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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 179 added, 307 removed, 407 unchanged (54% of the section changed)

2 unchanged sentences

Statements of Assets, Liabilities and Trust

September 30,

Cash and cash equivalents

1 unchanged sentence

LIABILITIES AND TRUST CORPUS

Advances to the Trust

Total liabilities

Trust corpus (33,000,000 units issued and outstanding)

3 unchanged sentences

PERMIANVILLE ROYALTY TRUST

Statements of Distributable Income

Three Months Ended September 30,

Nine Months Ended September 30,

Statements of Distributable

Three Months Ended March 31,

Income from net profits interest

Income from sale of assets

Interest and investment income

7 unchanged sentences

Statements of Changes in Trust Corpus

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Trust corpus, beginning of period

1 unchanged sentence

Distributable income

Distributions to unitholders

Distributions to unitholders ($0.089 per unit)

Amortization of net profits interest

4 unchanged sentences

NOTES TO FINANCIAL STATEMENTS

TRUST ORGANIZATION AND PROVISIONS

ORGANIZATION AND PROVISIONS

Permianville Royalty Trust

18 unchanged sentences

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

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

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

As of March 31, 2022, the Sponsor owned 8,600,000 Trust

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

The Net Profits Interest

21 unchanged sentences

Liabilities and Trust Corpus as of December 31, 2021, which has been derived from audited financial statements, and the unaudited

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”).

interim financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 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, 2021 (the “2021 Annual Report on Form 10-K”).

In the opinion of the Trustee,

42 unchanged sentences

discounted cash flows.

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

The financial statements

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

certain cash reserves

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

administrative expenses are recorded when paid instead of when incurred;

and amortization of the net profits interest calculated on a

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

While these statements differ from financial statements

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

to the Trust unitholders are based on net cash receipts.

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

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

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

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

and amortization of the net profits interest

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

While these statements differ from

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

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

This comprehensive basis

17 unchanged sentences

the distributable income of the Trust.

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

Accumulated amortization as of March 31, 2022 and December 31, 2021 was $293,336,606

and $291,965,506, respectively.

3 unchanged sentences

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

impairment during the three months ended March 31, 2022 or 2021, 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

69 unchanged sentences

TO UNITHOLDERS

Each month, the Trustee determines

the amount of funds available for distribution to the Trust unitholders.

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

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

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

established for future liabilities of the Trust.

No distributions will be made to Trust unitholders until the indebtedness created by

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

Distributions are made to the holders of Trust Units

as of the applicable record date (generally the last business day of each calendar month) and are payable on or before the 10th business

day after the record date.

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

Available funds are the excess

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

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

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

No distributions will be made to Trust unitholders

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

Distributions are

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

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

The following table provides

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

Nine Months Ended September 30, 2021:

August 15, 2021

August 31, 2021

September 15, 2021

Year to Date –

Nine Months Ended September 30, 2020:

Declaration Date

Three Months Ended March 31, 2022:

December 17, 2021

7 unchanged sentences

March 14, 2022

March 16, 2020

March 31, 2020

April 14, 2020

April 17, 2020

April 30, 2020

June 15, 2020

June 30, 2020

July 15, 2020

Year to Date –

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

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

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.

Three Months Ended March 31, 2021:

Year to Date –

For the three months ended

March 31, 2021, although the Net Profits Interest generated positive income for each month in the period, these amounts were

applied to reduce the cumulative New Profits Interest shortfall of $1.7 million that existed as of December 31, 2020.

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

The aggregate Net Profits Interest shortfall, which

was approximately $1.3 million as of March 31, 2021, was carried forward and deducted from net profits generated by the Underlying

Properties in 2021 and was fully eliminated in August 2021.

Under the terms of the Trust

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

During each of the three-month periods ended March 31, 2022 and 2021, the Trust paid $50,000 to the Trustee and $0 to the Delaware

Trustee pursuant to the terms of the Trust Agreement.

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.

