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Item 8. Financial Statements and Supplementary Data

2023-03-23 compared with 2022-03-25 · 264 added, 299 removed, 268 unchanged (68% of the section changed)

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Opinion on the Financial Statements

We have audited the accompanying statement of

assets, liabilities, and trust corpus of Permianville Royalty Trust (the Trust) as of December 31, 2021, and the related statements of

distributable income and changes in trust corpus for the year then ended, and the related notes (collectively referred to as the “financial

statements”).

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

at December 31, 2021, and its distributable income and changes in trust corpus for the year then ended, in conformity with the modified

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

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

of December 31, 2022 and 2021, and the related statements of distributable income and changes in trust corpus for the years

then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the

financial statements present fairly, in all material respects, the financial position of the Trust at December 31, 2022 and

2021, and its distributable income and changes in trust corpus for the years then ended, in conformity with the modified cash basis

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

generally accepted accounting

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As described in Note 2 to the financial statements,

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

generally accepted in the United States of America.

these financial statements were prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Trustee.

Our responsibility is to express an opinion on these financial statements based on our audit.

We are a public accounting

firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent

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

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

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

financial statements are the responsibility of the Trustee.

Our responsibility is to express an opinion on these financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

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

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

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perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of

internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal

control over financial reporting.

As part of our audits we are required to obtain an understanding of

internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

Our audits included performing procedures to assess

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

to those risks.

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

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

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

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

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

evaluating the overall presentation of the financial statements.

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

Critical Audit Matters

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March 23, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Trustee and Unitholders of Permianville Royalty Trust:

Opinion on the Financial Statements

We have audited the accompanying statement of assets,

liabilities, and trust corpus of Permianville Royalty Trust (the Trust) as of December 31, 2020, the related statement of distributable

income and changes in trust corpus for the year ended December 31, 2020, and the related notes (collectively referred to as the “financial

statements”).

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

at December 31, 2020, and its distributable income for the year ended December 31, 2020, in conformity with the modified cash basis of

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

generally accepted accounting principles.

Basis of Accounting

As described in Note 2 to the financial statements,

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

than accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Trustee.

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

We are a public

accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent

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

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

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards

of the PCAOB.

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

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

The Trust is not required to have, nor were we engaged to perform, an

audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over

financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

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

to those risks.

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

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

the overall presentation of the financial statements.

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

/s/ Ernst & Young LLP

We served as the Trust’s

auditor from 2011 to 2021

Houston, Texas

March 23, 2021

PERMIANVILLE ROYALTY TRUST

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LIABILITIES AND TRUST CORPUS

Advances to the Trust

Total liabilities

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

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Distributions to unitholders

(13,480,500 )

Amortization of net profits interest

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are an integral part of these statements.

PERMIANVILLE ROYALTY

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

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

The Trust was created to acquire and hold for the

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

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

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

The properties in which the Trust holds

the Net Profits Interest are referred to as the “Underlying Properties.”

In connection with the closing of the initial public

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

The Trust was created to acquire and hold for

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

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

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

The properties in which the Trust

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

In connection with the closing of the initial

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

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

Through the initial public offering in 2011 and a secondary offering in 2013, Enduro

sold a total of 24,400,000 Trust Units.

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

Through the initial public offering in 2011 and a secondary offering in 2013,

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

As of December 31, 2017, Enduro owned 8,600,000 Trust Units, or 26% of the issued

and outstanding Trust Units.

At a special meeting of Trust unitholders held

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

In September 2017, Enduro, the

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

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

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

with the requirements of the Trust Agreement.

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

of the outstanding units of the Trust.

In July 2018 Enduro entered

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

or the “Sponsor”) for the Underlying Properties

and all of the outstanding Trust Units owned by Enduro (the “Sale Transaction”), and on August 31, 2018, the parties closed

In September 2017,

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

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

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

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

This amendment reduced the required threshold for approval

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

In July 2018 Enduro entered into a purchase

and sale agreement with COERT Holdings 1 LLC (“COERT”

or the “Sponsor”) for the Underlying Properties and all

of the outstanding Trust Units owned by Enduro (the “Sale Transaction”), and on August 31, 2018, the parties closed

the Sale Transaction.

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or 25% of the issued and outstanding Trust Units.

The Net Profits Interest is passive in nature and

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

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

The Trust Agreement provides, among other provisions, that:

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

including activities required or permitted by the terms of the Conveyance of Net Profits Interest, dated effective as of July 1, 2011

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

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

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

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

As a result, the Trust is not permitted to acquire other oil and

natural gas properties or net profits interests or otherwise to engage in activities beyond those necessary for the conservation and protection

As a result, the

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

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

of the Net Profits Interest;

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

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

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

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

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

PERMIANVILLE ROYALTY

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

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

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

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

outstanding Trust Units at a meeting of Trust unitholders;

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

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

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

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

on hand and available reserves.

