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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 149 added, 71 removed, 281 unchanged (44% of the section changed)

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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 March 31, 2026, and the distributable income and the changes in trust corpus for the three months ended March 31, 2026 and 2025, 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 June 30, 2026, and the distributable income and the changes in trust corpus for the three and six months ended June 30, 2026 and 2025, have been included.

The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year.

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

amortization of $10,813,082 and $10,812,650 at March 31, 2026 and

amortization of $10,813,495 and $10,812,650 at June 30, 2026 and

December 31, 2025, respectively)

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Three Months Ended

March 31, 2026

June 30, 2026

Three Months Ended

March 31, 2025

June 30, 2025

Royalty income

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Distributable income per Unit (46,608,796 Units outstanding)

Six Months Ended

June 30, 2026

Six Months Ended

June 30, 2025

Royalty income

Interest income

General and administrative expenditures

Distributable income

Distributable income per Unit (46,608,796 Units outstanding)

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

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Three Months Ended

March 31, 2026

June 30, 2026

Three Months Ended

March 31, 2025

June 30, 2025

Trust corpus, beginning of period

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Distributions per Unit (46,608,796 Units outstanding)

Six Months Ended

June 30, 2026

Six Months Ended

June 30, 2025

Trust corpus, beginning of period

Amortization of net overriding royalty interests

Distributable income

Distributions declared

Total Trust Corpus, end of period

Distributions per Unit (46,608,796 Units outstanding)

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

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At a Special Meeting of Trust Unitholders, the Unitholders approved the appointment of Southwest Bank as successor trustee of the Trust once the resignation of Bank of America N.A.

took effect and also approved certain amendments to the Trust’s indenture (the “Trust Indenture”).

took effect and also approved certain amendments to the Trust Indenture.

The effective date of Bank of America N.A.’s resignation and the effective date of Southwest Bank’s appointment as successor trustee was August 29, 2014.

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for periods prior to August 29, 2014, shall refer to Southwest Bank for periods from August 29, 2014 through February 19, 2018, shall refer to Simmons Bank for periods from February 20, 2018 through December 29, 2022, and shall refer to Argent for periods on and after December 30, 2022.

At a hearing held May 8, 2026, a court approved amendments to the Trust Indenture proposed by a Unitholder that (1) amended Section 8.03 of the Trust Indenture to eliminate the requirement that certain amendments require approval by 75% of the outstanding Units of the Trust, and (2) deleted Section 10.01 of the Trust Indenture that sets forth certain prohibited amendments and replaced Article X of the Trust Indenture with a provision permitting amendment of any provision of the Trust Indenture by a vote of Unitholders in accordance with Article VIII (which, as amended, would permit amendment by a majority in interest of Unitholders constituting a quorum at a meeting of Unitholders where a quorum is present).

The terms of the Trust Indenture provide, among other things, that:

the Trust shall not engage in any business or commercial activity of any kind or acquire any assets other than those initially conveyed to the Trust;

the Trustee may not sell all or any part of the Royalties unless approved by holders of 75% of all Units outstanding in which case the sale must be for cash and the proceeds promptly distributed;

the Trustee may not sell all or any part of the Royalties unless approved by a majority in interest of Unitholders constituting a quorum at a Unitholder meeting at which a quorum is present, in which case the sale must be for cash and the proceeds promptly distributed;

the Trustee may establish a cash reserve for the payment of any liability which is contingent or uncertain in amount;

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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 quarter ended March 31, 2026.

Royalty income for the Waddell Ranch properties was not received for the three and six months ended June 30, 2026.

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.

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Contingencies

Contingencies related to the underlying properties from which the royalties are carved (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.

Contingencies related to the properties from which the royalties are carved (“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.

Distributable Income Per Unit

Basic distributable income per Unit is computed by dividing distributable income by the weighted average of Units outstanding.

Distributable income per Unit assuming dilution is computed by dividing distributable income by the weighted average number of Units and equivalent Units outstanding.

Distributable income per Unit assuming dilution is computed by dividing distributable income by the weighted average

number of Units and equivalent Units outstanding.

The Trust had no equivalent Units outstanding for any period presented.

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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 months ended March 31, 2026, with the exception of the $1.1 million partial settlement included in the distribution declared in January 2026 that was paid on February 13, 2026.

The $1.1 million partial payment is included in “Royalty Income”

on the “Condensed Interim Statements of Distributable Income for the three months ended March 31, 2026”

As a result of excess costs, there was no royalty income received from Blackbeard for the three and six months ended June 30, 2026 with the exception of the $1.125 million partial settlement payments received in each of January and April 2026.

