What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-13 compared with 2025-08-13 · 141 added, 105 removed, 297 unchanged (45% of the section changed)

3 unchanged sentences

It 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 Trust’s latest annual report on Form 10-K.

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, 2025, and the distributable income and the changes in trust corpus for the three and six months ended June 30, 2025 and 2024, have been included.

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 September 30, 2025, and the distributable income and the changes in trust corpus for the three and nine months ended September 30, 2025 and 2024, 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 unaudited condensed interim financial statements as of the three and six months ended June 30, 2025 and 2024, 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, which does not express an opinion on those condensed financial statements.

The unaudited condensed interim financial statements as of the three and nine months ended September 30, 2025 and 2024, 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, which does not express an opinion on those condensed financial statements.

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 410)

6 unchanged sentences

Results of Review of Condensed Interim Financial Statements

We have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the Trust) as of June 30, 2025 and the related condensed statements of distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 2025 and 2024, and the related notes (collectively referred to as the “condensed interim financial statements”).

We have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the Trust) as of September 30, 2025 and the related condensed statements of distributable income and changes in trust corpus for the three-month and nine-month periods ended September 30, 2025 and 2024, and the related notes (collectively referred to as the “condensed interim financial statements”).

Based on our review, 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.

13 unchanged sentences

Houston, Texas

August 13, 2025

November 13, 2025

PERMIAN BASIN ROYALTY TRUST

CONDENSED INTERIM STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

September 30,

Cash and short-term investments

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

amortization of $10,812,094 and $10,810,809 at June 30, 2025 and

amortization of $10,812,793 and $10,810,809 at September 30, 2025 and

December 31, 2024, respectively)

LIABILITIES AND TRUST CORPUS

Distribution payable to Unitholders

Distribution payable to Unitholders (Note 3)

Commitments and reserves for contingencies (Note 7)

7 unchanged sentences

Three Months Ended

June 30, 2025

September 30, 2025

Three Months Ended

June 30, 2024

Royalty income

September 30, 2024

Royalty income (Note 3)

Interest income

3 unchanged sentences

The accompanying notes are an integral part of these condensed interim financial statements.

Six Months Ended

June 30, 2025

Six Months Ended

June 30, 2024

Royalty income

Nine Months Ended

September 30, 2025

Nine Months Ended

September 30, 2024

Royalty income (Note 3)

Interest income

6 unchanged sentences

Three Months Ended

June 30, 2025

September 30, 2025

Three Months Ended

June 30, 2024

September 30, 2024

Trust corpus, beginning of period

5 unchanged sentences

The accompanying notes are an integral part of these condensed interim financial statements.

Six Months Ended

June 30, 2025

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2025

Nine Months Ended

September 30, 2024

Trust corpus, beginning of period

56 unchanged sentences

Royalty income consists of the amounts received and available for distribution 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.

Royalty income for the Waddell Ranch properties was not received for the three and six months ended June 30, 2025.

Royalty income for the Waddell Ranch properties was not received for the three and nine months ended September 30, 2025.

Trust expenses, consisting principally of routine general and administrative costs, as recorded are based on liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.

25 unchanged sentences

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.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, and the fact that Blackbeard has provided this information on a monthly basis since Argent Trust Company has become Trustee of the Trust, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the announcement date for monthly distributions starting in May 2024.

As a result of Blackbeard's failure to provide this information by the NYSE notification date for the monthly distribution, in accordance with the Trust Indenture, if royalty income is received from the Waddell Ranch properties on or prior to the record date, it will be included in the following month's distribution, rather than the current month's distribution.

As a result of excess costs, there was no royalty income received from Blackbeard for the three and six months ended June 30, 2025.

As of May 2024, Blackbeard, the operator of the Waddell Ranch properties, provides the Trustee information necessary to calculate the net proceeds during the last week of the month.

In accordance with the Trust Indenture, if royalty income is received on or prior to the record date, it will be included in the following month's distribution, rather than the current month's distribution.

As such, royalty income reporting for the Waddell Ranch properties is one month in arrears.

As a result of excess costs, there was no royalty income received from Blackbeard for the three and nine months ended September 30, 2025, with the exception of the $4.5 million partial settlement declared in the September 2025 distribution that was paid on October 15, 2025.

