What changed in this filing

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Item 1. Financial Statements

2020-08-07 compared with 2020-05-11 · 195 added, 101 removed, 517 unchanged (36% of the section changed)

13 unchanged sentences

Statements of Distributable Income

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Income from net profits interest

Income from sale/lease of undeveloped acreage

Interest and investment income

General and administrative expenses

Cash reserves used for Trust expenses

Cash reserves (withheld) used for Trust expenses

Distributable income

Distributable income per unit (33,000,000 units)

The accompanying notes are an integral part

of these financial statements.

The accompanying notes are an integral

part of these financial statements.

PERMIANVILLE ROYALTY TRUST

Statements of Changes in Trust Corpus

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Trust corpus, beginning of period

Cash reserves used for Trust expenses

Cash reserves withheld (used) for Trust expenses

Distributable income

28 unchanged sentences

Enduro’s obligations under the Trust Agreement and other instruments to which Enduro and the Trustee were parties.

March 31, 2020, the Sponsor owned 8,600,000 Trust Units, or 26% of the issued and outstanding Trust Units.

June 30, 2020, the Sponsor owned 8,600,000 Trust Units, or 26% of the issued and outstanding Trust Units.

The Net Profits Interest

21 unchanged sentences

Assets, Liabilities and Trust Corpus as of December 31, 2019, which has been derived from audited financial statements, and

the unaudited interim financial statements as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 have been

prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Accordingly, certain

information and disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules

and regulations.

Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto

included in the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Annual Report

on Form 10-K”).

the unaudited interim financial statements as of June 30, 2020 and for the three and six months ended June 30, 2020 and 2019 have

been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

certain information and disclosures normally included in annual financial statements have been condensed or omitted pursuant to

those rules and regulations.

Therefore, these financial statements should be read in conjunction with the financial statements

and notes thereto included in the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019

Annual Report on Form 10-K”).

In the opinion of

73 unchanged sentences

Amortization is charged directly to the Trust corpus balance and does not affect the distributable income of the

Accumulated amortization as of March 31, 2020 and December 31, 2019 was $281,271,889 and $279,925,202, respectively.

Accumulated amortization as of June 30, 2020 and December 31, 2019 was $282,727,370 and $279,925,202, respectively.

The Net Profits Interest

2 unchanged sentences

While the Trust

did not record an impairment during the three months ended March 31, 2020 or 2019, future downward revisions in actual production volumes relative to current forecasts, higher than expected operating costs,

or lower than anticipated commodity prices could result in recognition of impairment in future periods.

did not record an impairment during the six months ended June 30, 2020 or 2019, future downward revisions in actual production

volumes relative to current forecasts, higher than expected operating costs, or lower than anticipated commodity prices could result

in recognition of impairment in future periods.

Federal Income Taxes

81 unchanged sentences

Declaration Date

Three Months Ended March 31, 2020:

Six Months Ended June 30, 2020:

December 16, 2019

7 unchanged sentences

March 13, 2020

Year to Date - 2020

Three Months Ended March 31, 2019:

March 16, 2020

March 31, 2020

April 14, 2020

April 17, 2020

April 30, 2020

June 15, 2020

Year to Date –

Six Months Ended June 30, 2019:

January 18, 2019

4 unchanged sentences

March 14, 2019

March 18, 2019

March 29, 2019

April 15, 2019

April 18, 2019

April 30, 2019

June 14, 2019

Year to Date - 2019

1 unchanged sentence

and development expenses exceeded the revenues causing the net profits to be negative.

This was primarily due to the delay in transitioning

operator reporting for the Underlying Properties to the Sponsor, thus reducing the cash receipts to the Trust for this period.

This was primarily due to the delay in

transitioning operator reporting for the Underlying Properties to the Sponsor, thus reducing the cash receipts to the Trust for

As a result, there was no distribution to the Trust unitholders reported in December 2018 to be distributed in January

January 2019, net profits from the Underlying Properties were positive, and the aggregate shortfall in net profits of $667,227

In January 2019, net profits from the Underlying Properties were positive, and the aggregate shortfall in net profits of

$667,227 from December 2018 was deducted from such net profits when calculating distributions paid in February 2019.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS - Continued

ADVANCES TO THE TRUST

5 unchanged sentences

Liabilities and Trust Corpus until repaid.

