What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-23 compared with 2020-03-16 · 409 added, 682 removed, 119 unchanged (90% of the section changed)

Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Trustee and Unitholders of Permianville Royalty Trust:

Opinion on the Financial Statements

We have audited the accompanying statements of assets, liabilities,

and trust corpus of Permianville Royalty Trust (the Trust) as of December 31, 2019 and 2018, the related statements of distributable

income and changes in trust corpus for each of the three years in the period ended December 31, 2019, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Trust at December 31, 2019 and 2018, and its distributable income for each of the three

years in the period ended December 31, 2019, in conformity with the modified cash basis of accounting, as described in Note 2,

which is a comprehensive basis of accounting other than U.S.

Statements and Supplementary Data.

of Independent Registered Public Accounting Firm

the Trustee and Unitholders of Permianville Royalty Trust:

on the Financial Statements

have audited the accompanying statements of assets, liabilities, and trust corpus of Permianville Royalty Trust (the Trust) as

of December 31, 2020 and 2019, the related statements of distributable income and changes in trust corpus for each of the two

years ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust at December

31, 2020 and 2019, and its distributable income for each of the two years in the period ended December 31, 2020, in conformity

with the modified cash basis of accounting, as described in Note 2, which is a comprehensive basis of accounting other than U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the

Public Company Accounting Oversight Board (United States) (PCAOB), the Trust's internal control over financial reporting as of

December 31, 2019, based on criteria established in Internal Control –

Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 framework), and our report dated March 16, 2020 expressed an unqualified opinion

Basis of Accounting

As described in Note 2 to the financial statements, these financial

statements were prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting

principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Trustee.

Our responsibility is to express an opinion on the Trust’s financial statements based on our audits.

We are a public accounting

firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial

Our audits also included evaluating the accounting principles used and significant estimates made by the Trustee, as

well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis

for our opinion.

of Accounting

described in Note 2 to the financial statements, these financial statements were prepared on the modified cash basis of accounting,

which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Trustee.

Our responsibility is to express an opinion on the Trust’s financial

statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with

respect to the Trust in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the

purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting.

we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by the Trustee, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was

communicated or required to be communicated to the Trustee and that:

(1) relates to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of

the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not,

by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account

or disclosure to which it relates.

Amortization of Net Profits

Interest in oil and natural gas properties

Description of the Matter

December 31, 2020, the net book value of the Trust’s Net Profits Interest in oil and natural gas properties was $71,265,032,

and amortization was $5,900,923 for the year then ended.

As described in Note 2, amortization of Net Profits Interest in oil and

natural gas properties is calculated using the unit-of-production method based on the oil and natural gas reserves of the Underlying

Properties, as estimated by the Trust’s independent petroleum engineers.

Oil and natural gas reserves are those quantities

of natural gas, crude oil, and natural gas liquids, which by analysis of geoscience and engineering data, can be estimated with

reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic

conditions, operating methods, and government regulations.

Significant judgment is required by the Trust’s independent petroleum

engineers in evaluating geological and engineering data when estimating oil and natural gas reserves.

Estimating reserves also

requires the selection of inputs, including oil and gas price assumptions, future operating and capital costs assumptions, among

the Trust’s amortization of Net Profits Interest is complex because of the use of the work of the independent petroleum

engineers and the evaluation of Trustee’s determination of the inputs described above used by the engineers in estimating

oil and natural gas reserves.

How We Addressed the Matter in Our Audit

Our audit procedures included, among others,

evaluating the professional qualifications and objectivity of the Trust’s independent petroleum engineers used to prepare

the reserve estimates.

In addition, in assessing whether we can use the work of the independent petroleum engineers we evaluated

the completeness and accuracy of the financial data and inputs described above used by the engineers in estimating oil and

natural gas reserves by agreeing them to source documentation, and we identified and evaluated corroborative and contrary

For proved undeveloped reserves, we evaluated the Sponsor’s development plan for compliance with the SEC rule

that undrilled locations are scheduled to be drilled within five years and by assessing consistency of the development projections

with the Sponsor’s development plan.

We also tested the mathematical accuracy of the amortization calculation, including

comparing the oil and natural gas reserve amounts used in the calculations to the Trust’s reserve reports.

/s/ Ernst & Young LLP

We have served as the Trust’s auditor

Houston, Texas

March 16, 2020

PERMIANVILLE ROYALTY TRUST

Statements of Assets, Liabilities and

have served as the Trust’s auditor since 2011.

ROYALTY TRUST

of Assets, Liabilities and Trust Corpus

Cash and cash equivalents

5 unchanged sentences

Total liabilities and Trust corpus

The accompanying notes to financial statements

are an integral part of these statements.

PERMIANVILLE ROYALTY TRUST

Statements of Distributable Income

accompanying notes to financial statements are an integral part of these statements.

ROYALTY TRUST

of Distributable Income

Year Ended December 31,

1 unchanged sentence

Income from sale of net profits interest on undeveloped acreage

Income from sale of net profits interest on producing properties

Interest and investment income

3 unchanged sentences

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

The accompanying notes to financial statements

are an integral part of these statements.

PERMIANVILLE ROYALTY TRUST

Statements of Changes in Trust Corpus

accompanying notes to financial statements are an integral part of these statements.

ROYALTY TRUST

of Changes in Trust Corpus

Year Ended December 31,

Trust corpus, beginning of period

$ 107,324,542

Sale of net profits interest on producing properties

Cash reserves (used) withheld for Trust expenses

1 unchanged sentence

Distributions to unitholders

(14,354,736 )

(44,744,073 )

Amortization of net profits interest

(10,476,140 )

(11,757,051 )

Trust corpus, end of year

The accompanying notes to financial statements

are an integral part of these statements.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

TRUST ORGANIZATION

AND PROVISIONS

Permianville Royalty Trust (the “Trust”),

previously known as Enduro Royalty Trust, is a Delaware statutory trust formed in May 2011 pursuant to a trust agreement (the

“Trust Agreement”) among Enduro Resource Partners LLC (“Enduro”), as trustor, The Bank of New York Mellon

Trust Company, N.A.

(the “Trustee”), as trustee, and Wilmington Trust Company (the “Delaware Trustee”),

as Delaware Trustee.

The Trust was created to acquire and hold

for the benefit of the Trust unitholders a net profits interest representing the right to receive 80% of the net profits from the

sale of oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico held by Enduro

as of the date of the conveyance of the net profits interest to the Trust (the “Net Profits Interest”).

The properties

in which the Trust holds the Net Profits Interest are referred to as the “Underlying Properties.”

In connection with the closing of the initial

public offering in November 2011, Enduro contributed the Net Profits Interest to the Trust in exchange for 33,000,000 units

of beneficial interest in the Trust (the “Trust Units”).

Through the initial public offering in 2011 and a secondary

offering in 2013, Enduro sold a total of 24,400,000 Trust Units.

As of December 31, 2017, Enduro owned 8,600,000 Trust Units, or

26% of the issued and outstanding Trust Units.

At a special meeting of Trust unitholders

held on August 30, 2017, unitholders approved several proposals, including amendments to the Trust Agreement.

