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Item 1. Financial Statements

2021-05-17 compared with 2020-11-06 · 419 added, 642 removed, 139 unchanged (88% of the section changed)

1 unchanged sentence

PERMIANVILLE ROYALTY TRUST

Statements of Assets, Liabilities and

September 30,

Statements of Assets, Liabilities and Trust

Cash and cash equivalents

5 unchanged sentences

Total liabilities and Trust corpus

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 Distributable Income

Three Months Ended September 30,

Nine Months Ended September 30,

Statements of Distributable

Three Months Ended March 31,

Income from net profits interest

Income from sale/lease of undeveloped acreage

Interest and investment income

General and administrative expenses

Cash reserves (withheld) used for Trust expenses

Cash reserves 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Trust corpus, beginning of period

Cash reserves withheld (used) for Trust expenses

Cash reserves (used) for Trust expenses

Distributable income

2 unchanged sentences

Trust corpus, end of period

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

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”).

On August 31, 2018, COERT Holdings 1

LLC (“COERT”

or the “Sponsor”) acquired from Enduro the Underlying Properties and all of the outstanding

Trust Units owned by Enduro (the “Sale Transaction”).

In connection with the Sale Transaction, COERT assumed all of

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

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

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”).

On August 31, 2018, COERT Holdings 1 LLC (“COERT”

or the “Sponsor”) acquired from Enduro the Underlying Properties and all of the outstanding Trust Units owned by Enduro (the

“Sale Transaction”).

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

Agreement and other instruments to which Enduro and the Trustee were parties.

As of March 31, 2021, 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.

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 Amended and Restated Trust Agreement provides, among other provisions, that:

14 unchanged sentences

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS - Continued

BASIS OF PRESENTATION

The Statement of

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 September 30, 2020 and for the three and nine months ended September 30, 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”).

In the opinion of

the Trustee, the accompanying unaudited financial statements reflect all adjustments, consisting only of normal, recurring accrual

adjustments, that are necessary for a fair presentation of the interim periods presented and include all the disclosures necessary

to make the information presented not misleading.

The Statement of Assets,

Liabilities and Trust Corpus as of December 31, 2020, which has been derived from audited financial statements, and the unaudited

interim financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 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, 2020 (the “2020 Annual Report on Form 10-K”).

In the opinion of the Trustee,

the accompanying unaudited financial statements reflect all adjustments, consisting only of normal, recurring accrual adjustments, that

are necessary for a fair presentation of the interim periods presented and include all the disclosures necessary to make the information

presented not misleading.

These interim results are not necessarily indicative of results for a full year.

The preparation of

financial statements requires the Trustee 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.

Although the Trustee believes that these estimates

are reasonable, actual results could differ from those estimates.

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 (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 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 during the relevant

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.

The preparation of financial

statements requires the Trustee 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.

Although the Trustee believes that these estimates are reasonable, actual

results could differ from those estimates.

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 (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 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 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.

The financial statements

2 unchanged sentences

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

(b) Distributions

to Trust unitholders are recorded when paid by the Trust;

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

(b) Distributions to

Trust unitholders are recorded when paid by the Trust;

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;

(e) 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' production and reserves 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.

The financial statements

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

certain cash reserves

may be established for contingencies which would not be accrued in financial statements prepared in accordance with GAAP;

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.

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;

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

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 is considered to be the most meaningful

because monthly distributions to the Trust unitholders are based on net cash receipts.

This comprehensive

basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by Staff

Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts .

financial statements prepared in accordance with GAAP, the modified cash basis of reporting is considered to be the most meaningful because

monthly distributions to the Trust unitholders are based on net cash receipts.

This comprehensive basis

of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin

Topic 12:E, Financial Statements of Royalty Trusts .

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 reserves.

As the Trust uses the modified cash basis of accounting, amortization is recognized only in those months in which

income from net profits interest exceeds capital expenditures.

The reserves upon which the amortization rate is based are quantity

estimates that are subject to numerous uncertainties inherent in the estimation of proved reserves.

The volumes considered to be

commercially recoverable fluctuate with changes in commodity prices and operating costs.

These estimates are expected to change

as additional information becomes available in the future.

Downward revisions in proved reserves may result in an increased rate

of amortization.

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

Accumulated amortization as of September 30, 2020 and December 31, 2019 was $283,986,545 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 nine months ended September 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.

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’

production and reserves.

The reserves upon which the amortization rate is based are quantity estimates that are subject to numerous uncertainties inherent in the

estimation of proved reserves.

The volumes considered to be commercially recoverable fluctuate with changes in commodity prices and operating

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

Downward revisions in proved

reserves may result in an increased rate of amortization.

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

the distributable income of the Trust.

Accumulated amortization as of March 31, 2021 and December 31, 2020 was $287,384,924

and $285,826,125, 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 three months ended March 31, 2021 or 2020, 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

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.

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 gross 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.

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 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.

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.

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 gross 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.

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.

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.

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

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

Presently, Louisiana and New Mexico tax nonresident income from real property located within that state.

