PermRock Royalty Trust 10-Q

ITEM 1A. RISK FACTORS Except as provided below, there have been no material changes to the risk factors contained in Item 1A of the Trust’s 2019 Annual Report on Form 10-K. The COVID-19 pandemic and efforts to contain the virus could adversely affect the operators of the Underlying Properties, the Net Profits Interest and the cash available for distribution to unitholders. The effect of the recent outbreak of COVID-19 and response efforts to contain the pandemic are unprecedented and continuously evolving. A rapid and sharp decline in oil and gas prices occurred in the first quarter of 2020, and continued in the second quarter of 2020, including briefly trading negative in April 2020 in response to COVID-19 and the dispute over production levels between Russia and the other members of the Organization of Petroleum Exporting Countries (“OPEC”). The extent and duration of the decline and curtailed economic activity, including business and operational disruptions, closures, limitations and restrictions on travel, and supply chain and workforce disruptions, is unknown and rapidly evolving, and continues to affect the operators of the Underlying Properties and production activity. It is not possible to reliably estimate the impact these developments will have on future periods. The value of the Net Profits Interest and the Trust’s ultimate cash available for distribution is highly dependent on the financial condition of Boaz Energy and other third-party operators, oil and natural gas prices, supply and demand, and other factors, which are being negatively impacted by the COVID-19 pandemic. Boaz Energy shut in production of certain wells during May 2020 and Boaz Energy or any third-party operator of the Underlying Properties could, in future periods, shut in or curtail production from wells on the Underlying Properties or plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices, without the consent of the Trust or the Trust unitholders. Substantial and extended declines in economic activity and oil, natural gas and natural gas liquids prices have resulted and may continue to result in a reduction in the amount of oil and natural gas that is economic to produce from the Underlying Properties, reduced net proceeds to which the Trust is entitled, and elimination of cash available for distribution to Trust unitholders for an unknown period of time. The ability or willingness of OPEC and other oil exporting nations to set and maintain production levels has a significant impact on oil and natural gas commodity prices, which could reduce the amount of cash available for distribution to Trust unitholders. OPEC is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market. Actions taken by OPEC members, including those taken alongside other oil exporting nations, have a significant impact on global oil supply and pricing. The extent and duration of production cuts by OPEC members and other oil exporting nations to support crude oil prices have fluctuated and may continue to do so. When Russia’s agreement to oil production cuts expired, an immediate and steep decrease in oil prices occurred, with prices reaching a closing NYMEX price low of negative $37.63 per Bbl of crude oil in April 2020. There can be no assurance that OPEC members and other oil exporting nations will agree to future production cuts or other actions to support and stabilize oil prices, nor can there be any assurance that they will not further reduce oil prices or increase production. Uncertainty regarding future actions to be taken by OPEC members or other oil exporting countries could lead to increased volatility in the price of oil, which could adversely affect the financial condition and economic performance of the operators of the Underlying Properties and may reduce net profits income and significantly reduce or completely eliminate the amount of cash available for distribution to Trust unitholders for an unknown period of time. 18 ITEM 6. EXHIBITS Exhibit No. Description 3.1 Certificate of Trust of PermRock Royalty Trust (incorporated by reference to Exhibit 3.3 to Registration Statement on Form S-1 (SEC File No. 333-224191) filed on April 6, 2018). 3.2 Amended and Restated Trust Agreement of PermRock Royalty Trust, dated May 4, 2018, among Boaz Energy II, LLC, Wilmington Trust, National Association, as Delaware Trustee of PermRock Royalty Trust, and Simmons Bank, as Trustee of PermRock Royalty Trust (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K (SEC File No. 001-38472) filed on May 8, 2018). 31.1 Section 302 Certification. * 32.1 Section 906 Certification. * The exhibits marked with the asterisk symbol (*) are filed or furnished with this Quarterly Report on Form 10-Q. 19 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PERMROCK ROYALTY TRUST By: Simmons Bank, as Trustee By: /s/ Lee Ann Anderson Lee Ann Anderson Senior Vice President Date: August 14, 2020 The registrant, PermRock Royalty Trust, has no principal executive officer, principal financial officer, board of directors or persons performing similar functions. Accordingly, no additional signatures are available, and none have been provided. In signing the report above, the Trustee does not imply that it has performed any such function or that any such function exists pursuant to the terms of the Trust Agreement under which it serves. 20