In September 2017,

Enduro, the Trustee and the Delaware Trustee entered into the First Amendment to Amended and Restated Trust Agreement, which amended

certain provisions of the Trust Agreement to, among other things, allow Enduro to sell interests in the Underlying Properties free

and clear of the Net Profits Interest with the approval of Trust unitholders holding at least 50% of the then outstanding units

of the Trust at a meeting held in accordance with the requirements of the Trust Agreement.

This amendment reduced the required

threshold for approval of such sales from 75% to 50% of the outstanding units of the Trust.

In July 2018 Enduro

entered into a purchase and sale agreement with COERT Holdings 1 LLC (“COERT”

or the “Sponsor”) for the

Underlying Properties and all of the outstanding Trust Units owned by Enduro (the “Sale Transaction”), and on August

31, 2018, the parties closed the Sale Transaction.

Trust corpus, end of period

accompanying notes to financial statements are an integral part of these statements.

ROYALTY TRUST

TO FINANCIAL STATEMENTS

ORGANIZATION AND PROVISIONS

Royalty Trust (the “Trust”), previously known as Enduro Royalty Trust, is a Delaware statutory trust formed in May 2011

pursuant to a trust agreement (the “Trust Agreement”) among Enduro Resource Partners LLC (“Enduro”), as

trustor, The Bank of New York Mellon Trust Company, N.A.

(the “Trustee”), as trustee, and Wilmington Trust Company

(the “Delaware Trustee”), as Delaware Trustee.

Trust was created to acquire and hold for the benefit of the Trust unitholders a net profits interest representing the right to

receive 80% of the net profits from the sale of oil and natural gas production from certain properties in the states of Texas,

Louisiana and New Mexico held by Enduro as of the date of the conveyance of the net profits interest to the Trust (the “Net

Profits Interest”).

The properties in which the Trust holds the Net Profits Interest are referred to as the “Underlying

Properties.”

connection with the closing of the initial public offering in November 2011, Enduro contributed the Net Profits Interest

to the Trust in exchange for 33,000,000 units of beneficial interest in the Trust (the “Trust Units”).

initial public offering in 2011 and a secondary offering in 2013, Enduro sold a total of 24,400,000 Trust Units.

As of December

31, 2017, Enduro owned 8,600,000 Trust Units, or 26% of the issued and outstanding Trust Units.

a special meeting of Trust unitholders held on August 30, 2017, unitholders approved several proposals, including amendments to

the Trust Agreement.

In September 2017, Enduro, the Trustee and the Delaware Trustee entered into the First Amendment to Amended

and Restated Trust Agreement, which amended certain provisions of the Trust Agreement to, among other things, allow Enduro to

sell interests in the Underlying Properties free and clear of the Net Profits Interest with the approval of Trust unitholders

holding at least 50% of the then outstanding units of the Trust at a meeting held in accordance with the requirements of the Trust

This amendment reduced the required threshold for approval of such sales from 75% to 50% of the outstanding units of

July 2018 Enduro entered into a purchase and sale agreement with COERT Holdings 1 LLC (“COERT”

or the “Sponsor”)

for the Underlying Properties and all of the outstanding Trust Units owned by Enduro (the “Sale Transaction”), and

on August 31, 2018, the parties closed the Sale Transaction.

In connection with the Sale Transaction, COERT assumed all of Enduro’s

2 unchanged sentences

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

The Net Profits Interest is passive in nature

and neither the Trust nor the Trustee has any management control over or responsibility for costs relating to the operation of

the Underlying Properties.

Net Profits Interest is passive in nature and neither the Trust nor the Trustee has any management control over or responsibility

for costs relating to the operation of the Underlying Properties.

The Trust Agreement provides, among other provisions, that:

the Trust’s business activities are limited to owning the Net Profits Interest and any activity reasonably related to

such ownership, including activities required or permitted by the terms of the Conveyance of Net Profits Interest, dated effective

as of July 1, 2011 (as supplemented and amended to date, the “Conveyance”).

As a result, the Trust is not permitted

to acquire other oil and natural gas properties or net profits interests or otherwise to engage in activities beyond those necessary

for the conservation and protection of the Net Profits Interest;

the Trust may dispose of all or any material part of the assets of the Trust (including the sale of the Net Profits Interests)

if approved by at least 75% of the outstanding Trust Units;

the Sponsor may sell a divided or undivided portion of its interests in the Underlying Properties, free from and unburdened

by the Net Profits Interest, if approved by at least 50% of the outstanding Trust Units at a meeting of Trust unitholders;

the Trustee will make monthly cash distributions to unitholders (Note 7);

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

the Trustee may create a cash reserve to pay for future liabilities of the Trust;

the Trustee may authorize the Trust to borrow money to pay administrative or incidental expenses of the Trust that exceed its

cash on hand and available reserves.

No further distributions will be made to Trust unitholders until such amounts borrowed are

the 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 of time.

The Trust will dissolve upon the earliest to occur of the following:

the Trust, upon approval of the holders of at least 75% of the outstanding Trust Units, sells the Net Profits Interest;

the annual cash proceeds received by the Trust attributable to the Net Profits Interest are less than $2 million for each of

any two consecutive years;

the holders of at least 75% of the outstanding Trust Units vote in favor of dissolution;

the Trust is judicially dissolved.

SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

Basis of Accounting

The Trust uses the modified cash basis of

accounting to report Trust receipts of income from the Net Profits Interest and payments of expenses incurred.

The Net Profits

Interest represents the right to receive revenues (oil and natural gas sales), less direct operating expenses (including lease

operating expenses and production and property taxes) and development expenses of the Underlying Properties, multiplied by 80%.

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

the Conveyance creating the Net Profits Interest.

Under the terms of the Conveyance, the monthly

Net Profits Interest calculation includes oil and natural gas revenues received by the Sponsor during the relevant month.

operating expenses and capital expenditures represent estimated incurred expenses, and as a result, represent accrued expenses

as well as expenses paid during the period.

The financial statements of the Trust are

prepared on the following basis:

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

(b) Distributions to Trust unitholders are recorded when paid by the Trust;

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

and other professional fees) are recorded when paid;

(d) Cash reserves for Trust expenses may be established by the Trustee for certain future expenditures that would not be recorded

as contingent liabilities under accounting principles generally accepted in the United States of America (“GAAP”);

(e) Amortization of the Net Profits Interest in oil and natural gas properties is calculated on a unit-of-production basis and

is charged directly to the Trust corpus;

(f) The Net Profits Interest in oil and natural gas properties is periodically assessed whenever events or circumstances indicate

that the aggregate value may have been impaired below its total capitalized cost based on the Underlying Properties.

If an impairment

loss is indicated by the carrying amount of the assets exceeding the sum of the undiscounted expected future net cash flows of

the Net Profits Interest, then an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds

its estimated fair value determined using discounted cash flows.

PERMIANVILLE ROYALTY TRUST

Trust’s business activities are limited to owning the Net Profits Interest and

any activity reasonably related to such ownership, including activities required or permitted

by the terms of the Conveyance of Net Profits Interest, dated effective as of July 1,

2011 (as supplemented and amended to date, the “Conveyance”).

the Trust is not permitted to acquire other oil and natural gas properties or net profits

interests or otherwise to engage in activities beyond those necessary for the conservation

and protection of the Net Profits Interest;

Trust may dispose of all or any material part of the assets of the Trust (including the

sale of the Net Profits Interests) if approved by at least 75% of the outstanding Trust

Sponsor may sell a divided or undivided portion of its interests in the Underlying Properties,

free from and unburdened by the Net Profits Interest, if approved by at least 50% of

the outstanding Trust Units at a meeting of Trust unitholders;

Trustee will make monthly cash distributions to unitholders (Note 5);

ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

The financial statements of the Trust differ

from financial statements prepared in accordance with GAAP because revenues are not accrued in the month of production;

cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with

Trustee may create a cash reserve to pay for future liabilities of the Trust;

Trustee may authorize the Trust to borrow money to pay administrative or incidental expenses

of the Trust that exceed its cash on hand and available reserves.

