What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-25 compared with 2021-03-23 · 326 added, 338 removed, 73 unchanged (90% of the section changed)

Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.

The Trust Units trade

on the New York Stock Exchange under the symbol “PVL.”

At December 31, 2020, there were 33,000,000 Trust Units

The Trust Units trade on the

New York Stock Exchange under the symbol “PVL.”

At December 31, 2021, there were 33,000,000 Trust Units outstanding.

On March 25, 2022, there were four unitholders of record.

This number does not include owners for whom Trust

Units may be held in “street”

This number does not include owners for whom Trust Units may be held in

“street”

Distributions

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 incurred expenses for that month.

Available funds are reduced by any cash the Trustee decides to hold as a reserve

against future liabilities.

The holders of Trust Units as of the applicable record date (generally the last business day of each

calendar month) are entitled to monthly distributions payable on or before the tenth business day after the record date (or the

next succeeding business day).

For further information on distributions to unitholders, see Note 5 of the Notes to Financial Statements

in Item 8 of this Form 10-K.

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

incurred expenses for that month.

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

The holders of Trust Units as of the applicable record date (generally the last business day of each calendar month) are entitled to monthly

distributions payable on or before the tenth business day after the record date (or the next succeeding business day).

For further information

on distributions to Trust unitholders, see Note 5 of the Notes to Financial Statements in Item 8 of this Form 10-K.

Equity Compensation Plans

The Trust does not have any employees and

does not maintain any equity compensation plans.

The Trust does not have any employees and does

not maintain any equity compensation plans.

Recent Sales of Unregistered Securities

There were no equity securities sold by the Trust during the year ended December 31, 2020.

There were no equity securities sold by the Trust

during the year ended December 31, 2021.

Purchases of Equity Securities

There were no purchases of Trust Units by

the Trust or any affiliated purchaser during the fourth quarter of 2020.

Selected Financial Data.

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.

There were no purchases of Trust Units by the Trust

or any affiliated purchaser during the fourth quarter of 2021.

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

This discussion contains forward-looking

This discussion contains forward-looking statements.

Please refer to “Forward-Looking Statements”

for an explanation of these types of statements.

Permianville Royalty Trust, previously known

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

Permianville Royalty Trust, previously known as

Enduro 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.

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

holders of record (generally the last business day of each calendar month) on or before the tenth business day after the record

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:

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.

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 holders of record (generally

the last business day of each calendar month) on or before the tenth 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:

oil and natural gas sales prices;

5 unchanged sentences

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.

2021 Recap and 2022 Outlook

The average NYMEX oil price and gas price

received for the production months included in 2020 distributions decreased 0% and 32%, respectively, from the prior year as a

result of the corresponding decrease in the average NYMEX oil price and average NYMEX gas price for the relevant production months.

In 2020, the development activity on the

Underlying Properties included the successful drilling, with completion activities scheduled for the first half of 2021, of seven

gross wells in the Haynesville area of Louisiana and four gross wells in the Permian area.

Crude oil prices declined sharply in the

first quarter of 2020 in response to the economic effects of the coronavirus pandemic and the dispute over production levels between

Russia and members of OPEC.

Prices have since rebounded for both crude oil and natural gas, but the effects of the global pandemic

have resulted in continuing volatility for commodity prices and an oil and gas industry facing increasing capital constraint.

Such factors, if they persist for the near term or longer, could adversely affect the operators of the Underlying Properties,

production from the Underlying Properties and/or distributions to Trust unitholders.

The operators of the Underlying Properties

continue to evaluate planned capital expenditures during 2021, but based on currently available information, the Sponsor anticipates

2021 capital expenditures to range from $2.0 million to $4.0 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.

New York Stock Exchange Continued Listing

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, 2021.

The average NYMEX oil price received for the production

months included in 2021 distributions decreased 10%, while the gas price received for the production months included in 2021 distributions

increased 15%, from the prior year.

While there was a corresponding increase in the average NYMEX oil price and average NYMEX gas price

for the relevant production months, the volatility in the market led to wider differentials for the received oil price.

In 2021, the development activity on the Underlying

Properties included the successful drilling and completion of four gross wells in the Haynesville area of Louisiana and one gross wells

in the Permian area.

Crude oil prices increased materially

throughout 2021, with some noted volatility but still ending the year up 59% year-over-year, as the improvement in economic activity

and mobility from the lingering effects of the coronavirus pandemic transitioned into demand recovery in 2021.

