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Item 1. Financial Statements

2021-11-15 compared with 2021-08-13 · 338 added, 260 removed, 376 unchanged (61% of the section changed)

2 unchanged sentences

Statements of Assets, Liabilities and Trust

September 30,

Cash and cash equivalents

9 unchanged sentences

Statements of Distributable Income

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Income from net profits interest

8 unchanged sentences

Statements of Changes in Trust Corpus

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Trust corpus, beginning of period

8 unchanged sentences

NOTES TO FINANCIAL STATEMENTS

TRUST ORGANIZATION AND

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 “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”),

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

As of June 30, 2021, the Sponsor owned 8,600,000 Trust Units,

or 26% of the issued and outstanding Trust Units.

As of September 30, 2021, the Sponsor owned 8,600,000

Trust Units, or 26% of the issued and outstanding Trust Units.

The Net Profits Interest

18 unchanged sentences

NOTES TO FINANCIAL STATEMENTS - Continued

BASIS OF PRESENTATION

OF PRESENTATION

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 June 30, 2021 and for the three and six months ended June 30, 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”).

interim financial statements as of September 30, 2021 and for the three and nine months ended September 30, 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

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,

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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;

expenses (which includes the Trustee’s fees as well as accounting, engineering, legal, and other professional fees) are recorded

(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

(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;

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.

An impairment loss would be charged to the Trust and would not impact the Statement of Distributable Income.

The financial statements

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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’

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.

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the distributable income of the Trust.

Accumulated amortization as of June 30, 2021 and December 31, 2020 was $289,057,084 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 June 30, 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.

Accumulated amortization as of September 30, 2021 and December 31, 2020 was $290,590,924

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 September 30, 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

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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.

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.

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

DISTRIBUTIONS

TO UNITHOLDERS

Each month, the Trustee determines

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

Declaration Date

Six Months Ended June 30, 2021:

Nine Months Ended September 30, 2021:

August 15, 2021

August 31, 2021

September 15, 2021

Year to Date –

Six Months Ended June 30, 2020:

Nine Months Ended September 30, 2020:

December 16, 2019

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June 15, 2020

June 30, 2020

July 15, 2020

Year to Date –

For the six months ended June

30, 2021, the Net Profits Interest generated positive income for each month in the period, which reduced the cumulative outstanding Net

Profits Interest shortfall from $1.7 million as of December 31, 2020 to approximately $0.5 million as of June 30, 2021.

As a result, there

were no net profits reported or distributed in the first six months of 2021.

Distributions to the Trust will resume once the cumulative

outstanding Net Profits Interest shortfall of approximately $0.5 million and outstanding administrative advances to the Trust of $0.8

million as of June 30, 2021 are eliminated.

These balances will be carried forward to be deducted from future net profits generated by

the Underlying Properties.

In July and August 2020,

the direct operating and development expenses exceeded revenues, causing the net profits to be negative and creating a Net Profits Interest

shortfall of $2.2 million as of September 30, 2020, which was carried forward to be deducted from future net profits to be generated

by the Underlying Properties.

As a result, there were no distributions to the Trust unitholders in August and September 2020,

respectively.

During the nine months ended

September 30, 2021, the Net Profits Interest generated positive income for each month in the period, which eliminated the cumulative

outstanding Net Profits Interest shortfall of $1.7 million that existed as of December 31, 2020.

In August 2021, the remaining

amount of the shortfall and advances to the Trust were fully repaid, resulting in a positive distribution to the unitholders in September 2021.

ADVANCES TO THE TRUST

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Such advances are recorded as a liability on the Statements of Assets, Liabilities and Trust Corpus until

As of June 30, 2021 and December 31, 2020, advances to the Trust were $797,744 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- and six-month periods ended June 30, 2021 and 2020, the Trust paid $50,000 and $100,000, respectively, to the

Trustee pursuant to the terms of the Trust Agreement.

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

periods ended June 30, 2021, respectively.