The two $1.125 million partial payments are included in “Royalty Income”

on the “Condensed Interim Statements of Distributable Income for the Six Months ended June 30, 2026”

(See Note 7).

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 months of October 2024 through February 2026, respectively such that the Waddell Ranch properties remain in a deficit position as of March 31, 2026.

The Waddell Ranch properties did not contribute to royalty income for the reporting months of October 2024 through May 2026 (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, 2026.

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

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Net excess costs (recovery) for the quarter ended 3/31/26

Net excess costs (recovery) for the quarter ended 6/30/26

Cumulative excess costs remaining at 6/30/2026

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Total remaining to be recovered at 6/30/26

Interest for the activity month of March 2026 (the April reporting month for the Trust) included a $2,939,787 ($2,204,840 net to the Trust) true up for the months of November 2025 through January 2026 in addition to interest for the month of March 2026 of $440,069 ($330,051 net to the Trust).

FEDERAL INCOME TAXES

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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.

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.

STATE TAX CONSIDERATIONS

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Entities subject to the Texas franchise tax generally include trusts and most other types of entities that provide limited liability protection, unless otherwise exempt.

Trusts that receive at least 90% of their federal gross income from certain passive sources, including royalties from mineral properties and other non-operated mineral interest income, and do not receive more than 10% of their income from operating an active trade or business, generally are exempt from the Texas franchise tax as “passive

entities.”

The Trust has been and expects to continue to be exempt from Texas franchise tax as a passive entity.

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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 2025, $1,125,000 was paid in January 2026, and the remainder of which will be paid in three equal installments of $1,125,000 quarterly during the next three quarters of the 2026 calendar year.

Pursuant to the Settlement Agreement, Blackbeard has agreed to pay the Trust $9,000,000, of which $4,500,000 was paid in September 2025, $1,125,000 was paid in each of January 2026, April 2026, and July 2026, and the remainder of which is scheduled to be paid in October 2026, if the Business Combination (as defined below) has not been approved by Unitholders and closed by such date.

Pursuant to the Business Combination, the Settlement Agreement would be assigned from the Trust to PBT Land and Minerals, Inc., and then following other steps in the Business Combination, would expire.

Subsequent Events for additional information regarding the Business Combination.

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.

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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 period ending March 31, 2026, were $18,644.

For the period ending March 31, 2025, Trustee fees were $31,365.

The Trustee maintains an expense reserve, which as of June 30, 2026 was $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.

The Trust increased the expense reserve by $400,000 to $1,500,000 with the distribution declared on July 21, 2026.

Trustee fees for the three month periods ending June 30, 2026 and June 30, 2025, were $22,314 and $29,136, respectively.

For the six months ended June 30, 2026 and 2025, Trustee fees were $40,958 and $60,501, respectively.

SUBSEQUENT EVENTS

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

Subsequent to March 31, 2026, the Trust declared a distribution on April 20, 2026 of $0.038014 per Unit outstanding payable on May 14, 2026 to Unitholders of record on April 30, 2026.

The April 2026 distribution included $1.125 million, the third partial installment of the settlement with Blackbeard.

On March 30, 2026, Blackbeard informed the Trust that after further reviewing the Trust Conveyance (Sections 1.07, 1.10, and 1.15) for the Waddell Ranch properties, it has initiated a change in the computation of net proceeds.

Beginning with the activity month of January 2026, production costs will be reported in the month incurred (activity month) rather than in the month in which revenue is recognized (generally the subsequent month).

To bring the quarterly reporting into compliance with this timing change in the calculation of net proceeds, the March reporting period, which will be disclosed in the Trust’s quarterly report on Form 10-Q for the second quarter of 2026, will include production costs for both January and February while reflecting one month (January) of gross proceeds.

On May 8, 2026, a hearing (the “Hearing”) was held before the 96th District Court of Tarrant County, Texas (the “Court”) in connection with the Original Petition for Modification of Trust (the “Petition”) filed by SoftVest, L.P.

(“SoftVest”), a Unitholder of the Trust , seeking judicial modification of the Trust Indenture.

At the Hearing, the Court approved SoftVest’s requested modifications which (1) amended Section 8.03 of the Trust Indenture to eliminate the requirement that certain amendments require approval by 75% of the outstanding Units of the Trust, and (2) deleted Section 10.01 of the Trust Indenture that sets forth certain prohibited amendments and replaced Article X of the Trust Indenture with a provision permitting amendment of any provision of the Trust Indenture by a vote of Unitholders in accordance with Article VIII (which, as amended, will permit amendment by a majority in interest of Unitholders constituting a quorum at a meeting of Unitholders where a quorum is present).