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

Texas does not impose

a state income tax, so the Trust’s income is not subject to income tax at the trust level in Texas.

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.

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 tax nonresident income from real property located within that state.

Louisiana and New Mexico impose a corporate

income tax which may apply to unitholders organized as corporations.

Texas does not impose a state

income tax, so the Trust’s income is not subject to income tax at the trust level in Texas.

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.

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.

Each unitholder should

consult his or her own tax advisor regarding state tax requirements, if any, applicable to such person’s ownership of Trust

DISTRIBUTIONS

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 10th

business day after the record date.

The following table

provides information regarding the Trust’s distributions per unit paid during the periods indicated:

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.

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.

DISTRIBUTIONS TO UNITHOLDERS

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.

No distributions will be made to Trust unitholders

until the indebtedness created by such amounts drawn or borrowed as advances to the Trust have been repaid in full.

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 10th business day after the record date.

The following table provides

information regarding the Trust’s distributions per unit paid during the periods indicated:

Declaration Date

Nine Months Ended September 30, 2020:

Three Months Ended March 31, 2021:

Year to Date –

Three Months Ended March 31, 2020:

December 16, 2019

7 unchanged sentences

March 13, 2020

March 16, 2020

March 31, 2020

April 14, 2020

April 17, 2020

April 30, 2020

June 15, 2020

June 30, 2020

July 15, 2020

to Date –

Nine Months Ended September 30, 2019:

January 18, 2019

January 31, 2019

February 14, 2019

February 15, 2019

February 28, 2019

March 14, 2019

March 18, 2019

March 29, 2019

April 15, 2019

April 18, 2019

April 30, 2019

June 14, 2019

June 17, 2019

June 28, 2019

July 15, 2019

July 19, 2019

July 31, 2019

August 14, 2019

August 16, 2019

August 30, 2019

September 16, 2019

to Date - 2019

In July and August 2020, the direct operating

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

As a result, there were no distributions to

the Trust unitholders in August and September 2020, respectively.

In December 2018, the direct

operating and development expenses exceeded 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.

As a result, there were no net profits reported in December 2018 to be distributed to the Trust

unitholders in January 2019.

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 the distribution

paid in February 2019.

Year to Date - 2020

the three months ended March 31, 2021, the Net Profits Interest generated positive income for each month in the period, and

reduced the cumulative shortfall of $1.7 million as of December 31, 2020.

As a result, there were no net profits reported or distributed

in the first three months of 2021.

The aggregate Net Profits Interest shortfall, which was approximately $1.3 million as of March 31,

2021, will be carried forward to be deducted from future net profits generated by the Underlying Properties.

ADVANCES TO THE TRUST

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 September 30, 2020 and December 31, 2019, advances to the Trust were $159,071

and $34,818, respectively.

Under the terms of

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

Delaware Trustee.

During the three- and nine-month periods ended September 30, 2020 and 2019, the Trust paid $50,000 and $150,000,

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

During the three- and nine-month periods ended September

30, 2020 and 2019, the Trust paid $0 and $2,000, respectively, to the Delaware Trustee pursuant to the terms of the Trust Agreement.

2017 DIVESTITURE

PROPERTIES HOLDBACK AMOUNT

In September 2017,

Enduro completed the sale of certain properties in the Permian Basin.

In connection with the sale, Enduro withheld $750,000 (the

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

the related purchase and sale agreements arising within 25 months of the closing of the transactions, or by the end of October

2019 (the “Indemnification Term”).

In connection with the Sale Transaction, Enduro released the Holdback Amount to

the Trustee on September 4, 2018, with the Trustee announcing that it would continue to retain the Holdback Amount for the remainder

of the Indemnification Term.

The Trustee announced in September 2019 that it would release the Holdback Amount, totaling approximately

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

On October 15, 2020,

the Trust announced that there would be no distribution to the Trust unitholders in November

2020 as a result of the cumulative outstanding net profits shortfall.

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

As of March 31, 2021 and December 31, 2020, advances to the Trust were $612,744 and $348,821, respectively.

Under the terms of the Trust

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

During each of the three-month periods ended March 31, 2021 and 2020, the Trust paid $50,000 to the Trustee pursuant to the terms

of the Trust Agreement.

During each of the three-month periods ended March 31, 2021 and 2020 the Trust paid $2,000 to the Delaware

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

References to the

“Trust”

in this document refer to Permianville Royalty Trust, previously known as Enduro Royalty Trust, while references

to “COERT”

References to the “Trust”

in this document refer to Permianville Royalty Trust, previously known as Enduro Royalty Trust, while references to “COERT”

or the “Sponsor”

1 unchanged sentence

References to “Enduro”

in this document refer to Enduro Resource Partners LLC, the original sponsor of the Trust.

The following review of the Trust’s

financial condition and results of operations should be read in conjunction with the financial statements and notes thereto, as

well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Trust’s

2019 Annual Report on Form 10-K.

The Trust’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports

on Form 8-K and all other filings with the SEC are available on the SEC’s website at www.sec.gov .

in this document refer

to Enduro Resource Partners LLC, the original sponsor of the Trust.