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

periods ended June 30, 2020, respectively.

Trustee’s Discussion and Analysis of Financial Condition

and Results of Operations.

During the nine months ended September 30, 2021 the balance of the advance to the Trust has been fully repaid.

As of September 30,

2021 and December 31, 2020, cumulative outstanding advances to the Trust were $0 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- and nine-month periods ended September 30, 2021 and 2020, the Trust paid $50,000

and $150,000, respectively, to the Trustee pursuant to the terms of the Trust Agreement.

The Trust paid $0 and $2,000 to the

Delaware Trustee during the three- and nine-month periods ended September 30, 2021, respectively.

The Trust paid a total of $0

and $2,000 to the Delaware Trustee during the three- and nine-month periods ended September 30, 2020, respectively.

Distributions Paid or Declared

On October 15, 2021,

a distribution of $0.021000 per unit, which was declared on September 17, 2021, was paid to Trust unitholders of record as of September 30,

On October 18, 2021,

the Trust declared a distribution of $0.02700 per unit to unitholders of record as of October 29, 2021.

The distribution is expected

to be paid to unitholders on November 15, 2021.

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

References to the “Trust”

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and Analysis of Financial Condition and Results of Operations contained in the Trust’s 2020 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 .

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

This Form 10-Q includes “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”

This Form 10-Q includes

“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”

are forward-looking statements.

Such statements may be influenced by factors that could cause actual outcomes and results to differ materially

from those projected.

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,”

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 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:

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;

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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

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”).

1 unchanged sentence

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:

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 outlook for development

activity for the Underlying Properties improved during the first half 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 $69.25 per barrel on August 11, 2021.

However, the effects of the COVID-19 pandemic and the ongoing disagreements 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.

the spread of the Delta variant of the coronavirus has resulted in the reimposition of restrictions and health protocols in some jurisdictions

in the United States and elsewhere and could have an adverse effect on the demand for oil and natural gas.

The 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.

If commodity 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.

activity for the Underlying Properties improved during the first three quarters 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 $81.34 per barrel on November 10, 2021.

However, the lingering effects of the COVID-19 pandemic and the

ongoing uncertainty around the timing of production increases from Russia and the members of OPEC continue to affect the oil and gas industry,

with many operators electing to reduce their 2021 capital budgets to levels below those in prior years in which oil prices were comparable

to current levels.

The COVID-19 pandemic 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.

pandemic 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 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.

If commodity prices for crude oil and natural gas remain volatile as seen in

2020, monthly cash distributions to unitholders could be substantially lower than historical distributions, and in certain periods there

may be no distribution to unitholders.

As previously disclosed,

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.

the Sponsor anticipates 2021 capital expenditures to range from $2 million to $4 million attributable to the Underlying Properties, or

$1.6 million to $3.2 million net to the Trust’s 80% Net Profits Interest.

The Sponsor now expects the 2021 cash capital expenditures

to be at the high end of that range, based on recent drilling proposals received from operators of the Underlying Properties for projects

that are expected to take place during the final months of 2021 and into 2022.

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

held up in contrast to oil prices during 2020 and into early 2021.

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 June 30, 2021 Compared to

Three Months Ended June 30, 2020

Three Months Ended September 30, 2021

Compared to Three Months Ended September 30, 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:

Three Months Ended

Three Months Ended September 30,

Increase (Decrease)

Gross profits:

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Distributable income

Cumulative Net Profits Interest Shortfall at June 30, 2021

For the three months ended

June 30, 2021, the Net Profits Interest generated positive income for each month in the period, which reduced the cumulative Net Profits

Interest shortfall from $1.3 million as of March 31, 2021 to approximately $0.5 million as of June 30, 2021.

Due to the continuing Net

Profits Interest shortfall, there were no net profits reported or distributed in the three months ended June 30, 2021.

Distributions to

the Trust will resume once the cumulative outstanding Net Profits Interest shortfall of approximately $0.5 million and outstanding administrative

advances to the Trust of $0.8 million as of June 30, 2021 are eliminated.