The $4.5 million partial payment is included in both “Distribution Payable to Unitholders”

on the “Condensed Interim Statements of Assets, Liabilities and Trust Corpus”

as of September 30, 2025, as well as in “Royalty Income”

on the “Condensed Interim Statements of Distributable Income for the three and nine months ended September 30, 2025”

(See Notes 4 and 7).

No partial settlement payment was received as of December 31, 2024, or during the three and nine months ended September 30, 2024.

If monthly costs exceed revenues for the Waddell Ranch properties or Texas Royalty properties, such excess costs must be recovered, with accrued interest, from future net proceeds and cannot reduce net proceeds from the other conveyance.

The Waddell Ranch properties did not contribute to royalty income for the reporting months of October 2024 through May 2025 (due to Blackbeard’s reporting being one month in arrears), such that the Waddell Ranch properties remain in a deficit position as of June 30, 2025.

Any funds received from the settlement of the lawsuit the Trust filed against Blackbeard do not reduce excess costs on the Waddell Ranch properties.

The Waddell Ranch properties did not contribute to royalty income for the reporting months of October 2024 through August 2025 such that the Waddell Ranch properties remain in a deficit position as of September 30, 2025.

The following table summarizes excess costs activity, cumulative excess costs balance, and accrued interest to be recovered as calculated by Blackbeard.

4 unchanged sentences

Net excess costs (recovery) for the quarter ended 6/30/25

Net excess costs (recovery) for the quarter ended 9/30/25

Cumulative excess costs remaining at 9/30/2025

4 unchanged sentences

A grantor trust is not subject to federal income tax at the trust level.

The Unitholders are considered for federal income tax purposes to own the Trust’s income and principal as though no trust were in existence.

The Unitholders are considered for federal income tax purposes to own the Trust’s income and principal as though no trust was in existence.

The income of the Trust is deemed to have been received or accrued by each Unitholder at the time such income is received or accrued by the Trust and not when distributed by the Trust.

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

Pursuant to the Settlement Agreement agreed upon between the Trust and Blackbeard to end the lawsuit filed in 2024 alleging the underpayment of royalties due and owing to the Trust, Blackbeard has agreed to pay the Trust $9,000,000, of which $4,500,000 was paid in September, and the remainder of which will be paid in four equal installments of $1,125,000 quarterly during the 2026 calendar year.

For federal income tax purposes, the settlement payments made by Blackbeard will be treated as additional royalty income that is received by the Trust (and, correspondingly, each Unitholder) for the period in which the settlement payment is made.

See Note 7 - Commitments and Contingencies for additional information regarding the Settlement Agreement.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

The OBBBA includes significant federal

income tax provisions, such as the permanent extension of the income tax rates set by the Tax Cuts and Jobs Act, the continued

suspension of miscellaneous itemized deductions and the restoration of favorable tax treatment for certain business provisions.

The OBBBA includes significant federal income tax provisions, such as the permanent extension of the income tax rates set by the Tax Cuts and Jobs Act, the continued suspension of miscellaneous itemized deductions and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

Unitholders should consult their tax advisors regarding the potential tax consequences of the OBBBA and its impact on such

person’s ownership of Units.

Unitholders should consult their tax advisors regarding the potential tax consequences of the OBBBA and its impact on such person’s ownership of Units.

STATE TAX CONSIDERATIONS

8 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Blackbeard Settlement

On August 19, 2025, the Trustee on behalf of the Trust, entered into a settlement agreement and release (the “Settlement Agreement”) in connection with its lawsuit against Blackbeard.

Pursuant to the lawsuit, the Trustee had sought to recover more than $9 million in damages it alleged resulted from Blackbeard’s failure to properly calculate and pay royalties due and owing to the Trust.

Pursuant to the Settlement Agreement, Blackbeard has agreed to pay the Trust $9,000,000, of which $4,500,000 was paid in September, and the remainder of which will be paid in four equal installments of $1,125,000 quarterly during the 2026 calendar year.

Additionally, the Settlement Agreement established the overhead rate that may be charged to the Trust and permits Blackbeard to pass through third-party charges for saltwater disposal and gathering and transportation, and charge technical labor on reservoir engineers using an agreed allocation methodology against the net overriding royalty.

The parties also agreed that the Trust would not make future claims for lost volumes in the case of ordinary line loss (as defined by third party purchase agreements with purchasers).

The Trust will have the option to conduct annual site audits, at its expense.

The Settlement Agreement also set forth agreed reporting that Blackbeard will provide the Trustee going forward.

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 Unitholders.