The following review of the Trust’s financial condition and

results of operations should be read in conjunction with the financial statements and notes thereto, as well as Management’s Discussion

and Analysis of Financial Condition and Results of Operations contained in the Trust’s 2020 Annual Report on Form 10-K.

Trust’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all other filings

with the SEC are available on the SEC’s website at www.sec.gov .

Forward-Looking Statements

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“forward-looking statements”

within the meaning of Section 27A of the Securities Act of 1933, as amended, and

Section 21E of the Securities Exchange Act of 1934, as amended.

All statements other than statements of historical fact included

in this Form 10-Q, including without limitation the statements under this “Trustee’s Discussion and Analysis of

Financial Condition and Results of Operations”

within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E

of the Securities Exchange Act of 1934, as amended.

All statements other than statements of historical fact included in this Form 10-Q,

including without limitation the statements under this “Trustee’s Discussion and Analysis of Financial Condition and Results

of Operations”

are forward-looking statements.

Such statements may be influenced by factors

that could cause actual outcomes and results to differ materially from those projected.

No assurance can be given that such expectations

will prove to have been correct.

When used in this document, the words “believes,”

Such statements may be influenced by factors that could cause actual outcomes and

results to differ materially from those projected.

No assurance can be given that such expectations will prove to have been correct.

used in this document, the words “believes,”

“expects,”

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“intends”

or similar expressions are intended to identify such forward-looking statements.

The following important

factors, in addition to those discussed elsewhere in this Form 10-Q, in the Trust’s 2019 Annual Report on Form 10-K

and the Trust’s other filings with the SEC could affect the future results of the energy industry in general, and COERT and

the Trust in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

expressions are intended to identify such forward-looking statements.

The following important factors, in addition to those discussed

elsewhere in this Form 10-Q, in the Trust’s 2020 Annual Report on Form 10-K and the Trust’s other filings with the

SEC could affect the future results of the energy industry in general, and COERT and the Trust in particular, and could cause actual results

to differ materially from those expressed in such forward-looking statements:

risks associated with the drilling and operation of oil and natural gas wells;

the amount of future direct operating expenses and development expenses;

the effect, impact, potential duration or other implications of the outbreak of a novel strain of coronavirus (“COVID-19”)

which the World Health Organization declared a pandemic in March 2020;

the effect, impact, potential duration or other implications of the novel strain of coronavirus (“COVID-19”) pandemic;

the actions of the Organization of Petroleum Exporting Countries (“OPEC”)

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cost inflation.

You should not place

undue reliance on these forward-looking statements.

You should not place undue

reliance on these forward-looking statements.

All forward-looking statements speak only as of the date of this Form 10-Q.

The Trust does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events

or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, unless the securities

laws require us to do so.

This Form 10-Q

describes other important factors that could cause actual results to differ materially from expectations of the Sponsor and the

Trust, including under the caption “Risk Factors.”

All forward-looking statements in this report and all subsequent

written and oral forward-looking statements attributable to the Sponsor or the Trust or persons acting on behalf of the Sponsor

or the Trust are expressly qualified in their entirety by such factors.

The Trust assumes no obligation, and disclaims any duty,

to update these forward-looking statements.

Permianville Royalty

Trust, a statutory trust created in May 2011, completed its initial public offering in November 2011.

The Trust’s

only asset and source of income is the Net Profits Interest, which entitles the Trust to receive 80% of the net profits from oil

and natural gas production from the Underlying Properties.

The Net Profits Interest is passive in nature and neither the Trust

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

Additionally, third parties operate substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is

not in a position to control the timing of development efforts, associated costs, or the rate of production of the reserves.

does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances

after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, unless the securities laws require us to do

This Form 10-Q describes

other important factors that could cause actual results to differ materially from expectations of the Sponsor and the Trust, including

under the caption “Risk Factors.”

All forward-looking statements in this report and all subsequent written and oral forward-looking

statements attributable to the Sponsor or the Trust or persons acting on behalf of the Sponsor or the Trust are expressly qualified in

their entirety by such factors.

The Trust assumes no obligation, and disclaims any duty, to update these forward-looking statements.

Permianville Royalty Trust,

a statutory trust created in May 2011, completed its initial public offering in November 2011.

The Trust’s only asset

and source of income is the Net Profits Interest, which entitles the Trust to receive 80% of the net profits from oil and natural gas

production from the Underlying Properties.

The Net Profits Interest is passive in nature and neither the Trust nor the Trustee has any

management control over or responsibility for costs relating to the operation of the Underlying Properties.

Additionally, third parties

operate substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is not in a position to control the timing

of development efforts, associated costs, or the rate of production of the reserves.

On August 31, 2018,

COERT completed the acquisition from Enduro of the Underlying Properties and all of the outstanding Trust Units owned by Enduro

(the “Sale Transaction”).

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

under the Amended and Restated Trust Agreement of the Trust and other instruments to which Enduro and the Trustee were parties.

required to make monthly cash distributions of substantially all of its monthly cash receipts, after deducting the Trust’s

administrative expenses, to the holders of Trust Units as of the applicable record date (generally the last business day of each

calendar month) on or before the 10 th business day after the record date.