No further distributions

will be made to Trust unitholders until such amounts borrowed are repaid;

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 of time.

The Trust will dissolve

upon the earliest to occur of the following:

Trust, upon approval of the holders of at least 75% of the outstanding Trust Units, sells

the Net Profits Interest;

annual cash proceeds received by the Trust attributable to the Net Profits Interest are

less than $2 million for each of any two consecutive years;

holders of at least 75% of the outstanding Trust Units vote in favor of dissolution;

Trust is judicially dissolved.

OF SIGNIFICANT ACCOUNTING POLICIES

of Accounting

Trust uses the modified cash basis of accounting to report Trust receipts of income from the Net Profits Interest and payments

of expenses incurred.

The Net Profits Interest represents the right to receive revenues (oil and natural gas sales), less direct

operating expenses (including lease operating expenses and production and property taxes) and development expenses of the Underlying

Properties, multiplied by 80%.

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

the Sponsor pursuant to terms of the Conveyance creating the Net Profits Interest.

the terms of the Conveyance, the monthly Net Profits Interest calculation includes oil and natural gas revenues received by the

Sponsor during the relevant month.

Monthly operating expenses and capital expenditures represent estimated incurred expenses,

and as a result, represent accrued expenses as well as expenses paid during the period.

financial statements of the Trust are prepared on the following basis:

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

(b) Distributions

to Trust unitholders are recorded when paid by the Trust;

general and administrative expenses (which includes the Trustee’s fees as well

as accounting, engineering, legal, and other professional fees) are recorded when paid;

reserves for Trust expenses may be established by the Trustee for certain future expenditures

that would not be recorded as contingent liabilities under accounting principles generally

accepted in the United States of America (“GAAP”);

(e) Amortization

of the Net Profits Interest in oil and natural gas properties is calculated on a unit-of-production

basis and is charged directly to the Trust corpus;

ROYALTY TRUST

TO FINANCIAL STATEMENTS—Continued

Net Profits Interest in oil and natural gas properties is periodically assessed whenever

events or circumstances indicate that the aggregate value may have been impaired below

its total capitalized cost based on the Underlying Properties.

If an impairment loss

is indicated by the carrying amount of the assets exceeding the sum of the undiscounted

expected future net cash flows of the Net Profits Interest, then an impairment loss is

recognized for the amount by which the carrying amount of the asset exceeds its estimated

fair value determined using discounted cash flows.

financial statements of the Trust differ from financial statements prepared in accordance with GAAP because revenues are not accrued

in the month of production;

certain cash reserves may be established for contingencies which would not be accrued in financial

statements prepared in accordance with GAAP;

general and administrative expenses are recorded when paid instead of when incurred;

and amortization of the net profits

interest calculated on a unit-of-production basis is charged directly to trust corpus instead of as an expense.

While these statements

differ from financial statements prepared in accordance with GAAP, the modified cash basis of reporting revenues, expenses, and

distributions is considered to be the most meaningful because monthly distributions to the Trust unitholders are based on net cash

This comprehensive basis of accounting other

than GAAP corresponds to the accounting permitted for royalty trusts by the U.S.

Securities and Exchange Commission (“SEC”)

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

Use of Estimates

The preparation of financial statements

in conformity with the basis of accounting described above requires the Trust to make estimates and assumptions that affect reported

amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period.

Significant estimates

affecting these financial statements include estimates of proved oil and natural gas reserves, which are used to compute the Trust’s

amortization of net profits interest and its impairment assessments.

Although the Trustee believes that these estimates are reasonable,

actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in

banks, money market accounts, and all highly liquid investments with an original maturity of three months or less.

The Net Profits Interest in oil and natural

gas properties is periodically assessed for impairment whenever events or circumstances indicate that the current fair value based

on expected future cash flows of the Underlying Properties may be less than the carrying value of the Net Profits Interest.

the Trust did not record an impairment during the years ended December 31, 2019, 2018 or 2017, 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.

New Accounting Pronouncements

As the Trust’s financial statements

are prepared on the modified cash basis, most accounting pronouncements are not applicable to the Trust’s financial statements.

No new accounting pronouncements have been adopted or issued that would impact the financial statements of the Trust.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

NET PROFITS INTEREST

IN OIL AND NATURAL GAS PROPERTIES

The Net Profits Interest in oil and natural

gas properties was recorded at its fair value on the date of conveyance.

Amortization of the Net Profits Interest in oil and natural

gas properties is calculated on a unit-of-production basis based on the Underlying Properties’

and amortization of the net profits interest calculated on a unit-of-production basis is charged directly to trust corpus instead

of as an expense.

While these statements differ from financial statements prepared in accordance with GAAP, the modified cash

basis of reporting revenues, expenses, and distributions is considered to be the most meaningful because monthly distributions

to the Trust unitholders are based on net cash receipts.

comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the U.S.

and Exchange Commission (“SEC”) as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty

preparation of financial statements in conformity with the basis of accounting described above requires the Trust to make estimates

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

the reporting period.

Significant estimates affecting these financial statements include estimates of proved oil and natural gas

reserves, which are used to compute the Trust’s amortization of net profits interest and its impairment assessments.

the Trustee believes that these estimates are reasonable, actual results could differ from those estimates.

and Cash Equivalents

and cash equivalents include cash in banks, money market accounts, and all highly liquid investments with an original maturity

of three months or less.

Net Profits Interest in oil and natural gas properties is periodically assessed for impairment whenever events or circumstances

indicate that the current fair value based on expected future cash flows of the Underlying Properties may be less than the carrying

value of the Net Profits Interest.

While the Trust did not record an impairment during the years ended December 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.

Accounting Pronouncements

the Trust’s financial statements are prepared on the modified cash basis, most accounting pronouncements are not applicable

to the Trust’s financial statements.

No new accounting pronouncements have been adopted or issued that would impact the

financial statements of the Trust.

ROYALTY TRUST

TO FINANCIAL STATEMENTS—Continued

PROFITS INTEREST IN OIL AND NATURAL GAS PROPERTIES

Net Profits Interest in oil and natural gas properties was recorded at its fair value on the date of conveyance.

of the Net Profits Interest in oil and natural gas properties is calculated on a unit-of-production basis based on the Underlying

Properties’

production and reserves.

the Trust uses the modified cash basis of accounting, amortization is recognized only in those months for which income from net

profits interest exceeds capital expenditures.

The reserves upon which the amortization rate is based are quantity estimates which

7 unchanged sentences

amortization as of December 31, 2020 and 2019 was $285,826,125 and $279,925,202, respectively.

The Net Profits Interest is periodically

assessed for impairment whenever events or circumstances indicate that the current fair value based on expected future cash flows

of the Underlying Properties may be less than the carrying value of the Net Profits Interest.

