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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 352 added, 374 removed, 236 unchanged (75% of the section changed)

Financial Statements

The condensed financial statements included herein are presented without

audit, pursuant to the rules and regulations of the U.S.

The condensed financial statements included herein are presented

without audit, pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”).

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and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations,

and Simmons Bank, as Trustee (the “Trustee”), believes that the disclosures are adequate to make the information presented

and Argent Trust Company, as Trustee (the “Trustee”), believes that the disclosures are adequate to make the information presented

not misleading.

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opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the assets,

liabilities and Trust corpus of PermRock Royalty Trust at September 30, 2022, and December 31, 2021, and the distributable income and

changes in Trust corpus for the three- and nine-month periods ended September 30, 2022, and September 30, 2021, have been included.

Distributable

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

liabilities and Trust corpus of PermRock Royalty Trust at March 31, 2023, and December 31, 2022, and the distributable income and changes

in Trust corpus for the three-month periods ended March 31, 2023, and March 31, 2022, have been included.

Distributable income for such

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

The accompanying notes to condensed financial statements are an integral

part of these financial statements.

PERMROCK ROYALTY TRUST

STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

September 30,

CONDENSED STATEMENTS OF ASSETS, LIABILITIES

AND TRUST CORPUS

March 31, 2023

December 31, 2022

Cash and short-term investments

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of the Trust.

The accompanying notes to condensed financial statements

are an integral part of these financial statements.

The accompanying notes to condensed financial statements are an integral

part of these financial statements.

PERMROCK ROYALTY TRUST

STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

Ended September 30,

CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME

Ended March 31,

Net profits income

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general and administrative

Interest received but not distributed

Cash reserves (1)

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of the Trust.

(2) Based on 12,165,732 Trust units issued and outstanding as of November 14, 2022.

The accompanying notes to condensed

financial statements are an integral part of these financial statements.

(2) Based on 12,165,732 Trust units issued and outstanding as of May 15, 2023.

The accompanying notes to condensed financial statements

are an integral part of these financial statements.

PERMROCK ROYALTY TRUST

STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

Ended September 30,

CONDENSED STATEMENTS OF CHANGES IN TRUST

CORPUS (UNAUDITED)

Ended March 31,

Trust corpus, beginning of period

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PERMROCK ROYALTY TRUST

TO CONDENSED FINANCIAL STATEMENTS

NOTES TO CONDENSED FINANCIAL STATEMENTS

Organization of Trust

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trust formed on November 22, 2017 under the Delaware Statutory Trust Act pursuant to a trust agreement dated November 22, 2017, as amended

and restated on May 4, 2018, by and among Boaz Energy II, LLC (“Boaz Energy”), as trustor, Simmons Bank, as Trustee (the “Trustee”),

and Wilmington Trust, National Association, as Delaware Trustee (the “Delaware Trustee”) (such amended and restated trust

agreement, as amended to date, the “Trust Agreement”).

The Trust was created to acquire and hold the Net Profits Interest for

the benefit of the Trust unitholders.

In connection with the closing of the initial public offering of Trust units, on May 4, 2018, Boaz

Energy conveyed the Net Profits Interest to the Trust in exchange for Trust units pursuant to a conveyance agreement between Boaz Energy,

the Trustee and the Delaware Trustee (the “Conveyance”).

and restated on May 4, 2018, by and among Boaz Energy II, LLC (“Boaz Energy”), as trustor, Simmons Bank, as trustee, and Wilmington

Trust, National Association, as Delaware Trustee (the “Delaware Trustee”) (such amended and restated trust agreement, as amended

to date, the “Trust Agreement”).

In accordance with the successor trustee provisions of the Trust Agreement,

Argent Trust Company, as successor trustee of the Trust, is subject to all terms and conditions of the Trust Agreement.

The defined term

“Trustee”

as used herein shall refer to Simmons Bank (which maintains its offices at 2200 West 7th Street, Suite 210, P.O.

Box 470727, Fort Worth, Texas 76147) for periods prior to December 30, 2022, and shall refer to Argent Trust Company (which maintains

its offices at 2911 Turtle Creek Blvd, Suite 850, Dallas, Texas 75219-6291) for periods on and after December 30, 2022.

The Trust was created to acquire and hold the Net Profits Interest

for the benefit of the Trust unitholders.

In connection with the closing of the initial public offering of Trust units, on May 4, 2018,

Boaz Energy conveyed the Net Profits Interest to the Trust in exchange for Trust units pursuant to a conveyance agreement between Boaz

Energy, the Trustee and the Delaware Trustee (the “Conveyance”).

The Net Profits Interest represents an interest in the Underlying

The Net Profits Interest entitles the Trust to receive 80% of the net profits

from the sale of oil and natural gas production from the Underlying Properties.

The Net Profits Interest is passive in nature and neither

the Trust nor the Trustee has any control over, or responsibility for, costs relating to the operation of the Underlying Properties.

Trust has and will continue to make monthly cash distributions of all of its monthly cash receipts, after deduction of fees and expenses

The Net Profits Interest entitles the Trust to receive 80% of the

net profits from the sale of oil and natural gas production from the Underlying Properties.

The Net Profits Interest is passive in nature

and neither the Trust nor the Trustee has any control over, or responsibility for, costs relating to the operation of the Underlying Properties.

The Trust has and will continue to make monthly cash distributions of all of its monthly cash receipts, after deduction of fees and expenses

for the administration of the Trust and any cash reserves, to holders of its Trust units as of the applicable record date on or before

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Distributions generally relate to sales from a one-month period.

The Trustee may deposit funds awaiting distribution in an account with

an FDIC-insured or national bank, including the Trustee, if the interest paid to the Trust at least equals amounts paid by the Trustee

The Trustee may deposit funds awaiting distribution in an account

with an FDIC-insured or national bank, including the Trustee, if the interest paid to the Trust at least equals amounts paid by the Trustee

on similar deposits, and make other short-term investments with the funds distributed to the Trust.

In May 2018, Boaz Energy completed an initial

public offering of 6,250,000 of the 12,165,732 total Trust units outstanding, retaining ownership of 5,915,732 Trust units.

of September 30, 2022, Boaz Energy owned 5,756,675 Trust units of the 12,165,732 Trust units issued and outstanding.

In May 2018, Boaz Energy completed an initial public offering of

6,250,000 of the 12,165,732 total Trust units outstanding, retaining ownership of 5,915,732 Trust units.