This improvement was

also aided by relatively stable supply actions by Russia and members of OPEC, in contrast to prior years.

The effects of the global

COVID-19 pandemic have not completely subsided and continue to create volatility for commodity prices and an oil and gas industry

facing continued capital constraints despite higher absolute prices.

Natural gas prices saw a similar, and even more volatile,

recovery in 2021 due in part to severe weather events in the first quarter of 2021, but ended the year up 53% compared to the prior

Natural gas prices are also expected to remain volatile due to weather and changing supply and demand dynamics in the U.S.

to increased exports and the effects of the transition to alternative fuels on the U.S.

power industry.

Such factors, if they

persist for the near term or longer, could adversely affect the operators of the Underlying Properties, production from the

Underlying Properties and/or distributions to Trust unitholders.

The operators of the Underlying Properties continue

to evaluate planned capital expenditures during 2022, but based on currently available information, the Sponsor anticipates 2022 capital

expenditures to range from $6.0 million to $8.0 million attributable to the properties in which the Trust owns a net profits interest,

or $4.8 million to $6.4 million net to the Trust’s 80% Net Profits Interest.

This increase compared to prior years is due in

part to higher commodity prices and the operators of the Underlying Properties generating more cash flow for reinvestment in the current

price environment than in previous years.

The Sponsor indicates that it continues to have access to adequate capital and liquidity to

fund such capital expenditures as the come due.

Results of Operations

The following table displays oil and natural

gas sales volumes and average prices from the Underlying Properties, representing the amounts included in the net profits calculation

for the distributions paid during the years ended December 31, 2020 and 2019.

The following table displays oil and natural gas

sales volumes and average prices from the Underlying Properties, representing the amounts included in the net profits calculation for

the distributions paid during the years ended December 31, 2021 and 2020.

Underlying Properties Sales Volumes

1 unchanged sentence

Month of Distribution

Natural Gas (Mcf)

Total—2021 (1)

Total—2020 (2)

(1) The table for the year ended December 31, 2020 does not separately display sales volumes for August through December because

the Trust did not pay a distribution with respect to those months, as the net profits interest calculation for each such period

was negative.

In August 2020, direct operating and development expenses and capital expenditures exceeded revenues, which resulted

in negative net profits from the Underlying Properties which was carried forward to be deducted from future net profits generated

by the Underlying Properties.

(2) The table for the year ended December 31, 2019 does not separately display sales volumes for January because the Trust did

not pay a distribution that month, as the net profits interest calculation for such period was negative.

In January 2019, direct

operating and development expenses and capital expenditures exceeded revenues, which resulted in negative net profits from the

Underlying Properties that was carried forward to be deducted from future net profits generated by the Underlying Properties.

February 2019, net profits from the Underlying Properties were positive, and the aggregate shortfall was deducted from such net

profits when calculating distributions paid in February 2019.

As a result, sales volumes for January 2019 have been included in

the sales volumes for February 2019.

Computation of Income from Net Profits Interest Received

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 newly

issued Trust Units.

The Net Profits Interest entitles the Trust to receive 80% of the net profits from the sale and production

of oil and natural gas attributable to the Underlying Properties that are produced during the term of the Conveyance, which commenced

on July 1, 2011.

The Trust’s Income from Net Profits Interest consists of monthly net profits attributable to the Income

from Net Profits Interest.

Net profits income for the years ended December 31, 2020 and 2019 were determined as shown in the following

(1) The table for the year ended December 31, 2021 does not separately display sales volumes for January through August because the Trust

did not pay a distribution with respect to those months, as the net profits interest calculation for each such period was negative.

(2) The table for the year ended December 31, 2020 does not include sales volumes from August through December as the Trust did not pay

a distribution in those months as the net profits interest calculation for such periods was negative.

In August 2020, direct operating

and development expenses and capital expenditures exceeded revenues, which resulted in a Net Profits Interest shortfall of $2.1 million

as of August 31, 2020, which was carried forward to be deducted from future net profits to be generated by the Underlying Properties.

Computation of Income from Net Profits Interest Received by the

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 newly issued Trust

The Net Profits Interest entitles the Trust to receive 80% of the net profits from the sale and production of oil and natural gas

attributable to the Underlying Properties that are produced during the term of the Conveyance, which commenced on July 1, 2011.