While the Trust did not record an

impairment during the years ended December 31, 2019, 2018 or 2017, 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.

For further information, see “Note 5.

Fair Value Measurements.”

As further discussed in “Note 4.

of Net Profits Interest in Certain Permian Basin Properties,”

in September 2017, Enduro completed the sale of certain properties

in the Permian Basin and, in connection with the sale, the Trust released its 80% Net Profits Interest in the properties in exchange

for 80% of the net proceeds of the sales.

As a result of the divestiture, and concurrent with the distribution of cash to the Trust

that occurred in October 2017, the Trust reduced the carrying value of the Net Profits Interest reflected on the accompanying

Statement of Assets, Liabilities and Trust Corpus by $1,650,000, which was the portion of the net sales proceeds allocated to producing

The remainder of the net sales proceeds, totaling $36,300,165, was attributed to the sale of the net profits interest

on undeveloped acreage and not reflected in the carrying value of the Net Profits Interest.

See “Note 5.

Fair Value Measurements”

for further discussion of the fair value of the divested properties, which was the basis for allocating net proceeds between producing

properties and undeveloped acreage.

DIVESTITURE OF

NET PROFITS INTEREST IN CERTAIN PERMIAN BASIN PROPERTIES

In June 2017, Enduro notified the Trustee

that Enduro had entered into eight separate purchase and sale agreements to divest certain acreage and associated production in

the Permian Basin (the “Divestiture Properties”) that constituted part of the Underlying Properties and were therefore

burdened by the Trust’s Net Profits Interest.

On August 30, 2017, at a special meeting of Trust unitholders, the unitholders

approved (i) the eight transactions pursuant to which Enduro would sell the Divestiture Properties, (ii) the release of the Trust’s

80% Net Profits Interest in the Divestiture Properties, and (iii) the related proposals to effect the sale transactions in exchange

for the Trust receiving 80% of the net proceeds from the sale of the Divestiture Properties.

In September 2017, Enduro, the Trustee and

the Delaware Trustee entered into the First Amendment to Amended and Restated Trust Agreement, which amended certain provisions

of the Trust Agreement to, among other things, allow Enduro to sell interests in the Underlying Properties free and clear of the

Net Profits Interest with the approval of Trust unitholders holding at least 50% of the then outstanding units of the Trust at

a meeting held in accordance with the requirements of the Trust Agreement.

This amendment reduced the required threshold for approval

of such sales from 75% to 50% of the outstanding units of the Trust.

To effect the same changes as those included in the amended

Trust Agreement, Enduro, the Trustee and the Delaware Trustee also entered into the First Amendment to Conveyance of Net Profits

As a result of the Trust unitholders approving amendments to the Trust Agreement and Conveyance and the approval of the

divestiture of the Divestiture Properties, Enduro and the Trustee entered into the Partial Release, Reconveyance and Termination

Agreement (the “Partial Release”).

Pursuant to the terms of the Partial Release, the Trustee, on behalf of the Trust,

reconveyed, terminated and released to Enduro the Net Profits Interest with respect to the Divestiture Properties sold pursuant

to eight letter agreements or purchase and sale agreements, as applicable, entered into between Enduro and eight separate counterparties.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

In September 2017, Enduro completed the

sale of the Divestiture Properties.

The following table displays the aggregate net proceeds from the sale of the Divestiture Properties

and the aggregate net proceeds allocable to Trust unitholders:

Proceeds to Enduro from sale of Divestiture Properties

Transaction expenses

Net proceeds from sale of Divestiture Properties

Percentage allocable to Trust’s Net Profits Interest

Net proceeds allocable to the Trust

Indemnity holdback

Cash distributed to Trust unitholders from divestiture of Net Profits Interest

Number of Trust Units

Special distribution per Trust Unit

Total proceeds received by Enduro from the

sale of the Divestiture Properties, after preliminary closing adjustments, were approximately $49.1 million.

After deducting transaction

expenses of $766,737, net proceeds to Enduro were $48.4 million, of which the proceeds allocable to the Trust were $38.7 million

in accordance with its 80% Net Profits Interest.

Pursuant to an agreement between Enduro and the Trust, Enduro withheld $750,000

(the “Holdback Amount”) of the net proceeds allocable to the Trust to cover possible indemnification obligations under

the purchase and sale agreements within 25 months of the closing of the transactions, or by the end of October 2019 (the “Indemnification

Period”).

As a result of these transactions, a special distribution of $1.150005 per unit was paid on October 20, 2017 to

Net Profits Interest is periodically assessed for impairment whenever events or circumstances indicate that the current fair value

based on expected future cash flows of the Underlying Properties may be less than the carrying value of the Net Profits Interest.

While the Trust did not record an impairment during the years ended December 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.

of Net Profits Interest

value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level

1 inputs) and the lowest priority to unobservable inputs (Level 3).

When indicators of impairment are present and it is determined

that the carrying value of the Net Profits Interest exceeds the estimated undiscounted cash flows of the subject interest, fair

value estimates utilized in the impairment assessment are determined based on inputs not observable in the market and thus represent

Level 3 measurements.

federal income tax purposes, the Trust is a grantor trust and therefore is not subject to tax at the trust level.

Trust unitholders

In connection with the Sale Transaction, Enduro released the Holdback Amount to the Trustee on September 4,

The Trustee retained the Holdback Amount for the remainder of the Indemnification Term and released the Holdback Amount,

totaling approximately $752,000, including interest, as part of the Trust distribution to unitholders paid in October 2019.

As discussed in “Note 5.

Measurements,”

the cash distributed to Trust unitholders as a result of the divestitures of the Net Profits Interest was

allocated between producing properties and undeveloped acreage based on the fair value of the Divestiture Properties.

The $1,650,000

allocated to producing properties reduced the carrying value of the “Net profits interest in oil and natural gas properties,

line item on the Statement of Assets, Liabilities and Trust Corpus at December 31, 2017 and is shown as “Income

from sale of net profits interest on producing properties”

on the Statement of Distributable Income for the year ended December

The remaining amount totaling $36,300,165 was allocated to undeveloped acreage and is reflected in the Statement of Distributable

Income as “Income from sale of net profits interest on undeveloped acreage.”

As the proceeds received from the sale

of the Divestiture Properties were primarily attributable to undeveloped acreage, the net profits generated from the Divestiture

Properties have been insignificant to the Trust historically.

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The three approaches for measuring the fair value of assets and liabilities are the market approach, the income approach and the

cost approach, each of which includes multiple valuation techniques.

The market approach uses prices and other relevant information

generated by market transactions involving identical or comparable assets or liabilities.

The income approach uses valuation techniques

to measure fair value by converting future amounts, such as cash flows or earnings, into a single present value amount using current

market expectations about those future amounts.

The cost approach is based on the amount that would currently be required to replace

the service capacity of an asset, often referred to as current replacement cost.

The cost approach assumes that the fair value

would not exceed what it would cost a market participant to acquire or construct a substitute asset of comparable utility, adjusted

for obsolescence.

The fair value accounting standards do

not prescribe which valuation technique should be used when measuring fair value and do not prioritize among the techniques.

These standards establish a fair value hierarchy that prioritizes the inputs used in applying the various valuation

Inputs broadly refer to the assumptions that market participants use to make pricing decisions, including

assumptions about risk.