As of March 31, 2023, Boaz Energy

owned 5,194,632 Trust units of the 12,165,732 Trust units issued and outstanding.

Trust Significant Accounting Policies

Basis of Accounting

The Trust uses the modified cash basis of accounting to report Trust receipts

of the Net Profits Interest and payments of expenses incurred.

The Net Profits Interest represents the right to receive revenues (primarily

oil and natural gas sales), less direct operating expenses, lease operating expenses, severance and ad valorem taxes and development expenses

of the Underlying Properties, multiplied by 80%, less any payments made or plus any payments received in connection with the settlement

of certain hedge contracts.

Cash distributions of the Trust are made based on the amount of cash received by the Trust pursuant to terms

of the Conveyance creating the Net Profits Interest.

The financial statements of the Trust, as prepared on a modified cash basis,

reflect the Trust’s assets, liabilities, Trust corpus, earnings and distributions as follows:

The Trust uses the modified cash basis of accounting to report Trust

receipts of the Net Profits Interest and payments of expenses incurred.

The Net Profits Interest represents the right to receive revenues

(primarily oil and natural gas sales), less direct operating expenses, overhead expenses, lease operating expenses, severance and ad valorem

taxes and development expenses of the Underlying Properties, multiplied by 80%, less any payments made or plus any payments received in

connection with the settlement of certain hedge contracts.

Cash distributions of the Trust are made based on the amount of cash received

by the Trust pursuant to terms of the Conveyance creating the Net Profits Interest.

The financial statements of the Trust, as prepared on a modified

cash basis, reflect the Trust’s assets, liabilities, Trust corpus, earnings and distributions as follows:

Income from the Net Profits Interest is recorded when distributions are received by the Trust;

Distributions to Trust unitholders are recorded when declared by the Trust;

PERMROCK ROYALTY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

· Trust general and administrative expenses (which includes the Trustee’s fees as well as accounting, printing, engineering, legal,

Trust general and administrative expenses (which includes the Trustee’s fees as well as accounting, printing, engineering, legal,

tax advisory and other professional fees) are recorded when paid;

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certain expenditures that would not be recorded as contingent liabilities under United States generally accepted accounting principles

(“GAAP”);

Amortization of the investment in the Net Profits Interest is calculated on a unit-of-production basis and is charged directly to

Trust corpus, and such amortization does not affect distributions from the Trust;

· The Trust’s investment in the Net Profits Interest is periodically assessed to determine whether its aggregate value has been

The Trust’s investment in the Net Profits Interest is periodically assessed to determine whether its aggregate value has been

impaired below its total capitalized cost basis.

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development and operating expenses .

The financial statements of the Trust are prepared on a modified cash basis

of accounting, which is considered to be the most meaningful basis of preparation for a royalty trust because monthly distributions to

the Trust unitholders are based on net cash receipts.

Although this basis of accounting is permitted for royalty trusts by the SEC, the

financial statements of the Trust differ from financial statements prepared in accordance with GAAP because net profits income is not

accrued in the month of production, expenses are not recognized when incurred and cash reserves may be established for certain contingencies

that would not be recorded in GAAP financial statements.

This comprehensive basis of accounting other than GAAP corresponds to the accounting

permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Any impairment would be charged directly to the Trust corpus.

The financial statements of the Trust are prepared on a modified

cash basis of accounting, which is considered to be the most meaningful basis of preparation for a royalty trust because monthly distributions

to the Trust unitholders are based on net cash receipts.

Although this basis of accounting is permitted for royalty trusts by the SEC,

the financial statements of the Trust differ from financial statements prepared in accordance with GAAP because net profits income is

not accrued in the month of production, expenses are not recognized when incurred, cash reserves may be established for certain contingencies,

and overpayments received do not need to be paid back and are instead taken from future payments that would not be recorded in GAAP financial

This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the SEC

as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Interim Financial Statements.

The accompanying unaudited financial statements have been prepared by the

Trust in accordance with the accounting policies stated in the audited financial statements and notes of the Trust thereto included in

the Trust’s 2021 Annual Report and reflect all adjustments that are, in the opinion of the Trustee, necessary to state fairly the

information in the Trust’s unaudited interim financial statements.

The accompanying unaudited financial statements have been prepared

by the Trust in accordance with the accounting policies stated in the audited financial statements and notes of the Trust thereto included

in the Trust’s 2022 Annual Report and reflect all adjustments that are, in the opinion of the Trustee, necessary to state fairly

the information in the Trust’s unaudited interim financial statements.

Use of Estimates.

The preparation of financial statements requires the Trust to make estimates

and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the

reporting period.

The preparation of financial statements requires the Trust to make

estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses

during the reporting period.

Actual results could differ from those estimates.

Estimated future cash flows used to determine amortization and potential

impairment of the investment in the Net Profits Interest are subject to change.

Risks and Uncertainties.

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and natural gas prices historically have been volatile and may be subject to significant fluctuations in the future.

PERMROCK ROYALTY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

Contingencies.

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Please see the discussion of litigation in Note 8 to condensed financial

Revenue received by the Trust (and its ability to pay distributions) has

been and will continue to be directly affected by the volatility in commodity prices in response to the economic effects of the COVID-19

Crude oil prices have been higher during the first three quarters of 2022, but fluctuations and depressions could continue for

an extended period of time.

Tax counsel advised the Trust at the time of formation that for U.S.

income tax purposes, the Trust is treated as a grantor trust and will not be subject to federal income tax at the trust level.

Trust unitholders

will be treated for such purposes as owning a direct interest in the assets of the Trust, and each Trust unitholder is taxed directly

on its pro rata share of the income and any gain, if sold, attributable to the assets of the Trust and is entitled to claim its pro rata

share of deductions and expenses attributable to the assets of the Trust.

Each Trust unitholder should consult his or her own tax advisor

regarding income tax requirements, if any, applicable to such unitholder’s ownership of Trust units.

Tax counsel advised the Trust at the time of formation that for

federal income tax purposes, the Trust is treated as a grantor trust and will not be subject to federal income tax at the trust level.

Trust unitholders will be treated for such purposes as owning a direct interest in the assets of the Trust, and each Trust unitholder

is taxed directly on its pro rata share of the income and any gain, if sold, attributable to the assets of the Trust and is entitled to

claim its pro rata share of deductions and expenses attributable to the assets of the Trust.