These balances will be carried forward to be deducted from future

net profits generated by the Underlying Properties.

September 30, 2021, the Net Profits Interest generated positive income for each month in the period, which eliminated the cumulative

Net Profits Interest shortfall of $0.5 million as of June 30, 2021 and the cumulative outstanding Sponsor advances to the Trust of

$0.8 million.

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 Interest shortfall of $2.7 million, prior to repayment of

Sponsor advances, as of August 30, 2020, which was carried forward to be deducted from future net profits to be generated by the

Underlying Properties.

For September 2020, excluding the aggregate Net Profits Interest shortfall, income from the distributable

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

The income of $0.5 million

reduced the aggregate Net Profits Interest shortfall to approximately $2.2 million, prior to repayment of Sponsor advances, as of September 30,

As net profits for August and September 2020 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 June 30, 2021 and 2020:

Three Months Ended June 30,

net profits calculation for distributions paid during the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Underlying Properties Production Volumes:

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Net profits attributable

to the Underlying Properties for the three months ended June 30, 2021 were $0.8 million compared to $3.1 million for the three months

ended June 30, 2020.

As a result of the aggregate Net Profits Interest shortfall that was carried from 2020 into the three months ended

June 30, 2021, the Trust did not make any distributions to unitholders during the three months ended June 30, 2021.

The $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

Oil sales decreased $3.1 million, due to lower produced volumes and lower realized prices.

The 12% decrease

in realized oil sales prices in the 2021 period compared to the 2020 period decreased revenues by $0.9 million, and 24% lower produced

volumes decreased revenues by $2.2 million.

Natural gas sales increased $0.3 million due to higher produced volumes and higher realized prices.

5% increase in gas sales volumes and 14% increase in realized gas prices in the 2021 period compared to the 2020 period increased revenues

by $0.1 million and $0.2 million, respectively.

Lease operating expenses decreased by $0.2 million primarily because of lower oil production.

Compression, gathering and transportation costs increased $0.1 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 an increase in ad valorem

taxes during the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Development expenses decreased $0.1 million due to a slight decrease in capital projects in the Permian

For the first half of 2021,

the Trust paid $0.2 million for general and administrative expenses.

Expenses paid during the period primarily consisted of fees for the

preparation of the Trust’s monthly press releases, financial statement audit fees, and Trustee fees.

to the Underlying Properties for the three months ended September 30, 2021 were $2.4 million compared to $0.2 million for the three

months ended September 30, 2020.

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

sales for two months during the third quarter of 2020, the Trust did not pay a distribution to unitholders in August or September 2020.

Accordingly, 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.

Therefore, several variances between the three-month

periods are due to the inclusion of three months of results during the quarter ended September 30, 2021 compared to only one month

of results in the quarter ended September 30, 2020.

The $2.2 million increase 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 increased $5.4 million, primarily due

to the inclusion of three months of oil sales in the quarter ended September 30, 2021 compared to one month in the quarter ended

September 30, 2020.

The 97% increase in realized oil sales prices in the 2021 period compared to the 2020 period increased revenues

by $3.6 million, and the 98% increase in produced volumes increased revenues by $1.8 million.

Natural gas sales increased $1.8 million, primarily

due to the inclusion of three months of natural gas sales in the quarter ended September 30, 2021 compared to one month in the quarter

ended September 30, 2020.

The 170% increase in gas sales volumes and 92% increase in realized gas prices in the 2021 period compared

to the 2020 period increased revenues by $0.7 million and $1.1 million, respectively.

Lease operating expenses increased $2.8 million,

primarily attributable to the difference in the number of months included in the respective periods.

Compression, gathering and transportation costs

increased $0.6 million, primarily due to the 170% increase in natural gas production.

Production, ad valorem and other taxes increased

$0.7 million during the three months ended September 30, 2021 compared to the three months ended September 30, 2020, due to

the increase in oil and natural gas sales.