Level 1 inputs are given the highest priority in the fair value hierarchy, while Level 3 inputs are

given the lowest priority.

The three levels of the fair value hierarchy are as follows:

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

Level 1 –

Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets

as of the reporting date.

Active markets are those in which transactions for the asset or liability occur in sufficient frequency

and volume to provide pricing information on an ongoing basis.

Level 2 –

Observable market-based inputs or unobservable inputs that are corroborated by market data.

These are inputs

other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting

Level 3 –

Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies

that result in management’s best estimate of fair value.

Valuation techniques that maximize the use

of observable inputs are favored.

Assets and liabilities are classified in their entirety based on the lowest priority level of

input that is significant to the fair value measurement.

The assessment of the significance of a particular input to the fair value

measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

Fair Values—Non-recurring

Divestiture of Net Profits Interest

In connection with the divestiture of the

Net Profits Interest as discussed in Note 4, the fair value of the producing properties sold in relation to the fair value of the

Underlying Properties was evaluated utilizing an undiscounted cash flow model as of the date of sale.

This fair value measurement

using an income approach was based upon internal estimates of future production levels, prices, drilling and operating costs and

discount rates, which are Level 3 inputs.

Internal price estimates were developed based on third-party longer-term commodity futures

price outlooks.

Based on this analysis, the expected future net cash flows of the producing properties sold discounted at an annual

rate of 10 percent was approximately $2.2 million, representing approximately 1.7% of the total expected future net cash flows

of the Underlying Properties discounted at an annual rate of 10 percent.

As the producing properties sold by Enduro

represented 1.7% of the fair value of the Underlying Properties, the Trust reduced the carrying value of the Net Profits Interest

reflected on its financial statements by 1.7%, or approximately $1.7 million, in October 2017.

Impairment of Net Profits Interest

Although the Trust did not record an impairment

during the years ended December 31, 2019, 2018 or 2017, it is reasonably possible that the estimates of undiscounted future net

cash flows attributable to the Underlying Properties may change in the future resulting in the need to further impair the carrying

value of the Net Profits Interest.

The primary factors that may affect estimates of future cash flows include:

revisions, both

positive and negative, to estimates of oil and natural gas reserves;

changes in estimated average realized oil and natural gas

and results of future drilling activities.

Federal Income Taxes

For federal income tax purposes, the

Trust is a grantor trust and therefore is not subject to tax at the trust level.

Trust unitholders are treated as owning a

direct interest in the assets of the Trust, and each Trust unitholder is taxed directly on his or her pro rata share of the

income and gain attributable to the assets of the Trust and entitled to claim his or her pro rata share of the deductions and

expenses attributable to the assets of the Trust.

The income of the Trust is deemed to have been received or accrued by each

unitholder at the time such income is received or accrued by the Trust rather than when distributed by the Trust.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

The deductions of the Trust consist of severance

taxes and administrative expenses.

In addition, each unitholder is entitled to depletion deductions because the Net Profits Interest

constitutes “economic interests”

in oil and natural gas properties for federal income tax purposes.

Each unitholder

is entitled to amortize the cost of the Trust Units through cost depletion over the life of the Net Profits Interest or, if greater,

through percentage depletion.

Unlike cost depletion, percentage depletion is not limited to a unitholder’s depletable tax

basis in the Trust Units.

Rather, a unitholder could be entitled to percentage depletion as long as the applicable Underlying Properties

generate net income.

Some Trust Units are held by a middleman,

as such term is broadly defined in U.S.

Treasury Regulations (and includes custodians, nominees, certain joint owners, and brokers

holding an interest for a custodian in street name).

Therefore, the Trustee considers the Trust to be a non-mortgage widely held

fixed investment trust (“WHFIT”) for U.S.

are treated as owning a direct interest in the assets of the Trust, and each Trust unitholder is taxed directly on his or her

pro rata share of the income and gain attributable to the assets of the Trust and entitled to claim his or her pro rata share

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

The income of the Trust is deemed to have been received

or accrued by each unitholder at the time such income is received or accrued by the Trust rather than when distributed by the

deductions of the Trust consist of severance taxes and administrative expenses.

In addition, each unitholder is entitled to depletion

deductions because the Net Profits Interest constitutes “economic interests”

in oil and natural gas properties for

federal income tax purposes.

The Bank of New York Mellon Trust Company, N.A.,

601 Travis, 16 th Floor, Houston, Texas 77002, telephone number (512) 236-6545, is the representative of the Trust that

will provide tax information in accordance with applicable U.S.

Treasury Regulations governing the information reporting requirements

of the Trust as a WHFIT.

Each unitholder is entitled to amortize the cost of the Trust Units through cost depletion over the

life of the Net Profits Interest or, if greater, through percentage depletion.

Unlike cost depletion, percentage depletion is

not limited to a unitholder’s depletable tax basis in the Trust Units.

Rather, a unitholder could be entitled to percentage

depletion as long as the applicable Underlying Properties generate net income.

Trust Units are held by a middleman, as such term is broadly defined in U.S.

Treasury Regulations (and includes custodians, nominees,

certain joint owners, and brokers holding an interest for a custodian in street name).

Therefore, the Trustee considers the Trust

to be a non-mortgage widely held fixed investment trust (“WHFIT”) for U.S.

federal income tax purposes.

New York Mellon Trust Company, N.A., 601 Travis, 16 th Floor, Houston, Texas 77002, telephone number (512) 236-6545,

is the representative of the Trust that will provide tax information in accordance with applicable U.S.

Treasury Regulations governing

the information reporting requirements of the Trust as a WHFIT.

Tax information is also posted by the Trustee at www.permianvilleroyaltytrust.com .

Notwithstanding

the foregoing, the middlemen holding units on behalf of unitholders, and not the Trustee of the Trust, are solely responsible for

complying with the information reporting requirements under the U.S.

Treasury Regulations with respect to such units, including

the issuance of IRS Forms 1099 and certain written tax statements.

Unitholders whose units are held by middlemen should consult

with such middlemen regarding the information that will be reported to them by the middlemen with respect to the Trust Units.

The tax consequences to a unitholder of

ownership of Trust Units will depend in part on the unitholder’s tax circumstances.

Unitholders should consult their tax

advisors about the federal tax consequences relating to owning the Trust Units.

The Trust’s revenues are from sources

in the states of Louisiana, New Mexico and Texas.

Because it distributes all of its net income to unitholders, the Trust is not

taxed at the trust level in Louisiana or New Mexico.

Although the Trust does not owe tax, the Trustee is required to file a return

with Louisiana reflecting the income and deductions of the Trust attributable to properties located in that state.

Louisiana and

New Mexico presently have income taxes which tax income of nonresidents from real property located within that state.

and New Mexico also impose a corporate income tax which may apply to unitholders organized as corporations.

Texas imposes a franchise tax at a rate

of 0.75% on gross revenues less certain deductions for returns originally due on or after January 1, 2016, as specifically set

forth in the Texas franchise tax statutes.

Entities subject to tax generally include trusts unless otherwise exempt.

receive at least 90% of their federal gross income from designated passive sources, including royalties from mineral properties

and other income from other non-operating mineral interests, and do not receive more than 10% of their income from operating an

active trade or business, generally are exempt from the Texas franchise tax as “passive entities.”