The Net Profits Interest is entitled to a

share of the profits from and after July 1, 2011 attributable to production occurring on or after June 1, 2011.

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

COERT completed the acquisition from Enduro of the Underlying Properties and all of the outstanding Trust Units owned by Enduro (the “Sale

Transaction”).

In connection with the Sale Transaction, COERT assumed all of Enduro’s obligations under the Amended and Restated

Trust Agreement of the Trust and other instruments to which Enduro and the Trustee were parties.

The Trust is required to

make monthly cash distributions of substantially all of its monthly cash receipts, after deducting the Trust’s administrative expenses,

to the holders of Trust Units as of the applicable record date (generally the last business day of each calendar month) on or before the

10 th business day after the record date.

The Net Profits Interest is entitled to a share of the profits from and after July 1,

2011 attributable to production occurring on or after June 1, 2011.

The amount of Trust revenues and cash distributions to Trust

unitholders depends on, among other things:

oil and natural gas sales prices;

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the establishment, increase, or decrease of reserves for approved development expenses or future liabilities of the Trust.

Generally, the Sponsor

receives cash payment for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after

it is produced.

Generally, the Sponsor receives

cash payment for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after it is produced.

New York Stock Exchange Listing Status

As previously disclosed,

on September 25, 2020, the Trust received written notification from the New York Stock Exchange (“NYSE”) that the Trust

no longer satisfied the continued listing compliance standards set forth under Section 802.01C of the NYSE Listed Company Manual

because the average closing price of the Trust’s units of beneficial interest fell below $1.00 over a 30 consecutive trading-day

period that ended September 24, 2020.

If the Trust is unable to regain compliance with the applicable standards within a six-month

cure period, the NYSE will commence suspension and delisting procedures.

by the NYSE, the Trust units may be transferred to the over-the-counter market.

During the cure period, the Trust units will continue

to trade on the NYSE, subject to compliance with other continued listing requirements.

Under the continued listing requirements of The

New York Stock Exchange (“NYSE”), a company will be considered to be out of compliance with the exchange’s minimum price

requirement if the company’s average closing price over a consecutive 30 trading day period (“Average Closing Price”)

is less than $1.00 (the “Minimum Price Requirement”).

Under NYSE rules, a company that is out of compliance with the

Minimum Price Requirement has a cure period of six months to regain compliance if it notifies the NYSE within 10 business days of receiving

a deficiency notice of its intention to cure the deficiency.

A company may regain compliance if on the last trading day of any calendar

month during the cure period the company has a closing share price of at least $1.00 and an average closing share price of at least $1.00

over the 30-trading-day period ending on the last trading day of that month.

If at the expiration of the cure period, both a $1.00 closing

share price on the last trading day of the cure period and a $1.00 average closing share price over the 30-trading-day period ending on

the last trading day of the cure period are not attained, the NYSE will commence suspension and delisting procedures.

On September 25, 2020, the Trust received

written notification from the NYSE that the Trust was not in compliance with the Minimum Price Requirement.

On March 11, 2021, the

Trust received written notification from the NYSE that the Trust had regained compliance with the Minimum Price Requirement as of February 26,

The outlook for development

activity for the Underlying Properties during the remainder of 2020 remains uncertain given the significant oil and natural gas

price volatility experienced since the beginning of 2020.

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

from $61.17 per barrel on January 2, 2020 to $35.79 per barrel on October 30, 2020, but in the interim ranged widely in response

to the economic effects of the COVID-19 pandemic and the dispute over production levels between Russia and the members of OPEC.

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 volatile and below historical levels, monthly cash distributions to unitholders will be substantially

activity for the Underlying Properties has improved during the first months of 2021 when compared to the historic downturn in oil and

gas prices seen during 2020.

The West Texas Intermediate spot price of crude oil has rallied materially from $48.52 per barrel on December 31,

2020 to $63.82 per barrel on May 13, 2021.

However, the effects of the COVID-19 pandemic and the 2020 dispute over production levels

between Russia and the members of OPEC continue to affect the oil and gas industry, with many operators expected to reduce their 2021

capital budgets to levels below those in prior years in which oil prices were comparable to current levels.

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.

lasting impact of COVID-19 is still unknown and the timing of a full oil and natural gas demand recovery continues to evolve, and it is

not possible to reliably estimate the impact that these developments will have on the Sponsor or the Trust in future periods.

prices for crude oil and natural gas remain volatile as seen in 2020, monthly cash distributions to unitholders will be substantially

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

In response to the

drop in commodity prices, a number of the operators on the Underlying Properties elected to defer production sales or temporarily

shut-in some of the producing wells on the Underlying Properties, which negatively affected recent reported production.

the Sponsor has reported to the Trustee that various operators of the Underlying Properties have indicated plans to return production

to prior, pre-shut-in levels.