Development expenses increased $0.9 million due

to drilling and completion costs for drilling multiple new wells in the Haynesville Area.

For the three months ended

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

Six Months Ended June 30, 2021 Compared to

Six Months Ended June 30, 2020

September 30, 2021, the Trust withheld $1.0 million and paid $0.2 million for general and administrative expenses.

Expenses paid

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

fees, and Trustee fees.

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

general and administrative expenses.

Nine Months Ended September 30, 2021 Compared

to Nine Months Ended September 30, 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:

Six Months Ended

Nine Months Ended September 30,

Increase (Decrease)

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Distributable income

Cumulative Net Profits Interest Shortfall at June 30, 2021

For the six months ended June

30, 2021, the Net Profits Interest generated positive income for each month in the period, which reduced the cumulative Net Profits Interest

shortfall from $1.7 million as of December 31, 2020 to approximately $0.5 million as of June 30, 2021.

Due to the continuing Net Profits

Interest shortfall, there were no net profits reported or distributed in the six months ended June 30, 2021.

Distributions to the Trust

will resume once the cumulative outstanding Net Profits Interest shortfall of approximately $0.5 million and outstanding administrative

advances to the Trust of $0.8 million as of June 30, 2021 are eliminated.

These balances will be carried forward to be deducted from future

net profits generated by the Underlying Properties.

For the nine months ended

September 30, 2021, the Net Profits Interest generated positive income for each month in the period, which eliminated the cumulative

Net Profits Interest shortfall of $1.7 million as of December 31, 2020 and the cumulative outstanding Sponsor advances to the Trust

of $0.8 million.

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 or

September 2020.

This resulted in an aggregate Net Profits Interest shortfall of $2.7 million, prior to repayment of Sponsor advances,

as of August 30, 2020, which was carried forward to be deducted from future net profits to be generated by the Underlying Properties.

For September 2020, excluding the aggregate Net Profits Interest shortfall, income from the distributable net profits interest was

approximately $0.5 million, which would have been distributed in October 2020.

The income of $0.5 million reduced the aggregate Net

Profits Interest shortfall to approximately $2.2 million, prior to repayment of Sponsor advances, as of September 30, 2020.

profits for July and August 2020 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.

The following table displays

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

net profits calculation for distributions paid during the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

net profits calculation for distributions paid during the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Underlying Properties Production Volumes:

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Net profits attributable

to the Underlying Properties for the six months ended June 30, 2021 were $1.2 million compared to $5.4 million for the six months ended

June 30, 2020.

As a result of aggregate Net Profits Interest shortfall that was carried from December 31, 2020 into the first half of

2021, the Trust did not make any distributions to unitholders during the first half of 2021.

The $4.2 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 $6.4 million, due to lower produced volumes and lower realized prices.

The 21% decrease

in realized oil sales prices in the 2021 period compared to the 2020 period decreased revenues by $3.1 million, and 19% lower produced

volumes decreased revenues by $3.3 million.

Natural gas sales increased $0.1 million primarily due to higher realized prices.

The 3% increase in realized

gas prices increased revenues by $0.1 million in the 2021 period compared to the 2020 period.

Lease operating expenses decreased by $1.4 million primarily because of lower oil production.

Compression, gathering and transportation costs increased $0.3 million, primarily due to an increase in

plant processing fees for NGL sales.

Production, ad valorem and other taxes increased $0.4 million, primarily due to an increase in ad valorem

taxes during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Development expenses decreased $0.4 million due to a decrease in capital projects in the Permian Basin.

For the first half of 2021, the Trust withheld

$0.0 million, and paid $0.5 million for general and administrative expenses.

Expenses paid during the period primarily consisted of fees

for the preparation of the Trust’s monthly press releases, financial statement audit fees, and Trustee fees.

For the six months

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

to the Underlying Properties for the nine months ended September 30, 2021 were $3.9 million compared to $7.0 million for the nine

months ended September 30, 2020.

