (gross) completed, 20 new wells (gross) in progress and 37 workover wells (gross) in progress during the three months ended June 30, 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 June 30, 2020, on the Waddell Ranch properties.

There were various facility projects in progress for the second

quarter of 2021.

Lease operating expenses and property taxes totaled $6.8 million (gross) for the second quarter of 2021, compared to

$4.8 million (gross) for the same period in 2020 on the Waddell Ranch properties due to increased maintenance work.

Six Months Ended

June 30, 2021 Compared to Six Months Ended June 30, 2020

For the six months ended June 30, 2021, royalty income received by the Trust

amounted to $5,065,303 compared to royalty income of $8,701,011 for the six months ended June 30, 2020.

The decrease in royalty income is primarily attributable to the Waddell Ranch NPI having been in deficit for the year and therefore has not

contributed to the Royalty Income for the year.

Revenue from the Texas Royalty properties increased due to an increase in oil and gas pricing and an increase in oil and gas production for the six months ending June 30, 2021, as compared to the

six months ended June 30, 2020.

Average oil and gas prices were $52.14 and $2.68, respectively, for the six months ending June 30, 2021 compared to $45.51 and $1.22 for the six months ended June 30, 2020.

Interest income for the six months ended June 30, 2021, was $2,586 compared to $6,784 during the six

months ended June 30, 2020.

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

Total expenses during the six months ending June 30, 2021, amounted to $570,044

compared to $849,756 during the six months ended June 30, 2020.

The decrease in total expenses can be primarily attributed to decreased 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, 2021 of $4,497,845, or $.10 per Unit.

For the six months ended

June 30, 2020, distributable income was $7,858,039 or $0.17 per Unit.

Royalty income for the Trust for the six months ended June 30, 2021, is

associated with actual oil and gas production for the period November 2020 through April 2021 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:

Six Months Ended

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 increased during the six months ended June 30, 2021 to $52.14 per

barrel compared to $45.51 per barrel for the same period in 2020 due to worldwide market variables.

The increase in the average price of gas (including natural gas liquids) from $1.22 per Mcf for the six months ended June 30, 2020, to $2.68 per

Mcf for the six months ended June 30, 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 from the properties from which the Royalties are carved have increased for the applicable period of 2021 compared to 2021.

Capital expenditures

for drilling, remedial and maintenance activities on the Waddell Ranch properties for the six months ended June 30, 2021 totaled $20.1 million (gross) compared to $1.2 million (gross) to the Trust for the same period in 2020.

Blackbeard has previously advised the Trust that the

The Trustee has been advised that 61 workover wells (gross) were completed and 30 new wells (gross)

were completed on the Waddell Ranch properties during the six months ended June 30, 2021, as compared to 27 workover well completed and 73 workover wells in process on the Waddell Ranch properties during the six months ended June 30, 2020.

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

Production from the 2020 budgeted new wells (net to the Trust) through

6/30/21 was 76,978 BOE.

Production from the 2021 budgeted new wells (net to the Trust) through 6/30/21 was 37,561 BOE.

Lease operating expenses and property taxes totaled $9.1 million for the six months ended June 30, 2021, compared to $10 million for the same

period in 2020.

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

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 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 March 31, 2021 and 2020, respectively,

were 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 by the Trust for the three months ended June 30, 2021 and 2020, respectively, were computed as shown in the table below:

THREE MONTHS ENDED JUNE 30

Gross proceeds of sales from the Underlying Properties

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Royalty income

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

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.

Due to the NPI deficit, the Waddell Ranch properties did not contribute to Royalty Income for June of 2021.

of June 30, 2021, the cumulative NPI deficit was 9,986,914.

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 three

months ended March 31, 2021.

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

ended June 30, 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