What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2024-02-29 compared with 2023-03-01 · 122 added, 120 removed, 76 unchanged (76% of the section changed)

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Units of Beneficial Interest

of Beneficial Interest (Units) of the Trust are traded on the New York Stock Exchange with the symbol PBT.

Approximately 755

Unit holders of record held the 46,608,796 Units of the Trust at February 28, 2023.

The Trust has no equity compensation plans and has not

repurchased any Units during the period covered by this report.

Units of Beneficial Interest (Units) of the Trust are traded on the New York Stock Exchange with the symbol PBT.

Approximately 727 Unit holders of record held the 46,608,796 Units of the Trust at February 20, 2024.

The Trust has no equity compensation plans and has not repurchased any Units during the period covered by this report.

Selected Financial Data

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Computation of Royalty Income Received by the Trust

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 percentages of net profits are 75% and 95% in the cases of the Waddell Ranch properties and the Texas Royalty properties, respectively.

Royalty income received by the Trust for the five years ended December 31, 2022, was

computed as shown in the table on the next page.

Royalty income received by the Trust for the five years ended December 31,

2023, was computed as shown in the table on the next page.

Year Ended December 31,

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From the Underlying Properties:

Adjustment(1)

Severance Tax

Lease Operating Expense and Property Tax Oil and Gas

Capital Expenditures

Net Overriding Royalty Interest

Total Royalty Income for

Due to beginning NPI deficit at 1/1/2022, the Waddell Ranch properties did not contribute to Royalty income from 1/1/2022

Beginning on 5/1/2022, the NPI deficit was fully recovered, therefore the Waddell Ranch properties began contributing to Royalty income.

Total Royalty Income for Distribution

Due to beginning NPI deficit at January 1, 2022, the Waddell Ranch properties did not contribute to

Royalty income from January 1, 2022 through April 30, 2022.

Beginning on May 1, 2022, the NPI deficit was fully recovered, therefore the Waddell Ranch properties began contributing to Royalty income from that time until March 2023

when it once again returned to a deficit position.

Due to returning again to a deficit position in March, 2023, the Waddell Ranch properties did not contribute to royalty income for the period from March through April, 2023 and from July through

September, 2023.

As of December 31, 2023, the NPI deficit had been fully recovered.

Managements Discussion and Analysis of Financial Condition and Results of Operation

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Liquidity and Capital Resources

As stipulated in the Trust Agreement, the Trust is intended to be passive in nature and the Trustee does not have any control over or any responsibility

relating to the operation of the Underlying Properties.

As stipulated in the Trust Agreement, the Trust is intended to be passive in nature and the Trustee does not have any control over or any

responsibility relating to the operation of the Underlying Properties.

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

The Trust is a

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

borrowing transactions.

Trust is a passive entity and other than the Trusts ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from

engaging in borrowing transactions.

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

Results of Operations

income received by the Trust for the three-year period ended December 31, 2022, is reported in the following table:

Royalty income received by the Trust for the three-year period ended December 31, 2023, is reported in the following table:

Year Ended December 31,

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Total Revenue/Unit

Royalty income of the Trust for the calendar year is associated with actual oil and gas production for the period

November of the prior year through October of the current year.

Oil and gas production for 2022, 2021 and 2020 generated by the Royalties and the Underlying Properties, excluding portions attributable to the adjustments discussed hereafter, are

presented in the following table:

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

period from November of the prior year through October of the current year.

Oil and gas production for 2023, 2022 and 2021 generated by the Royalties and the Underlying Properties, excluding portions attributable to the adjustments discussed

hereafter, are presented in the following table:

Year Ended December 31,

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Average Price/Mcf

The average price of oil increased to $94.11 per barrel in 2022, up from $63.34 per barrel in 2021.

The average price of

oil in 2020 was $39.51 per barrel.

In addition, the average price of gas increased from $3.53 per Mcf in 2021 to $5.54 per Mcf in 2022.

The average price of oil decreased to $76.72 per barrel in 2023, down from $94.11 per barrel in 2022.

average price of oil in 2021 was $63.34 per barrel.

In addition, the average price of gas decreased from $5.54 per Mcf in 2022 to $2.40 per Mcf in 2023.

The average price of gas in 2021 was $3.53 per Mcf.

Oil prices have increased primarily because of world market

Oil prices have decreased primarily because

of world market conditions.

Oil prices are expected to remain volatile.

Gas liquids values remain stronger and keep the prices of gas stronger.

Blackbeard, after assuming the role of operation of the Waddell Ranch Properties, immediately instituted a workover of

specific wells, which caused the Trust not to receive any royalty income from the Waddell Properties in 2021.

Subsequent to December 31, 2022, the price of both oil and gas continued to fluctuate, giving

rise to a correlating adjustment of the respective standardized measure of discounted future net cash flows.

As of February 24, 2023, NYMEX posted oil prices were approximately $76.45 per barrel, which compared to the posted price of $93.67 per

barrel, used to calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a smaller standardized measure of discounted future net cash flows for oil.

As of February 24 , 2023, NYMEX posted

gas prices were $2.07 per million British thermal units.

The use of such price, as compared to the posted price of $6.36 per million British thermal units, used to calculate the future net revenue of the Trusts proved developed reserves would

result in a smaller standardized measure of discounted future net cash flows for gas.

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), production amounts do not necessarily provide a meaningful comparison.

For the underlying properties total oil production increased

by approximately 84% from 2021 to 2022 primarily due to additional production on Waddell due to new drilling.

For the underlying properties total gas production increased approximately 145% from 2021 to 2022 primarily due to production increase.

Gas liquids values have declined along with gas pricing due to high production levels, consistently mild weather patterns, and decreased heating demand.

Blackbeard, after

assuming the role of operator of the Waddell Ranch Properties, immediately instituted a workover of specific wells, which caused the Trust not to receive any royalty income from the Waddell Properties in 2021 and portions of 2022 and 2023.

Subsequent to December 31, 2023, the price of both oil and gas continued to fluctuate,

giving rise to a correlating adjustment of the respective standardized measure of discounted future net cash flows.

As of February 20, 2024, NYMEX posted oil prices were approximately $78.72 per barrel, which compared to the posted price of $78.22

per barrel, used to calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a slightly larger standardized measure of discounted future net cash flows for oil.

As of February 21 , 2024, NYMEX

posted gas prices were $1.58 per million British thermal units.

The use of such price, as compared to the posted price of $2.64 per million British thermal units, used to calculate the future net revenue of the Trusts proved developed reserves

would result in a smaller standardized measure of discounted future net cash flows for gas.

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), production amounts do not necessarily provide a meaningful comparison.

For the underlying properties total oil and

gas production increased approximately 30% and 29% respectively, from 2022 to 2023 primarily due to additional production on Waddell due to new drilling.

Total capital expenditures in 2023 used in the net overriding royalty calculation were approximately $116 million (gross) compared to

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Trusts assets more fully, a more aggressive, robust capital expenditure budget will be necessary in the future and is being pursued.

there were 28 recompletion wells completed and 47 wells permanently plugged on the Waddell Ranch properties.

Actual costs for this program in 2021 approximated $66.6 million (gross).

This cost is for the development program and base facilities.

In 2022, there were 46.1 new drill wells and 46.9 recompletion wells completed on the Waddell Ranch properties.

Texas law requires all temporarily

abandoned wells to be either worked over and recompleted to functional status or permanently plugged and abandoned within a five year time frame.

In 2022, there were 46.9 recompletion wells completed and 17.8 wells permanently plugged on the Waddell Ranch properties.

Actual costs for

this program in 2022 approximated $124.3 million (gross).

In 2023, there were 28.9 new drill wells (net) and 53 recompletion wells (net) completed on the Waddell Ranch properties.

Texas law requires all temporarily abandoned wells to be either worked over and recompleted to functional status or permanently plugged and

abandoned within a five year time frame.

The Waddell Ranch properties contain over 700 such temporarily abandoned wells.

In 2022, there were

46.9 recompletion wells completed and 17.8 wells permanently plugged on the Waddell Ranch properties.

There were 91 drill wells completed on

the Waddell Ranch properties during 2022.

At December 31, 2021, there were 79 drill wells on the Waddell Ranch properties.

Blackbeard has

advised the Trustee that the proposed budget for 2023 will be $122 million (net).

The 2023 budget will include amounts to be spent on 48.75 (net) horizontal wells targeting the Sandhills and McKnight formations, along with various other

recompleted wells prospects to be worked over and completed, and also amounts to be spent on additional facilities and infrastructure improvements and the completion of projects begun in 2022.

Because the wide volatility of the pricing for both oil

and gas in the current market, Blackbeard could not make any accurate projections as to the anticipated revenue streams or production levels of both the 2022 and projected 2023 budget projects.

In 2022, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $43.7 million.

In 2021, lease

operating expense and property taxes on the Waddell Ranch properties amounted to approximately $23 million.

In 2020, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $19.6 million.

The Trustee has been advised by the operator that since June 2006, the oil from the Waddell Ranch has been marketed by the operator by soliciting bids

from third parties on an outright sale basis of production listed in bid packages.

During 2022, the monthly royalty receipts were invested by the

Trustee in cash and cash equivalents until the monthly distribution date, and earned interest totaled $48,371.

In 2023, there were 53 recompletion wells completed and 31 wells permanently plugged on the Waddell Ranch properties.

There were 77 drill wells (gross) completed on the Waddell Ranch properties during 2023.

During, 2022, there were 91 drill wells

completed on the Waddell Ranch properties.

Blackbeard has advised the Trustee that the proposed budget for 2024 has not been finalized;

however, it has provided the Trustee with a preliminary capital expenditure budget of approximately $301 million (gross) and development plan reflecting that the 2024 budget will include amounts to be spent on 83 (gross) horizontal wells and 12

(gross) vertical wells along with 24 (gross) recompleted well prospects to be worked over and completed as well as infrastructure and plugging and abandonment costs.

In 2023, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $79.6 million, compared to

approximately $43.7 million in 2022, and approximately $23 million in 2021.

The Trustee has been advised by the operator that

the majority of Waddell Ranch oil production is now pipeline connected and sold under long term crude purchase agreements.

the monthly royalty receipts were invested by the Trustee in cash and cash equivalents until the monthly distribution date, and earned interest totaled $86,162.

Interest income for 2022 and 2021 was $48,371 and $5,112, respectively.

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The reserve for administrative expenses for any potentially extraordinary events and/or expenses was $0 as of December 31, 2023.

reserves for expenses for the years ended December 31, 2022, 2021 and 2020 was $0, $0 and $50,000, respectively.

Distributable income for 2022

was $53,543,824 or $1.15 per Unit.

Total reserves for

expenses for the years ended December 31, 2023, 2022 and 2021 was $0, $0 and $0, respectively.

Distributable income for 2023 was

$27,978,487 or $0.60 per Unit.

Distributable income for 2022 was $53,543,824 or $1.15 per Unit.

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Results of the Fourth Quarters of 2023 and 2022

income received by the Trust for the fourth quarter of 2022 amounted to $15,385,233 or $0.33 per Unit.

For the fourth quarter of 2021, the Trust received royalty income of $3,396,125 or $0.07 per Unit.

Interest income for the fourth quarter

of 2022 amounted to $33,117 compared to $1,253 for the fourth quarter of 2021.

The increase in interest income can be attributed primarily to an increase of funds available.

Total general and administrative expenses was $150,153 for the fourth

quarter of 2022 compared to $166,809 for the fourth quarter of 2021.

The decrease in expenses primarily related to timing of payments of legal and auditor expenses.