Although the Trust

is intended to be exempt from Texas franchise tax at the trust level as a passive entity, each unitholder that is considered a

taxable entity under the Texas franchise tax would generally be required to include its portion of Trust net income in its own

Texas franchise tax computation.

Each unitholder should consult his or her

own tax advisor regarding state tax requirements, if any, applicable to such person’s ownership of Trust Units.

PERMIANVILLE ROYALTY TRUST

Notwithstanding the foregoing, the middlemen holding units on behalf of unitholders, and not the Trustee of the Trust, are solely

responsible for complying with the information reporting requirements under the U.S.

Treasury Regulations with respect to such

units, including the issuance of IRS Forms 1099 and certain written tax statements.

Unitholders whose units are held by middlemen

should consult with such middlemen regarding the information that will be reported to them by the middlemen with respect to the

ROYALTY TRUST

TO FINANCIAL STATEMENTS—Continued

tax consequences to a unitholder of ownership of Trust Units will depend in part on the unitholder’s tax circumstances.

Unitholders should consult their tax advisors about the federal tax consequences relating to owning the Trust Units.

Trust’s revenues are from sources in the states of Louisiana, New Mexico and Texas.

Because it distributes all of its net

income to unitholders, the Trust is not taxed at the trust level in Louisiana or New Mexico.

Although the Trust does not owe tax,

the Trustee is required to file a return with Louisiana reflecting the income and deductions of the Trust attributable to properties

located in that state.

Louisiana and New Mexico presently have income taxes which tax income of nonresidents from real property

located within that state.

Louisiana and New Mexico also impose a corporate income tax which may apply to unitholders organized

as corporations.

imposes a franchise tax at a rate of 0.75% on gross revenues less certain deductions for returns originally due on or after January

1, 2016, as specifically set forth in the Texas franchise tax statutes.

Entities subject to tax generally include trusts unless

otherwise exempt.

Trusts that receive at least 90% of their federal gross income from designated passive sources, including royalties

from mineral properties and other income from other non-operating mineral interests, and do not receive more than 10% of their

income from operating an active trade or business, generally are exempt from the Texas franchise tax as “passive entities.”

Although the Trust is intended to be exempt from Texas franchise tax at the trust level as a passive entity, each unitholder that

is considered a taxable entity under the Texas franchise tax would generally be required to include its portion of Trust net income

in its own Texas franchise tax computation.

unitholder should consult his or her own tax advisor regarding state tax requirements, if any, applicable to such person’s

ownership of Trust Units.

ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

1 unchanged sentence

TO UNITHOLDERS

Each month, the Trustee determines the amount

of funds available for distribution to the Trust unitholders.

Available funds are the excess cash, if any, received by the Trust

from the Net Profits Interest and other sources (such as interest earned on any amounts reserved by the Trustee) that month, over

the Trust’s liabilities for that month, subject to adjustments for changes made by the Trustee during the month in any cash

reserves established for future liabilities of the Trust.

Distributions are made to the holders of Trust Units as of the applicable

record date (generally the last business day of each calendar month) and are payable on or before the tenth business day after

the record date.

The following table provides information

regarding the Trust’s distributions paid during the periods indicated:

month, the Trustee determines the amount of funds available for distribution to the Trust unitholders.

Available funds are the

excess cash, if any, received by the Trust from the Net Profits Interest and other sources (such as interest earned on any amounts

reserved by the Trustee) that month, over the Trust’s liabilities for that month, subject to adjustments for changes made

by the Trustee during the month in any cash reserves established for future liabilities of the Trust.

Distributions are made to

the holders of Trust Units as of the applicable record date (generally the last business day of each calendar month) and are payable

on or before the tenth business day after the record date.

following table provides information regarding the Trust’s distributions paid during the periods indicated:

Declaration Date

Distribution per Unit

December 16, 2019

December 31, 2019

January 15, 2020

January 17, 2020

January 31, 2020

February 14, 2020

11 unchanged sentences

July 15, 2020

July 19, 2019

July 31, 2019

August 14, 2019

August 16, 2019

August 30, 2019

September 16, 2019

September 30, 2019

October 15, 2019

October 18, 2019

October 31, 2019

November 14, 2019

November 15, 2019

November 29, 2019

December 13, 2019

Total—2020

December 18, 2017

December 29, 2017

January 18, 2019

January 31, 2019

January 31, 2018

February 14, 2019

27 unchanged sentences

Total—2019

December 19, 2016

December 30, 2016

January 17, 2017

January 20, 2017

January 31, 2017

February 14, 2017

February 17, 2017

February 28, 2017

March 14, 2017

March 21, 2017

March 31, 2017

April 14, 2017

April 18, 2017

April 28, 2017

June 14, 2017

June 20, 2017

June 30, 2017

July 17, 2017

July 21, 2017

July 31, 2017

August 14, 2017

August 21, 2017

August 31, 2017

September 15, 2017

September 19, 2017

September 29, 2017

October 16, 2017

September 25, 2017 –

Special Distribution

October 5, 2017

October 20, 2017

Total—2017

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

DEVELOPMENT EXPENSE

During 2016, Enduro established a reserve

from the calculated net profits interest for approved 2016 development expenses.

At December 31, 2017, $100,000 remained in the

reserve for development expenses which was released during the first three months of 2018.

AND RELATED PARTY TRANSACTIONS

Trustee Administrative Fee.

the terms of the Trust Agreement, the Trust pays an annual administrative fee of $200,000 to the Trustee and $2,000 to the Delaware

During the year ended December 31, 2019, the Trust paid $200,000 to the Trustee and $2,000 to the Delaware Trustee pursuant

to the terms of the Trust Agreement.

During the years ended December 31, 2018 and 2017, the Trust paid $202,018 and $200,997,

respectively, to the Trustee and $2,010 and $2,000, respectively, to the Delaware Trustee.

Advances from COERT .

time, if the Trust’s cash on hand (including available cash reserves, if any) is not sufficient to pay the Trust’s

ordinary course administrative expenses that are due prior to the monthly payment to the Trust of proceeds from the Net Profits

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

Such advances are recorded as a liability on the Statements

of Assets, Liabilities and Trust Corpus until repaid.

As of December 31, 2019 and 2018, Advances to the Trust were $34,818 and

$0, respectively.

Registration Rights Agreement.

Trust and COERT (as the assignee of Enduro, in connection with the Sale Transaction) are parties to a Registration Rights Agreement,

as amended, whereby COERT, its affiliates and certain permitted transferees holding registrable Trust Units are entitled, upon

receipt by the Trustee of written notice from holders of a majority of the then outstanding registrable Trust Units, to demand

that the Trust effect the registration of the registrable Trust Units.

The holders of the registrable Trust Units are entitled

to demand a maximum of five such registrations.

In connection with the preparation and filing of any registration statement, COERT

will bear all costs and expenses incidental to any registration statement, excluding certain internal expenses of the Trust, which

will be borne by the Trust.

Any underwriting discounts and commissions will be borne by the seller of the Trust Units.

PERMIAN BASIN

OPERATOR ADJUSTMENT

As previously disclosed, Enduro received

a letter in July 2015 from one of its operators in the Permian Basin pertaining to 480,000 Mcf of natural gas for which the operator

had paid Enduro on the Underlying Properties but for which Enduro had only produced 240,000 Mcf.