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

the Trust is not subject to any pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the

passage of time.

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

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

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

consecutive years;

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

the Trust is judicially dissolved.

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

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

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

No further distributions

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

Trust is not subject to any pre-set termination provisions based on a maximum volume of oil

or natural gas to be produced or the passage of time.

The Trust will dissolve upon the earliest

to occur of the following:

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

the Net Profits Interest;

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

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

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

Trust is judicially dissolved.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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on the following basis:

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

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

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

other professional fees) are recorded when paid;

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

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

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

directly to the Trust corpus;

PERMIANVILLE ROYALTY

(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

fees as well as accounting, engineering, legal, and other professional fees) are recorded

(d) Cash reserves for Trust expenses may be established by the Trustee

for certain future expenditures that would not be recorded as contingent liabilities under

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

(e) Amortization of the Net Profits Interest in oil and natural gas properties

is calculated on a unit-of-production basis and is charged directly to the Trust corpus;

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

(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

(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.

Any impairment is a direct charge to the trust corpus.

The financial statements of the Trust differ from

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

Significant estimates affecting these financial

statements include estimates of proved oil and natural gas reserves, which are used to compute the Trust’s amortization of net profits

interest and its impairment assessments.

Although the Trustee believes that these estimates are reasonable, actual results could differ

from those estimates.

Significant estimates affecting these

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

of net profits interest and its impairment assessments.

Although the Trustee believes that these estimates are reasonable, actual results

could differ from those estimates.

Cash and Cash Equivalents

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New Accounting Pronouncements

As the Trust’s financial statements are prepared

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

No new accounting

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

PERMIANVILLE ROYALTY

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.

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

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

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

Amortization of the Net Profits Interest in oil and natural gas properties

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

Amortization of the Net Profits Interest in oil and natural gas

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

production and reserves.

The reserves upon which

the amortization rate is based are quantity estimates which are subject to numerous uncertainties inherent in the estimation of proved

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 commodity prices and operating costs.

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

Downward revisions in proved reserves may

result in an increased rate of amortization.

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

income of the Trust.

Accumulated amortization as of December 31, 2021 and 2020 was $291,965,506 and $285,826,125, respectively.

The Net Profits Interest is periodically assessed

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

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

While the Trust did not record an impairment during the years

ended December 31, 2021 or 2020, future downward revisions in actual production volumes relative to current forecasts, higher than expected

operating costs, or lower than anticipated commodity prices could result in recognition of impairment in future periods.

Impairment of Net Profits Interest

Fair value accounting guidance includes a hierarchy that prioritizes

the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in

active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3).

When indicators

of impairment are present and it is determined that the carrying value of the Net Profits Interest exceeds the estimated undiscounted

cash flows of the subject interest, fair value estimates utilized in the impairment assessment are determined based on inputs not observable

in the market and thus represent Level 3 measurements.

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

Downward revisions in proved reserves

may result in an increased rate of amortization.

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

distributable income of the Trust.

Accumulated amortization as of December 31, 2022 and 2021 was $297,449,525 and $291,965,506,

respectively.

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

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

Trust did not record an impairment during the years ended December 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 impairment in future periods.

Any impairment is a direct charge to the trust corpus.

Federal Income Taxes

For federal income tax purposes, the Trust is a

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

Trust unitholders are treated as owning a direct interest in the

assets of the Trust, and each Trust unitholder is taxed directly on his or her pro rata share of the income and gain attributable to the

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

The income of the Trust is deemed to have been received or accrued by each unitholder at the time such income is received or accrued by

the Trust rather than when distributed by the Trust.

For federal income tax purposes, the Trust is

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

Trust unitholders are treated as owning a direct interest in

the assets of the Trust, and each Trust unitholder is taxed directly on his or her pro rata share of the income and gain attributable

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

of the Trust.

The income of the Trust is deemed to have been received or accrued by each unitholder at the time such income is received

or accrued by the Trust rather than when distributed by the Trust.

The deductions of the Trust consist of severance

taxes and administrative expenses.

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

“economic interests”

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

constitutes “economic interests”

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

Each unitholder is entitled to amortize

the cost of the Trust Units through cost depletion over the life of the Net Profits Interest or, if greater, through percentage depletion.

Each unitholder is entitled

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

Unlike cost depletion, percentage depletion is not limited to a unitholder’s depletable tax basis in the Trust Units.

unitholder could be entitled to percentage depletion as long as the applicable Underlying Properties generate net income.

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

Some Trust Units are held by a middleman, as such

term is broadly defined in U.S.

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

interest for a custodian in street name).

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

trust (“WHFIT”) for U.S.

federal income tax purposes.

The Bank of New York Mellon Trust Company, N.A., 601 Travis, 16 th

Floor, Houston, Texas 77002, telephone number (512) 236-6545, is the representative of the Trust that will provide tax information

in accordance with applicable U.S.