Each Trust unitholder should consult his

or her own tax advisor regarding income tax requirements, if any, applicable to such unitholder’s ownership of Trust units.

Cash Reserves

Pursuant to the

Trust Agreement, as of May 31, 2019, the Trustee began retaining cash from the distributions the Trust receives to be used by the Trust

in the event that its cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses

as they become due.

The Trustee is authorized to retain cash reserves (i) in an amount not to exceed $1.0 million at any one time and

(ii) in such amounts as the Trustee in its discretion deems appropriate to pay for future liabilities of the Trust, but not less than

$25,000 per month or more than $100,000 per month.

Cash reserves held by the Trustee for administrative expenses totaled $1,000,000 as

of September 30, 2022 .

Boaz Energy is entitled under the Conveyance to reserve up to $3.0 million

from the net profits for certain future taxes and development or operating expenses.

of December 31, 2021, the balance of funds held back to cover certain

future capital expenses was $214,157 net to the Trust.

of September 30, 2022 , the balance of funds reserved by Boaz Energy, net to the Trust, was $1,918,156.

Pursuant to the Trust Agreement, as of May 31, 2019, the Trustee

began retaining cash from the distributions the Trust receives to be used by the Trust in the event that its cash on hand (including available

cash reserves) is not sufficient to pay ordinary course administrative expenses as they become due.

The Trustee is authorized to retain

cash reserves (i) in an amount not to exceed $1.0 million at any one time and (ii) in such amounts as the Trustee in its discretion deems

appropriate to pay for future liabilities of the Trust, but not less than $25,000 per month or more than $100,000 per month.

Cash reserves

held by the Trustee for administrative expenses totaled $1,000,000 as of March 31, 2023, and December 31, 2022.

Boaz Energy is entitled under the Conveyance to reserve up to $3.0

million from the net profits for certain future taxes and development or operating expenses.

As of December 31, 2022, the balance

of funds held back to cover certain future capital expenses

was $1,478,157 net to the Trust.

As of March 31, 2023, the balance of funds held back to cover future capital expenses was $666,157 net

to the Trust.

Distributions to Unitholders

The Trust makes monthly cash distributions of the net amount, if any, of

its monthly cash receipts, after deduction of fees and expenses for the administration of the Trust and cash reserves to holders of its

Trust units as of the applicable record date on or before the 10th business day after the record date.

Based on 12,165,732 Trust units outstanding at each date listed below,

the per unit distributions during the quarter ended September 30, 2022, were as follows:

July 29, 2022

August 12, 2022

August 31, 2022

September 15, 2022

September 30, 2022

October 17, 2022

PERMROCK ROYALTY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

The Trust makes monthly cash distributions of the net amount, if

any, of its monthly cash receipts, after deduction of fees and expenses for the administration of the Trust and cash reserves to holders

of its Trust units as of the applicable record date on or before the 10th business day after the record date.

Based on 12,165,732 Trust units outstanding at each date listed

below, the per unit distributions during the quarter ended March 31, 2023, were as follows:

January 31, 2023

February 14, 2023

February 28, 2023

March 14, 2023

March 31, 2023

April 14, 2023

Related Party Transactions

Trustee Administrative Fee .

Under the terms of the Trust Agreement,

the Trust pays an annual administrative fee to the Trustee and the Delaware Trustee.

The Delaware Trustee’s annual fee is $4,000.

For 2022, the Trustee’s annual administrative fee is $198,374, which is divided into twelve equal monthly payments throughout the

The Trustee’s annual administrative fee increased at a rate of 3% per year for the first three years of the Trust’s

existence, increased at a rate of 2% this year, will increase at a rate of 2% next year, and then will increase at a rate of 1% per year

until the 20th anniversary of the Trust’s formation and then remain flat thereafter.

These costs of the Trust, which are included

in administration expenses, are deducted by the Trust before distributions are made to Trust unitholders.

Under the terms of the Trust

Agreement, the Trust pays an annual administrative fee to the Trustee and the Delaware Trustee.

The Delaware Trustee’s annual fee

For 2023, the Trustee’s annual administrative fee is approximately $200,357, which is divided into twelve equal monthly

payments throughout the year.

The Trustee’s annual administrative fee increased at a rate of 3% per year for the first three years

of the Trust’s existence, increased at a rate of 2% in 2021 and 2022, and increased at a rate of 1% in 2023.

The Trustee’s

annual administrative fee will continue to increase at a rate of 1% per year until the 20th anniversary of the Trust’s formation

and then remain flat thereafter.

These costs of the Trust, which are included in administration expenses, are deducted by the Trust before

distributions are made to Trust unitholders.

Agreements with Boaz Energy .

On May 4, 2018, the Trust entered into

a registration rights agreement for the benefit of Boaz Energy and certain of its affiliates and transferees, pursuant to which the Trust

agreed to register the offering of the Trust units held by Boaz Energy and certain of its affiliates and permitted transferees upon request

by Boaz Energy.

As of September 30, 2022, Boaz Energy owned 5,756,675 Trust units of the 12,165,732 Trust

units issued and outstanding.

On May 4, 2018, the Trust entered

into a registration rights agreement for the benefit of Boaz Energy and certain of its affiliates and transferees, pursuant to which the

Trust agreed to register the offering of the Trust units held by Boaz Energy and certain of its affiliates and permitted transferees upon

request by Boaz Energy.

As of March 31, 2022, Boaz Energy owned 5,878,332 Trust units of the 12,165,732 Trust units issued and outstanding.

The Trust filed a Registration Statement on Form S-3 on April 28, 2022 (the “Registration Statement”) seeking the registration

of 5,801,675 Trust units held by Boaz Energy.

The SEC confirmed the effectiveness of the Registration Statement on May 9, 2022.

has not and will not receive any of the proceeds received from the sale of the Trust units.

The selling unitholder will bear all costs

and expenses incidental to the preparation and filing of the Registration Statement, excluding certain internal expenses of the Trust,

which will be borne by the Trust, and any underwriting discounts and commissions, which will be borne by the selling unitholder as the

seller of the Trust units.

As of March 31, 2023, Boaz Energy owned 5,194,632 Trust units of the 12,165,732 Trust units issued and outstanding.

Development Costs

Boaz Energy has advised the Trustee that the

estimate for Boaz Energy’s 2022 capital budget for the Underlying Properties is $7.0 million, of which approximately $4.4 million

had been expended as of September 30, 2022.

