What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 174 added, 95 removed, 245 unchanged (52% 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,

2022, and the distributable income and the changes in trust corpus for the three-month period ended March 31, 2022 and 2021, 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,

2022, and the distributable income and the changes in trust corpus for the three-month and six-month periods ended June 30, 2022 and 2021, 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, 2022 and for the three-month periods ended March 31, 2022 and 2021, 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, 2022 and for the three-month and six-month periods

ended June 30, 2022 and 2021, 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

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

Trust (the Trust) as of March 31, 2022, and the related condensed statements of distributable income and changes in trust corpus for the three-month periods ended March 31, 2022 and 2021, 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

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, 2021, 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 30, 2022 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, 2021, is fairly stated, in all material respects, in relation to the statement of assets, liabilities, and trust corpus

from which it has been derived.

Trust (the Trust) as of June 30, 2022, and the related condensed statements of distributable income and changes in trust corpus for the three-month and six-month periods ended June 30,

2022 and 2021, 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

As 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, 2021, 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 30,

2022 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, 2021, 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.

our reviews in accordance with the standards of 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 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.

We conducted our reviews in accordance with the standards of the

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

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.

Dallas, Texas

August 15, 2022

PERMIAN BASIN ROYALTY TRUST

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

amortization of $10,638,671 and $10,622,528 at March 31, 2022 and December 31, 2021, respectively)

amortization of $10,649,131 and $10,622,528 at June 30, 2022 and December 31, 2021, respectively)

LIABILITIES AND TRUST CORPUS

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CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

THREE MONTHS ENDED

June 30, 2022

THREE MONTHS ENDED

June 30, 2021

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, 2022

SIX MONTHS ENDED

June 30, 2021

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

June 30, 2022

THREE MONTHS ENDED

June 30, 2021

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, 2022

SIX MONTHS ENDED

June 30, 2021

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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The Trustees resignation as trustee, and Argents

appointment as successor trustee, are subject to certain conditions set forth in the agreement, including approval by the Unit holders of the Trust and of certain other trusts of which Simmons Bank acts as trustee (or a court) of

(i) Argents appointment as successor trustee and (ii) any amendments to the Indenture of the Trust and the trust agreements and indentures of the other trusts necessary to permit Argent to serve as successor trustee.

appointment as successor trustee, are subject to certain conditions set forth in the agreement, including approval by the Unit holders of the Trust (which approval was received on May 4, 2022) and of certain other trusts of which Simmons Bank

acts as trustee (or a court) of (i) Argents appointment as successor trustee and (ii) any amendments to the Indenture of the Trust and the trust agreements and indentures of the other trusts necessary to permit Argent to serve as

successor trustee.

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

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the calculated Monthly Distribution Amount for each month on or before 10 business days after the monthly record date, which is generally the last business day of each calendar month.

The cash received by the Trustee consists of the amounts received by owners of the interest burdened by the Royalties from the sale of

production less the sum of applicable taxes, accrued production costs, development and drilling costs, operating charges and other costs and deductions, multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas

Royalty properties.

The cash received by the Trustee consists of the amounts received by owners of the interest

burdened by the Royalties from the sale of production less the sum of applicable taxes, accrued production costs, development and drilling costs, operating charges and other costs and deductions, multiplied by 75% in the case of the Waddell Ranch

properties and 95% in the case of the Texas Royalty properties.

FEDERAL INCOME TAXES

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SUBSEQUENT EVENTS

Subsequent to March 31, 2022, the Trust declared a distribution on April 19, 2022 of $0.031783 per Unit payable on

May 13, 2022 to Unit holders of record on April 29, 2022.

On April 5, 2022, the Trust commenced its Special Meeting of

unitholders (the Special Meeting) as previously scheduled and adjourned the meeting due to lack of the requisite quorum.

The Special Meeting was adjourned to allow the unitholders additional time to vote on the proposals described in the

Trusts definitive proxy statement filed by the Trust with the Securities and Exchange Commission on February 9, 2022, as amended.

The Special Meeting was reconvened on May 4, 2022, whereby a quorum was obtained and the proposals were

Subsequent to June 30, 2022, the Trust declared a distribution on July 19, 2022, of $0.163979 per Unit paid on August 12, 2022,

to unitholders of record on July 29, 2022.

Trustees Discussion and Analysis

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variety of additional factors that are beyond the Trustees control.

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

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.