As of March 31, 2020 and December 31, 2019, advances to the Trust were $101,148

and $34,818, respectively.

As of June 30, 2020 and December 31, 2019, advances to the Trust were $19,100 and

$34,818, respectively.

Under the terms of

1 unchanged sentence

Delaware Trustee.

During the three months ended March 31, 2020 and 2019, the Trust paid $50,000 to the Trustee pursuant to the

terms of the Trust Agreement.

During the three months ended March 31, 2020 and 2019 the Trust paid $2,000 to the Delaware Trustee

for both periods.

During the three- and six-month periods ended June 30, 2020 and 2019, the Trust paid $50,000 and $100,000, respectively,

to the Trustee pursuant to the terms of the Trust Agreement.

The Trust paid $0 and $2,000 to the Delaware Trustee during the three-month

and six-month periods ended June 30, 2020, respectively.

The Trust paid a total of $0 and $2,000 to the Delaware Trustee during

the three-month and six-month periods ended June 30, 2019, respectively.

2017 DIVESTITURE

13 unchanged sentences

Paid or Declared

On April 14, 2020,

a distribution of $0.041000 per unit, which was declared on March 16, 2020, was paid to Trust unitholders of record as of March

On April 17, 2020,

the Trust declared a distribution of $0.029000 per unit to unitholders of record as of April 30, 2020.

The distribution is expected

to be paid to unitholders on May 12, 2020.

On July 15, 2020,

a distribution of $0.003800 per unit, which was declared on June 15, 2020, was paid to Trust unitholders of record as of June 30,

On July 17, 2020,

the Trust announced a reduction in sales volumes when comparing the July distribution period to prior periods This reduction was

due, in part, to shut ins by operators of certain Underlying Properties coupled with lower commodity prices as a result of the

COVID-19 pandemic.

The result of this reduction is that direct operating expenses and development expenditures exceeded cash receipts

for the calculation period and, as a result, a distribution will not be paid in August 2020.

The shortfall of $892,782 will

be deducted from any net profits allocable to the Trust from the August distribution period.

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

92 unchanged sentences

The West Texas Intermediate spot price of crude oil has dropped sharply

from $61.17 per barrel on January 2, 2020 to $23.55 per barrel on May 7, 2020, in response to the economic effects of the

COVID-19 pandemic and the dispute over production levels between Russia and the members of the Organization of Petroleum Exporting

Countries, including Saudi Arabia, which resulted in an oversupply of crude oil and exacerbated the decline in crude oil prices.

COVID-19 has resulted in widespread and localized health crises that adversely affect general commercial activity, the economies

and financial markets of many countries and localities, as well as global demand for oil and natural gas.

COVID-19 also has resulted

in significant business and operational disruptions, including business closures, disruptions to supply chains, travel restrictions

and limitations on the availability of workforces.

The full impact of COVID-19 is unknown and is rapidly evolving, and it is not

possible to reliably estimate the impact that these developments will have on future periods.

A prolonged period of low crude oil

and natural gas prices will adversely affect the operators of the Underlying Properties.

If commodity prices for crude oil

and natural gas remain at reduced levels, monthly cash distributions to unitholders will be substantially lower than historical

from $61.17 per barrel on January 2, 2020 to $41.95 per barrel on August 6, 2020 but in the interim ranged widely and even

briefly traded negative in April 2020 in response to the economic effects of the COVID-19 pandemic and the dispute over production

levels between Russia and the members of the Organization of Petroleum Exporting Countries.

COVID-19 has resulted in widespread

and localized health crises that adversely affect general commercial activity, the economies and financial markets of many countries

and localities, as well as global demand for oil and natural gas.