Based on current oil and gas prices, Boaz anticipates continuing to participate in Crane

and Glasscock counties non-operated drilling and recompletion projects, waterflood conformance and reactivations in Terry, Coke and Crane

counties, as well as drilling two additional wells in Coke and Terry counties sometime in 2022.

The majority of capital spent in

2022 to date has been on non-operated drilling and completions in Crane and Glasscock counties, well reactivations and stimulations across

the underlying properties, and on wellbore re-entry opportunities in Coke and Crane counties.

The $7.0 million estimate is subject to

change based on, among other things, changes in the price of oil and natural gas, the pace of regulatory approvals and availability of

materials, equipment and labor.

Boaz Energy has advised the Trustee that the estimate for Boaz Energy’s

2023 capital budget for the Underlying Properties is $5.2 million, of which approximately $1.3 million had been expended as of March 31,

Based on current oil and gas prices, Boaz anticipates continuing to participate in Crane and Glasscock Counties non-operated

drilling and waterflood conformance work in Crane, Terry, Schleicher and Stonewall Counties, as well as drilling two new operated wells

in Crane and Coke Counties sometime in 2023.

The majority of capital spent in 2023 to date has been on a well deepening in the Abo

The $5.2 million estimate is subject to change based on, among other things, changes in the price of oil and natural gas, Boaz Energy’s

actual capital requirements, the pace of regulatory approvals and the mix of projects.

Settlements and Litigation

On October 1, 2018,

a lawsuit styled Thaleia L.

Marston, Trustee of the Marston Trust v.

On October 1, 2018, a lawsuit styled Thaleia L.

Trustee of the Marston Trust v.

Blackbeard Operating, LLC , et.al, No.

18-10-24761 –

CVW in the 143rd District Court in Ward County, Texas (the “2018 Litigation”) was filed, naming, among others, Boaz Energy

and the Trust as defendants.

The plaintiff is a lessor under two leases operated by Blackbeard Operating LLC.

The Underlying Properties

include the interests of Boaz Energy in some of the minerals covered by those leases.

The litigation sought surface use damages and alleged

violations of the terms of the leases, among other things.

The court had set a two-day bench trial to commence May 18, 2022, but on May

10, 2022, the court granted motions for summary judgment effectively disposing of the plaintiff’s claims.

At a status conference

conducted on May 12, 2022, the plaintiff confirmed the court’s rulings disposed of all the plaintiff’s claims.

The only remaining

issue is whether the court will award attorneys’

fees to the prevailing parties.

The court held a hearing regarding attorneys’

CVW CVW in the 143rd District Court in

Ward County, Texas (the “2018 Litigation”) was filed, naming, among others, Boaz Energy and the Trust as defendants.

plaintiff is a lessor under two leases operated by Blackbeard Operating LLC.

The Underlying Properties include the interests of Boaz

Energy in some of the minerals covered by those leases.

The litigation sought surface use damages and alleged violations of the

terms of the leases, among other things.

The court had set a two-day bench trial to commence May 18, 2022, but on May 10, 2022, the

court granted motions for summary judgment effectively disposing of the plaintiff’s claims.

At a status conference conducted

on May 12, 2022, the plaintiff confirmed the court’s rulings disposed of all the plaintiff’s claims.

The court held a

hearing regarding attorneys’

fees in June 2022.

As of November 11, 2022, the court had not rendered a decision or entered final judgment on the matter.

On May 12, 2023 the court entered its Final Judgment, incorporating its prior

order granting the defendants’

motion for summary judgment and granting their motion for attorneys’

Subsequent Events

On October 21, 2022, the Trust declared a cash distribution of $0.093361

per Trust unit based upon production during the month of August 2022.

Underlying Sales Volumes

Average Price

On April 18, 2023, the Trust declared a cash distribution of $0.030888

per Trust unit based upon production during the month of February 2023 to record holders as of April 28, 2023.

The distribution was paid

on May 12, 2023.

The following table shows underlying oil and natural gas sales and average prices during the production month of February

2023 and attributable to the distribution declared on April 18, 2023:

Sales Volumes

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to help the reader understand

the Trust’s financial condition, results of operations, liquidity and capital resources.

This discussion and analysis should be

read in conjunction with the Trust’s unaudited condensed financial statements and the accompanying notes included in this Quarterly

Report on Form 10-Q (“Quarterly Report”) and the Trust’s audited financial statements and the accompanying notes included

in the Trust’s 2021 Annual Report.

The following discussion and analysis is intended to help the reader

understand the Trust’s financial condition, results of operations, liquidity and capital resources.

This discussion and analysis

should be read in conjunction with the Trust’s unaudited condensed financial statements and the accompanying notes included in

this Quarterly Report on Form 10-Q (“Quarterly Report”) and the Trust’s audited financial statements and the accompanying

notes included in the Trust’s 2022 Annual Report.

Cautionary Statement Regarding Forward Looking Statements

Certain information included in this Quarterly Report contains, and other

materials filed or to be filed by the Trust with the SEC (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 Exchange

Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”).

Such forward-looking statements generally

are accompanied by words such as “may,”

Certain information included in this Quarterly Report contains,

and other materials filed or to be filed by the Trust with the SEC (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

Exchange Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”).

Such forward-looking statements

generally are accompanied by words such as “may,”

“will,”

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and all statements

regarding Boaz Energy and Simmons Bank’s (as Trustee of the Trust) expectations, beliefs and plans regarding the following:

Boaz Energy’s capital projects, timing and estimated costs, and the resulting impact of those activities on the computation of the

Net Profits Interest;

regarding Boaz Energy and Argent Trust Company’s (as Trustee of the Trust) expectations, beliefs and plans regarding the following:

(i) Boaz Energy’s capital projects, timing and estimated costs, and the resulting impact of those activities on the computation

of the Net Profits Interest;

(ii) outside operators’

capital projects and the resulting impact of those activities on the Net Profits Interest;

capital projects and the resulting impact of those activities on the Net Profits

(iii) implementation or continued use of waterflood projects and workovers and the location of waterflood projects and workovers;

Boaz Energy’s estimated capital expenditures;

(iv) Boaz Energy’s estimated capital expenditures;

(v) the timing of capital expenditures and capital reserve amounts;

(vi) the expected

timing of litigation proceedings;

expected timing of litigation proceedings;

(vii) the impact of current litigation matters on the Trust;

(viii) Boaz Energy’s staffing levels

or future reductions in staffing on the Underlying Properties;

(viii) Boaz Energy’s staffing

levels or future reductions in staffing on the Underlying Properties;

(ix) shut in of wells on the Underlying Properties;

(x) the effects of

COVID-19 and disputes over production levels;

(x) the effects

of COVID-19 and disputes over production levels;

and (xi) distributions to Trust unitholders.