As a result of the Court’s order, the Trustee entered into Amendment No.

2 to the Amended and Restated Trust Indenture of Permian Basin Royalty Trust dated May 8, 2026 implementing the modifications approved by the Court.

Subsequent to June 30, 2026, the Trust declared a distribution on July 21, 2026 of $0.043566 per Unit outstanding payable on August 14, 2026 to Unitholders of record on July 31, 2026.

The Trustee maintains an expense reserve that allows the Trustee to pay obligations of the Trust in the event there is not sufficient royalty income to pay such expenses.

The expense reserve was $1,100,000 as of June 30, 2026 and was increased with the distribution declared on July 21, 2026 by $400,000, such that the current balance is $1,500,000.

The Trustee was notified by SoftVest, L.P.

(“SoftVest”), a Unitholder of the Trust, that on July 28, 2026, SoftVest and certain of its affiliates entered into a definitive Combination Agreement with Blackbeard Holdings, LLC and certain of its affiliates (“Blackbeard”) pursuant to which they propose to combine the assets of the Trust and certain oil and natural gas mineral interest and land operations owned by Blackbeard to create a new publicly traded corporation, PBT Land and Minerals, Inc.

(“New PBT”) (the “Business Combination”).

Completion of the Business Combination is subject to a vote of Trust Unitholders.

SoftVest and certain other unitholders representing in excess of 15% of the Trust Units have, as permitted by the Trust Indenture, requested that the Trustee call a special meeting of Trust Unitholders for purposes of considering amendments to the Trust Indenture that would implement the Business Combination and related matters.

New PBT has filed a registration statement on Form S-4 that includes a prospectus and a proxy statement for purposes of soliciting proxies with respect to the special meeting.

New PBT has also filed a registration statement on Form S-1 pursuant to which it will make a rights offering to Trust Unitholders with respect to shares of New PBT.

Neither the Trust, nor the Trustee is a party to the Combination Agreement, nor is the Trust or the Trustee soliciting proxies or participating in any offering of securities.

The Trustee is not making any recommendation to Trust Unitholders as to how to vote with respect to the Business Combination or other proposals at the special meeting.

Unitholders will be notified of the record date and meeting date for the special meeting at a later date.

Trustee’s Discussion and Analysis

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Oil prices began to spike sharply in March and April, reaching a high price of $114.58 on April 7, 2026, due to the war in Iran.

As of May 4, 2026 the price of oil was $109.76 per barrel.

As of August 3, 2026 the price of oil was $81.96 per barrel.

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

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As stipulated in the Trust Indenture, 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 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 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.

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

Recent Developments

SoftVest Special Meeting and Petition

SoftVest Special Meeting, Petition, and Proposed Business Combination

On December 16, 2025, the Trust held a special meeting of its Unitholders (the “2025 Special Meeting”).

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2 to the Amended and Restated Trust Indenture of Permian Basin Royalty Trust dated May 8, 2026 implementing the modifications approved by the Court.

The Trustee was notified by SoftVest that on July 28, 2026, SoftVest and certain of its affiliates entered into a definitive Combination Agreement with Blackbeard Holdings, LLC and certain of its affiliates (“Blackbeard”) pursuant to which they propose to combine the assets of the Trust and certain oil and natural gas mineral interest and land operations owned by Blackbeard to create a new publicly traded corporation, PBT Land and Minerals, Inc.

(“New PBT”) (the “Business Combination”).

Completion of the Business Combination is subject to a vote of Trust Unitholders.

New PBT has filed a registration statement on Form S-4 that includes a prospectus and a proxy statement for purposes of soliciting proxies with respect to the special meeting.

New PBT has also filed a registration statement on Form S-1 pursuant to which it will make a rights offering to Trust Unitholders with respect to shares of New PBT.

Neither the Trust, nor the Trustee is a party to the Combination Agreement, nor is the Trust or the Trustee soliciting proxies or participating in any offering of securities.

The Trustee is not making any recommendation to Trust Unitholders as to how to vote with respect to the Business Combination or other proposals at the special meeting.

Unitholders will be notified of the record date and meeting date for the special meeting at a later date.

