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Item 1. Business

2024-02-29 compared with 2023-03-01 · 96 added, 102 removed, 22 unchanged (90% of the section changed)

The Permian Basin Royalty Trust (the Trust) is an express trust created under the laws of the state of Texas by the Permian Basin Royalty

Trust Indenture (the Trust Indenture) entered into on November 3, 1980, between Southland Royalty Company (Southland Royalty) and The First National Bank of Fort Worth, as Trustee.

Simmons Bank, an Arkansas

state-chartered bank (Simmons Bank), was previously the Trustee of the Trust.

Effective December 30, 2022, Argent Trust Company, a Tennessee chartered trust company (Argent), became the Trustee of the Trust.

principal office of the Trust (sometimes referred to herein as the Registrant) is located at 2911 Turtle Creek Boulevard, Suite 850, Dallas, Texas (telephone number (855) 588-7839).

On January 9, 2014, 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.

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

periods from February 20, 2018 through December 29, 2022, and shall refer to Argent (as defined below) for periods on and after December 30, 2022.

On November 4, 2021, Simmons Bank announced that it had entered into an agreement with Argent pursuant to which Simmons Bank would be resigning as

trustee of the Trust and would nominate Argent as successor trustee of the Trust.

The effective date of Simmons Banks resignation and Argents appointment as successor trustee was December 30, 2022.

On October 23, 1980, the stockholders of Southland Royalty approved and authorized that companys conveyance of net overriding royalty

interests (equivalent to net profits interests) to the Trust for the benefit of the stockholders of Southland Royalty of record at the close of business on the date of the conveyance consisting of a 75% net overriding royalty interest carved out of

that companys fee mineral interests in the Waddell Ranch properties in Crane County, Texas and a 95% net overriding royalty interest carved out of that companys major producing royalty properties in Texas.

The conveyance of these

interests (the Royalties) was made on November 3, 1980, effective as to production from and after November 1, 1980 at 7:00 a.m.

The properties and interests from which the Royalties were carved and which the Royalties now

burden are collectively referred to herein as the Underlying Properties. The Underlying Properties are more particularly described under Item 2.

The Permian Basin Royalty Trust (the Trust) is an express trust created under the laws of the state of Texas by the Permian Basin

Royalty Trust Indenture (the Trust Indenture) entered into on November 3, 1980, between Southland Royalty Company (Southland Royalty) and The First National Bank of Fort Worth, as Trustee.

Argent Trust Company, a

Tennessee chartered trust company (Argent), is the current Trustee of the Trust.

The principal office of the Trust (sometimes referred to herein as the Registrant) is located at 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas

(telephone number (855) 588-7839).

On October 23, 1980, the stockholders of Southland

Royalty approved and authorized that companys conveyance of net overriding royalty interests (equivalent to net profits interests) to the Trust for the benefit of the stockholders of Southland Royalty of record at the close of business on the

date of the conveyance consisting of a 75% net overriding royalty interest carved out of that companys fee mineral interests in the Waddell Ranch properties in Crane County, Texas and a 95% net overriding royalty interest carved out of that

companys major producing royalty properties in Texas.

The conveyance of these interests (the Royalties) was made on November 3, 1980, effective as to production from and after November 1, 1980 at 7:00 a.m.

The properties

and interests from which the Royalties were carved and which the Royalties now burden are collectively referred to herein as the Underlying Properties. The Underlying Properties are more particularly described under Item 2.

Properties herein.

The function of the Trustee is to collect the income attributable to the Royalties, to pay all expenses and charges of the Trust, and then to distribute

the remaining available income to the Unit holders.

The function of the Trustee is to collect the income attributable to the Royalties, to pay all expenses and

charges of the Trust, and then to distribute the remaining available income to the Unit holders.

The Trust is not empowered to carry on any business activity and has no employees, all administrative functions being performed by the Trustee.

The Royalties constitute the principal asset of the Trust and the beneficial interests in the Royalties are divided into that number of Units of

Beneficial Interest (the Units) of the Trust equal to the number of shares of the common stock of Southland Royalty outstanding as of the close of business on November 3, 1980.