Trust’s Income from Net Profits Interest consists of monthly net profits attributable to the Income from Net Profits Interest.

profits income for the years ended December 31, 2021 and 2020 were determined as shown in the following table:

Year Ended December 31,

9 unchanged sentences

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Release of Escrow

Income from Net Profits Interest

2 unchanged sentences

Distributable income

In 2020, there were

five months in which direct operating and development expenses exceeded revenues, thereby causing net profits attributable to the

Underlying Properties to be negative.

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

Sponsor advances, as of August 31, 2020.

In 2020, there were five months

in which direct operating and development expenses exceeded revenues, thereby causing net profits attributable to the Underlying Properties

to be negative.

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

as of August 31, 2020.

As a result, there were no distributions to Trust unitholders from August through December 2020.

As of December 31, 2020, the remaining aggregate shortfall of $1.7 million will be carried forward to be deducted from future

net profits generated by the Underlying Properties.

As net profits for the five months were negative and therefore no distributions

were paid to unitholders with respect to these five months, the corresponding revenues and associated direct operating and development

expenses are excluded from the calculation of distributable income for 2020 detailed in the table above as well as the related

sales volumes detailed below.

The following table displays 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 years ended December 31, 2020 and 2019:

As of December

31, 2020, the remaining aggregate shortfall of $1.7 million was carried forward to be deducted from future net profits to be generated

by the Underlying Properties.

As net profits for the five months were negative and therefore no distributions were paid to Trust unitholders

with respect to these five months, the corresponding revenues and associated direct operating and development expenses are excluded from

the calculation of distributable income for the year ended December 31, 2020 detailed in the table above as well as the related sales

volumes detailed below.

In September 2021, net profits

from the Underlying Properties were positive, which eliminated the cumulative Net Profits Interest shortfall of $2.7 million and the cumulative

outstanding Sponsor advances to the Trust of $0.8 million.

Since the Net Profits Interest shortfall was eliminated in 2021, revenues

and the associated direct operating and development expenses for the final five months of 2020 are included in the calculation of distributable

income detailed in the table above for the year ended December 31, 2021 as well as the related sales volumes detailed below.

The following table displays 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 years ended December 31, 2021 and 2020:

Year Ended December 31,

3 unchanged sentences

Average Prices:

NYMEX (September-August) ($/Bbl)

NYMEX (applicable NPI period) ($/Bbl)

Oil prices realized ($/Bbl)

Natural gas –

NYMEX (August-July) ($/Mcf)

NYMEX (applicable NPI period) ($/Mcf)

Natural gas prices realized ($/Mcf)

Years Ended December 31, 2021 and 2020

Net profits attributable to the Underlying

Properties for the year ended December 31, 2020 are calculated from the following:

oil sales related to oil produced from the Underlying Properties primarily from September 2019 through March 2020;

natural gas sales related to natural gas produced from the Underlying Properties primarily from August 2019 through February

direct operating and development expenses related to expenses and capital incurred primarily from October 2019 to April 2020.

Net profits attributable to the Underlying

Properties for the year ended December 31, 2020 were $7.0 million compared to $12.1 million for the year ended December 31,

As a result of direct operating expenses and development expenses exceeding oil and natural gas sales for the last five months

of 2020, the Trust did not pay a distribution to unitholders from August through December 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 last five months of 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

year ended December 31, 2020 compared to twelve months included in the year ended December 31, 2019.

The $5.1 million decrease

in net profits attributable to the Underlying Properties from the 2019 period to the 2020 period was primarily due to the

Net profits attributable to the Underlying Properties

for the year ended December 31, 2021 are calculated from the following:

oil sales related to oil produced from the Underlying Properties primarily from April 2020 through August 2021;

natural gas sales related to natural gas produced from the Underlying Properties primarily from March 2020 through July 2021;

direct operating and development expenses related to expenses and capital incurred primarily from May 2020 to September 2021.

Net profits attributable to the Underlying Properties

for the year ended December 31, 2021 were $5.4 million compared to $7.0 million for the year ended December 31, 2020.

of direct operating expenses and development expenses exceeding oil and natural gas sales for the last five months of 2020, the Trust

did not pay a distribution to Trust unitholders from August through December 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 final five

months of 2020 and instead are included in the results for the year ended December 31, 2021, as the Net Profits Interest shortfall was

finally eliminated in September 2021.

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

results in the year ended December 31, 2020 compared to seventeen months included in the year ended December 31, 2021.

The $1.5 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 $15.0 million, primarily due to lower sales volumes, which decreased oil sales by $15.0 million.

volumes decreased 43% primarily because the year ended December 31, 2020 included only seven months of oil sales volumes while

the year ended December 31, 2019 included twelve months of oil sales volumes.