COVID-19 also has resulted in significant business and operational

disruptions, including business closures, disruptions to supply chains, travel restrictions and limitations on the availability

of workforces.

The full impact of COVID-19 is unknown and is rapidly evolving, and it is not possible to reliably estimate the

impact that these developments will have on future periods.

While oil prices have recently stabilized and the demand for oil and

refined products has improved from the lows experienced earlier this year, a prolonged period of low crude oil and natural gas

prices will adversely affect the operators of the Underlying Properties.

If commodity prices for crude oil and natural gas

remain volitle and below historical levels, monthly cash distributions to unitholders will be substantially lower than historical

distributions, and in certain periods there may be no distribution to unitholders.

8 unchanged sentences

The Underlying Properties also have exposure to natural gas reserves in

the Haynesville shale and other properties, where commodity prices and capital markets activy have improved in contrast to oil

the Haynesville shale and other properties, where commodity prices and capital markets activity have held up in contrast to oil

The Sponsor will continue to monitor and possibly participate in future capital projects in 2020 as operators shift from

1 unchanged sentence

Results of Operations

Three Months Ended March 31, 2020 Compared

to Three Months Ended March 31, 2019

Three Months Ended June 30, 2020 Compared

to Three Months Ended June 30, 2019

The Trust’s

10 unchanged sentences

Development expenses

Gross proceeds from sale/lease of undeveloped acreage

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Sponsor loan repayment

Trust general and administrative expenses and cash withheld for expenses

Distributable income

During the three months

ended March 31, 2019, some third party operators of the Underlying Properties encountered delays in transitioning their reporting

processes from Enduro to the Sponsor, which reduced the reported cash receipts to the Trust for this period when compared to the

three months ended March 31, 2020.

A majority of these reporting issues were addressed, with a majority of the revenues held in

suspense as a result of these delays having been distributed to the Trust as part of the March 2019 distribution of $0.076357 per

unit, which was paid on April 15, 2019.

The following table

displays reported oil and natural gas sales volumes and average prices from the Underlying Properties, representing the amounts

included in the net profits calculation for distributions paid during the three months ended March 31, 2020 and 2020:

Three Months Ended March 31,

included in the net profits calculation for distributions paid during the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Underlying Properties Production Volumes:

Natural Gas (Mcf)

Combined (Boe)

Average Prices:

Oil - NYMEX (December - February) ($/Bbl)

Oil prices realized ($/Bbl)

Natural gas - NYMEX (November - January) ($/Mcf)

Natural gas prices realized ($/Mcf)

Income from Net Profits

Interest for the three months ended June 30, 2020 is calculated from the following:

oil sales primarily related to oil produced from the Underlying Properties from December 2019 through

February 2020;

natural gas sales primarily related to natural gas produced from the Underlying Properties from

November 2019 through January 2020;

direct operating and development expenses primarily related to expenses incurred from January 2020

to March 2020.

Net profits attributable

to the Underlying Properties for the three months ended June 30, 2020 were $3.9 million compared to $4.4 million for the three

months ended June 30, 2019.

The $0.5 million decrease was primarily due to the following items:

Oil sales increased $0.6 million, primarily due to higher realized prices.

The 22% increase in

realized oil sales prices in the 2020 period compared to the 2019 period increased revenues by $1.6 million;

however, lower produced

volumes decreased revenues by $1.0 million.

Natural gas sales decreased $2.2 million due to lower produced volumes and lower realized prices.

The 26% decrease in gas sales volumes in the 2020 period compared to the 2019 period decreased revenues by $1.0 million, and lower

realized gas prices decreased revenues by $1.2 million.

Lease operating expenses increased $0.6 million during the three months ended June 30, 2020 compared

to the three months ended June 30, 2019 due to an increase in routine maintenance activity.

Compression, gathering and transportation costs decreased $0.1 million, primarily due to the 26%

decrease in natural gas production.

Production, ad valorem and other taxes decreased $0.3 million during the three months ended June

30, 2020 compared to the three months ended June 30, 2019, primarily due to the 56% decrease in natural gas sales.

Development expenses decreased $1.5 million primarily due to a decrease in capital projects in

the Permian Basin.

For the three months

ended June 30, 2020, the Trust withheld $0.2 million, and paid $0.2 million for general and administrative expenses.

Expenses paid

during the period primarily consisted of fees for the preparation of the Trust’s monthly press releases, financial statement

audit fees, and Trustee fees.

For the three months ended June 30, 2019, the Trust withheld $0.2 million, and paid $0.2 million

for general and administrative expenses.

Six Months Ended June 30, 2020 Compared

to Six Months Ended June 30, 2019

The Trust’s net profits income

consists of monthly net profits attributable to the Net Profits Interest, which was determined as shown in the following table:

Six Months Ended

Increase (Decrease)

Gross profits:

Natural gas sales

Direct operating expenses:

Lease operating expenses

Compression, gathering and transportation

Production, ad valorem and other taxes

Development expenses

Gross proceeds from sale/lease of undeveloped acreage

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Sponsor loan repayment

Trust general and administrative expenses and cash withheld for expenses

Distributable income

During the six months

ended June 30, 2019, some third party operators of the Underlying Properties encountered delays in transitioning their reporting

processes from Enduro to the Sponsor, which reduced the reported cash receipts to the Trust for this period when compared to the

six months ended June 30, 2020.

A majority of these reporting issues were addressed, with a majority of the revenues held in suspense

as a result of these delays having been distributed to the Trust as part of the March 2019 distribution of $0.076357 per unit,

which was paid on April 15, 2019.

The following table

displays reported oil and natural gas sales volumes and average prices from the Underlying Properties, representing the amounts

included in the net profits calculation for distributions paid during the six months ended June 30, 2020 and 2019:

Six Months Ended

Underlying Properties Production Volumes:

2 unchanged sentences

Average Prices:

Oil - NYMEX (March - May) ($/Bbl)

Oil - NYMEX (September - February) ($/Bbl)

Oil prices realized ($/Bbl)

Natural gas - NYMEX (February - April) ($/Mcf)

Natural gas - NYMEX (August - January) ($/Mcf)

Natural gas prices realized ($/Mcf)

Income from Net Profits

Interest for the three months ended March 31, 2020 is calculated from the following:

Interest for the six months ended June 30, 2020 is calculated from the following:

oil sales primarily related to oil produced from the Underlying Properties from September 2019

through November 2019;

through February 2020;

natural gas sales primarily related to natural gas produced from the Underlying Properties from

August 2019 through October 2019;

August 2019 through January 2020;

direct operating and development expenses primarily related to expenses incurred from October 2019

to December 2019.

to March 2020.

Net profits attributable

to the Underlying Properties for the three months ended March 31, 2020 were $2.9 million compared to $1.6 million for the three

months ended March 31, 2019.

to the Underlying Properties for the six months ended June 30, 2020 were $6.7 million compared to $5.9 million for the six months

ended June 30, 2019.

The $0.8 million increase was primarily due to the following items:

Oil sales increased $1.0 million, primarily due to higher produced volumes.

The increase in

oil sales volumes of 10% in the 2020 period compared to the 2019 period increased revenues by $0.7 million and, higher

realized oil prices caused an increase in revenues by $0.3 million.

Oil sales increased $1.7 million, primarily due to higher realized prices.

The slight decrease

in oil sales volumes of 2% in the 2020 period compared to the 2019 period decreased revenues by $0.4 million;

however, higher realized

oil prices caused an increase in revenues by $2.1 million.

Natural gas sales decreased $3.1 million due to lower produced volumes and lower realized prices.

The decrease in gas sales volumes of 14% in the 2020 period compared to the 2019 period decreased revenues by $0.3 million, and

lower realized gas prices caused an additional decrease in revenues by $0.6 million.

Lease operating expenses decreased slightly by $0.1 million during the three months ended March

31, 2020 compared to the three months ended March 31, 2019.

The 21% decrease in gas sales volumes in the 2020 period compared to the 2019 period decreased revenues by $1.3 million, and lower

realized gas prices caused an additional decrease in revenues by $1.8 million.