On April 14, 2022, a

distribution of $0.016000 per unit, which was declared on March 18, 2022, was paid to Trust unitholders of record as of March 31,

On April 18, 2022, the

Trust declared a distribution of $0.031500 per unit to unitholders of record as of April 29, 2022.

The distribution was paid to

unitholders on May 13, 2022.

On May 16, 2022, the

Trust declared a distribution of $0.032000 per unit to unitholders of record as of May 31, 2022.

The distribution is expected to

be paid to unitholders on June 14, 2022.

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

36 unchanged sentences

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

the ongoing armed conflict between Russia and Ukraine and the potential destabilizing effect such conflict may pose for the European

continent or the global oil and gas markets;

the effect of existing and future laws and regulatory actions;

9 unchanged sentences

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

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

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

This Form 10-Q describes

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

under the caption “Risk Factors.”

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

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

their entirety by such factors.

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

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

All forward-looking

statements in this report and all subsequent written and oral forward-looking statements attributable to the Sponsor or the Trust or persons

acting on behalf of the Sponsor or the Trust are expressly qualified in their entirety by such factors.

The Trust assumes no obligation,

and disclaims any duty, to update these forward-looking statements.

Permianville Royalty Trust,

31 unchanged sentences

The outlook for development

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 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.

activity for the Underlying Properties continued to improve during the first quarter of 2022, following the rise in commodity prices and

operator activity in the second half of 2021.

While the global economy remains volatile following the outbreak of the armed conflict between

Russia and Ukraine and given the continuing effects of the COVID-19 pandemic, the Sponsor does not expect the impact to the Underlying

Properties and the 2022 development activity to be material, aside from the effects of volatile commodity prices.

The West Texas Intermediate

spot price of crude oil has increased materially from $76.99 per barrel on December 31, 2021 to $106.13 per barrel on May 12,

Natural gas prices have shown greater volatility and have increased at an even higher rate than crude oil prices, with the Henry

Hub spot price increasing from $3.66 per MMBTU on December 31, 2021 to $7.25 per MMBTU on May 12, 2022.

While lingering effects

of the COVID-19 pandemic remain, most recently in the form of oilfield service inflationary pressures and supply chain bottlenecks, operators

of the Underlying Properties have continued to increase their spending activity.

However, due to the current heightened market volatility

and global macroeconomic uncertainty, it is not possible to reliably estimate the ultimate impact on of these conflicting market drivers

against an overall supportive commodity price environment.

If commodity prices for crude oil and natural gas remain volatile and inflationary

trends continue, monthly cash distributions to unitholders could vary greatly and possibly be lower than historical distributions.

The Sponsor previously announced

an anticipated 2022 capital expenditures program between $6 million to $8 million attributable to the Underlying Properties, or $4.8 million

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

At the current pace, the Sponsor now expects the 2022 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 in 2022.

To account for this increased activity level,

the Sponsor has established a cash reserve for approved, future development expenses this year.

In addition, the Sponsor maintains

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

The Sponsor will continue to monitor and possibly participate in future, to be announced capital projects in 2022 as operators

continue to increase capital ependitures to levels beyond that of recent years in response to current commodity prices.

Results of Operations

Three Months Ended September 30, 2021

Compared to Three Months Ended September 30, 2020

Three Months Ended March 31, 2022

Compared to Three Months Ended March 31, 2021

The Trust’s net profits

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

Three Months Ended September 30,

Increase (Decrease)

Three Months Ended

Gross profits:

5 unchanged sentences

Development expenses

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

1 unchanged sentence

Trust general and administrative expenses and cash withheld for expenses

Sponsor loan repayment

Net profits allocable to Net Profits Interest Shortfall

Distributable income

Cumulative Net Profits Interest Shortfall

For the three 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 $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.

March 31, 2021, although the Net Profits Interest generated positive income for each month in the period, these amounts were

applied to reduce the cumulative Net Profits Interest shortfall of $1.7 million that existed as of December 31, 2020.

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

The aggregate Net Profits Interest shortfall, which

was approximately $1.3 million as of March 31, 2021, was carried forward and deducted from net profits generated by the Underlying

Properties in 2021 and was fully eliminated in August 2021.