Treasury Regulations governing the information reporting requirements of the Trust as a WHFIT.

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

Notwithstanding the foregoing, the middlemen holding

units on behalf of unitholders, and not the Trustee of the Trust, are solely responsible for complying with the information reporting

requirements under the U.S.

Treasury Regulations with respect to such units, including the issuance of IRS Forms 1099 and certain written

tax statements.

Trust unitholders whose units are held by middlemen should consult with such middlemen regarding the information that

will be reported to them by the middlemen with respect to the Trust Units.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

Some Trust Units are held by a middleman, as

such term is broadly defined in U.S.

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

holding an interest for a custodian in street name).

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

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

federal income tax purposes.

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

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

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

Treasury Regulations governing the information reporting

requirements of the Trust as a WHFIT.

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

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

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

Treasury Regulations with respect to such

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

Trust unitholders whose units are held by

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

to the Trust Units.

The tax consequences to a unitholder of ownership

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Texas imposes a franchise tax at a rate of 0.75%

on gross revenues less certain deductions for returns originally due on or after January 1, 2016, as specifically set forth in the Texas

franchise tax statutes.

on gross revenues less certain deductions for returns originally due on or after January 1, 2016, as specifically set forth in the

Texas franchise tax statutes.

Entities subject to tax generally include trusts unless otherwise exempt.

Trusts that receive at least 90% of

their federal gross income from designated passive sources, including royalties from mineral properties and other income from other non-operating

mineral interests, and do not receive more than 10% of their income from operating an active trade or business, generally are exempt from

the Texas franchise tax as “passive entities.”

Although the Trust is intended to be exempt from Texas franchise tax at the

trust level as a passive entity, each unitholder that is considered a taxable entity under the Texas franchise tax would generally be

required to include its portion of Trust net income in its own Texas franchise tax computation.

Each unitholder should consult his or her own tax

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

PERMIANVILLE ROYALTY

Trusts that receive at least

90% of their federal gross income from designated passive sources, including royalties from mineral properties and other income from

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

are exempt from the Texas franchise tax as “passive entities.”

Although the Trust is intended to be exempt from Texas franchise

tax at the trust level as a passive entity, each unitholder that is considered a taxable entity under the Texas franchise tax would generally

be required to include its portion of Trust net income in its own Texas franchise tax computation.

Each unitholder should consult his or her own

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

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

DISTRIBUTIONS TO UNITHOLDERS

Each month, the Trustee determines the amount of

funds available for distribution to the Trust unitholders.

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

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

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

future liabilities of the Trust.

Distributions are made to the holders of Trust Units as of the applicable record date (generally the

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

Each month, the Trustee determines the amount

of funds available for distribution to the Trust unitholders.

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

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

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

for future liabilities of the Trust.

Distributions are made to the holders of Trust Units as of the applicable record date (generally

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

The following table provides information regarding

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Distribution per Unit

August 16, 2021

August 31, 2021

September 15, 2021

September 17, 2021

September 30, 2021

October 15, 2021

October 18, 2021

October 29, 2021

November 15, 2021

November 17, 2021

November 30, 2021

December 17, 2021

Total—2021

December 31, 2021

December 31, 2019

January 14, 2022

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July 15, 2022

July 18, 2022

July 29, 2022

August 12, 2022

August 18, 2022

August 31, 2022

September 15, 2022

September 16, 2022

September 30, 2022

October 17, 2022

October 31, 2022

November 14, 2022

November 18, 2022

November 30, 2022

December 13, 2022

Total—2022

August 16, 2021

August 31, 2021

September 15, 2021

September 17, 2021

September 30, 2021

October 15, 2021

October 18, 2021

October 29, 2021

November 15, 2021

November 17, 2021

November 30, 2021

December 15, 2021

Total—2021

TRUSTEE FEES AND RELATED PARTY TRANSACTIONS

Trustee Administrative Fee.

Under the terms

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

the years ended December 31, 2021 and 2020, the Trust paid $200,000 to the Trustee and $2,000 to the Delaware Trustee, respectively, pursuant

to the terms of the Trust Agreement.

Letter of Credit .

Under the terms of the

Trust Agreement, COERT has provided the Trust with a $1,200,000 million letter of credit to be used by the Trust in the event that its

cash on hand (including available cash reserves) is not sufficient to pay ordinary course administrative expenses.

The letter of credit

is issued to the benefit of the Trustee.

The standby letter of credit was issued by West Texas National Bank and matures February 11,

Administrative Fee.

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

Trustee and $2,000 to the Delaware Trustee.

During the years ended December 31, 2022 and 2021, the Trust paid $200,000 to the Trustee

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

Under the terms of the Trust Agreement, COERT has provided the Trust with a $1,200,000 million letter of credit

to be used by the Trust in the event that its cash on hand (including available cash reserves) is not sufficient to pay ordinary course

administrative expenses.