Recent prices have been substantially higher, but are expected to remain volatile.

As of May 2, 2022, the price of oil was $105.18.

Factors that may impact future commodity prices, including the price of oil and natural gas, include but

are not limited to:

As of July 26, 2022, the price of oil was $94.98.

Factors that may impact future commodity prices, including the

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

political conditions in major oil producing regions, especially in the Middle East and Russia;

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

Three Months Ended March 31, 2022 Compared to Three Months Ended

March 31, 2021

For the quarter ended March 31, 2022, royalty income received by the Trust amounted to $4,078,645 compared to royalty income

of $2,124,157 during the first quarter of 2021.

The increase in royalty income is primarily attributable to an increase in oil and natural gas production and pricing for the quarter ended March 31, 2022.

Average oil and gas prices were $75.95

and $4.52, respectively, for the quarter ending March 31, 2022 compared to $44.08 and $2.67 for the quarter ended March 31, 2021.

income for the quarter ended March 31, 2022, was $1,233 compared to $1,313 during the first quarter of 2021.

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

Total expenses during

the first quarter of 2022 amounted to $345,184 compared to $285,740 during the first quarter of 2021.

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

These transactions resulted in distributable income for the quarter ended March 31, 2022, of $3,734,694

or $0.08 per Unit of beneficial interest.

Distributions of $0.031614, $0.029164 and $0.019331 per Unit were made to Unit holders of record as of January 31, 2022, February 28, 2022, and March 31, 2022, respectively.

For the first

quarter of 2021, distributable income was $1,839,730 or $.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 2021 and January 2022 from the properties from which the Trusts net overriding royalty interests (Royalties) were

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

First Quarter

Three Months Ended June 30, 2022 Compared to Three Months Ended

June 30, 2021

For the quarter ended June 30, 2022, royalty income received by the Trust amounted to $7,630,221 compared to royalty income of

$2,941,146 during the second quarter of 2021.

The increase in royalty income is primarily attributable to an increase in oil and gas pricing and an increase in oil and gas production, for the quarter ending June 30, 2022, as compared to the

quarter ended June 30, 2021.

Average oil and gas prices were $101.24 and $5.33, respectively, for the quarter ending June 30, 2022, compared to $59.35 and $2.69 for the quarter ended June 30, 2021.

Interest income for the quarter ended June 30, 2022, was $1,785 compared to $1,273 during the second

quarter of 2021.

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

Total expenses during the second quarter of 2022 amounted to $273,698 compared to $284,304 during the

second quarter of 2021.

The decrease in total expenses can be primarily attributed to decreased expenses for professional services.

These transactions

resulted in distributable income for the quarter ended June 30, 2022, of $7,358,308 or $.16 per Unit of beneficial interest.

Distributions of $0.031783, $0.034445 and $0.091662 per Unit were made to Unit holders of record as of April 29,

2022, May 31, 2022, and June 30, 2022, respectively.

For the second quarter of 2021, distributable income was $2,658,115 or $0.06 per Unit of beneficial interest.

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 2022 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

Three Months Ended

Oil sales (Bbls)

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Average price per Mcf

The average received price of oil increased to an average price per barrel of $75.95 per Bbl in the first quarter of 2022,

compared to $44.08 per Bbl in the first quarter of 2021 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, 2022, the oil

The average received price of oil increased to an average price per barrel of $101.24 per Bbl in the second quarter of 2022,

compared to $59.35 per Bbl in the second quarter of 2021 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 April 30, 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 $2.67 per Mcf in the first quarter of 2021 to $4.52 per Mcf in the first quarter of

The average price of gas (including natural gas liquids) increased from $2.69 per Mcf in the second quarter of 2021 to $5.33 per Mcf in the second quarter of

2022 due to change in overall market variables.

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the Underlying Properties (as defined in the Trusts Annual Report on Form 10-K for the year ended December 31, 2021) for the applicable period in 2022 compared to 2021.

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first quarter of 2022 totaled

$20.5 million as compared to $9.5 million for the first quarter of 2021.

Blackbeard has previously informed the Trustee that the 2022 capital expenditures budget has been approved at $254 million (gross) for the Waddell Ranch

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 2022 totaled

$32 million as compared to about $10 million (gross) for the second quarter of 2021.

Blackbeard has previously informed the Trustee that the 2022 capital expenditures budget has been approved at $92.6 million (gross) for the Waddell

Ranch properties.