Subsequently, the operator and

Enduro agreed that the value of the overpaid production, totaling $1.1 million to the Underlying Properties, would be recouped

with proceeds from future production.

During the recoupment period, which began

during the second quarter of 2016 and ended during the second quarter of 2018 when the $1.1 million was fully recovered, Enduro

did not, and following the Sale Transaction, the Sponsor did not, receive any revenue payments from any of the operator’s

For the year ended December 31, 2018, these

properties would have contributed approximately 2,100 Bbls, amounting to $0.1 million in oil receipts, and 130,500 Mcf, amounting

to $0.5 million in natural gas receipts.

After deducting $0.2 million in revenue deductions for taxes and transportation expenses,

a total of $0.4 million has been withheld by the operator for the year ended December 31, 2018.

For the year ended December 31,

2017, these properties would have contributed approximately 5,900 Bbls, amounting to $0.2 million in oil receipts, and 191,200

Mcf, amounting to $0.5 million in natural gas receipts.

After deducting $0.3 million in revenue deductions for taxes and transportation

expenses, a total of $0.5 million has been withheld by the operator for the year ended December 31, 2017.

During the recoupment period, these properties

would have contributed approximately 12,200 Bbls, amounting to $0.5 million in oil receipts, and 417,200 Mcf, amounting to $1.2

million in natural gas receipts.

After deducting $0.6 million in revenue deductions for taxes and transportation expenses, the

total amount of $1.1 million has been fully withheld by the operator.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

SUBSEQUENT EVENTS

Distributions Paid or Declared

Subsequent to December 31, 2019, the

Trust declared the following distributions:

Declaration Date

December 16, 2019

December 31, 2019

January 15, 2020

January 17, 2020

January 31, 2020

February 14, 2020

February 17, 2020

February 28, 2020

March 13, 2020

PERMIANVILLE ROYALTY TRUST

FEES AND RELATED PARTY TRANSACTIONS

Administrative Fee.

Under the terms of the Trust Agreement, the Trust pays an annual administrative fee of $200,000 to the

Trustee and $2,000 to the Delaware Trustee.

During the years ended December 31, 2020 and 2019, the Trust paid $200,000 to the

Trustee and $2,000 to the Delaware Trustee, respectively, pursuant to the terms of the Trust Agreement.

Under the terms of the Trust Agreement, COERT has provided the Trust with a $1.2 million letter of credit 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.

The letter of credit is issued to the benefit of the Trustee.

The standby letter of credit was issued

by West Texas National Bank and matures February 10, 2021.

On February 11, 2021, COERT provided the Trust with a new letter of

credit for $1.2 million which matures on February 11, 2022.

This letter is set to automatically renew for 1 year from the date

of maturity unless otherwise notified by the lender 30 days prior to its maturity.

The letter of credit to the Trustee is unfunded

as of December 31, 2020.

From time to time, if the Trust’s cash on hand (including available cash reserves, if any) is not sufficient

to pay the Trust’s ordinary course administrative expenses that are due prior to the monthly payment to the Trust of proceeds

from the Net Profits Interest, COERT may advance funds to the Trust to pay such expenses.

Such advances are recorded as a liability

on the Statements of Assets, Liabilities and Trust Corpus until repaid.

As of December 31, 2020 and 2019, Advances to the Trust

were $348,821 and $34,818, respectively.

ROYALTY TRUST

TO FINANCIAL STATEMENTS—Continued

Rights Agreement.

The Trust and COERT (as the assignee of Enduro, in connection with the Sale Transaction) are parties to

a Registration Rights Agreement, as amended, whereby COERT, its affiliates and certain permitted transferees holding registrable

Trust Units are entitled, upon receipt by the Trustee of written notice from holders of a majority of the then outstanding registrable

Trust Units, to demand that the Trust effect the registration of the registrable Trust Units.

The holders of the registrable Trust

Units are entitled to demand a maximum of five such registrations.

In connection with the preparation and filing of any registration

statement, COERT will bear all costs and expenses incidental to any registration statement, excluding certain internal expenses

of the Trust, which will be borne by the Trust.

Any underwriting discounts and commissions will be borne by the seller of the

Distributions

Paid or Declared

Trust did not declare any distributions subsequent to December 31, 2020 and up to the date of the financial statements.

PERMIANVILLE ROYALTY

UNAUDITED SUPPLEMENTARY INFORMATION

Oil and Natural Gas Producing Activities

Oil and Natural Gas Reserve Quantities

Estimates of proved reserves attributable

to the Trust and the related valuations were based 100% on reports prepared by the Trust’s independent petroleum engineers,

Cawley, Gillespie & Associates, Inc.

Estimates were prepared in accordance with guidelines prescribed by the SEC and the

Financial Accounting Standards Board, which require that reserve estimates be prepared under existing economic and operating conditions

based upon an average of the first-day-of-the-month commodity price during the 12-month period ending on the balance sheet date

with no provision for price and cost escalations except by contractual arrangements.

Prices used in estimating reserves were as

Supplementary Oil and Natural Gas Information (Unaudited)

and Natural Gas Reserve Quantities

of proved reserves attributable to the Trust and the related valuations were based 100% on reports prepared by the Trust’s

independent petroleum engineers, Cawley, Gillespie & Associates, Inc.

Estimates were prepared in accordance with guidelines

prescribed by the SEC and the Financial Accounting Standards Board, which require that reserve estimates be prepared under existing

economic and operating conditions based upon an average of the first-day-of-the-month commodity price during the 12-month period

ending on the balance sheet date with no provision for price and cost escalations except by contractual arrangements.

in estimating reserves were as follows:

Oil (per Bbl)

Natural gas (per Mcf)

Proved reserve quantity estimates are subject to numerous uncertainties

inherent in the estimation of proved reserves and in the projection of future rates of production and the timing of development

expenditures.

The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation

and judgment.

Results of subsequent drilling, testing and production may cause either upward or downward revisions of previous

Further, the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs.

The process of estimating quantities of oil and natural gas reserves is very complex, requiring significant subjective decisions

in the evaluation of all available geological, engineering and economic data for each reserve.

Consequently, these estimates are

expected to change as additional information becomes available in the future.

As of December 31, 2019, 2018, and

2017, all of the Underlying Properties’

oil and natural gas reserves were attributable to properties within the United States.

Proved reserves attributable to the Trust and related standardized measure valuations are prepared on an accrual basis, which is

the basis on which Enduro and, following the Sale Transaction, the Sponsor, and the Underlying Properties maintain their production

records and is different from the basis on which the Trust production records are computed.

The following is a summary of the changes

in quantities of proved oil and natural gas reserves attributable to the Trust for the periods indicated:

Trust Net Profits Interest

Natural gas (per MMBTU)

reserve quantity estimates are subject to numerous uncertainties inherent in the estimation of proved reserves and in the projection

of future rates of production and the timing of development expenditures.

The accuracy of such estimates is a function of the

quality of available data and of engineering and geological interpretation and judgment.

Results of subsequent drilling, testing

and production may cause either upward or downward revisions of previous estimates.

Further, the volumes considered to be commercially

recoverable fluctuate with changes in prices and operating costs.

The process of estimating quantities of oil and natural gas

reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering

and economic data for each reserve.

Consequently, these estimates are expected to change as additional information becomes available

in the future.

of December 31, 2020 and 2019, all of the Underlying Properties’

oil and natural gas reserves were attributable to

properties within the United States.