The Trustee maintains an expense reserve, which is currently $1,100,000, that allows the Trustee to pay obligations of the Trust in the event there is not sufficient royalty income to pay such expenses.

Trustee fees for the three month periods ending June 30, 2025 and June 30, 2024, were $29,136 and $35,922, respectively.

For the six months ended June 30, 2025 and 2024, Trustee fees were $60,501 and $68,549, respectively.

Trustee fees for the three month periods ending September 30, 2025 and September 30, 2024, were $31,253 and $27,696, respectively.

For the nine months ended September 30, 2025 and 2024, Trustee fees were $91,754 and $96,245, respectively.

SUBSEQUENT EVENTS

Subsequent events were evaluated through the issuance date of the financial statements.

Subsequent to June 30, 2025, the Trust declared a distribution on July 21, 2025 of $0.015311 per Unit outstanding payable on August 14, 2025 to Unitholders of record on July 31, 2025.

Subsequent to September 30, 2025, the Trust declared a distribution on October 21, 2025 of $0.020021 per Unit outstanding payable on November 17, 2025 to Unitholders of record on October 31, 2025.

Trustee’s Discussion and Analysis

1 unchanged sentence

Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.

Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, litigation, information to be received by operators of the Waddell Ranch properties or Texas Royalty properties, and regulatory matters.

Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove correct.

16 unchanged sentences

The price of oil hit a high price of $79.28 per barrel on January 17, 2025 and steadily decreased through May 2025.

Since that time, the price of oil has increased slightly such that as of July 28, 2025 the price of oil was $67.81 per barrel.

Since that time, the price of oil fluctuated in the second quarter between $58.50 per barrel on May 5, 2025, and $75.89 per barrel on June 18, 2025.

Prices have also fluctuated in the third quarter as well, with a high of $71.09 per barrel on July 30, 2025 and a low of $62.22 on September 5, 2025.

The price of oil was $61.79 on November 3, 2025.

Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

18 unchanged sentences

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 Trust’s 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.

The Trust is a passive entity and other than the Trust’s 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.

Recent Events

Special Meeting

On October 10, 2025, the Trustee received a request from SoftVest Advisors, LLC (“SoftVest”), together with other Unitholders who collectively with SoftVest own more than 15% of the outstanding Units, to call a special meeting (“Special Meeting”) of the Unitholders to be held on December 16, 2025, with a record date of November 11, 2025.

The purpose of the Special Meeting requested by the Unitholders is to present for a vote by the Unitholders a proposal in support of SoftVest or another appropriate party taking appropriate actions to effect the judicial reformation of the Trust Indenture to provide that the affirmative vote of a majority of Units cast at a special meeting (at which a quorum is present) be sufficient to approve any amendment to the Trust Indenture.

In accordance with the terms of the Trust Indenture, the Trustee intends to call the Special Meeting.

Additional details regarding the Special Meeting will be set forth in the Trustee’s notice of special meeting to be mailed to Unitholders and are also expected to be set forth in a proxy statement to be filed by SoftVest with respect to the Special Meeting.

Blackbeard Settlement

On August 19, 2025, the Trustee on behalf of the Trust, entered into a settlement agreement and release (the “Settlement Agreement”) in connection with its lawsuit against Blackbeard.

The parties also agreed that the Trust would not make future claims for lost volumes in the case of ordinary line loss (as defined by third party purchase agreements with purchasers).

The Trust will have the option to conduct annual site audits, at its expense.

The Settlement Agreement also set forth agreed reporting that Blackbeard will provide the Trustee going forward.

Results of Operations

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

For the quarter ended June 30, 2025, royalty income received by the Trust amounted to $3,089,889 compared to royalty income of $8,803,389 during the second quarter of 2024.

Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for March, April and May 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the second quarter of 2025).

For the Waddell Ranch properties, the average realized oil and gas prices were $70.27 per barrel (Bbl) and $2.41 per thousand cubic feet (Mcf), respectively for the three months ended May 31, 2025, compared to $73.40 and $1.83 for the months of April and May 2024 (reflecting the two months for which proceeds were distributed to Unitholders in the second quarter of 2024).

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

For the quarter ended September 30, 2025, royalty income received by the Trust amounted to $7,258,464 compared to royalty income of $8,366,375 during the third quarter of 2024.

The royalty income for the three months ended September 30, 2025 includes the $4.5 million partial settlement payment from Blackbeard.

Pricing information for the Waddell Ranch properties is for June, July, and August 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the third quarter of 2025).

For the Waddell Ranch properties, the average realized oil and gas prices were $62.32 per barrel (Bbl) and $1.35 per thousand cubic feet (Mcf), respectively for the three months ended August 31, 2025, compared to $79.91 per Bbl and $1.19 per Mcf for the three months ended August 31, 2024.

The average realized price of gas was calculated by dividing the total gas and plant product sales by the total gas and plant product volumes (converted to an Mcf equivalent).

For the Texas Royalty properties, the average realized oil and gas prices were $68.61 per Bbl and $10.15 per Mcf, respectively for the quarter ended June 30, 2025, compared to $78.00 per Bbl and $10.04 per Mcf, respectively for the quarter ended June 30, 2024.

The lower royalty income reported in the three months ended June 30, 2025, compared to the same time period in 2024 is attributable to a deficit position in the second quarter of 2025, resulting in no royalty income being received from the Waddell Ranch properties due to an excess in working interest costs during the second quarter of 2025.

No deficit position existed during the second quarter of 2024, and royalty income was received from the Waddell Ranch properties during such period.

Blackbeard continues to refuse to provide information regarding monthly net proceeds in time for the monthly distribution announcement.

Interest income for the quarter ended June 30, 2025 was $15,751 compared to $29,106 during the second quarter of 2024.

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

Total expenses during the second quarter of 2025 amounted to $708,385 compared to $395,807 during the second quarter of 2024.

For the Texas Royalty properties, the average realized oil and gas prices were $65.20 per Bbl and $8.65 per Mcf, respectively for the quarter ended September 30, 2025, compared to $79.06 per Bbl and $10.54 per Mcf, respectively for the quarter ended September 30, 2024.

The lower royalty income reported in the three months ended September 30, 2025, compared to the same time period in 2024 is attributable to a deficit position in the third quarter of 2025, resulting in no royalty income being received from the Waddell Ranch properties due to an excess in working interest costs and lower oil pricing during the third quarter of 2025, somewhat offset by the partial settlement payment of $4.5 million received in September 2025.

No deficit position existed during the third quarter of 2024, and royalty income was received from the Waddell Ranch properties during such period.

Interest income for the quarter ended September 30, 2025 was $15,049 compared to $54,534 during the third quarter of 2024.

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

Total expenses during the third quarter of 2025 amounted to $411,626 compared to $367,625 during the third quarter of 2024.

The increase in total expenses can be primarily attributed to increased expenses for professional services associated with legal proceedings with Blackbeard.

These transactions resulted in distributable income for the quarter ended June 30, 2025 of $2,397,255 or $0.05 per Unit outstanding of beneficial interest.

Distributions of $0.019615, $0.018841 and $0.012976 per Unit were made to Unitholders of record as of April 30, 2025, May 31, 2025, and June 30, 2025, respectively.

For the second quarter of 2024, distributable income was $8,436,688 or $0.18 per Unit outstanding of beneficial interest.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024 such that royalty income for the Trust for the second quarter of the calendar year is associated with actual oil and gas production for January, February, and March 2025 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the second quarter of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from February, March, and April 2025.

Beginning in May 2024, Blackbeard has also refused to provide production, product sales, capital expenditure, and development information for the Waddell Ranch properties from which the Trust's Royalties are carved for each distribution month, information Blackbeard has previously provided on a monthly basis since Argent Trust Company has become Trustee of the Trust.

Blackbeard has opted to provide this information quarterly, approximately 30 days after the end of each fiscal quarter.

On July 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended June 30, 2025.

For the quarter ended June 30, 2024, only the months of April and May are shown below, as those were the only two months for which the Trust received information in time to distribute proceeds for the Waddell Ranch properties during the second quarter of 2024.

These transactions resulted in distributable income for the quarter ended September 30, 2025 of $6,861,887 or $0.15 per Unit outstanding of beneficial interest.

Distributions of $0.015311, $0.016418, and $0.115493 per Unit were made to Unitholders of record as of July 31, 2025, August 29, 2025, and September 30, 2025, respectively.

The September distribution includes the first installment, in the amount of $4.5 million, of the settlement agreed upon between the Trust and Blackbeard to end the lawsuit filed in 2024.

For the third quarter of 2024, distributable income was $8,053,284 or $0.17 per Unit outstanding of beneficial interest.

From and after May 2024, Blackbeard has provided, and will continue to provide, information to calculate net proceeds during the last week of the month.