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the effect of changes in commodity prices or alternative fuel prices;

· the effect of public health concerns such as the coronavirus disease (COVID-19) and any government response thereto;

the impact of the COVID-19 pandemic and measures implemented in response thereto;

the effects armed conflict between Russia and Ukraine may have on global oil and gas markets;

political and economic conditions in or affecting other oil and natural gas producing regions or countries;

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the effect of existing and future laws and regulatory actions;

· the actions of the Organizations of Petroleum Exporting Countries (“OPEC”);

the actions of the Organizations of Petroleum Exporting Countries (“OPEC”);

conditions in the capital markets;

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severe or unseasonable weather that may adversely affect production;

· adequacy of Boaz Energy’s insurance coverage;

adequacy of Boaz Energy’s insurance coverage;

costs to comply with current and future governmental regulation of the oil and natural gas industry, including environmental, health

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general economic conditions affecting the Permian Basin;

· risks associated with title deficiencies that may arise with respect to the Underlying Properties and Boaz Energy’s ability

risks associated with title deficiencies that may arise with respect to the Underlying Properties and Boaz Energy’s ability

to cure any such defects;

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the cost of inflation;

· the risk factors discussed in Item 1A of Part II of this Quarterly Report and in Part I of the Trust’s 2021 Annual Report.

the risk factors discussed in Item 1A of Part II of this Quarterly Report and in Part I of the Trust’s 2022 Annual Report.

You should not place undue reliance on any forward-looking statements.

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Boaz Energy Information

As a holder of a net profits interest, the Trust relies on Boaz Energy

for information regarding Boaz Energy and its affiliates;

the Underlying Properties, including the operations, acreage, well and completion

count, working interests, production volumes, sales revenues, capital expenditures, operating expenses, reserves, drilling plans, drilling

results and leasehold terms related to the Underlying Properties;

and factors and circumstances that have or may affect the foregoing.

As a holder of a net profits interest, the Trust relies on Boaz

Energy for information regarding Boaz Energy and its affiliates;

the Underlying Properties, including the operations, acreage, well and

completion count, working interests, production volumes, sales revenues, capital expenditures, operating expenses, reserves, drilling

plans, drilling results and leasehold terms related to the Underlying Properties;

and factors and circumstances that have or may affect

the foregoing.

PermRock Royalty Trust, a Delaware statutory trust formed in November

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is entitled to a share of the profits from and after January 1, 2018 attributable to production occurring on or after such date.

Trust is not subject to any pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage

is not subject to any pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage of

The amount of Trust revenues and cash distributions to Trust unitholders depends on, among other things:

5 unchanged sentences

the amount and timing of Trust administrative expenses.

Boaz Energy typically receives payment for oil production 30 to 60 days

after it is produced and for natural gas production 60 to 90 days after it is produced.

The Underlying Properties consist of four operating areas in the Permian Basin in Texas, aggregating 35,390 gross (22,997 net) acres.

The Permian Clearfork area consists of 2,434 net acres on the Central Basin Platform of the Permian Basin in Hockley and Terry Counties,

The Permian Abo area consists of 1,667 net acres on the Central Basin Platform of the Permian Basin in Terry and Cochran Counties,

The Permian Shelf area consists of 14,727 net acres on the Eastern Shelf of the Permian Basin in Glasscock, Schleicher, Stonewall

and Coke Counties, Texas.

The Permian Platform area consists of 4,169 net acres on the Central Basin Platform of the Permian Basin in

Ward, Crane, Terry and Ector Counties, Texas.

Boaz Energy has advised the Trustee that the

estimate for Boaz Energy’s 2022 capital budget for the Underlying Properties is $7.0 million, of which approximately $4.4 million

had been expended as of September 30, 2022.

Based on current oil and gas prices, Boaz anticipates continuing to participate in Crane

and Glasscock counties non-operated drilling and recompletion projects, waterflood conformance and reactivations in Terry, Coke and Crane

counties, as well as drilling two additional wells in Coke and Terry counties sometime in 2022.

The majority of capital spent in

2022 to date has been on non-operated drilling and completions in Crane and Glasscock counties, well reactivations and stimulations across

the underlying properties, and on wellbore re-entry opportunities in Coke and Crane counties.

The $7.0 million estimate is subject to

change based on, among other things, changes in the price of oil and natural gas, the pace of regulatory approvals and availability of

materials, equipment and labor.

Boaz Energy typically receives payment for oil production 30 to

60 days after it is produced and for natural gas production 60 to 90 days after it is produced.

The Underlying Properties consist of four operating

areas in the Permian Basin in Texas, aggregating 31,783 gross (22,731 net) acres.

The Permian Clearfork area consists of 2,434 net acres

on the Central Basin Platform of the Permian Basin in Hockley and Terry Counties, Texas.

The Permian Abo area consists of 1,667 net acres

on the Central Basin Platform of the Permian Basin in Terry and Cochran Counties, Texas.

The Permian Shelf area consists of 14,727 net

acres on the Eastern Shelf of the Permian Basin in Glasscock, Schleicher, Stonewall and Coke Counties, Texas.

The Permian Platform area

consists of 3,903 net acres on the Central Basin Platform of the Permian Basin in Ward, Crane, Terry and Ector Counties, Texas.

Boaz Energy has advised the Trustee that the estimate for Boaz Energy’s

2023 capital budget for the Underlying Properties is $5.2 million, of which approximately $1.3 million had been expended as of March 31,

Based on current oil and gas prices, Boaz anticipates continuing to participate in Crane and Glasscock Counties, non-operated

drilling and waterflood conformance work in Crane, Terry, Schleicher and Stonewall Counties, as well as drilling two new operated wells

in Crane and Coke, Counties sometime in 2023.

The majority of capital spent in 2023 to date has been on a well deepening in the

The $5.2 million estimate is subject to change based on, among other things, changes in the price of oil and natural gas, Boaz

Energy’s actual capital requirements, the pace of regulatory approvals and the mix of projects.