Natural gas sales decreased $6.6 million due to lower sales volumes, which decreased natural gas sales by $4.9 million.

gas volumes decreased 49% primarily because the year ended December 31, 2020 included only seven months of natural gas sales volumes

while the year ended December 31, 2019 included twelve months of natural gas sales volumes.

The remaining $1.7 million decrease

in natural gas sales was due to lower realized prices.

The average natural gas price received decreased 32% as a result of the

corresponding decreases in the average NYMEX natural gas price for the relevant production months.

Compression, gathering and transportation (“CGT”) expenses decreased from $2.1 million in 2019 to $1.0 million

The decrease in CGT expenses is primarily due to the difference in the number of months included in the respective periods.

Lease operating expenses decreased $9.5 million in 2020 compared to 2019, primarily attributable to the difference in the number

Oil sales increased $13.7 million, primarily due to higher sales volumes, which increased oil sales by $17.3 million.

Oil sales volumes

increased 88% primarily because the year ended December 31, 2021 included seventeen months of oil sales volumes while the year ended December

31, 2020 only included seven months of oil sales volumes.

Natural gas sales increased $6.4 million due to higher sales volumes, which increased natural gas sales by $5.1 million.

volumes increased 144% primarily because the year ended December 31, 2021 included seventeen months of gas sales volumes while the year

ended December 31, 2020 only included seven months of gas sales volumes.

The remaining $1.3 million increase in natural gas sales was

due to higher realized prices.

The average natural gas price received increased 15% as a result of the corresponding increases in the

average NYMEX natural gas price for the relevant production months.

Compression, gathering and transportation (“CGT”) expenses increased from $1.0 million in 2020 to $3.4 million in 2021.

The increase in CGT expenses is primarily due to the difference in the number of months included in the respective periods.

Lease operating expenses increased $14.4 million in 2021 compared to 2020, primarily attributable to the difference in the number

of months included in the respective periods.

Production, ad valorem and other taxes decreased $2.3 million in 2020 compared to 2019 primarily due to the decrease in production

Development expenses decreased $3.7 million, or 70%, in 2020 compared to 2019 primarily due decrease in drilling activity during

In 2017, pursuant to an agreement between

Enduro and the Trust, Enduro withheld $0.8 million (the “Holdback Amount”) from the net proceeds allocable to the Trust

from the sale by Enduro of certain properties in the Permian Basin.

This amount was intended to cover possible indemnification

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

Period”).

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

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

totaling $0.8 million, including interest, as part of the Trust distribution to unitholders paid in October 2019.

The Trust withheld $0.5 million and paid

$0.9 million for general and administrative expenses during the year ended December 31, 2020.

Expenses paid during the period

primarily consisted of fees for the preparation of 2019 tax information for unitholders, preparation of the Trust’s 2020

reserve report and Annual Report on Form 10-K, 2020 financial statement audit fees, preparation of the Trust’s 2020

monthly press releases and Quarterly Reports on Form 10-Q, Trustee fees, and New York Stock Exchange listing fees.

ended December 31, 2019, the Trust withheld $0.8 million and paid $0.9 million for general and administrative expenses.

Production, ad valorem and other taxes increased $3.1 million in 2021 compared to 2020, primarily due to the increase in production

Development expenses increased $2.0 million in 2021 compared to 2020, primarily due to the increase in drilling activity during 2021.

The Trust withheld $1.2 million and paid $0.8 million

for general and administrative expenses during the year ended December 31, 2021.

Expenses paid during the period primarily consisted

of fees for the preparation of 2020 tax information for Trust unitholders, preparation of the Trust’s 2021 reserve report and Annual

Report on Form 10-K, 2020 financial statement audit fees, preparation of the Trust’s 2020 monthly press releases and Quarterly

Reports on Form 10-Q, Trustee fees, and New York Stock Exchange listing fees.

For the year ended December 31, 2020, the Trust withheld

$0.5 million and paid $0.9 million for general and administrative expenses.

Liquidity and Capital Resources

1 unchanged sentence

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

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, the Sponsor 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, the Sponsor has agreed to loan funds to the Trust necessary to pay such expenses.

made by the Sponsor 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 the Sponsor than those that would be obtained in an arm’s length transaction between the Sponsor

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 money other than Sponsor advances

to pay the Trust’s monthly operating expenses.