Royalty income for the Trust for the fourth quarter is associated with actual oil and gas production during August through October from the Underlying

Royalty income received by the Trust for the fourth quarter of 2023 amounted to $14,412,501 or $0.31 per Unit.

For the fourth quarter of 2022,

the Trust received royalty income of $15,385,233 or $0.33 per Unit.

Interest income for the fourth quarter of 2023 amounted to $24,688 compared to $33,117 for the fourth quarter of 2022.

The decrease in interest income can be attributed primarily to

a decrease of funds available.

Total general and administrative expenses was $162,490 for the fourth quarter of 2023 compared to $150,153 for the fourth quarter of 2022.

The increase in expenses primarily related to timing of payments of legal and

auditor expenses.

Royalty income for the Trust for the fourth quarter is associated with actual oil and gas production during August

through October from the Underlying Properties.

Oil and gas production attributable to the Underlying Properties for the quarter and the comparable period for 2022 are as follows:

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Average Price/Mcf

The posted price of oil increased for the fourth quarter of 2022 compared to the fourth quarter of 2021, resulting in an

average price per barrel of $88.24 compared to $72.44 in the same period of 2021.

The average price of gas increased for the fourth quarter of 2022 compared to the same period in 2021, resulting in an average price per Mcf of $5.49 compared to $4.85

in the fourth quarter of 2021.

The Trustee has been advised that oil and gas production increased in the fourth quarter of 2022 compared to the

same period in 2021 primarily due to additional drilling.

The Trust has been advised that 18.5 wells were drilled and completed during the

three months ended December 31, 2022, and there were 6.8 wells in progress.

Use of Estimates

The preparation of financial statements in conformity with the basis of accounting described above requires management to make estimates and assumptions

that affect reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting periods.

The posted price of oil decreased for the fourth quarter of 2023 compared to the fourth quarter of 2022,

resulting in an average price per barrel of $84.23 compared to $88.24 in the same period of 2022.

The average price of gas decreased for the fourth quarter of 2023 compared to the same period in 2022, resulting in an average price per Mcf of $2.31

compared to $5.49 in the fourth quarter of 2022.

The Trustee has been advised that oil and gas production increased in the fourth quarter

of 2023 compared to the same period in 2022 primarily due to additional drilling.

The Trust has been advised that 5.6 (net) wells were

drilled and completed during the three months ended December 31, 2023, and there were 4.9 (net) wells in progress.

The preparation of financial statements in conformity with the basis of accounting described above requires management

to make estimates and assumptions that affect reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting periods.

Actual results may differ from such estimates.

The Trustee routinely reviews its royalty interests in oil and gas properties for impairment whenever events or circumstances indicate that the carrying

amount of an asset may not be recoverable.

If an impairment event occurs and it is determined that the carrying value of the Trusts royalty interests may not be recoverable, an impairment will be recognized as measured by the amount by which

the carrying amount of the royalty interests exceeds the fair value of these assets, which would likely be measured by discounting projected cash flows.

The Trustee routinely reviews its royalty interests in oil and gas properties for impairment whenever events or circumstances indicate that the

carrying amount of an asset may not be recoverable.

If an impairment event occurs and it is determined that the carrying value of the Trusts royalty interests may not be recoverable, an impairment will be recognized as measured by the amount

by which the carrying amount of the royalty interests exceeds the fair value of these assets, which would likely be measured by discounting projected cash flows.

There was no impairment of the assets as of December 31, 2023.

Critical Accounting Policies and Estimates

The Trusts financial statements reflect the selection and application of accounting policies that require the Trust to make significant estimates

and assumptions.

The Trusts financial statements reflect the selection and application of accounting policies that require the Trust to make significant

estimates and assumptions.

The following are some of the more critical judgment areas in the application of accounting policies that currently affect the Trusts financial condition and results of operations.

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The financial statements of the Trust are prepared on the following basis:

Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the interest

Royalty income consists of the amounts received by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges and other

costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.