As previously disclosed,

the Sponsor anticipated 2020 capital expenditures to range from $4 million to $6 million attributable to the properties in which

the Trust owns a net profits interest, or $3 million to $5 million net to the Trust’s 80% net profits interest.

Given publicly

announced reduced capital spending plans by a number of the operators of the Underlying Properties in response to current crude

oil prices, the Sponsor now expects the previously anticipated capital expenditures to be at the low end or below the projected

The Sponsor maintains significant liquidity and financial flexibility to respond to the operational and capital spending

changes of the operators of the Underlying Properties.

The Underlying Properties also have exposure to natural gas reserves in

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

oil weighted to gas weighted projects.

the Sponsor anticipates 2021 capital expenditures to range from $2 million to $4 million attributable to the properties in which the Trust

owns a net profits interest, or $1.6 million to $3.2 million net to the Trust’s 80% Net Profits Interest.

The Sponsor maintains

significant liquidity and financial flexibility to respond to the operational and capital spending changes of the operators of the Underlying

The Underlying Properties also have exposure to natural gas reserves in the Haynesville shale and other properties, where

commodity prices and capital markets activity held up in contrast to oil prices over the last twelve months.

The Sponsor will continue

to monitor and possibly participate in future capital projects in 2021 as operators continue to dynamically shift capital between oil

and natural gas focused projects.

Results of Operations

Three Months Ended September 30, 2020

Compared to Three Months Ended September 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:

Three Months Ended

September 30,

Three Months Ended March 31, 2021 Compared

to Three Months Ended March 31, 2020

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:

Months Ended March 31,

Increase (Decrease)

Gross profits:

5 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

Net profits allocable to Net Profits Interest Shortfall

Distributable income

During the three months

ended September 30, 2020, there were two months in which direct operating and development expenses exceeded revenues, thereby causing

net profits attributable to the Underlying Properties to be negative.

As a result, there were no distributions to Trust unitholders

in August and September 2020, respectively.

This resulted in an aggregate net profits shortfall of $2.7 million, prior to repayment

of Sponsor advances, as of August 30, 2020.

For September 2020, excluding prior net profits interest shortfalls, income from the

distributable net profits interest was approximately $0.5 million which would have been distributed in October 2020.

The $0.5 million

reduced the aggregate shortfall to approximately $2.2 million, prior to repayment of Sponsor advances, as of September 30, 2020.

This aggregate shortfall will be carried forward to be deducted from future net profits generated by the Underlying Properites.

As net profits for the two months were negative and therefore no distributions were paid to unitholders with respect to these two

months, the corresponding revenues and associated direct operating and development expenses are excluded from the calculation of

distributable income for the three months ended September 30, 2020 detailed in the table above as well as the related sales volumes

detailed below.

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 September 30, 2020 and 2019:

Three Months Ended September 30,

Cumulative Net Profits Interest Shortfall at March 31, 2021

the three months ended March 31, 2021, the Net Profits Interest generated positive income for each month in the period,

and reduced the cumulative shortfall of $1.7 million that existed as of December 31, 2020.

As a result, there were no net

profits reported or distributed in the first three months of 2021.

The aggregate Net Profits Interest shortfall, which was

approximately $1.3 million as of March 31, 2021, will be carried forward to be deducted from future net profits generated by

the Underlying Properties.

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, 2021 and 2020:

Months Ended March 31,

Increase(Decrease)

Underlying Properties Production Volumes:

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Natural gas prices realized ($/Mcf)

Income from Net Profits

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

oil sales primarily related to oil produced from the Underlying Properties from March 2020;

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

February 2020;

direct operating and development expenses primarily related to expenses incurred from April 2020.

Net profits attributable

to the Underlying Properties for the three months ended September 30, 2020 were $0.2 million compared to $3.7 million for the three

months ended September 30, 2019.

As a result of direct operating expenses and development expenses exceeding oil and natural gas

sales for two months during the period, the Trust did not pay a distribution to unitholders in August and September 2020.

under the modified cash basis of accounting, the oil and natural gas sales, direct operating expenses and development expenses

for such periods were not included in the three months ended September 30, 2020 and instead will be included in a future period

once the shortfall has been recouped.

Therefore, several variances between the periods are due to the inclusion of only one month

of results in the three months ended September 30, 2020 compared to three months during the quarter ended September 30, 2019.

attributable to the Underlying Properties for the three months ended March 31, 2021 were $0.6 million compared to $2.8 million

for the three months ended March 31, 2020.

As a result of aggregate net profits shortfall that was carried from 2020 into the

first three months of 2021, the Trust did not pay a distribution to unitholders during the first three months of 2021.

$2.3 million decrease in net profits attributable to the Underlying Properties from the 2020 period to the 2021 period was

primarily due to the following items:

Oil sales decreased $8.0 million, primarily due to the inclusion of only one month of oil sales

in the quarter ended September 30, 2020 compared to three months in the quarter ended September 30, 2019.

The 66% decrease in oil

production volumes decreased revenues by $6.5 million, and the 44% decrease in realized oil sales prices in the 2020 period compared

to the 2019 period decreased revenues by $1.5 million.