RESULTS OF OPERATIONS

Distributable Income

Three Months Ended September 30, 2022

For the three months ended September 30, 2022, net profits income received

Three Months Ended March 31, 2023

For the three months ended March 31, 2023, net profits income received

by the Trust was $2,366,677 compared to $2,787,336 for the same period of the prior year.

increase in net profits income was primarily due to higher oil and gas prices .

This decrease in net profits income was primarily

due to a decrease in oil and gas revenue resulting from decreased oil production and decreased gas prices in the current period.

See “Computation

of Income from the Net Profits Interest Received by the Trust”

After considering interest income of $ 5,191

and general and administrative expenditures of $ 180,772 , distributable income for the

three months ended September 30, 2022, was $3,355,009 , or $ 0.275774 per Trust unit.

For the three

months ended September 30, 2021, total distributable income was $ 2,101,348 , or $0.172726 per

Interest income was higher for the quarter

ended September 30, 2022, as compared to the prior year, due to higher interest rates.

General and administrative expenditures increased

by $ 8,504 for the three months ended September 30, 2022, as compared to the prior year,

primarily due to the timing of payments.

Pursuant to the Trust Agreement, as of May 31, 2019, the Trustee is authorized

to retain cash reserves for administrative expenses.

The Trustee did not retain any cash reserves during the three months ended September

30, 2022, or September 30, 2021.

Total cash reserves were $1,000,000 as of September 30, 2022, and September 30, 2021.

Based on 12,165,732 Trust units outstanding at each date listed below,

the per unit distributions during the quarter ended September 30, 2022, were as follows:

July 29, 2022

August 12, 2022

August 31, 2022

September 15, 2022

September 30, 2022

October 17, 2022

Nine Months Ended September 30, 2022

For the nine months ended September 30, 2022, net profits income received

by the Trust was $9,815,297 compared to $5,738,514 for the same period of the prior year.

This increase in net profits income was primarily

due to higher oil and gas prices.

See “Computation of Income from the Net Profits Interest Received by the Trust”

After considering interest income of $6,188 and general and administrative

expenditures of $735,306 , distributable income for the nine months ended September 30, 2022, was $9,086,179, or $0.746867 per Trust

For the nine months ended September 30, 2021, total distributable income was $5,109,987, or $0.420032 per Trust unit.

Interest income increased for the nine months ended September 30, 2022,

as compared to the prior year, due to higher interest rates.

General and administrative expenditures increased by $106,649 for the nine

months ended September 30, 2022, as compared to the prior year, primarily due to timing of payment of expenses.

Pursuant the terms of the Trust Agreement, the Trustee was authorized to

begin retaining cash reserves for administrative expenses in May of 2019.

The Trustee did not retain any cash reserves during the nine

months ended September 30, 2022, or September 30, 2021.

Total cash reserves were $1,000,000 as of September 30, 2022, and September 30,

Computation of Income from the Net Profits Interest Received by the

The Net Profits Interest entitles the Trust to receive 80% of the net profits

attributable to Boaz Energy’s interest from the sale of oil and natural gas production from the Underlying Properties.

The Trust’s

income from the Net Profits Interest consists of monthly net profits attributable to income from the Underlying Properties.

the interval between the time of production and receipt of net profits income by the Trust, the Trust recognizes production during the

month in which the related net profits income is paid to the Trust.

Net profits income for the three months ended September 30, 2022,

was based on production during the months of May 2022 through July 2022.

Net profits income for the nine months ended September 30, 2022,

was based on production during the months of November 2021 through July 2022.

The table below outlines the computation of income from

the Net Profits Interest received by the Trust for the three and nine months ended September 30, 2022, and September 30, 2021:

After considering interest income of $13,727 and

general and administrative expenditures of $177,118, distributable income for the three months ended March

31, 2023, was $2,203,286 , or $ 0.181106 per Trust unit.

For the three months ended March

31 , 2022, total distributable income was $2,526,890, or $0.207704 per unit.

Interest income increased for the quarter

ended March 31, 2023, as compared to the prior year, due to higher interest rates.

administrative expenditures decreased by $83,365 for the three months ended March 31, 2023, as

compared to the prior year, primarily due to differences in timing of the receipt and payment of certain expenses by the Trust.

Pursuant to the Trust Agreement, as of May 31, 2019, the Trustee

is authorized to retain cash reserves for administrative expenses.

The Trustee did not retain any additional cash reserves during the

three months ended March 31, 2023, or March 31, 2022.

During the three months ended March 31, 2023, and March 31, 2022, total cash reserves

were $1,000,000.

Based on 12,165,732 Trust units outstanding at each date listed

below, the per unit distributions during the three months ended March 31, 2023, were as follows:

January 31, 2023

February 14, 2023

February 28, 2023

March 14, 2023

March 31, 2023

April 14, 2023

Computation of Income from the Net Profits Interest Received

The Net Profits Interest entitles the Trust to receive 80% of the

net profits attributable to Boaz Energy’s interest from the sale of oil and natural gas production from the Underlying Properties.

The Trust’s income from the Net Profits Interest consists of monthly net profits attributable to income from the Underlying Properties.

Because of the interval between the time of production and receipt of net profits income by the Trust, the Trust recognizes production

during the month in which the related net profits income is paid to the Trust.

Net profits income for the three months ended March 31,

2023, was based on production during the months of November 2022 through January 2023.

The table below outlines the computation of income

from the Net Profits Interest received by the Trust for the three months ended March 31, 2023, and March 31, 2022:

Three Months Ended

September 30, 2022

March 31, 2023

Three Months Ended

September 30, 2021

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

March 31, 2022

Underlying Properties sales volumes (1) :

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Natural gas sales

Income from divestitures

Other revenue

7 unchanged sentences

$ (4,435,808 )

$ (14,441,952 )

$ (11,133,068 )

Percentage allocable to Net Profits Interest

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Net profits income received by the Trust

(1) Quarterly sales volumes are typically reported for a three-month period, and therefore sales volumes for the three months ended September

30, 2022, reflect production volumes for May 2022 through July 2022.

Sales volumes for the nine months ended September 30, 2022, reflect

production volumes for November 2021 through July 2022.

(1) Quarterly sales volumes are typically reported for a three-month period, and therefore sales volumes for the three months ended March

31, 2023, reflect production volumes for November 2022 through January 2023.

(2) Sales volumes for natural gas include NGLs.