At December 31, 2020 and 2019, the Trust held cash reserves of $29,639

and $90,665, respectively, for future Trust expenses.

Since its formation, the Trust has not borrowed any funds other than Sponsor

advances to pay the Trust’s monthly operating expenses 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.

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

Corpus until repaid.

As of December 31, 2020 and 2019, Advances to the Trust were $348,821 and $34,818, respectively.

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

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.

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 to Trust unitholders paid

in February 2022, the Trust is withholding, and in the future intends to withhold, $37,833 from the funds otherwise available for distribution

each month to gradually build a cash reserve of approximately $2.3 million.

This cash is reserved for the payment of future known, anticipated

or contingent expenses or liabilities of the Trust.

The Trustee may increase or decrease the targeted cash reserve 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 Trust 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 Trust 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.

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.

the Sponsor 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, the Sponsor has agreed to loan funds to the Trust

necessary to pay such expenses.

Any loan made by the Sponsor 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 the Sponsor than those that would be obtained in an arm’s length

transaction between the Sponsor 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 money

other than Sponsor advances to pay the Trust’s monthly operating expenses.

At December 31, 2021 and 2020, the Trust held

cash reserves of $67,116 and $29,639, respectively, for future Trust expenses.

Since its formation, the Trust has not borrowed any

funds other than Sponsor advances to pay the Trust’s monthly operating expenses and no amounts have been drawn on the letter

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.

December 31, 2021 and 2020, Advances to the Trust were $0 and $348,821, respectively.

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;

2 unchanged sentences

bank certificates of deposit.

Neither Enduro nor the Sponsor has entered

into any hedge contracts relating to oil and natural gas volumes produced from the Underlying Properties, attributable to the Net

Profits Interest for the years ended December 31, 2020 or 2019, and the terms of the Conveyance prohibit COERT from entering into

new hedging arrangements burdening the Trust.

The Trust pays the Trustee an administrative

fee of $200,000 per year.

Neither Enduro nor the Sponsor has entered into

any hedge contracts relating to oil and natural gas volumes produced from the Underlying Properties, attributable to the Net Profits Interest

for the years ended December 31, 2021 or 2020, and the terms of the Conveyance prohibit COERT from entering into new hedging arrangements

burdening the Trust.

The Trust pays the Trustee an administrative fee

of $200,000 per year.

The Trust pays 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.

Contractual Obligations

of December 31, 2020, the Trust had no obligations or commitments to make future contractual payments other than the administrative

fee payable to the Trustee and the Delaware Trustee.

See “Certain Relationships and Related Transactions, and Director Independence—Trustee

Administrative Fee”

in Item 13 of this Form 10-K.

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.

New Accounting Pronouncements

As the Trust’s financial statements

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

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

As the Trust’s financial statements are prepared

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

No new accounting

pronouncements have been adopted or issued that would impact the financial statements of the Trust.

Critical Accounting Policies and 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 plus any payments made or net

payments received in connection with the settlement of certain hedge contracts, 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.

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 plus any payments made or net payments received in connection with

the settlement of certain hedge contracts, 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.

Under the terms of the Conveyance, the monthly

Net Profits Interest calculation includes oil and natural gas revenues received.

Monthly operating expenses and capital expenditures

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

The financial statements of the Trust are

prepared on the following basis:

(a) Income from Net Profits Interest is

recorded when distributions are received by the Trust;

(b) Distributions to Trust unitholders are

recorded when paid by the Trust;

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

(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.

amortization does not affect cash earnings of the Trust;

(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 in the month of production;

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 revenues, expenses, and

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

This comprehensive basis of accounting other

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

12:E, Financial Statements of Royalty Trusts .

preparation of financial statements requires the Trust to make estimates and assumptions that affect the reported amounts of assets

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

Actual results could differ from

those estimates.

Monthly operating expenses and capital expenditures represent

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

The financial statements of the Trust are prepared

on the following basis:

(a) Income from Net Profits Interest is recorded

when distributions are received by the Trust;

(b) Distributions to Trust unitholders are recorded

when paid by the Trust;

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.

Such amortization

does not affect distributable income of the Trust;

(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 in the month of production;

certain cash reserves

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

administrative expenses are recorded when paid instead of when incurred;

and amortization of the net profits interest calculated on a

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

While these statements differ from financial statements

prepared in accordance with GAAP, the modified cash basis of reporting revenues, expenses, and distributions is considered to be the most

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

preparation of financial statements requires the Trust to make estimates and assumptions that affect the reported amounts of assets and

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

Actual results could differ from those estimates.