The total amount of capital expenditures for 2021 with regard to the Waddell Ranch properties totaled $10.8 million (gross).

The Trustee has been advised that there were 11.6 workover wells completed, 10.9 new wells completed, 3.4

new wells in progress and 4.1 workover wells in progress during the three months ended March 31, 2022, as compared to 27 workover wells completed, 8 new wells completed, 8 new wells in progress and 9 workover wells in progress

for the three months ended March 31, 2021, on the Waddell Ranch properties.

There were various facility projects in progress for the first quarter of 2022.

Lease operating expenses and property taxes totaled $9.5 million (gross) for the first quarter of 2021, compared to $2.3 million (gross) for the

same period in 2021 on the Waddell Ranch properties due to increased maintenance work.

Trustee has been advised that there were 12 workover wells completed, 11.6 new wells completed, 11.3 new wells in progress and 12 workover wells in progress during the three months ended June 30, 2022, as compared to 34 workover wells (gross)

completed, 22 new wells (gross) completed, 20 new wells (gross) in progress and 37 workover wells (gross) in progress for the three months ended June 30, 2021, on the Waddell Ranch properties.

There were various facility projects in progress

for the second quarter of 2022.

Lease operating expenses and property taxes totaled $10.3 million (gross) for the second quarter of 2022, compared

to $6.8 million (gross) for the same period in 2021 on the Waddell Ranch properties due to increased maintenance work.

Six Months Ended

June 30, 2022 Compared to Six Months Ended June 30, 2021

For the six months ended June 30, 2022, royalty income received by the Trust

amounted to $11,708,866 compared to royalty income of $5,065,303 for the six months ended June 30, 2021.

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

for the six months ending June 30, 2022, as compared to the six months ended June 30, 2021, and an increase due to the fact that the Waddell Ranch NPI deficit was fully recovered during the six months ending June 30, 2022, as compared

to the six months ended June 30, 2021.

Average oil and gas prices were $89.15 and $4.89, respectively, for the six months ending June 30, 2022 compared to $52.14 and $2.68 for the six months ended June 30, 2021.

Interest income for the six months ended June 30, 2022, was $3,018 compared to $2,586 during the six

months ended June 30, 2021.

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

Total expenses during the six months ending June 30, 2022, amounted to $618,882

compared to $570,044 during the six months ended June 30, 2021.

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

These transactions resulted in distributable income for the six months ended June 30, 2022 of $11,093,002, or $0.24 per Unit.

For the six months ended

June 30, 2021, distributable income was $4,497,845 or $0.10 per Unit.

Royalty income for the Trust for the six months ended June 30, 2022, is

associated with actual oil and gas production for the period November 2021 through April 2022 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, 2022 to $89.15 per

barrel compared to $52.14 per barrel for the same period in 2021 due to worldwide market variables.

The increase in the average price of gas (including natural gas liquids) from $2.68 per Mcf for the six months ended June 30, 2021, to $4.89 per

Mcf for the six months ended June 30, 2022 is 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 2022 compared to 2021.

expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the six months ended June 30, 2022 totaled $52.5 million (gross) compared to $20.1 million (gross) to the Trust for the same period in

Blackbeard has previously advised the Trust that the 2022 capital expenditures budget for the Waddell Ranch properties is $92.6 million (gross).

The Trustee has been advised that 22.9 workover wells were completed and 21 new wells were completed on the Waddell Ranch properties during the six months

ended June 30, 2022, as compared to 61 workover wells (gross) completed and 30 new wells (gross) in process on the Waddell Ranch properties during the six months ended June 30, 2021.

There were various facility projects in progress for the

second quarter of 2022.

Lease operating expenses and property taxes totaled $19.8 million for the six months ended June 30, 2022, compared to

$9.1 million for the same period in 2021.

The increase in lease operating expense is primarily attributable to increased 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 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, 2022 and 2021, 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, 2022 and 2021, respectively,

were computed as shown in the table below:

THREE MONTHS ENDED JUNE 30

Gross proceeds of sales from the Underlying Properties

Other (adjustments)

Other (adjustment)

Severance tax:

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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, 2022, the cumulative NPI deficit is 4,580,223 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 in April 2022.

June 30, 2022, the NPI deficit for the underlying property (at 75%) was recovered from the future proceeds of the Waddell Ranch properties.

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, 2021.

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

months ended March 31, 2022.

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

ended June 30, 2022.

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