Each stockholder of Southland Royalty of record at the

close of business on November 3, 1980, received one Unit for each share of the common stock of Southland Royalty then held.

In 1985, Southland

Royalty became a wholly-owned subsidiary of Burlington Northern Inc.

The Royalties constitute the principal asset of the Trust and the beneficial interests in the Royalties are divided into that number of Units

of Beneficial Interest (the Units) of the Trust equal to the number of shares of the common stock of Southland Royalty outstanding as of the close of business on November 3, 1980.

Each stockholder of Southland Royalty of record at

the close of business on November 3, 1980, received one Unit for each share of the common stock of Southland Royalty then held.

1985, Southland Royalty became a wholly-owned subsidiary of Burlington Northern Inc.

In 1988, BNI transferred its natural resource operations to Burlington Resources Inc.

1 unchanged sentence

became a wholly-owned indirect subsidiary of BRI.

As a result of this transfer, Meridian Oil Inc., a Delaware corporation (MOI), which was the parent company of Southland Royalty,

became a wholly owned direct subsidiary of BRI.

Effective January 1, 1996, Southland Royalty was merged with and into MOI.

As a result of this merger, the separate corporate existence of Southland Royalty ceased and MOI survived and succeeded

to the ownership of all of the assets of Southland Royalty and assumed all of its rights, powers, privileges, liabilities and obligations.

Effective July 11, 1996, MOI changed its name to Burlington Resources Oil & Gas Company, now

Burlington Oil & Gas Company LP (BROG).

Any reference to BROG hereafter for periods prior to the occurrence of the aforementioned name change or merger should, as applicable, be construed to be a reference to MOI or Southland

Further, BROG notified the Trust that, on February 14, 1997, the Texas Royalty properties (as defined herein on page 10) that are subject to the Net Overriding Royalty Conveyance dated November 1, 1980 (the Texas Royalty

Conveyance), were sold to Riverhill Energy Corporation (Riverhill Energy) of Midland, Texas.

Effective March 31, 2006, ConocoPhillips acquired BRI pursuant to a merger between BRI and a wholly-owned subsidiary of

ConocoPhillips.

As a result of this acquisition, BRI and BROG are both wholly-owned subsidiaries of ConocoPhillips.

BROG notified the Trust, that

on November 1, 2019, the Waddell Ranch properties (as defined herein on page 10) that are subject to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust Waddell Ranch) dated November 1, 1980 (the Waddell

Ranch Conveyance), were sold to Blackbeard Operating, LLC (Blackbeard) of Fort Worth, Texas.

As a result of this transfer, Meridian Oil Inc., a Delaware corporation (MOI), which was the parent company of Southland Royalty, became a wholly owned direct subsidiary of BRI.

January 1, 1996, Southland Royalty was merged with and into MOI.

As a result of this merger, the separate corporate existence of Southland Royalty ceased and MOI survived and succeeded to the ownership of all of the assets of Southland Royalty

and assumed all of its rights, powers, privileges, liabilities and obligations.

Effective July 11, 1996, MOI changed its name to Burlington Resources Oil & Gas Company, now Burlington Oil & Gas Company LP (BROG).

Any reference to BROG hereafter for periods prior to the occurrence of the aforementioned name change or merger should, as applicable, be construed to be a reference to MOI or Southland Royalty.

Further, BROG notified the Trust that, on

February 14, 1997, the Texas Royalty properties (as defined herein) that are subject to the Net Overriding Royalty Conveyance dated November 1, 1980 (the Texas Royalty Conveyance), were sold to Riverhill Energy Corporation

(Riverhill Energy) of Midland, Texas.

Effective March 31, 2006, ConocoPhillips acquired BRI pursuant to a merger between BRI and a wholly-owned subsidiary of ConocoPhillips.

As a result of this acquisition, BRI and BROG both became

wholly-owned subsidiaries of ConocoPhillips.

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

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

(Blackbeard) of Fort Worth, Texas.

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

The term net proceeds is used in the above described conveyance and means the excess of gross proceeds received by the owner of

the Underlying Properties during a particular period over production costs for such period.

Gross proceeds means the amount received by the owner of the Underlying Properties from the sale of the production attributable to

the Underlying Properties, subject to certain adjustments.

