Item 9A. Controls and Procedures
Item 9A.
Controls and Procedures.
Disclosure Controls and Procedures
As of
the end of the period covered by this report, the Trustee carried out an evaluation of the effectiveness of the design and operation of the Trusts disclosure controls and procedures pursuant to Rules
13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934, as amended. Based on such evaluation, the Trustee concluded that the Trusts disclosure
controls and procedures are effective in ensuring that information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Trustee to
allow timely decisions regarding required disclosure.
In its evaluation of disclosure controls and procedures, the Trustee has relied, to
the extent considered reasonable, on information provided by Blackbeard Operating, LLC, the owner of the Waddell Ranch properties, and Riverhill Energy Corporation, the owner of the Texas Royalty properties.
Changes in Internal Control over Financial Reporting
There has not been any change in the Trusts internal control over financial reporting during the twelve months ended December 31, 2023 that has
materially affected, or is reasonably likely to materially affect, the Trusts internal control over financial reporting.
Trustees Report
on Internal Control Over Financial Reporting
The Trustee is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Securities and Exchange Act of 1934, as amended. Internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with the modified cash basis of accounting. The Trustee conducted an evaluation of the effectiveness of the Trusts internal control over
financial reporting based on the criteria established in Internal Control-Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the Trustees evaluation under the framework in
Internal Control-Integrated Framework 2013, the Trustee concluded that the Trusts internal control over financial reporting are effective as of December 31, 2023.
The independent registered public accounting firm of Weaver and Tidwell, L.L.P., as auditors of the statements of assets, liabilities and
trust corpus, and the related statements of distributable income and changes in trust corpus for the year ended December 31, 2023, has issued an attestation report on the Trusts internal control over financial reporting as of
December 31, 2023, which is included herein.
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Report of Independent Registered Public Accounting Firm
To the Unit Holders of Permian Basin Royalty Trust and Argent Trust Company, Trustee
Opinion on Internal Control Over Financial Reporting
We have audited Permian Basin Royalty Trust (the Trust)s internal control over financial reporting as of December 31, 2023 based on
criteria established in 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). In our opinion, the Trust maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with
the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the statements of assets, liabilities, and trust corpus of Permian Basin Royalty Trust as of December 31, 2023 and 2022 and the related statements of
distributable income and changes in trust corpus for each of the three years in the period ended December 31, 2023, and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Trustee is
responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Trustees Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the Trusts internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to Permian Basin Royalty 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 conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of
Internal Control Over Financial Reporting
An entitys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the modified cash basis of accounting described in Note 2 to the financial statements. An
entitys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the modified cash basis of accounting described in Note 2 to the financial statements, and
that receipts and expenditures of the entity are being made only in accordance with authorizations of the Trustee and directors of the entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the entitys assets that could have a material effect on the financial statements.
Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
February 29, 2024
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Item 9B.
Other Information.
(a)
None.
(b)
The Trust does not have any directors or officers, and as a result, no such person adopted or terminated any
Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement, as defined in Item 408(a) of Regulation S-K, nor did the Trust adopt or terminate any Rule 10b5-1 trading arrangement during the most recent fiscal quarter. Because the Trust does not have officers, directors, or
employees, it has not adopted insider trading policies and procedures governing the purchase, sale and/or other disposition of Trust securities by such persons.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent
Inspection.
None.
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PART III
Item 10.
Directors and Executive Officers of the Registrant
DIRECTORS AND OFFICERS
The Trust has no directors or executive officers. The Trustee is a corporate trustee which may be removed, with or without cause, at a meeting
of the Unit holders, by the affirmative vote of the holders of a majority of all the Units then outstanding.
AUDIT COMMITTEE AND
NOMINATING COMMITTEE
Because the Trust has no directors, it does not have an audit committee, an audit committee financial expert or
a nominating committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Trusts directors, officers or beneficial owners of
more than ten percent of a registered class of the Trusts equity securities to file reports of ownership and changes in ownership with the SEC and to furnish the Trust with copies of all such reports.
The Trust has no directors or officers and based solely on its review of the reports received by it, the Trust believes that during the fiscal
year of 2023, no person who was a beneficial owner of more than ten percent of the Trusts Units failed to file on a timely basis any report required by Section 16(a).
STANDARDS OF CONDUCT
Because the Trust has no employees, it does not have a code of ethics. Employees of the Trustee, Argent Trust Company, must comply with the
companys code of ethics which may be found at www.argentfinancial.com.
Item 11.
Executive Compensation
During the years ended December 31, 2023, 2022 and 2021, the Trustee for such periods received total remuneration as follows:
Name of Individual or Number
of Persons in Group
Cash
Compensation
Year
Argent Trust Company, Trustee
$
95,443
(1)
2023
Simmons Bank, Trustee
$
130,209
(1)
2022
Simmons Bank, Trustee
$
108,653
(1)
2021
(1)
Under the Trust Indenture, the Trustee is entitled to an administrative fee for its administrative services,
preparation of quarterly and annual statements with attention to tax and legal matters of: (i) 1/20 of 1% of the first $100 million and (ii) Trustees standard hourly rate in excess of 300 hours annually. The administrative fee is
subject to reduction by a credit for funds provision.
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Table of Contents
COMPENSATION COMMITTEE
Because the Trust has no directors, it does not have a compensation committee or maintain any equity compensation plans, and the Trust has not
engaged any consultants to provide advice or recommendations on the amount or form of compensation. The Trust does not have a principal executive officer or employees and therefore, the pay ratio disclosure is not applicable.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
(a) Security Ownership of Certain Beneficial Owners . Based solely on a review of
statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the following table sets forth all persons who are known to the Trustee to own beneficially more than 5% of the outstanding
Units of the Trust as of December 31, 2023:
Name
Number of Units
Owned(1)
Percent(2)
Loyd Powell(3)
3,372,195
7.235
%
Gideon Powell(3)
1,287,004
2.76
%
SoftVest, LP(4)
4,148,095
8.9
%
Horizon Kinetics Asset Management LLC(5)
3,746,345
8.04
%
(1)
Unless otherwise indicated, all Units are held directly with sole voting and investment power.
(2)
Based on 46,608,796 Units outstanding as of December 31, 2023.
(3)
Based on Schedule 13G/A filed February 11, 2021, reporting ownership as of December 31, 2020, jointly
and as a group by Loyd Powell and Gideon Powell. The address for each of Loyd Powell and Gideon Powell is P.O. Box 12208; Suite 1610, Dallas, Texas 75225.
(4)
Based on Schedule 13G/A filed February 14, 2024 reporting ownership as of December 31, 2023, jointly
and as a group by SoftVest Advisors, LLC, SoftVest, LP, and SoftVest GP I, LLC. The address for each of SoftVest Advisors, LLC, SoftVest, LP, and SoftVest GI I, LLC is 400 Pine Street, Suite 1010, Abilene, TX, 79601.
(5)
Based on Schedule 13G filed April 6, 2023 reporting ownership as of December 31, 2022 by Horizon
Kinetic Asset Management LLC. The address for Horizon Kinetic Asset Management LLC is 470 Park Avenue South, 4th Floor South, New York, Ny 10016.
(b) Security Ownership of Management . The Trust has no directors or officers. Argent Trust Company, the Trustee, held as of
February 26, 2024, an aggregate of 5,000 Units in various fiduciary capacities, and it had shared voting and investment power with respect to all such Units.
(c) Change In Control . The Trustee knows of no arrangements which may subsequently result in a change in control of the Trust.
(d) Securities Authorized for Issuance under Equity Compensation Plans. The Trust has no equity compensation plans.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The Trust has no directors or executive officers. See Item 11 for the remuneration received by the Trustee during
the years ended December 31, 2023, 2022 and 2021.
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Table of Contents
Item 14.
Principal Accounting Fees and Services
Fees for services performed by Weaver and Tidwell, L.L.P. for the years ended December 31, 2023 and 2022 are:
Weaver and Tidwell, L.L.P.
2023
2022
Audit fees
$
120,000
$
73,800
Audit-related fees
Tax fees
All other fees
Total
$
120,000
$
73,800
As referenced in Item 10 above, the Trust has no audit committee, and as a result, has no audit committee pre-approval policy with respect to fees paid to Weaver and Tidwell, L.L.P.
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PART IV
Item 15.
Exhibits, Financial Statement Schedules
The following documents are filed as a part of this Report:
1. Financial Statements
Included in Part II of this Report:
Report of Independent Registered Public Accounting Firm
34
Statements of Assets, Liabilities and Trust Corpus at December
31, 2023 and 2022
35
Statements of Distributable Income for Each of the Three Years in the Period Ended
December 31, 2023
35
Statements of Changes in Trust Corpus for Each of the Three Years in the Period
Ended December 31, 2023
36
Notes to Financial Statements
37
2. Financial Statement Schedules
Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required
information is given in the financial statements or notes thereto.
3. Exhibits
Exhibit
Number
Exhibit
(4)(a)
Permian Basin Amended and Restated Royalty Trust Indenture dated June
20, 2014, between Southland Royalty Company (now Burlington Resources Oil
& Gas Company LP) and The First National Bank of Fort Worth (now Simmons Bank), as Trustee, heretofore filed as Exhibit 4.1 to the Trusts Quarterly Report on Form 10-Q to the Securities and Exchange Commission
for the quarterly period ended June 30, 2014, is incorporated herein by reference.*
(b)
Amendment No. 1 to the Amended and Restated Royalty Trust Indenture of Permian Basin Royalty Trust, dated May
4, 2022, heretofore filed as Exhibit 4.1 to the Trusts Current Report on Form 8-K to the Securities and Exchange Commission filed on May 6, 2022 is incorporated herein by
reference.*
(c)
Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) to The First National Bank of Fort Worth (now Simmons Bank), as Trustee, dated
November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trusts Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended
December 31, 1980, is incorporated herein by reference.* (P)
(d)
Net Overriding Royalty Conveyance (Permian Basin Royalty Trust Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) to The First National Bank of Fort Worth (now Simmons
Bank), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(c) to the Trusts Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal
year ended December 31, 1980, is incorporated herein by reference.* (P)
(23.1)
Consent of Cawley, Gillespie & Associates, Inc., reservoir engineer.**
(31.1)
Certification required by Rule 13a-14(a)/15d-14(a).**
(32.1)
Certification required by Rule 13a-14(b)/15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002.**
(97)
Executive Officer Compensation Recovery Policy**
(99.1)
Report of Cawley, Gillespie & Associates, Inc., reservoir engineer.**
*
A copy of this Exhibit is available to any Unit holder, at the actual cost of reproduction, upon written
request to the Trustee, Argent Trust Company, 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas 75219.
**
Filed herewith.
(P)
Paper exhibits.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
ARGENT TRUST COMPANY,
TRUSTEE FOR THE
PERMIAN BASIN ROYALTY TRUST
By:
/s/ Jana Egeler
Jana Egeler
Vice President and Trust Administrator
Date: February 29, 2024
(The Trust has no directors or executive officers.)
52