(3) Boaz Energy is entitled under the Conveyance to reserve up to $3.0 million from the net profits for certain future taxes and expenses.

As of September 30, 2022, Boaz had reserved $1,918,156 net to the Trust for future capital expense.

Important factors used in calculating the Trust’s net profits income

include the volumes of oil and natural gas produced from the Underlying Properties and the realized prices received for the sale of those

minerals, including oil and natural gas liquids, as well as direct operating expenses, lease operating expenses, severance and ad valorem

taxes, development and other expenses and capital reserves.

For the three months ended March 31, 2023, the reserve was reduced by $812,000 net to the Trust.

Important factors used in calculating the Trust’s net profits

income include the volumes of oil and natural gas produced from the Underlying Properties and the realized prices received for the sale

of those minerals, including oil and natural gas liquids, as well as direct operating expenses, lease operating expenses, severance and

ad valorem taxes, development and other expenses and capital reserves.

Sales Volumes

sales volumes decreased by 6,166 Bbls (6.6%) for the three months ended September 30, 2022, as compared to the same period in 2021 and

27,977 Bbls (9.5%) for the nine months ended September 30, 2022, as compared to the same period in 2021.

Boaz Energy reports this decrease

was primarily due to a natural decline in the producing properties and a decrease in demand.

Natural gas sales

volumes decreased by 13,961 Mcf (12.1%) for the three months ended September 30, 2022, as compared to the same period in 2021 and 80,053

Mcf (20.6%) for the nine months ended September 30, 2022, as compared to the same period in the prior year.

Boaz Energy reports this decrease

was primarily due to a natural decline in the producing properties and a decrease in demand.

The average realized oil price per Bbl increased

for the three and nine months ended September 30, 2022, as compared to the prior year periods primarily due to an increase in the WTI

benchmark oil price.

The average realized

natural gas price per Mcf increased for the three and nine months ended September 30, 2022, as compared to the prior year periods primarily

due to an increase in the Henry Hub benchmark price for natural gas.

Qualified De Minimis Sales

Boaz Energy informed the Trust that as of

March 1, 2022, it had assigned its deep interests in certain leases located in Stonewall County, Texas pursuant to a Qualified De Minimis

Sale as contemplated by Section 3.02(c) of the Trust Agreement.

Boaz Energy received $452,269 in consideration of the sale of its interest,

which amount was received in the second quarter and included in calculating the Trust’s April distributions to unitholders.

Boaz Energy informed the Trust that as of May 25, 2022, it had assigned

its deep interests in certain leases located in Glasscock County, Texas pursuant to a Qualified De Minimis Sale as contemplated by Section

3.02(c) of the Trust Agreement.

Boaz Energy received $638,118 in consideration of the sale of its interest, which amount was received

in the second quarter and included in calculating the Trust’s June distributions to unitholders.

As of November 14, 2022, Boaz Energy has not provided notice to the Trustee

regarding a sale of any other of the Underlying Properties.

Oil sales volumes decreased by 4,757 Bbls (5.2%) for the three months

ended March 31, 2023, as compared to the same period in 2022 primarily due to a decrease in demand and natural decline in production.

Natural gas sales volumes increased by 1,022 Mcf (1.0%) for the

three months ended March 31, 2023, as compared to the prior year period.

Boaz Energy reports this increase was primarily because of reworking

wells in the Permian Platform area.

The average realized oil price per Bbl increased for the three months

ended March 31, 2023, as compared to the prior year period primarily related to increases in industry prices.

The average realized natural gas price per Mcf decreased for the

three months ended March 31, 2023, as compared to the prior year period related to decreases in industry prices.

Direct Operating Expenses

Direct operating expenses increased for the

three and nine months ended September 30, 2022, as compared to the prior year periods primarily

because of costs incurred in repairing wells and bringing marginal wells back to production in 2022.

Direct operating expenses decreased for the three months ended March

31, 2023, as compared to the prior year period primarily because of fewer projects to return wells

to production.

Lease Operating Expenses

Lease operating expenses increased

for the three and nine months ended September 30, 2022, as compared to the prior year periods because

of an increase in pricing of materials .

Lease operating expenses increased for the three months ended March 31, 2023, as compared

to the prior year period primarily because of costs related to additional Permian ABO wells.

Severance and ad Valorem Taxes

and ad valorem taxes increased for the three and nine months ended September 30, 2022, as compared to the prior year periods primarily

because of increased valuation of the Underlying Properties.

Severance and ad valorem taxes

increased for the three months ended March 31, 2023, as compared to the prior year period

as a result of an increase in the valuation of the Underlying Properties .

Development Expenses Related to the Underlying Properties

expenses related to the Underlying Properties decreased for the

three months ended September 30, 2022, as compared to the prior year period as a result of a refund for previously overcharged

capital costs related to recompleting a well in Crane County, Texas in 2022 .

expenses related to the Underlying Properties increased for the nine months ended September

30, 2022, as compared to the prior year period as a result of costs incurred in recompleting a well in Crane County, Texas in 2022.

Development expenses related

to the Underlying Properties decreased for the three months ended March 31, 2023,

as compared to the prior year period because of fewer

capital projects .

Other Expenses

Other expenses decreased for the three and nine months ended September

30, 2022, as compared to the prior year periods primarily due to fewer professional service fees in 2022.

Other expenses increased for

the three months ended March 31, 2023, as compared

to the prior year period, primarily due to costs related to additional Permian ABO wells.

Capital Reserve

As of September 30, 2022, Boaz Energy had reserved $1,918,156 net to the

Trust for future capital expenses.

As of March 31, 2023, Boaz had reserved $666,157 net to the Trust

for future capital expenses, a decrease of $812,000 for the three months then ended.

LIQUIDITY AND CAPITAL RESOURCES

The Trust’s principal sources of liquidity and capital are cash flow

generated from the Net Profits Interest, the amounts held by the Trustee as cash reserves to pay future liabilities, and borrowings, if

any to fund administrative expenses.

The Trust’s primary uses of cash are distributions to Trust unitholders, payment of Trust administrative

expenses, including, if applicable, any reserves established by the Trustee for future liabilities.

Administrative expenses include the Trustee and Delaware Trustee fees,

accounting, engineering, legal, tax advisory and other professional fees, and tax reporting and distribution expenses.