Trust expenses, consisting principally of routine general and administrative costs, recorded are based on liabilities paid

and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.

Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the

interest owners.

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.

Trust expenses, consisting principally of routine general and administrative costs, recorded are based on

liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.

Distributions to Unit holders are recorded when declared by the Trustee.

Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust.

monthly costs exceed revenues for any conveyance (excess costs), such excess costs cannot reduce royalty income from other conveyances, but is carried forward with accrued interest to be recovered from future net proceeds of that

The financial statements of the Trust differ from financial statements prepared in accordance with accounting

principles generally accepted in the United States of America (GAAP) because revenues are not accrued in the month of production and certain cash reserves may be established for contingencies which would not be accrued in financial

statements prepared in accordance with GAAP.

Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the

If monthly costs exceed revenues for any conveyance (excess costs), such excess costs cannot reduce royalty income from other conveyances, but is carried forward with accrued interest to be recovered from future net proceeds of

that conveyance.

The financial statements of the Trust differ from financial statements prepared in accordance with

accounting principles generally accepted in the United States of America (GAAP) because revenues are not accrued in the month of production and certain cash reserves may be established for contingencies which would not be accrued in

financial statements prepared in accordance with GAAP.

Amortization of the Royalties calculated on a unit-of-production basis is charged directly to trust corpus.

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Revenues from Royalty Interests are recognized in the period in which amounts are received by the Trust.

Royalty income received by the Trust in a given

calendar year will generally reflect the proceeds from crude oil and natural gas produced for the twelve-month period ended October 31 st in that calendar year.

Royalty income received by the Trust

in a given calendar year will generally reflect the proceeds from crude oil and natural gas produced for the twelve-month period ended October 31 st in that calendar year.

Reserve Disclosure

Independent petroleum engineers estimate the net proved reserves attributable to the Royalty Interests.

Estimates of future net revenues from proved

reserves have been prepared using average 12-month oil and gas prices, determined as an unweighted arithmetic average of the first-day-of-the-month benchmark price for each month within the 12-month period

preceding the end of the most recent fiscal year, unless prices are defined by contractual arrangements.

The standardized measure of discounted future net cash flows is achieved by using a

discount rate of 10% a year to reflect the timing of future cash flows relating to proved oil and gas reserves.

Estimates of future net revenues from

proved reserves have been prepared using average 12-month oil and gas prices, determined

as an unweighted arithmetic average of the

first-day-of-the-month benchmark price for each month within the 12-month period preceding the end of the most recent fiscal year, unless prices are defined by contractual arrangements.

The standardized measure of discounted future net cash flows is achieved by using a discount

rate of 10% a year to reflect the timing of future cash flows relating to proved oil and gas reserves.

The reserves actually recovered and the timing of production may be substantially different from the reserve estimates and related costs.

Numerous uncertainties are inherent in estimating volumes and the value of proved reserves and in projecting future production rates and the timing of development of non-producing reserves.

estimates are subject to change as market conditions change.

Detailed information concerning the number of wells on royalty properties is not

generally available to the owner of royalty interests.

uncertainties are inherent in estimating volumes and the value of proved reserves and in projecting future production rates and the timing of development of non-producing reserves.

Such reserve estimates are

subject to change as market conditions change.

Detailed information concerning the number of wells on royalty properties is not generally

available to the owner of royalty interests.

Consequently, the Registrant does not have information that would be disclosed by a company with oil and gas operations, such as an accurate account of the number of wells located on its royalty

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Contingencies

Contingencies related to the Underlying Properties that are unfavorably resolved would generally be reflected by the Trust as reductions to future

royalty income payments to the Trust with corresponding reductions to cash distributions to Unit holders.

Contingencies related to the Underlying Properties that are unfavorably resolved would generally be reflected by the Trust as reductions to

future royalty income payments to the Trust with corresponding reductions to cash distributions to Unit holders.

New Accounting Pronouncements

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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-K

Item 5. Market for Registrant’s Common Equity