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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 281 added, 271 removed, 329 unchanged (63% of the section changed)

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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 June 30, 2022 and December 31, 2021, and the distributable income and changes

in Trust corpus for the three- and six-month periods ended June 30, 2022 and June 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 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.

PERMROCK ROYALTY TRUST

STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

September 30,

Cash and short-term investments

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STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

Ended June 30,

Ended September 30,

Net profits income

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of the Trust.

(2) Based on 12,165,732 Trust units issued and outstanding as of August 15, 2022.

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

The accompanying notes to condensed

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STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

Ended June 30,

Ended September 30,

Trust corpus, beginning of period

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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”).

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.

The 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.

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.

As of June 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.

of September 30, 2022, Boaz Energy owned 5,756,675 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, 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,

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

PERMROCK ROYALTY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

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

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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

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.

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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 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.

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.

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

PERMROCK ROYALTY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

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 two quarters of 2022, but fluctuations and depressions could continue for

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

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.

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.

Cash Reserves

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

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.

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

of June 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 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 June 30, 2022 , the balance of funds reserved by Boaz Energy, net to the Trust, was $426,157.

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

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 June 30, 2022 were as follows:

Distribution per Unit

April 29, 2022

June 14, 2022

June 30, 2022

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

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

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

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

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

PERMROCK ROYALTY TRUST

NOTES TO CONDENSED FINANCIAL STATEMENTS

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

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.

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 $3.8

million had been expended as of June 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 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.

Settlements and Litigation

On October 1, 2018,

a lawsuit styled Thaleia L.

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Blackbeard Operating, LLC , et.al, No.

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.

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.

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fees in June 2022.

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

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

Subsequent Events

On July 19, 2022 the Trust declared a cash distribution of $0.090702

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

Sales Volumes

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

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 2021 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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· general economic conditions affecting the Permian Basin;

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

cure any such defects;

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

to cure any such defects;

· actions by Boaz Energy, including such that result in conflicts of interest, that adversely affect the Trust;

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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 2017

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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.

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

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

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

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· 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, 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 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 $3.8

million had been expended as of June 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 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.

RESULTS OF OPERATIONS

Distributable Income

Three Months Ended June 30, 2022

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

Three Months Ended September 30, 2022

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

by the Trust was $3,530,590 compared to $ 2,273,583 for the same period of the prior year.

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

three months ended June 30, 2022 was $3,204,281 , or $ 0.263384 per Trust unit.

For the three months

ended June 30, 2021, total distributable income was $ 1,960,229 , or $0.

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

General and administrative expenditures increased by

$ 78,956 for the three months ended June 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 June 30, 2022 or June 30, 2021.

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

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

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

Distribution per Unit

April 29, 2022

June 14, 2022

June 30, 2022

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

Six Months Ended June 30, 2022

For the six months ended June 30, 2022, net profits income received

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.

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

expenditures of $554,534 , distributable income for the six months ended June 30, 2022 was $5,731,170, or $0.471091 per Trust unit.

For the six months ended June 30, 2021, total distributable income was $3,008,639, or $0.247304 per Trust unit.

Interest income increased for the six months ended June 30, 2022

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 $98,145 for the six

months ended June 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 six

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

Total cash reserves were $1,000,000 as of June 30, 2022 and December 31, 2021.

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 June 30,

2022, was based on production during the months of February 2022 through April 2022.

The table below outlines the computation of income

from the Net Profits Interest received by the Trust for the three and six months ended June 30, 2022 and June 30, 2021:

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:

Three Months Ended

June 30, 2022

September 30, 2022

Three Months Ended

June 30, 2021

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 2021

September 30, 2021

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

Underlying Properties sales volumes (1) :

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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 June

30, 2022 reflect production volumes for February 2022 through April 2022.

Sales volumes for the six months ended June 30, 2022 reflect

production volumes for November 2021 through April 2022.

(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.

(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 June 30, 2022, Boaz had reserved $426,157 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.

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.

Sales Volumes

volumes decreased by 6,157 Bbls (6.4%) for the three months ended June 30, 2022 as compared to the same period in 2021 and 21,812 Bbls

(10.8%) for the six months ended June 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.

Natural gas sales volumes decreased

by 22,869 Mcf (17.9%) for the three months ended June 30, 2022 as compared to the same period in 2021 and 66,093 Mcf (24.1%) for the six

months ended June 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.

The average realized oil price per

Bbl increased for the three and six months ended June 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 six months ended June 30, 2022 as compared to the prior year periods primarily due to an increase

in the Henry Hub benchmark price for natural gas.

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

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

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

As of August 15, 2022, Boaz Energy has not provided notice

to the Trustee regarding a sale of any other of the Underlying Properties.

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

regarding a sale of any other of the Underlying Properties.

Direct Operating Expenses

Direct operating expenses increased

for the three and six months ended June 30, 2022 as compared to the prior year periods primarily

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.

Lease Operating Expenses

Lease operating expenses increased for the three and six

months ended June 30, 2022 as compared to the prior year periods as a result of an increase

in pricing of materials .

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 .

Severance and ad Valorem Taxes

and ad valorem taxes increased for the three and six months ended June 30, 2022 as compared to the prior year period primarily because

of increased valuation of the Underlying Properties.

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.

Development Expenses Related to the Underlying Properties

expenses related to the Underlying Properties increased for the

three and six months ended June 30, 2022 as compared to the prior year period as a result costs incurred related to recompletion of a

well in Crane County, Texas.

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.

Other Expenses

Other expenses increased slightly

for the three months ended June 30, 2022 as compared to the prior year period, primarily due to annual adjustments in overhead rates.

Other expenses decreased slightly for the six months ended June 30, 2022 as compared to the prior year period, primarily due to annual

adjustments in overhead rates, and additional professional service fees in the first quarter of 2021.

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.

Capital Reserve

As of June 30, 2022, Boaz Energy had reserved $426,157 net to the

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

Trust for future capital expenses.

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.

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,

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,

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 June 30, 2022.

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

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 $3.8 million had been expended as of June 30, 2022.

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

Based on current oil and gas prices, Boaz anticipates

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Declared After Quarter End

On July 19, 2022 the Trust declared a cash distribution of $0.090702

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

Sales Volumes

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

Off-Balance Sheet Arrangements

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

As of September 30, 2022, 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 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.

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