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

The standby letter of credit was issued by West

Texas National Bank and matures on February 11, 2024.

The letter of credit to the Trustee is unfunded as of December 31, 2022.

Advances from COERT .

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

Registration Rights Agreement.

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

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

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

the Trust effect the registration of the registrable Trust Units.

The holders of the registrable Trust Units are entitled to demand

a maximum of five such registrations.

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

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

borne by the Trust.

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

PERMIANVILLE ROYALTY

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.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

Rights Agreement.

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

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

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

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

The holders of the registrable Trust Units are

entitled to demand a maximum of five such registrations.

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

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

will be borne by the Trust.

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

On June 22, 2022, pursuant to the Registration

Rights Agreement, the Trust filed a registration statement on Form S-3 registering the offering by COERT of 8,600,000 Trust Units.

The registration statement was declared effective on July 7, 2022.

SUBSEQUENT EVENTS

1 unchanged sentence

Subsequent to December 31, 2022, the Trust

declared the following distributions:

declared or paid the following distributions:

Declaration Date

11 unchanged sentences

April 14, 2023

PERMIANVILLE ROYALTY

PERMIANVILLE ROYALTY TRUST

UNAUDITED SUPPLEMENTARY INFORMATION

4 unchanged sentences

Associates, Inc.

Estimates were prepared in accordance with guidelines prescribed by the SEC and the Financial Accounting Standards Board,

which require that reserve estimates be prepared under existing economic and operating conditions based upon an average of the first-day-of-the-month

commodity price during the 12-month period ending on the balance sheet date with no provision for price and cost escalations except by

contractual arrangements.

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

Board, which require that reserve estimates be prepared under existing economic and operating conditions based upon an average of the

first-day-of-the-month commodity price during the 12-month period ending on the balance sheet date with no provision for price and cost

escalations except by contractual arrangements.

Prices used in estimating reserves were as follows:

20 unchanged sentences

natural gas reserves attributable to the Trust for the periods indicated:

Trust Net Profits

Trust Net Profits Interest

Balance—January 1, 2021

1 unchanged sentence

Revisions of previous estimates

Income from Net Profits

Income from Net Profits Interest

Balance—December 31, 2021

1 unchanged sentence

Revisions of previous estimates

Income from Net Profits

Income from Net Profits Interest

Balance—December 31, 2022

developed reserves:

Proved developed reserves:

December 31, 2021

December 31, 2022

undeveloped reserves:

Proved undeveloped reserves:

December 31, 2021

December 31, 2022

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

PERMIANVILLE ROYALTY

UNAUDITED SUPPLEMENTARY

INFORMATION—Continued

Revisions of previous estimates .

the year ended December 31, 2021, revisions of previous estimates increased oil reserves by 54%, primarily due to an increase in the

average oil price used to estimate future net reserves.

The NYMEX average oil price of $66.56 per Bbl used to determine reserves as of

December 31, 2021 was 68% higher than the $39.57 per Bbl average NYMEX oil price as of December 31, 2020.

During the year ended December 31, 2020, revisions

of previous estimates decreased oil reserves by 20%, primarily due to a decrease in the average oil price used to estimate future net

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

per Bbl average NYMEX oil price as of December 31, 2019.

(1) Reserves for natural gas liquids

are immaterial and included as a component of oil reserves.

PERMIANVILLE ROYALTY TRUST

UNAUDITED SUPPLEMENTARY INFORMATION -- Continued

of previous estimates .

During the year ended December 31, 2022, revisions of previous estimates increased oil reserves

by 36%, primarily due to an increase in the average oil price used to estimate future net reserves.

The NYMEX average oil price of $93.67

per Bbl used to determine reserves as of December 31, 2022 was 41% higher than the $66.56 per Bbl average NYMEX oil price as of

December 31, 2021.

During the year ended December 31, 2021,

revisions of previous estimates increased oil reserves by 54%, primarily due to an increase in the average oil price used to estimate

future net reserves.

The NYMEX average oil price of $66.56 per Bbl used to determine reserves as of December 31, 2021 was 68% higher

than the $39.57 per Bbl average NYMEX oil price as of December 31, 2020.

Standardized Measure of Discounted Future Net Cash Flows

11 unchanged sentences

future income taxes have been excluded.

PERMIANVILLE ROYALTY

UNAUDITED SUPPLEMENTARY INFORMATION—Continued

The standardized measure of discounted future

2 unchanged sentences

Future cash inflows

Future production

Future production taxes

Future net cash flows

10% annual discount

for estimated timing of cash flows

Standardized measure

of discounted future net cash flows

10% annual discount for estimated timing of cash flows

Standardized measure of discounted future net cash flows

The changes in standardized measure of discounted

13 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data