Oil and Natural Gas Reserves.

proved oil and natural gas reserves for the Underlying Properties are estimated by independent petroleum engineers.

Reserve engineering

is a subjective process that is dependent upon the quality of available data and the interpretation thereof.

Estimates by different

engineers often vary, sometimes significantly.

In addition, physical factors such as the results of drilling, testing and production

subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of

such estimates.

Because proved reserves are required to be estimated using prices at the date of the evaluation, estimated reserve

quantities can be significantly impacted by changes in product prices.

Accordingly, oil and natural gas quantities ultimately

recovered and the timing of production may be substantially different from original estimates.

The Financial Accounting Standards Board

requires supplemental disclosures for oil and gas producers based on a standardized measure of discounted future net cash flows

relating to proved oil and natural gas reserve quantities.

Under this disclosure, future cash inflows are computed by applying

the average prices during the 12-month period prior to fiscal year-end, determined as an unweighted arithmetic average of the first-day-of-the-month

benchmark price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations

based upon future conditions.

Future price changes are only considered to the extent provided by contractual arrangements in existence

The standardized measure of discounted future net cash flows is achieved by using a discount rate of 10% a year to

reflect the timing of future cash flows relating to proved oil and natural gas reserves.

Changes in any of these assumptions, including

consideration of other factors, could have a significant impact on the standardized measure.

The standardized measure does not

necessarily result in an estimate of the current fair market value of proved reserves.

engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof.

by different engineers often vary, sometimes significantly.

In addition, physical factors such as the results of drilling, testing

and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify

revision of such estimates.

Because proved reserves are required to be estimated using prices at the date of the evaluation,

estimated reserve quantities can be significantly impacted by changes in product prices.

Accordingly, oil and natural gas quantities

ultimately recovered and the timing of production may be substantially different from original estimates.

The Financial Accounting Standards Board requires

supplemental disclosures for oil and gas producers based on a standardized measure of discounted future net cash flows relating to proved

oil and natural gas reserve quantities.

Under this disclosure, future cash inflows are computed by applying the average prices during

the 12-month period prior to fiscal year-end, determined as an unweighted arithmetic average of the first-day-of-the-month benchmark

price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future

Future price changes are only considered to the extent provided by contractual arrangements in existence at year-end.

standardized measure of discounted future net cash flows is achieved by using a discount rate of 10% a year to reflect the timing of future

cash flows relating to proved oil and natural gas reserves.

Changes in any of these assumptions, including consideration of other factors,

could have a significant impact on the standardized measure.

The standardized measure does not necessarily result in an estimate of the

current fair market value of proved reserves.

Amortization of Net Profits Interest.

The Trust calculates amortization of the Net Profits Interest in oil and natural gas properties on a unit-of-production basis

based on the Underlying Properties’

Trust calculates amortization of the Net Profits Interest in oil and natural gas properties 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 which are subject to numerous uncertainties inherent in the estimation of proved reserves.

The volumes considered

to be commercially recoverable fluctuate with changes in 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 recorded on sales volumes paid by the Trust during the relevant period and is charged directly

to the Trust corpus balance.

As a result, amortization does not affect the cash earnings of the Trust.

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

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

The volumes considered to be commercially recoverable

fluctuate with changes in 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 recorded on sales

volumes paid by the Trust during the relevant period and is charged directly to the Trust corpus balance.

As a result, amortization does

not affect the cash earnings of the Trust.

Impairment of Net Profits Interest.

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

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

value of the Net Profits Interest.

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

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

Net Profits Interest.

The Trust did not realize any impairment during the years ended December 31, 2021 or 2020.

downward revisions in actual production volumes relative to current forecasts, higher than expected operating costs, or lower than

anticipated market pricing could result in recognition of impairment in future periods.

Any impairment of the Net Profits Interest

will result in a non-cash charge to Trust corpus and will not affect distributable income.

Future downward revisions

in actual production volumes relative to current forecasts, higher than expected operating costs, or lower than anticipated market pricing

could result in recognition of impairment in future periods.

Any impairment of the Net Profits Interest will result in a non-cash charge

to Trust corpus and will not affect distributable income.

For further information, see “Note 3.

Fair Value Measurements”

Net Profits Interest in Oil and

Gas Properties”

of the Notes to Financial Statements in Item 8 of this Form 10-K.

1 unchanged sentence

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.

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-K

Item 5. Market for Registrant’s Common Equity