Production costs means, generally, costs incurred on an accrual basis in operating the Underlying Properties, including both capital and

non-capital costs;

for example, development drilling, production and processing costs, applicable taxes, and operating charges.

If production costs exceed gross proceeds in any month, the excess is recovered

out of future gross proceeds prior to the making of further payment to the Trust, but the Trust is not liable for any production costs or liabilities attributable to these properties and interests or the minerals produced therefrom.

If at any time

the Trust receives more than the amount due from the Royalties, it shall not be obligated to return such overpayment, but the amounts payable to it for any subsequent period shall be reduced by such overpaid amount, plus interest, at a rate

specified in the conveyance.

To the extent it has the legal right to do so, the owner of the Underlying Properties is responsible for marketing the

production from such properties and interests, either under existing sales contracts or under future arrangements at the best prices and on the best terms it shall deem reasonably obtainable in the circumstances.

The owner of the Underlying

Properties also has the obligation to maintain books and records sufficient to determine the amounts payable to the Trustee.

The term net

proceeds is used in the above described conveyance and means the excess of gross proceeds received by the owner of the Underlying Properties during a particular period over production costs for such period.

Gross proceeds means the amount received by the owner of the Underlying Properties from the sale of the production attributable to the Underlying Properties, subject to certain

Production costs means, generally, costs incurred on an accrual basis in operating the Underlying Properties, including both capital and non-capital costs;

for example, development

drilling, production and processing costs, applicable taxes, and operating charges.

If production costs exceed gross proceeds in any month, the excess is recovered out of future gross proceeds prior to the making of further payment to the Trust, but

the Trust is not liable for any production costs or liabilities attributable to these properties and interests or the minerals produced therefrom.

If at any time the Trust receives more than the amount due from the Royalties, it shall not be

obligated to return such overpayment, but the amounts payable to it for any subsequent period shall be reduced by such overpaid amount, plus interest, at a rate specified in the conveyance.

To the extent it has the legal right to do so, the owner of the Underlying Properties is responsible for marketing the production from such

properties and interests, either under existing sales contracts or under future arrangements at the best prices and on the best terms it shall deem reasonably obtainable in the circumstances.

The owner of the Underlying Properties also has the

obligation to maintain books and records sufficient to determine the amounts payable to the Trustee.

The owner of the Underlying Properties, however, can sell its interests in the Underlying Properties.

Proceeds from production in the first month are generally received by Blackbeard in the second month, the net proceeds attributable to the Royalties are

paid by Blackbeard to the Trustee in the third month and distribution by the Trustee to the Unit holders is made in the fourth month.

The identity of Unit holders entitled to a distribution will generally be determined as of the last business day of

each calendar month (the monthly record date).

Proceeds from production in the first month are generally received by Blackbeard in the second month, the net proceeds attributable to the

Royalties are paid by Blackbeard to the Trustee in the third month and distribution by the Trustee to the Unit holders is made in the fourth month.

The identity of Unit holders entitled to a distribution will generally be determined as of the last

business day of each calendar month (the monthly record date).

The amount of each monthly distribution will generally be determined and announced ten days before the monthly record date.

Unit holders of record as of the monthly record date will be

entitled to receive the calculated monthly distribution amount for each month on or before ten business days after the monthly record date.

The aggregate monthly distribution amount is the excess of (i) net revenues from the Trust properties,

plus any decrease in cash reserves previously established for contingent liabilities and any other cash receipts of the Trust over (ii) the expenses and payments of liabilities of the Trust plus any net increase in cash reserves for contingent

Cash held by the Trustee as a reserve for liabilities or contingencies (which reserves may be established by the Trustee in its

discretion) or pending distribution is placed, at the Trustees discretion, in obligations issued by (or unconditionally guaranteed by) the United States or any agency thereof, repurchase agreements secured by obligations issued by the United

States or any agency thereof, certificates of deposit of banks having a capital surplus and undivided profits in excess

of $50,000,000, or other interest bearing accounts in FDIC-insured state or national banks, including the Trustee, so long as the entire amount in such account is at all times fully insured by

the FDIC, subject, in each case, to certain other qualifying conditions.