Natural gas sales decreased $1.8 million, primarily due to the inclusion of only one month of natural

gas sales in the quarter ended September 30, 2020 compared to three months in the quarter ended September 30, 2019.

Oil sales decreased $3.3 million, due to lower produced volumes and lower realized prices.

The 28% decrease

in natural gas production volumes decreased revenues by $1.4 million, and the 45% reduction in realized natural gas prices decreased

revenues by $0.4 million.

Lease operating expenses decreased $3.9 million, primarily attributable to the difference in the

number of months included in the respective periods.

Compression, gathering and transportation costs decreased $0.3 million, primarily due to the 65%

decrease in natural gas production.

Production, ad valorem and other taxes decreased $0.9 million during the three months ended September

30, 2020 compared to the three months ended September 30, 2019, due to the decrease in oil and natural gas sales.

Development expenses decreased $1.1 million primarily due to the decrease in capital workover activity

in the Permian Basin Area.

For the three

months ended September 30, 2020, the Trust withheld $0.1 million, and paid $0.1 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 three months ended September 30, 2019, the Trust withheld

$0.2 million, and paid $0.2 million for general and administrative expenses.

Nine Months Ended September 30, 2020

Compared to Nine Months Ended September 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:

Nine Months Ended

September 30,

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 nine months

ended September 30, 2020, there were two months in which direct operating and development expenses exceeded revenues, thereby causing

net profits attributable to the Underlying Properties to be negative.

As a result, there were no distributions to Trust unitholders

in August and September 2020, respectively.

This resulted in an aggregate net profits shortfall of $2.7 million, prior to repayment

of Sponsor advances, as of August 30, 2020.

For September 2020, excluding prior net profits interest shortfalls, income from the

distributable net profits interest was approximately $0.5 million which would have been distributed in October 2020.

The $0.5 million

reduced the aggregate shortfall to approximately $2.2 million, prior to repayment of Sponsor advances, as of September 30, 2020.

This aggregate shortfall will be carried forward to be deducted from future net profits generated by the Underlying Properites.

As net profits for the two months were negative and therefore no distributions were paid to unitholders with respect to these two

months, the corresponding revenues and associated direct operating and development expenses are excluded from the calculation of

distributable income for the nine months ended September 30, 2020 detailed in the table above as well as the related sales volumes

detailed below.

During the nine months

ended September 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

nine months ended September 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 nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

Underlying Properties Production Volumes:

Natural Gas (Mcf)

Combined (Boe)

Average Prices:

Oil - NYMEX (applicable NPI period ($/Bbl)

Oil prices realized ($/Bbl)

Natural gas - NYMEX (applicable NPI period ($/Mcf)

Natural gas prices realized ($/Mcf)

Income from Net Profits

Interest for the nine months ended September 30, 2020 is calculated from the following:

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

through March 2020;

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

August 2019 through February 2020;

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

to April 2020.

Net profits attributable

to the Underlying Properties for the nine months ended September 30, 2020 were $7.0 million compared to $9.6 million for the nine

months ended September 30, 2019.

As a result of direct operating expenses and development expenses exceeding oil and natural gas

sales for two months during the period, the Trust did not pay a distribution to unitholders in August and September 2020.

under the modified cash basis of accounting, the oil and natural gas sales, direct operating expenses and development expenses

for such periods were not included in the nine months ended September 30, 2020 and instead will be included in a future period

once the net profits shortfall has been recouped.

Therefore, several variances between the periods are due to the inclusion of

only seven months of results in the nine months ended September 30, 2020 compared to nine months during the nine-month period ended

September 30, 2019.

The $2.7 million decrease in net profits attributable to the Underlying Properties from the 2019 period

to the 2020 period was primarily due to the following items:

Oil sales decreased $6.3 million, primarily due to the inclusion of only seven months of oil sales

volumes in the nine-month period ended September 30, 2020 compared to nine months in the nine-month period ended September 30,

The decrease in oil sales volumes of 24% decreased revenues by $6.3 million, while realized oil sales prices remained consistent

with the prior year.

Natural gas sales decreased $4.9 million, primarily due to the inclusion of only seven months of

natural gas sales volumes in the nine-month period ended September 30, 2020 compared to nine months in the nine-month period ended

September 30, 2019.

The 34% decrease in gas sales volumes decreased revenues by $2.9 million, and lower realized gas prices caused

an additional decrease in revenues of $2.0 million.

Lease operating expenses decreased $3.3 million, primarily due to the inclusion of only seven months

of natural gas sales volumes in the nine-month period ended September 30, 2020 compared to nine months in the nine-month period

ended September 30, 2019.

Compression, gathering and transportation costs decreased $0.7 million, primarily due to the 24%

decrease in oil production and a 34% decrease natural gas production.

Production, ad valorem and other taxes decreased $1.5 million, primarily due to the decrease in

oil and natural gas sales.

Development expenses decreased $3.1 million primarily due to a decrease in capital projects in

the Permian Basin.