Proved reserves attributable to the Trust and related standardized measure valuations are

prepared on an accrual basis, which is the basis on which Enduro and, following the Sale Transaction, the Sponsor, and the Underlying

Properties maintain their production records and is different from the basis on which the Trust production records are computed.

The following is a summary of the changes in quantities of proved oil and natural gas reserves attributable to the Trust for the

periods indicated:

Net Profits Interest

Balance—January

Extensions and discoveries

Revisions of previous estimates

Sale of Net Profits Interest

Income from Net Profits Interest

Balance—December 31, 2017

Extensions and discoveries

Revisions of previous estimates

Income from Net Profits Interest

of previous estimates

from Net Profits Interest

Balance—December 31, 2019

Extensions and discoveries

Revisions of previous estimates

Income from Net Profits Interest

and discoveries

of previous estimates

from Net Profits Interest

Balance—December

Proved developed reserves:

December 31, 2017

December 31, 2018

December 31, 2019

Proved undeveloped reserves:

December 31, 2017

December 31, 2018

December 31, 2019

developed reserves:

undeveloped reserves:

for natural gas liquids are immaterial and included as a component of oil reserves.

1 unchanged sentence

UNAUDITED SUPPLEMENTARY INFORMATION—Continued

Extensions and discoveries .

the year ended December 31, 2019, two gross wells (0.1 net) were drilled in the Permian Basin of west Texas and three gross wells

(0.1 net) were drilled in the Haynesville shale of Louisiana.

Extensions and discoveries did not increase during 2019, as these

wells were completed at the end of the fourth quarter of 2019.

Given the non-operated nature of the Underlying Properties

there was insufficient production data to support an increase in reserves.

During the year ended December 31, 2018,

extensions and discoveries were primarily related to an increase in the development of the Wolfcamp shale in the Permian Basin

of west Texas and increasing activity in the Haynesville shale of Louisiana.

During the year ended December 31, 2017,

extensions and discoveries were primarily related to development activity in the Haynesville Shale in north Louisiana and the Pecos

Valley field in west Texas.

Revisions of previous estimates .

During the year ended December 31, 2019, revisions of previous estimates decreased oil reserves by 22%, primarily due to a decrease

in the average oil price used to estimate future net reserves.

The NYMEX average oil price of $55.69 per Bbl used to determine

reserves as of December 31, 2019 was 15% lower than the $65.56 per Bbl average NYMEX oil price as of December 31, 2018.

During the year ended December 31, 2018,

revisions of previous estimates increased oil reserves by 32%, primarily due to an increase in the average oil price used to estimate

future net reserves.

The NYMEX average oil price of $65.56 per Bbl used to determine reserves as of December 31, 2018 was 28% higher

than the $51.34 per Bbl average NYMEX oil price as of December 31, 2017.

During the year ended December 31, 2017,

revisions of previous estimates increased oil reserves by 25%, primarily due to an increase in the average oil price used to estimate

future net reserves.

The NYMEX average oil price of $51.34 per Bbl used to determine reserves as of December 31, 2017 was 20% higher

than the $42.75 per Bbl average NYMEX oil price as of December 31, 2016.

Sales of net profits interest.

sale of two producing wells and associated acreage of the Underlying Properties in 2019 represented a de minimis amount of proved

As discussed in Note 4 of the Notes to Financial Statements, during the year ended December 31, 2017, the Trust divested

of its Net Profits Interest in certain oil and natural gas properties in the Permian Basin.

As a result of this divestiture, the

proved reserves associated with the producing properties reduced the Trust’s total proved reserves on a BOE basis by approximately

Income from net profits interest .

Income from net profits interest represents the reduction in total proved reserves as a result of net profits allocable to the

Trust from the Underlying Properties during the applicable year, expressed as oil and natural gas reserve volumes.

Standardized Measure of Discounted Future Net Cash Flows

The standardized measure of discounted future

net cash flows relating to proved oil and natural gas reserves is computed by applying commodity prices used in determining proved

reserves (with consideration of price changes only to the extent provided by contractual arrangements) to the estimated future

production of proved reserves less estimated future expenditures (based on year-end costs) to be incurred in developing and producing

the proved reserves, discounted using a rate of 10% per year to reflect the estimated timing of the future cash flows.

cash inflows were computed by applying the commodity prices utilized in determining proved reserves to estimated future production.

Future production and development costs are computed by estimating the expenditures to be incurred in developing and producing

the proved oil and gas reserves at year-end, based on year-end costs and assuming continuation of existing economic conditions.

of previous estimates .

During the year ended December 31, 2020, revisions of previous estimates decreased oil reserves by

20%, primarily due to a decrease in the average oil price used to estimate future net reserves.

The NYMEX average oil price of

$39.57 per Bbl used to determine reserves as of December 31, 2020 was 29% lower than the $55.69 per Bbl average NYMEX oil price

as of December 31, 2019.

the year ended December 31, 2019, revisions of previous estimates decreased oil reserves by 22%, primarily due to a decrease in

the average oil price used to estimate future net reserves.

The NYMEX average oil price of $55.69 per Bbl used to determine reserves

as of December 31, 2019 was 15% lower than the $65.56 per Bbl average NYMEX oil price as of December 31, 2018.

Measure of Discounted Future Net Cash Flows

standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves is computed by applying

commodity prices used in determining proved reserves (with consideration of price changes only to the extent provided by contractual

arrangements) to the estimated future production of proved reserves less estimated future expenditures (based on year-end costs)

to be incurred in developing and producing the proved reserves, discounted using a rate of 10% per year to reflect the estimated

timing of the future cash flows.

Future cash inflows were computed by applying the commodity prices utilized in determining proved

reserves to estimated future production.

Future production and development costs are computed by estimating the expenditures to

be incurred in developing and producing the proved oil and gas reserves at year-end, based on year-end costs and assuming continuation

of existing economic conditions.

As the Trust is not subject to federal income taxes, future income taxes have been excluded.

PERMIANVILLE ROYALTY TRUST

PERMIANVILLE ROYALTY

UNAUDITED SUPPLEMENTARY INFORMATION—Continued

The standardized measure of discounted future

net cash flows relating to proved oil and natural gas reserves attributable to the Trust was as follows as of the dates indicated:

standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves attributable to the Trust

was as follows as of the dates indicated:

(in thousands)

4 unchanged sentences

Standardized measure of discounted future net cash flows

The changes in standardized measure of discounted

future net cash flows relating to proved oil and natural gas reserves attributable to the Trust for the periods indicated were

as follows (in thousands):

changes in standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves attributable

to the Trust for the periods indicated were as follows (in thousands):

Year Ended December 31,

Extensions, discoveries, and other additions

Sales of Net Profits Interest

Accretion of discount

4 unchanged sentences

Balance, end of year

Selected Quarterly Financial Data

The following table provides selected

quarterly financial data for the periods indicated:

Year Ended December 31, 2019:

Income from Net Profits Interest

Distributable income

Distributions per unit

Income from sale of Net Profits Interest on undeveloped acreage

Year Ended December 31, 2018:

Income from Net Profits Interest

Distributable income

Distributions per unit

Income from sale of Net Profits Interest on undeveloped acreage

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

in and Disagreements with Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data