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

sales for two months during the third quarter of 2020, the Trust did not pay a distribution to unitholders in August or September 2020.

Accordingly, 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.

Therefore, several variances between the periods

are due to the inclusion of nine months of results in the nine-month period ended September 30, 2021 compared to only seven months

of results in the nine month period ended September 30, 2020.

The $3.1 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 $1.1 million, due to lower produced volumes and lower

realized prices.

The 5% decrease in realized oil sales prices in the 2021 period compared to the 2020 period decreased revenues by $0.9

million, and 1% lower produced volumes decreased revenues by $0.2 million.

Natural gas sales increased $1.9 million, primarily

due to the inclusion of nine months of natural gas sales in the period ended September 30, 2021 compared to seven months in the period

ended September 30, 2020.

The 27% increase in gas sales volumes and 20% increase in realized gas prices in the 2021 period compared

to the 2020 period increased revenues by $1.0 million and $0.9 million, respectively.

Lease operating expenses increased $1.4 million,

primarily attributable to the difference in the number of months included in the respective periods.

Compression, gathering and transportation costs

increased $0.9 million, primarily due to the 27% increase in natural gas production.

Production, ad valorem and other taxes increased

$1.1 million during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, due to the

increase in oil and natural gas sales.

Development expenses increased $0.4 million due

to drilling and completion costs for drilling multiple new wells in the Haynesville Area.

For the nine months ended September 30, 2021,

the Trust withheld $1.0 million, and paid $0.7 million for general and administrative expenses.

Expenses paid during the period primarily

consisted of fees for the preparation of the Trust’s monthly press releases, financial statement audit fees, and Trustee fees.

the nine months ended September 30, 2020, the Trust withheld $0.5 million and paid $0.7 million for general and administrative expenses.

Liquidity and Capital Resources

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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.

As of June 30, 2021 and December 31,

2020, the Trust had cash of $7,161 and $29,639, respectively, to be used towards 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, COERT may advance funds to

the Trust to pay such expenses.

At June 30, 2021 and December 31, 2020, there was an outstanding advance of $797,744 and $348,821, respectively.

The advance to the Trust will be carried forward to be repaid out of future net profits generated by the Underlying Properties.

In November 2021, the Trustee notified COERT that the Trustee intends to

build a reserve for the payment of future known, anticipated or contingent expenses or liabilities, commencing with the distribution payable

in January 2022.

The Trustee may increase or decrease the targeted amount at any time, and may increase or decrease the rate at which

it is withholding funds to build the cash reserve at any time, without advance notice to the unitholders.

Cash held in reserve will be

invested as required by the Trust Agreement.

Any cash reserved in excess of the amount necessary to pay or provide for the payment of

future known, anticipated or contingent expenses or liabilities eventually will be distributed to unitholders, together with interest

earned on the funds.

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.

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 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

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.

As of September 30, 2021 and December 31, 2020, the Trust had cash of $1,091 and $29,639, respectively,

to be used towards 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,

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

September 30, 2021 and December 31, 2020, there was an outstanding advance of $0 and $348,821, respectively.

to the Trust will be carried forward to be repaid out of future net profits generated by the Underlying Properties.

Cash held by the Trustee

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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

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.

On October 18, 2021,

the Trust declared a distribution of $0.02700 per unit to unitholders of record as of October 29, 2021.

The distribution is expected

to be paid to unitholders on November 15, 2021.

Off-Balance Sheet Arrangements

8 unchanged sentences

and estimates.

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

June 30, 2021.

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

September 30, 2021.

Subsequent Events

Distributions Paid or Declared

On October 15, 2021,

a distribution of $0.021000 per unit, which was declared on September 17, 2021, was paid to Trust unitholders of record as of September 30,

On October 18, 2021,

the Trust declared a distribution of $0.02700 per unit to unitholders of record as of October 29, 2021.

The distribution is expected

to be paid to unitholders on November 15, 2021.

Quantitative and Qualitative Disclosures About Market Risk.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements