PERMIAN BASIN ROYALTY TRUST 10-Q

Item 1. Legal Proceedings 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. There are no material pending legal proceedings to which the Trust is a party or, to its knowledge, of which any of its property is the subject. Item 1A. Risk Factors Risk factors relating to the Trust are contained in Item 1A of the Trust's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Except as set forth in such filing, no material change to such risk factors has occurred during the nine months ended September 30, 2025. Items 2 through 4 Not applicable.