The income to the Trust attributable to the Royalties is not subject in

material respects to seasonal factors nor in any manner related to or dependent upon patents, licenses, franchises or concessions.

Unit holders of record as of the monthly record

date will be entitled to receive the calculated monthly distribution amount for each month on or before ten business days after the monthly record date.

The aggregate monthly distribution amount is the excess of (i) net revenues from the Trust

properties, plus any decrease in cash reserves previously established for contingent liabilities and any other cash receipts of the Trust over (ii) the expenses and payments of liabilities of the Trust plus any net increase in cash reserves for

contingent liabilities.

Cash held by the Trustee as a reserve for liabilities or contingencies (which reserves may be established by the

Trustee in its discretion) or pending distribution is placed, at the Trustees discretion, in obligations issued by (or unconditionally guaranteed by) the United States or any agency thereof, repurchase agreements secured by obligations issued

by the United States or any agency thereof, certificates of deposit of banks having a capital surplus and undivided profits in excess of $50,000,000, or other interest bearing accounts in FDIC-insured state or national banks, including the Trustee,

so long as the entire amount in such account is at all times fully insured by the FDIC, subject, in each case, to certain other qualifying conditions.

The income to the Trust attributable to the Royalties is not subject in material respects to seasonal factors nor in any manner related to or

dependent upon patents, licenses, franchises or concessions.

The Trust conducts no research activities.

The Trust has no employees since all administrative functions are performed

by the Trustee.

Blackbeard, as the current operator, has advised the Trustee that it believes that comparable revenues could be obtained in the

event of a change in purchasers of production.

The Trust has no employees since all administrative functions are performed by the Trustee.

Blackbeard, as the current operator, has advised the Trustee that it believes that comparable revenues could be obtained in the event of a

change in purchasers of production.

Trustee Background

On January 9, 2014, 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.

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.

On November 4, 2021, Simmons Bank announced that it had entered into an agreement with

Argent pursuant to which Simmons Bank would be resigning as trustee of the Trust and would nominate Argent as successor trustee of the Trust.

The effective date of Simmons Banks resignation and Argents appointment as successor trustee

was December 30, 2022.

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

for periods prior to August 29, 2014, shall refer to Southwest Bank for periods from August 29, 2014 through

February 19, 2018, shall refer to Simmons Bank for periods from February 20, 2018 through December 29, 2022, and shall refer to Argent (as defined below) for periods on and after December 30, 2022.

Website/SEC Filings

Our Internet address is www.pbt-permian.com.

You can review, free of charge, the filings the Trust has

made with respect to its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments

to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.

We shall post these reports to our Internet address as soon as reasonably practicable after we electronically file them

with, or furnish them to, the SEC.

Our Internet address

is www.pbt-permian.com.

You can review, free of charge, the filings the Trust has made with respect to its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as

We shall post these reports to our Internet address as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.

Widely Held Fixed Investment Trust Reporting Information

Some Trust Units are held by middlemen, as such term is broadly defined in U.S.

Treasury Regulations (and includes custodians, nominees, certain joint

owners, and brokers holding an interest for a customer in street name, collectively referred to herein as middlemen).

Therefore, the Trustee considers the Trust to be a non-mortgage widely held

fixed investment trust (WHFIT) for U.S.

Treasury Regulations (and includes custodians, nominees,

certain joint owners, and brokers holding an interest for a customer in street name, collectively referred to herein as middlemen).

Therefore, the Trustee considers the Trust to be a non-mortgage

widely held fixed investment trust (WHFIT) for U.S.

federal income tax purposes.

Argent Trust Company, EIN:

62-1437218, 2911 Turtle Creek Boulevard, Suite 850, Dallas, Texas 75219, telephone number (855) 588-7839, email address trustee@pbt-permian.com, is the representative of the Trust that will provide tax information in accordance with applicable U.S.

62-1437218, 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas 75219, telephone number (855) 588-7839, email address trustee@pbt-permian.com, is the representative of the Trust that will provide tax information in accordance with applicable U.S.

Treasury Regulations

7 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-K

Item 1. Business