In accordance with the Trust Indenture, if royalty income is received on or just prior to the record date, it will be included in the following month's distribution, rather than the current month's distribution.

As such, royalty income reporting for the Waddell Ranch properties is one month in arrears.

Royalty income for the Trust for the third quarter of the calendar year is associated with actual oil and gas production for April, May, and June 2025 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the third quarter of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from May, June, and July 2025.

Beginning in May 2024, Blackbeard has provided production, product sales, capital expenditure, and development information for the Waddell Ranch properties from which the Trust's Royalties are carved for each distribution month on a quarterly basis, as required in the conveyance, approximately 30 days after the end of each fiscal quarter.

On October 30, 2025, Blackbeard provided the Trustee with a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended September 30, 2025.

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

20 unchanged sentences

Pricing and Production Discussion

For the Waddell Ranch properties, the average realized price of oil decreased to $70.27 per Bbl for the production months of January through March 2025 compared to $73.40 per Bbl for February and March of 2024 due to worldwide market variables.

The average realized price of gas increased to $2.41 per Mcf for the production months of January through March 2025 from $1.83 per Mcf for the production months of February and March of 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.61 per Bbl in the second quarter of 2025, compared to $78.00 per Bbl in the second quarter of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties increased from $10.04 per Mcf in the second quarter of 2024 to $10.15 per Mcf in the second quarter of 2025 in part due to change in overall market variables.

For the Waddell Ranch properties, the average realized price of oil decreased to $62.32 per Bbl for the production months of April through June 2025 compared to $79.91 per Bbl for April through June of 2024 due to worldwide market variables.

The average realized price of gas (including plant products) increased to $1.35 per Mcf for the production months of April through June 2025 from $1.19 per Mcf for the production months of April through June of 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $65.20 per Bbl in the third quarter of 2025, compared to $79.06 per Bbl in the third quarter of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties decreased to $8.65 per Mcf in the third quarter of 2025 to $10.54 per Mcf in the third quarter of 2024 in part 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 always provide a meaningful comparison.

1 unchanged sentence

Blackbeard Capital Expense Discussion

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 2025 totaled $61.3 million (gross) as compared to $15.6 million (gross) for the second quarter of 2024.

The three months ended June 30, 2025, for the Waddell Ranch properties includes January through March 2025 expenditures, whereas the three months ended June 30, 2024 includes April and May 2024 expenditures only.

Blackbeard has not provided updated 2025 capital expenditures budget information.

Development information for the Waddell Ranch properties such as well completions, workovers, remedial activities, and plugging and abandonment, was not provided by Blackbeard.

This information has previously been provided monthly since Argent Trust Company has become Trustee of the Trust until May 2024.

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $19.8 million (gross) for the second quarter of 2025, compared to $14.7 million (gross) for the same period in 2024 on the Waddell Ranch properties.

The quarter ended June 30, 2025, for the Waddell Ranch properties includes January through March 2025 expenditures, whereas the three months ended June 30, 2024 includes April and May 2024 expenditures only.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

For the six months ended June 30, 2025, royalty income received by the Trust amounted to $6,144,586 compared to royalty income of $14,809,031 for the six months ended June 30, 2024.

Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for the six month period of December 2024 through May 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the first six months of 2025).

The average realized oil and gas prices for the Waddell Ranch properties were $69.55 per Bbl and $2.06 per Mcf, respectively for the six months ended June 30, 2025 compared to $74.75 per Bbl and $1.87 per Mcf for the six months ended June 30, 2024.

For the Texas Royalty properties, the average realized oil and gas prices were $68.78 per Bbl and $9.36 per Mcf, respectively for the six months ended June 30, 2025 compared to $76.53 per Bbl and $9.35 per Mcf, respectively for the six months ended June 30, 2024.

The decrease in royalty income reported in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is attributable to the deficit position of the Waddell Ranch properties due to an excess in working interest costs during the first six months of 2025.

No deficit position existed during the first six months of 2024 and royalty income was received from the Waddell Ranch properties for the months of January through May of 2024.

Interest income for the six months ended June 30, 2025, was $32,274 compared to $68,153 during the six months ended June 30, 2024.

The decrease in interest income is primarily attributable to a decrease in the amounts of funds available for investment and the length of time of such investment.

Total expenses during the six months ended June 30, 2025, amounted to $1,183,393 compared to $948,290 during the six months ended June 30, 2024.