Lease operating expenses increased by $0.5 million during the six months ended June 30, 2020 compared

to the six months ended June 30, 2019 primarily due to an increase in routine maintenance activity.

Compression, gathering and transportation costs decreased $0.3 million, primarily due to the 28%

decrease in natural gas production.

Production, ad valorem and other taxes decreased $0.3 million during the three months ended March

31, 2020 compared to the three months ended March 31, 2019, primarily due to the 39% decrease in natural gas sales.

Production, ad valorem and other taxes decreased $0.6 million during the three months ended June

30, 2020 compared to the six months ended June 30, 2019, primarily due to the 50% decrease in natural gas sales.

Development expenses decreased $2.0 million primarily due to a decrease in capital projects in

the Permian Basin.

For the first quarter

of 2020, the Trust withheld $0.2 million, and paid $0.4 million for general and administrative expenses.

Expenses paid during the

period primarily consisted of fees for the preparation of the Trust’s monthly press releases, financial statement audit fees,

and Trustee fees.

For the three months ended March 31, 2019, the Trust withheld $0.2 million and paid $0.4 million for general

and administrative expenses.

For the six months

ended June 30, 2020, the Trust withheld $0.4 million, and paid $0.6 million for general and administrative expenses.

paid during the period primarily consisted of fees for the preparation of the Trust’s monthly press releases, financial

statement audit fees, and Trustee fees.

For the six months ended June 30, 2019, the Trust withheld $0.4 million, and paid $0.6

million for general and administrative expenses.

Liquidity and Capital Resources

33 unchanged sentences

The Trustee has no current plans to authorize the Trust to borrow any funds.

At March 31, 2020 and December 31, 2019, the Trust

At June 30, 2020 and December 31, 2019, the Trust

held cash of $92 and $90,665, respectively, for future Trust expenses.

5 unchanged sentences

COERT may advance funds to the Trust to pay such expenses.

At March 31, 2020 and December 31, 2019, there was an outstanding advance

At June 30, 2020 and December 31, 2019, there was an outstanding advance

of $19,100 and $34,818, respectively.

The full amount of the advance to the Trust will be repaid out of the funds payable to the

Trust relating to the distribution to unitholders announced on April 17, 2020.

Trust relating to the monthly operational update announced on July 15, 2020.

In connection with

26 unchanged sentences

Distributions Declared After Quarter End

On April 17, 2020,

the Trust declared a distribution of $0.029000 per unit to unitholders of record as of April 30, 2020.

The distribution is expected

to be paid to unitholders on May 12, 2020.

The Trust did not

declare any distributions after the end of the quarter.

Off-Balance Sheet Arrangements

10 unchanged sentences

There were no material changes to the Trust’s critical accounting policies or

estimates during the three months ended March 31, 2020.

estimates during the three months ended June 30, 2020.

Subsequent Events

1 unchanged sentence

Paid or Declared

On April 14, 2020,

a distribution of $0.041000 per unit, which was declared on March 16, 2020, was paid to Trust unitholders of record as of March

On April 17, 2020,

the Trust declared a distribution of $0.029000 per unit to unitholders of record as of April 30, 2020.

The distribution is expected

to be paid to unitholders on May 12, 2020.

On July 15, 2020,

a distribution of $0.003800 per unit, which was declared on June 15, 2020, was paid to Trust unitholders of record as of June 30,

On July 17, 2020,

the Trust announced a reduction in sales volumes when comparing the July distribution period to prior periods This reduction was

due, in part, to shut ins by operators of certain Underlying Properties coupled with lower commodity prices as a result of the

COVID-19 pandemic.

The result of this reduction is that direct operating expenses and development expenditures exceeded cash receipts

for the calculation period and, as a result, a distribution will not be paid in August 2020.

The shortfall of $892,782 will

be deducted from any net profits allocable to the Trust from the August distribution period.

Quantitative and Qualitative Disclosures About Market Risk.

4 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