The Trust is also

responsible for paying other expenses incurred as a result of being a publicly traded entity, including costs associated with annual,

quarterly and current reports to the SEC, New York Stock Exchange listing fees, independent auditor fees and registrar and transfer agent

If the Trustee determines that cash on hand and cash to be received in respect of the Net Profits Interest are, or will be, insufficient

to cover the Trust’s liabilities and expenses, the Trustee may cause the Trust to borrow funds to pay liabilities of the Trust.

As authorized under the Trust Agreement, the Trustee is authorized to retain

cash from the distributions the Trust receives (i) in an amount not to exceed $1.0 million at any one time to be used by the Trust in

the event that its cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses as

they become due and (ii) in such amounts as the Trustee in its discretion deems appropriate to pay for future liabilities of the Trust,

The Trust’s principal sources of liquidity and capital are

cash flow generated from the Net Profits Interest, the amounts held by the Trustee as cash reserves to pay future liabilities, and borrowings,

if any to fund administrative expenses.

The Trust’s primary uses of cash are distributions to Trust unitholders, payment of Trust

administrative expenses, including, if applicable, any reserves established by the Trustee for future liabilities.

Administrative expenses include the Trustee and Delaware Trustee

fees, accounting, engineering, legal, tax advisory and other professional fees, and tax reporting and distribution expenses.

is also responsible for paying other expenses incurred as a result of being a publicly traded entity, including costs associated with

annual, quarterly and current reports to the SEC, New York Stock Exchange listing fees, independent auditor fees and registrar and transfer

If the Trustee determines that cash on hand and cash to be received in respect of the Net Profits Interest are, or will be,

insufficient to cover the Trust’s liabilities and expenses, the Trustee may cause the Trust to borrow funds to pay liabilities of

As authorized under the Trust Agreement, the Trustee is authorized

to retain cash from the distributions the Trust receives (i) in an amount not to exceed $1.0 million at any one time to be used by the

Trust in the event that its cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses

as they become due and (ii) in such amounts as the Trustee in its discretion deems appropriate to pay for future liabilities of the Trust,

but not less than $25,000 or more than $100,000 per month.

Cash reserves previously retained and currently held by the Trustee for

future administrative expenses total $1,000,000 as of September 30, 2022.

Cash reserves previously retained and currently held by the Trustee for future

administrative expenses total $1,000,000 as of March 31, 2023.

On May 4, 2018, the Trust entered into a registration rights agreement

for the benefit of Boaz Energy and certain of its affiliates and transferees, pursuant to which the Trust agreed to register the offering

of the Trust units held by Boaz Energy and certain of its affiliates and permitted transferees upon request by Boaz Energy.

31, 2022, Boaz Energy owned 5,878,332 Trust units of the 12,165,732 Trust units issued and outstanding.

The Trust filed a Registration

Statement on Form S-3 on April 28, 2022 (the “Registration Statement”) seeking the registration of 5,801,675 Trust units held

by Boaz Energy.

The SEC confirmed the effectiveness of the Registration Statement on May 9, 2022.

The Trust has not and will not receive

any of the proceeds received from the sale of the Trust units.

The selling unitholder will bear all costs and expenses incidental to the

preparation and filing of the Registration Statement, excluding certain internal expenses of the Trust, which will be borne by the Trust,

and any underwriting discounts and commissions, which will be borne by the selling unitholder as the seller of the Trust units.

March 31, 2023, Boaz Energy owned 5,194,632 Trust units of the 12,165,732 units issued and outstanding.

Boaz Energy Capital Expenditure Budget

Energy has advised the Trustee that the estimate for Boaz Energy’s 2022 capital budget for the Underlying Properties is $7.0 million,

of which approximately $4.4 million had been expended as of September 30, 2022.

Based on current oil and gas prices, Boaz anticipates

continuing to participate in Crane and Glasscock counties non-operated drilling and recompletion projects, waterflood conformance and

reactivations in Terry, Coke and Crane counties, as well as drilling two additional wells in Coke and Terry counties sometime in 2022.

The majority of capital spent in 2022 to date has been on non-operated drilling and completions in Crane and Glasscock counties, well

reactivations and stimulations across the underlying properties, and on wellbore re-entry opportunities in Coke and Crane counties.

$7.0 million estimate is subject to change based on, among other things, changes in the price of oil and natural gas, the pace of regulatory

approvals and availability of materials, equipment and labor.

Distributions

Declared After Quarter End

Subsequent Events

On October 21, 2022, the Trust declared a cash distribution of $0.093361

per Trust unit based upon production during the month of August 2022.

Boaz Energy has advised the Trustee that the estimate for Boaz Energy’s

2023 capital budget for the Underlying Properties is $5.2 million, of which approximately $1.3 million had been expended as of March 28,

Based on current oil and gas prices, Boaz anticipates continuing to participate in Crane and Glasscock Counties, non-operated

drilling and waterflood conformance work in Crane, Terry, Schleicher and Stonewall Counties, as well as drilling two new operated wells

in Crane and Coke Counties sometime in 2023.

The majority of capital spent in 2023 to date has been on a well deepening in the Abo

The $5.2 million estimate is subject to change based on, among other things, changes in the price of oil and natural gas,

Boaz Energy’s actual capital requirements, the pace of regulatory approvals and the mix of projects.

Distributions Declared After Quarter End

On April 18, 2023, the Trust declared a cash distribution of $0.030888

per Trust unit based upon production during the month of February 2023 to record holders as of April 28, 2023.

The distribution was paid

on May 12, 2023.

The following table shows underlying oil and natural gas sales and average prices during the production month of February

2023 and attributable to the distribution declared on April 18, 2023:

Underlying Sales Volumes

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Off-Balance Sheet Arrangements

As of September 30, 2022, the Trust had no off-balance sheet arrangements.

As of March 31, 2023, the Trust had no off-balance sheet arrangements.

New Accounting Pronouncements

4 unchanged sentences

Critical Accounting Policies and Estimates

Refer to Note 2 to the unaudited condensed financial statements contained

in this Quarterly Report and the Trust’s 2021 Annual Report on Form 10-K, including the audited financial statements of the Trust

and notes thereto included therein, for a description of the Trust’s accounting policies and use of estimates.

Refer to Note 2 to the unaudited condensed financial statements

contained in this Quarterly Report and the Trust’s 2022 Annual Report on Form 10-K, including the audited financial statements of

the Trust and notes thereto included therein, for a description of the Trust’s accounting policies and use of estimates.

Quantitative and Qualitative Disclosures about Market Risk

2 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