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the third quarter of 2025 totaled $53.3 million (gross) as compared to $24 million (gross) for the third quarter of 2024.

The three months ended September 30, 2025 and 2024 include expenditures for the production months of April through June.

Blackbeard does not provide capital expenditures budget information or development information for the Waddell Ranch properties such as well completions, workovers, remedial activities, and plugging and abandonment.

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $26.6 million (gross) for the third quarter of 2025, compared to $22.6 million (gross) for the same period in 2024 on the Waddell Ranch properties.

The quarter ended September 30, 2025 and September 30, 2024, for the Waddell Ranch properties includes April through June expenditures.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

For the nine months ended September 30, 2025, royalty income received by the Trust amounted to $13,403,049 compared to royalty income of $23,175,406 for the nine months ended September 30, 2024.

The royalty income for the nine months ended September 30, 2025, includes the $4.5 million partial settlement payment from Blackbeard.

Pricing information for the Waddell Ranch properties is for the nine month period of December 2024 through August 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the first nine months of 2025).

The average realized oil and gas prices for the Waddell Ranch properties were $66.68 per Bbl and $1.80 per Mcf, respectively for the nine months ended September 30, 2025 compared to $76.62 per Bbl and $1.61 per Mcf for the eight months ended August 31, 2024.

For the Texas Royalty properties, the average realized oil and gas prices were $67.66 per Bbl and $9.11 per Mcf, respectively for the nine months ended September 30, 2025 compared to $77.40 per Bbl and $9.69 per Mcf, respectively for the nine months ended September 30, 2024.

The decrease in royalty income reported in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 is attributable to the deficit position of the Waddell Ranch properties due to an excess in working interest costs during the first nine months of 2025, somewhat offset by the partial settlement payment of $4.5 million received in September 2025.

No deficit position existed during the first nine months of 2024.

Interest income for the nine months ended September 30, 2025, was $47,324 compared to $122,688 during the nine months ended September 30, 2024.

The decrease in interest income is primarily attributable to a decrease in the amounts of funds available for investment and the decrease in interest rates.

Total expenses during the nine months ended September 30, 2025, amounted to $1,595,019 compared to $1,315,916 during the nine months ended September 30, 2024.

The increase in total expenses can be primarily attributed to increased expenses for professional services associated with legal proceedings with Blackbeard.

These transactions resulted in distributable income for the six months ended June 30, 2025 of $4,993,467, or $0.11 per Unit.

For the six months ended June 30, 2024, distributable income was $13,928,894 or $0.30 per Unit.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024 such that royalty income for the Trust for the first six months of the calendar year is associated with actual oil and gas production for October 2024 through March 2025 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the first six months of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November 2024 through April 2025.

Blackbeard has opted to provide this information quarterly, approximately 30 days after the end of each fiscal quarter.

On July 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended June 30, 2025.

These transactions resulted in distributable income for the nine months ended September 30, 2025 of $11,855,354, or $0.25 per Unit.

For the nine months ended September 30, 2024, distributable income was $21,982,178 or $0.47 per Unit.

From and after May 2024, Blackbeard, the operator of the Waddell Ranch properties, provides the Trustee information necessary to calculate the net proceeds the last week of the month.

As such, royalty income reporting for the Waddell Ranch properties is one month in arrears.

Royalty income for the Trust for the first nine months of the calendar year is associated with actual oil and gas production for October 2024 through June 2025 for the Waddell Ranch properties from which "Royalties" were carved.

Royalty income for the Trust for the first nine months of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November 2024 through July 2025.

As of May 2024, Blackbeard provides production, product sales, capital expenditure, and development information for the Waddell Ranch properties from which the Trust's Royalties are carved for each distribution month on a quarterly basis, approximately 30 days after the end of each fiscal quarter.

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

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

PROPERTIES (1)

8 unchanged sentences

Average price per Mcf

(1) Due to the timing of information received from Blackbeard, information reflects Royalty income received by the Trust during the six-month period of December 2024 through May 2025.

(1) Waddell Ranch information reflects Royalty income received by the Trust during the nine-month period of December 2024 through August 2025.

See Note 2 to the Condensed Financial Statements.

Pricing and Production Discussion

Production and pricing information for the Waddell Ranch properties is shown for the months of December 2024 through May 2025.

The average realized price of oil decreased to $69.55 per Bbl for December 2024 through May 2025 compared to $74.75 per Bbl for the five month period ended May 31, 2024 due to worldwide market variables.