Blackbeard Settlement

On August 19, 2025, the Trustee entered into the “Settlement Agreement”

in connection with its lawsuit against Blackbeard, as operator of the properties in the Waddell Ranch, in Crane County, Texas, in which the Trust holds a 75% net overriding royalty.

On August 19, 2025, the Trustee entered into the Settlement Agreement in connection with its lawsuit against Blackbeard, as operator of the properties in the Waddell Ranch, in Crane County, Texas, in which the Trust holds a 75% net overriding royalty.

Pursuant to the Settlement Agreement, Blackbeard agreed to pay the Trust $9,000,000, of which $4,500,000 was paid to the Trust on September 18, 2025, $1,125,000 was paid in January 2026, and the remainder of which will be paid in three equal installments of $1,125,000 quarterly during the 2026 calendar year.

Pursuant to the Settlement Agreement, Blackbeard has agreed to pay the Trust $9,000,000, of which $4,500,000 was paid in September 2025, $1,125,000 was paid in each of January 2026, April 2026, and July 2026, and the remainder of which is scheduled to be paid in October 2026, if the Business Combination has not been approved by Unitholders and closed by such date.

Pursuant to the Business Combination, the Settlement Agreement would be assigned from the Trust to New PBT, and then following other steps in the Business Combination, would expire.

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 salt water disposal, gathering and transportation, and charge technical labor on reservoir engineers using an agreed allocation methodology against the net overriding royalty.

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To bring the quarterly reporting into compliance with this timing change in the calculation of net proceeds, the March reporting period, which is disclosed in this Form 10-Q for the second quarter of 2026, will include production costs for both January and February while reflecting one month (January) of gross proceeds.

Results of Operations

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

For the quarter ended March 31, 2026, royalty income received by the Trust amounted to $3,551,082 compared to royalty income of $3,054,697 during the first quarter of 2025.

The royalty income for the three months ended March 31, 2026 includes the $1,125,000 partial settlement payment from Blackbeard.

Pricing information for the Waddell Ranch properties is for December 2025, January and February 2026 (reflecting the period for which proceeds would have been distributed to Unitholders in the first quarter of 2026).

For the Waddell Ranch properties, the average realized oil and gas prices were $59.19 per barrel (Bbl) and $0.92 per thousand cubic feet (Mcf), respectively for the three months ended March 31, 2026, compared to $68.83 per barrel (Bbl) and $1.66 per Mcf for the three months ended March 31, 2025.

For the Texas Royalty properties, the average realized oil and gas prices were $57.58 per Bbl and $6.70 per Mcf, respectively for the quarter ended March 31, 2026, compared to $68.96 per Bbl and $8.61 per Mcf, respectively for the quarter ended March 31, 2025.

The higher royalty income reported in the three months ended March 31, 2026, compared to the same time period in 2025 is attributable to a $1,125,000 partial settlement payment from Blackbeard in the first quarter of 2026.

Interest income for the quarter ended March 31, 2026 was $16,876 compared to $16,523 during the first quarter of 2025.

The slight increase in interest income is primarily attributable to a small increase in the amount of funds available for investment.

Total expenses during the first quarter of 2026 amounted to $541,157 compared to $475,008 during the first quarter of 2025.

The increase in total expenses can be primarily attributed to the timing of payment of expenses.

These transactions resulted in distributable income for the quarter ended March 31, 2026 of $3,026,801 or $0.06 per Unit outstanding of beneficial interest.

Distributions of $0.040056, $0.014221, and $0.010662 per Unit were made to Unitholders of record as of January 30, 2026, February 27, 2026, and March 31, 2026, respectively.

The January distribution includes the second installment, in the amount of $1,125,000 of the Settlement Agreement.

For the first quarter of 2025, distributable income was $2,596,212 or $0.06 per Unit outstanding of beneficial interest.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

For the quarter ended June 30, 2026, royalty income received by the Trust amounted to $4,158,812 compared to royalty income of $3,089,889 during the second quarter of 2025.

The royalty income for the three months ended June 30, 2026 includes the $1,125,000 partial settlement payment from Blackbeard paid in April 2026.

Pricing information for the Waddell Ranch properties is for March, April, and May 2026 (reflecting the period for which proceeds would have been distributed to Unitholders in the second quarter of 2026).

For the Waddell Ranch properties, the average realized oil and gas prices were $68.79 per barrel (Bbl) and $1.19 per thousand cubic feet (Mcf), respectively, for the three months ended May 31, 2026, compared to $70.27 and $2.41 for the three months ended May 31, 2025.

For the Texas Royalty properties, the average realized oil and gas prices were $74.46 per Bbl and $8.14 per Mcf, respectively, for the quarter ended June 30, 2026, compared to $68.61 per Bbl and $10.15 per Mcf, respectively, for the quarter ended June 30, 2025.

The higher royalty income reported in the three months ended June 30, 2026, compared to the same time period in 2025 is attributable to a $1,125,000 partial settlement payment from Blackbeard in the second quarter of 2026, partially offset by lower royalty income from underlying operations.

Interest income for the quarter ended June 30, 2026 was $16,319 compared to $15,751 during the second quarter of 2025.

The increase in interest income is primarily attributable to increased amounts of funds available for investment.

Total expenses during the second quarter of 2026 amounted to $304,569 compared to $708,385 during the second quarter of 2025.

The decrease in total expenses can be primarily attributed to expenses incurred for professional services associated with legal proceedings with Blackbeard in the second quarter of 2025.

These transactions resulted in distributable income for the quarter ended June 30, 2026 of $3,870,562 or $0.08 per Unit outstanding of beneficial interest.

Distributions of $0.038014, $0.020355 and $0.024673 per Unit were made to Unitholders of record as of April 30, 2026, May 29, 2026, and June 30, 2026, respectively.

The April distribution includes the third installment, in the amount of $1,125,000 of the Settlement Agreement.

For the second quarter of 2025, distributable income was $2,397,255, or $0.05 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.

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

Royalty income for the Trust for the first quarter of the calendar year is associated with actual oil and gas production for October, November, and December 2025 for the Waddell Ranch properties from which “Royalties”

Royalty income for the Trust for the first quarter of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November of 2025, December of 2025 and January of 2026.

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 2026 for the Waddell Ranch properties from which “Royalties”

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 2026.

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 April 30, 2026, 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 March 31, 2026.

On July 30, 2026, 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 June 30, 2026.

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

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Pricing and Production Discussion

For the Waddell Ranch properties, the average realized price of oil decreased to $59.19 per Bbl for the period December 2025 through February 2026 compared to $68.83 per Bbl for the period December 2024 through February 2025 due to worldwide market variables.

The average realized price of gas decreased to $0.92 per Mcf for the period December 2025 through February 2026 from $1.66 per Mcf for the period December 2024 through February 2025.

For the Texas Royalty properties, the average realized price of oil decreased to $57.58 per Bbl in the first quarter of 2026, compared to $68.96 per Bbl in the first quarter of 2025 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties decreased from $8.61 per Mcf in the first quarter of 2025 to $6.70 per Mcf in the first quarter of 2026 in part due to change in overall market variables.

For the Waddell Ranch properties, the average realized price of oil decreased to $68.79 per Bbl for the period January through March 2026 compared to $70.27 per Bbl for the period January through March of 2025 due to worldwide market variables.

The average realized price of gas decreased to $1.19 per Mcf for the period January through March 2026 from $2.41 per Mcf for the period January through March of 2025.

For the Texas Royalty properties, the average realized price of oil increased to $74.46 per Bbl in the second quarter of 2026, compared to $68.61 per Bbl in the second quarter of 2025 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties decreased from $10.15 per Mcf in the second quarter of 2025 to $8.14 per Mcf in the second quarter of 2026 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.

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Blackbeard Capital Expense Discussion

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first quarter of 2026 totaled $48.8 million (gross) as compared to $47.9 million (gross) for the first quarter of 2025.

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 2026 totaled $39.6 million (gross) as compared to $61.3 million (gross) for the second quarter of 2025.

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 $30.7 million (gross) for the first quarter of 2026, compared to $21.4 million (gross) for the same period in 2025 on the Waddell Ranch properties.

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $48.3 million (gross) for the second quarter of 2026, compared to $19.8 million (gross) for the same period in 2025 on the Waddell Ranch properties.

Blackbeard did not provide the Trustee with reasons for the increase in lease operating expenses and property taxes for the quarter.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

For the six months ended June 30, 2026, royalty income received by the Trust amounted to $7,709,894 compared to royalty income of $6,144,586 for the six months ended June 30, 2025.

The average realized oil and gas for the Waddell Ranch properties were $63.91 per Bbl and $1.05 per Mcf, respectively for the six months ended June 30, 2026 compared to $69.55 per Bbl and $2.06 per Mcf for the six months ended June 30, 2025.

For the Texas Royalty properties, the average realized oil and gas prices were $65.83 per Bbl and $7.40 per Mcf, respectively for the six months ended June 30, 2026 compared to $68.78 per Bbl and $9.36 per Mcf, respectively for the six months ended June 30, 2025 .