The following table displays

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

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

Three Months Ended September 30,

net profits calculation for distributions paid during the three months ended March 31, 2022 and 2021:

Months Ended March 31,

Underlying Properties Production Volumes:

7 unchanged sentences

Net profits attributable

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.

to the Underlying Properties for the three months ended March 31, 2022 were $3.3 million compared to $0.5 million for the three months

ended March 31, 2021.

The $2.8 million increase in net profits attributable to the Underlying Properties from the 2021 period

to the 2022 period was primarily due to the following items:

Oil sales increased $4.3 million due to higher realized prices, which caused oil sales to increase by

$4.7 million.

This increase was offset by reduced sales volumes, which reduced oil sales by $0.4 million.

The average oil price received

increased 100% primarily due to a 92% increase in the average NYMEX oil price for the relevant production months.

Oil sales volumes decreased

8% as a result of natural production declines.

Natural gas sales increased $2.5 million due to higher realized prices, which increased natural gas sales

by $2.4 million, and by higher produced volumes, which increased natural gas sales by $0.1 million.

The average natural gas price received

increased 183% primarily due to a 118% increase in the average NYMEX natural gas price for the relevant production months.

Lease operating expenses increased $1.1 million, primarily attributable to the increased number of producing

wells in the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021.

Compression, gathering and transportation costs increased $0.2 million, primarily due to the 6% increase

in natural gas production.

Production, ad valorem and other taxes increased $0.4 million during the three months ended March 31,

2022 compared to the three months ended March 31, 2021, due to the increase in oil and natural gas sales.

Development expenses increased $1.6 million due to drilling and completion costs for drilling multiple

new wells in the Permian and Haynseville Area.

For the three months ended

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:

Nine Months Ended September 30,

Increase (Decrease)

Gross profits:

Natural gas sales

Direct operating expenses:

Lease operating expenses

Compression, gathering and transportation

Production, ad valorem and other taxes

Development expenses

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Trust general and administrative expenses and cash withheld for expenses

Sponsor loan repayment

Net profits allocable to Net Profits Interest Shortfall

Distributable income

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 nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Underlying Properties Production Volumes:

Natural Gas (Mcf)

Combined (Boe)

Average Prices:

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

Oil prices realized ($/Bbl)

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

Natural gas prices realized ($/Mcf)

Net profits attributable

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.

March 31, 2022, the Trust withheld $0.4 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 March 31, 2021, the Trust withheld $0.0 million and paid $0.3 million for general and

administrative expenses.

Liquidity and Capital Resources

7 unchanged sentences

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 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.

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.

with the distribution to Trust unitholders paid in February 2022, the Trust has been 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

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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,

As of March 31, 2022 and December 31, 2021, the Trust had cash of $275,232 and $67,116, respectively,

to be used towards future Trust expenses.

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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,

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.

At March 31, 2022 and December 31, 2021, there was no outstanding

Any advances 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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Distributions Declared After Quarter End

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.

On April 18, 2022, the

Trust declared a distribution of $0.031500 per unit to unitholders of record as of April 29, 2022.

The distribution was paid to unitholders

on May 13, 2022.

On May 16, 2022, the

Trust declared a distribution of $0.032000 per unit to unitholders of record as of May 31, 2022.

The distribution is expected to

be paid to unitholders on June 14, 2022.

Off-Balance Sheet Arrangements

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and estimates.

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

September 30, 2021.

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

March 31, 2022.

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.

On April 14, 2022, a

distribution of $0.016000 per unit, which was declared on March 18, 2022, was paid to Trust unitholders of record as of March 31,

On April 18, 2022, the

Trust declared a distribution of $0.031500 per unit to unitholders of record as of April 29, 2022.

The distribution was paid to unitholders

on May 13, 2022.

On May 16, 2022, the

Trust declared a distribution of $0.032000 per unit to unitholders of record as of May 31, 2022.

The distribution is expected to

be paid to unitholders on June 14, 2022.

Quantitative and Qualitative Disclosures About Market Risk.

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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