The average realized price of gas for the six months ended May 31, 2025, was $2.06 per Mcf an increase from $1.87 for the five month period ending May 31, 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.78 per Bbl for the six months ended June 30, 2025, compared to $76.53 per Bbl for the same period of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties increased from $9.35 per Mcf in the six months ended June 30, 2024 to $9.36 per Mcf in the same period of 2025 due to change in overall market variables.

Production and pricing information for the Waddell Ranch properties is shown for the months of December 2024 through August 2025.

The average realized price of oil decreased to $66.68 per Bbl for December 2024 through August 2025 compared to $76.62 per Bbl for the eight month period ended August 31, 2024 due to worldwide market variables.

The average realized price of gas for the nine months ended August 31, 2025, was $1.80 per Mcf an increase from $1.61 per Mcf for the eight-month period ending August 31, 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $67.66 per Bbl for the nine months ended September 30, 2025, compared to $77.40 per Bbl for the same period of 2024 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties decreased from $9.69 per Mcf in the nine months ended September 30, 2024 to $9.11 per Mcf in the same period of 2025 due to change in overall market variables.

However, for the Texas Royalty properties, oil sales volumes decreased slightly and gas sales volumes increased for the properties from which the Royalties are carved for the applicable period of 2025 compared to 2024, while for the Waddell Ranch properties, oil and natural gas volumes (including plant products) increased for the applicable period in 2025 compared to 2024.

However, for the Texas Royalty properties, oil and gas sales volumes decreased for the properties from which the Royalties are carved for the applicable period of 2025 compared to 2024, while for the Waddell Ranch properties, oil and natural gas volumes (including plant products) increased for the applicable period in 2025 compared to 2024.

Blackbeard Capital Expense Discussion

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the six months ended June 30, 2025 totaled $109.2 million (gross).

For the six months ended June 30, 2024, capital expenditures were $43.9 million (gross) to the Trust.

The six months ended June 30, 2025 for the Waddell Ranch properties includes December 2024 through May 2025 expenditures and the six months ended June 30, 2024 include the five months of January through May 2024.

Development information for the Waddell Ranch properties, such as well activity, completions, workovers, remedial activities, and plugging and abandonment, was not provided by Blackbeard.

This information has previously been provided on a monthly basis since Argent Trust Company has become Trustee of the Trust until May 2024.

Lease operating expenses and property taxes totaled $41.2 million (gross) for the six months ended June 30, 2025, compared to $37.5 million (gross) for the same period in 2024.

The six months ended June 30, 2025, for the Waddell Ranch properties only includes December 2024 through May 2025 expenses and taxes and the 2024 expenses and taxes include the months of January through May 2024.

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the nine months ended September 30, 2025 totaled $162.5 million (gross).

For the nine months ended September 30, 2024, capital expenditures were $67.9 million (gross) to the Trust.

The nine months ended September 30, 2025 for the Waddell Ranch properties includes December 2024 through August 2025 expenditures and the nine months ended September 30, 2024 include the eight months of January through August 2024.

Development information for the Waddell Ranch properties, such as well activity, completions, workovers, remedial activities, and plugging and abandonment, is not provided by Blackbeard.

Lease operating expenses and property taxes totaled $67.8 million (gross) for the nine months ended September 30, 2025, compared to $60.1 million (gross) for the same period in 2024.

The nine months ended September 30, 2025, for the Waddell Ranch properties includes December 2024 through August 2025 expenses and taxes and the 2024 expenses and taxes include the months of January through August 2024.

Calculation of Royalty Income

3 unchanged sentences

respectively.

Royalty income received and available for distribution by the Trust for the three months ended June 30, 2025 and 2024, respectively, was computed as shown in the table below:

Three Months Ended June 30,

Royalty income received and available for distribution by the Trust for the three months ended September 30, 2025 and 2024, respectively, was computed as shown in the table below:

Three Months Ended September 30,

PROPERTIES (1)

6 unchanged sentences

Royalty income

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through June 2025.

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through September 2025.

Critical Accounting Policies and Estimates

A disclosure of critical accounting policies and the more significant judgments and estimates used in the preparation of the Trust’s financial statements is included in Item 7 of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no significant changes to the critical accounting policies during the six months ended June 30, 2025.

There have been no significant changes to the critical accounting policies during the three and nine months ended September 30, 2025.

Distributable Income Per Unit

13 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-Q

Item 1. Financial Statements