As previously disclosed,

in January 2019, the Sponsor completed the sale of certain of the Underlying Properties located in Glasscock County, Texas for

a total purchase price of approximately $62,000 (approximately $49,000 net to the Trust’s 80% net profits interest).

in January 2019, the Sponsor entered into a lease arrangement with a private equity backed operator with respect to a portion of

the mineral rights relating to certain of the Underlying Properties located in Gaines County, Texas (no current production is associated

with these mineral acres), for total proceeds of $160,000 ($128,000 net to the Trust’s 80% net profits interest).

months ended September 30, 2020, the Trust withheld $0.5 million, and paid $0.7 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 nine months ended September 30, 2019, the Trust withheld

$0.6 million, and paid $0.8 million for general and administrative expenses.

in realized oil sales prices in the 2021 period compared to the 2020 period decreased revenues by $2.2 million, and lower produced volumes

decreased revenues by $1.1 million.

Natural gas sales decreased $0.2 million due to lower produced volumes and lower realized prices.

6% decrease in gas sales volumes and 11% decrease in realized gas prices in the 2021 period compared to the 2020 period decreased revenues

by $0.1 million, respectively.

Lease operating expenses decreased by $1.2 million primarily because of temporarily shut-in wells due

to lower commodity prices during the COVID-19 pandemic.

Compression, gathering and transportation costs increased $0.2 million, primarily due to an increase in

plant processing fees for NGL sales.

Production, ad valorem and other taxes increased $0.2 million, primarily due to a slight increase in ad

valorem taxes during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Development expenses decreased $0.5 million primarily due to a decrease in capital projects in the Permian

For the first quarter of

2021, the Trust withheld $0.0 million, and paid $0.3 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

For the three months ended March 31, 2021, the Trust withheld $0.2 million and paid $0.4 million for general and administrative

Liquidity and Capital Resources

The Trust’s

principal sources of liquidity are cash flow generated from the Net Profits Interest and borrowing capacity under the letter of

credit described below.

Other than Trust administrative expenses, including any reserves established by the Trustee for future

liabilities, the Trust’s only use of cash is for distributions to 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) in any given month, over the Trust’s expenses paid for that month.

Available funds are reduced by any cash

the Trustee determines to hold as a reserve against future expenses.

The Trustee may create

a cash reserve to pay for future liabilities of the Trust.

If the Trustee determines that the cash on hand and the cash to be received

are, or will be, insufficient to cover the Trust’s liabilities, the Trustee may authorize the Trust to borrow money to pay

administrative or incidental expenses of the Trust that exceed cash held by the Trust.

The Trustee may authorize the Trust to borrow

from any person, including the Trustee or the Delaware Trustee or an affiliate thereof, although none of the Trustee, the Delaware

Trustee or any affiliate thereof intends to lend funds to the Trust.

The Trustee may also cause the Trust to mortgage its assets

to secure payment of the indebtedness.

The terms of such indebtedness and security interest, if funds were to be loaned by the

entity serving as Trustee or Delaware Trustee or an affiliate thereof, would be similar to the terms which such entity would grant

to a similarly situated commercial customer with whom it did not have a fiduciary relationship.

In addition, COERT has provided

the Trust with a $1.2 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves)

is insufficient to pay ordinary course administrative expenses.

Further, if the Trust requires more than the $1.2 million under

the letter of credit to pay administrative expenses, COERT has agreed to loan funds to the Trust necessary to pay such expenses.

Any loan made by COERT to the Trust would be evidenced by a written promissory note, be on an unsecured basis, and have terms that

are no less favorable to COERT than those that would be obtained in an arm’s length transaction between COERT and an unaffiliated

If the Trust borrows funds or draws on the letter of credit, no further distributions will be made to Trust unitholders

until such amounts borrowed or drawn are repaid.

Except for the foregoing, the Trust has no source of liquidity or capital resources.

The Trust’s principal

sources of liquidity are cash flow generated from the Net Profits Interest and borrowing capacity under the letter of credit described

Other than Trust administrative expenses, including any reserves established by the Trustee for future liabilities, the Trust’s

only use of cash is for distributions to 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) in any given month, over the Trust’s

expenses paid for that month.

Available funds are reduced by any cash the Trustee determines to hold as a reserve against future expenses.

The Trustee may create a

cash reserve to pay for future liabilities of the Trust.

If the Trustee determines that the cash on hand and the cash to be received are,

or will be, insufficient to cover the Trust’s liabilities, the Trustee may authorize the Trust to borrow money to pay administrative

or incidental expenses of the Trust that exceed cash held by the Trust.

The Trustee may authorize the Trust to borrow from any person,

including the Trustee or the Delaware Trustee or an affiliate thereof, although none of the Trustee, the Delaware Trustee or any affiliate

thereof intends to lend funds to the Trust.

The Trustee may also cause the Trust to mortgage its assets to secure payment of the indebtedness.

The terms of such indebtedness and security interest, if funds were to be loaned by the entity serving as Trustee or Delaware Trustee

or an affiliate thereof, would be similar to the terms which such entity would grant to a similarly situated commercial customer with

whom it did not have a fiduciary relationship.