The higher royalty income reported in the six months ended June 30, 2026, compared to the same time period in 2025 is attributable to the two $1,125,000 partial settlement payments received from Blackbeard in the first and second quarters of 2026.

The non-settlement royalty income decreased due to lower oil and gas pricing.

Interest income for the six months ended June 30, 2026, was $33,195 compared to $32,274 during the six months ended June 30, 2025.

The increase in interest income is primarily attributable to an increase 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, 2026, amounted to $845,726 compared to $1,183,393 during the six months ended June 30, 2025.

The decrease in total expenses can be primarily attributed to expenses for professional services associated with legal proceedings with Blackbeard during the first two quarters of 2025.

These transactions resulted in distributable income for the six months ended June 30, 2026 of $6,897,363 or $0.15 per Unit.

For the six months ended June 30, 2025, distributable income was $4,993,467, or $0.11 per Unit.

On July 30, 2026, 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, 2026.

Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved for the six months ended June 30, 2026 and 2025 are as follows:

For the Six Months Ended June 30,

Oil sales (Bbls)

Gas sales (Mcf)

Properties From Which The Royalties Were Carved:

Total oil sales (Bbls)

Average per day (Bbls)

Average price per Bbl

Total gas sales (Mcf)

Average per day (Mcf)

Average price per Mcf

Pricing and Production Discussion

Production and pricing information for the Waddell Ranch properties is shown for the months of December 2025 through May 2026.

The average realized price of oil decreased to $63.91 per Bbl for December 2025 through May 2026 compared to $69.55 per Bbl for the six month period ended May 31, 2025 due to worldwide market variables.

The average realized price of gas for the six months ended May 31, 2026 was $1.05 per Mcf, a decrease from $2.06 for the six month period ending May 31, 2025.

For the Texas Royalty properties, the average realized price of oil decreased to $65.83 per Bbl for the six months ended June 30, 2026, compared to $68.78 per Bbl for the same period of 2025 due to worldwide market variables.

The average realized price of gas (including natural gas liquids) for the Texas Royalty properties decreased from $9.36 per Mcf in the six months ended June 30, 2025 to $7.40 per Mcf in the same period of 2026 due to change in overall market variables.

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 2026 compared to 2025, while for the Waddell Ranch properties, oil and natural gas volumes (including plant products) increased for the applicable period in 2026 compared to 2025.

Blackbeard Capital Expense Discussion

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch

properties for the six months ended June 30, 2026 totaled $88.1 million (gross).

For the six months ended June 30, 2025, capital expenditures were $109.2 million (gross) to the Trust.

Lease operating expenses and property taxes totaled $79.0 million (gross) for the six months ended June 30, 2026, compared to $41.2 million (gross) for the same period in 2025.

Blackbeard did not provide the Trustee with reasons for the increase in lease operating expenses and property taxes for the six month period.

Calculation of Royalty Income

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

Royalty income received and available for distribution by the Trust for the three months ended March 31, 2026 and 2025, respectively, was computed as shown in the table below:

Three Months Ended March 31,

PROPERTIES (1)

Royalty income received and available for distribution by the Trust for the three months ended June 30, 2026 and 2025, respectively, was computed as shown in the table below:

Three Months Ended June 30,

Gross proceeds of sales from the Underlying Properties

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Royalty income (2)(3)

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through March 2026.

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through June 2026.

(2) The 2025 Net profits and Royalty income for the Waddell Ranch properties have been adjusted to reflect the amount received rather than reflecting Excess Costs for the quarter.

Excess Costs can be reviewed in Note 4 of the Condensed Interim Financial Statements.

(3) Royalty income for the Waddell Ranch properties does not include the $1.1 million partial settlement payment received in January of 2026.

(3) Royalty income for the Waddell Ranch properties does not include the $1.125 million partial settlement payments received in April of 2026.

(4) Beginning with the activity month of January 2026, production costs are reported in the month incurred (activity month) rather than in the month in which revenue is recognized (generally the subsequent month).

To bring the quarterly reporting into compliance with this timing change in the calculation of net proceeds, the March reporting period, includes production costs for both January and February while reflecting one month (January) of gross proceeds.

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, 2025.

There have been no significant changes to the critical accounting policies during the three months ended March 31, 2026.

There have been no significant changes to the critical accounting policies during the six months ended June 30, 2026.

Distributable Income Per Unit

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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-Q

Item 1. Financial Statements