In addition, COERT has provided the Trust with a $1.2 million letter of credit to be used

by the Trust if its cash on hand (including available cash reserves) is insufficient to pay ordinary course administrative expenses.

if the Trust requires more than the $1.2 million under the letter of credit to pay administrative expenses, COERT has agreed to loan funds

to the Trust necessary to pay such expenses.

Any loan made by COERT to the Trust would be evidenced by a written promissory note, be on

an unsecured basis, and have terms that are no less favorable to COERT than those that would be obtained in an arm’s length transaction

between COERT and an unaffiliated third party.

If the Trust borrows funds or draws on the letter of credit, no further distributions will

be made to Trust unitholders until such amounts borrowed or drawn are repaid.

Except for the foregoing, the Trust has no source of liquidity

or capital resources.

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

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

held cash of $63,598 and $90,665, respectively, for future Trust expenses.

Since its formation, the Trust has not borrowed any

funds and no amounts have been drawn on the letter of credit.

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,

At March 31, 2021 and December 31,

2020, the Trust held cash of $6,100 and $29,639, respectively, for future Trust expenses.

Since its formation, the Trust has not borrowed

any funds and no amounts have been drawn on the letter of credit.

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.

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

At March 31, 2021 and December 31, 2020, there was an outstanding

advance of $612,744 and $348,821, respectively.

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

to the Trust relating to the monthly operational update announced on September 18, 2020.

In connection with

Enduro’s sale of certain properties in the Permian Basin completed in September 2017, Enduro withheld $750,000 (the “Holdback

Amount”) from the net proceeds allocable to the Trust to cover possible indemnification obligations under the related purchase

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

Term”).

In connection with the Sale Transaction, Enduro released the Holdback Amount to the Trustee on September 4, 2018,

with the Trustee announcing that it would continue to retain the Holdback Amount for the remainder of the Indemnification Term.

In September 2019, the Trustee announced the release of the Holdback Amount, totaling approximately $752,000, including interest,

which was distributed to unitholders in October 2019.

Cash held by the

Trustee as a reserve against future liabilities or for distribution at the next distribution date may be held in a noninterest-bearing

account or may be invested in:

Cash held by the Trustee

as a reserve against future liabilities or for distribution at the next distribution date may be held in a noninterest-bearing account

or may be invested in:

interest-bearing obligations of the United States government;

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bank certificates of deposit.

The Trust pays the

Trustee an annual administrative fee of $200,000 and the Delaware Trustee an annual fee of $2,000.

The Trust also incurs, either

directly or as a reimbursement to the Trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that

are deducted by the Trust before distributions are made to Trust unitholders.

The Trust also is responsible for paying other expenses

incurred as a result of being a publicly traded entity, including costs associated with annual and quarterly reports to Trust unitholders,

tax return and Form 1099 preparation and distribution, NYSE listing fees, independent auditor fees and registrar and transfer

The Trust does not

have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect

the Trust’s liquidity or the availability of capital resources.

The Trust pays the Trustee

an annual administrative fee of $200,000 and the Delaware Trustee an annual fee of $2,000.

The Trust also incurs, either directly or as

a reimbursement to the Trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that are deducted by the

Trust before distributions are made to Trust unitholders.

The Trust also is responsible for paying other expenses incurred as a result

of being a publicly traded entity, including costs associated with annual and quarterly reports to Trust unitholders, tax return and Form 1099

preparation and distribution, NYSE listing fees, independent auditor fees and registrar and transfer agent fees.

The Trust does not have any

transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the Trust’s

liquidity or the availability of capital resources.

Distributions Declared After Quarter End

The Trust did not

declare any distributions after the end of the quarter.

The Trust did not declare

any distributions after the end of the quarter.

Off-Balance Sheet Arrangements

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sheet arrangements.

The Trust has not guaranteed the debt of any other party, nor does the Trust have any other arrangements or

relationships with other entities that could potentially result in unconsolidated debt, losses or contingent obligations.

The Trust has not guaranteed the debt of any other party, nor does the Trust have any other arrangements or relationships

with other entities that could potentially result in unconsolidated debt, losses or contingent obligations.

Critical Accounting Policies and Estimates

Please read “Item 7.

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies

and Estimates”

of the Trust’s 2019 Annual Report on Form 10-K for additional information regarding the Trust’s

critical accounting policies and estimates.

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

estimates during the nine months ended September 30, 2020.

Subsequent Events

On October 15, 2020,

the Trust announced that there would be no distribution to the Trust unitholders in November

2020 as a result of the cumulative outstanding net profits shortfall.

Trustee’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates”

of the Trust’s 2020 Annual Report on Form 10-K for additional information regarding the Trust’s critical accounting policies

and estimates.

There were no material changes to the Trust’s critical accounting policies or estimates during the three months ended

March 31, 2021.

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller

reporting company”

as defined in Item 10(f)(1) of Regulation S-K, the Trust is not required to provide information required

by this Item.

As a “smaller reporting

company”

as defined in Item 10(f)(1) of Regulation S-K, the Trust is not required to provide information required by this Item.

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