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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 447 added, 455 removed, 248 unchanged (78% of the section changed)

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Statements of Assets, Liabilities and Trust

September 30,

Cash and cash equivalents

Net profits interest in oil and natural gas properties, net

Net profits interest in oil and natural

gas properties, net

LIABILITIES AND TRUST CORPUS

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

Total liabilities and Trust corpus

Trust corpus (33,000,000 units issued

and outstanding)

Total liabilities

and Trust corpus

The accompanying notes are an integral part of

these financial statements.

PERMIANVILLE ROYALTY TRUST

PERMIANVILLE ROYALTY

Statements of Distributable

Three Months Ended September 30,

Nine Months Ended September 30,

Ended March 31,

Income from net profits interest

Income from sale/lease of assets

Income from sale of assets

Interest and investment income

General and administrative expenses

Cash reserves (withheld) used for Trust expenses

Cash reserves used (withheld) for Trust

Distributable income

Distributable income per unit (33,000,000 units)

Distributable income per unit (33,000,000

The accompanying notes are an integral part of

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Statements of Changes in Trust Corpus

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Trust corpus, beginning of period

Cash reserves withheld (used) for Trust expenses

Cash reserves withheld for Trust expenses

Distributable income

Distributions to unitholders

Distributions to unitholders ($0.1332 and $0.089 per unit)

Amortization of net profits interest

Trust corpus, end of period

The accompanying notes are an integral part

of these financial statements.

The accompanying notes are

an integral part of these financial statements.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

ORGANIZATION AND PROVISIONS

TRUST ORGANIZATION AND PROVISIONS

Permianville Royalty Trust

(the “Trust”), previously known as Enduro Royalty Trust, is a Delaware statutory trust formed in May 2011 pursuant to

a trust agreement (the “Trust Agreement”) among Enduro Resource Partners LLC (“Enduro”), as trustor, The Bank

(the “Trust”), previously known as Enduro Royalty Trust, is a Delaware statutory trust formed in May 2011 pursuant to

a trust agreement (the “Trust Agreement”) among Enduro Resource Partners LLC (“Enduro”), as trustor, The Bank

of New York Mellon Trust Company, N.A.

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

as Delaware Trustee.

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

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

The properties in

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

In connection with the closing

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

units of beneficial interest in the Trust (the “Trust Units”).

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

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

“Sale Transaction”).

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

units of beneficial interest in the Trust (the “Trust Units”).

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

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

“Sale Transaction”).

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

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

As of September 30, 2022, the Sponsor owned 8,546,594

As of March 31, 2023, the Sponsor owned 7,517,942

Trust Units, or 23% of the issued and outstanding Trust Units.

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The Amended and Restated 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 (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 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 Interest) 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 unitholders (Note 5);

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.

OF PRESENTATION

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

of the Net Profits Interest;

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

of the Net Profits Interest) 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 unitholders (Note 5);

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;

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

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

Trust is judicially dissolved.

BASIS OF PRESENTATION

The Statement of Assets,

Liabilities and Trust Corpus as of December 31, 2022, which has been derived from audited financial statements, and the unaudited

interim financial statements as of September 30, 2022 and for the three and nine months ended September 30, 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

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

interim financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 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, 2022 (the “2022 Annual Report on Form 10-K”).

In the opinion of the Trustee,

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

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

presented not misleading.

the accompanying unaudited financial statements reflect all adjustments, consisting only of normal, recurring, that are necessary for

a fair presentation of the interim periods presented and include all the disclosures necessary to make the information presented not

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

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cash basis of accounting to report Trust receipts of income from the Net Profits Interest and payments of expenses incurred.

The Net Profits

Interest represents the right to receive revenues (oil and natural gas sales), less direct operating expenses (lease operating expenses

and production and property taxes) and development expenses of the Underlying Properties, multiplied by 80%.

Cash distributions of the

Trust are made based on the amount of cash received by the Trust pursuant to terms of the Conveyance creating the Net Profits Interest.

Profits Interest represents the right to receive revenues (oil and natural gas sales), less direct operating expenses (lease operating

expenses and production and property taxes) and development expenses of the Underlying Properties, multiplied by 80%.

Cash distributions

of the Trust are made based on the amount of cash received by the Trust pursuant to terms of the Conveyance creating the Net Profits

Under the terms of the Conveyance,

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

are recorded when paid;

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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

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Trust corpus;

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

(f) The Net Profits

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If an impairment loss is indicated by the

carrying amount of the assets exceeding the sum of the undiscounted expected future net cash flows of the Net Profits Interest, then an

impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value determined using

discounted cash flows.

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

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.

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

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

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 and any impairment recorded is charged directly to trust corpus instead of as an expense.

these statements differ from financial statements prepared in accordance with GAAP, the modified cash basis of reporting is considered

amortization of the net profits interest

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

the Trust does not record a liability

or repay any overpayment received as these will be deducted from future payments;

and impairment is charged directly to the trust corpus.

While these statements differ from financial statements prepared in accordance with GAAP, the modified cash basis of reporting is considered

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

This comprehensive basis

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

Topic 12:E, Financial Statements of Royalty Trusts .

PROFITS INTEREST IN OIL AND NATURAL GAS PROPERTIES

The Net Profits Interest in

oil and natural gas properties was recorded at its fair value on the date of conveyance.

Amortization of the Net Profits Interest in oil

and natural gas properties is calculated on a unit-of-production basis based on the Underlying Properties’ production and reserves.

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

estimation of proved reserves.

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

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 .

NET PROFITS INTEREST IN OIL AND NATURAL GAS PROPERTIES

The Net Profits Interest

in oil and natural gas properties was recorded at its fair value on the date of conveyance.

Amortization of the Net Profits Interest

in oil and natural gas properties is calculated on a unit-of-production basis based on the Underlying Properties’

production and

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

in the estimation of proved reserves.

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

and operating costs.

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

Downward revisions in proved

reserves may result in an increased rate of amortization.

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

the distributable income of the Trust.

Accumulated amortization as of September 30, 2022 and December 31, 2021 was $296,249,377

and $291,965,506, respectively.

The Net Profits Interest is

periodically assessed for impairment whenever events or circumstances indicate that the current fair value based on expected future cash

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

While the Trust did not record an

impairment during the three or nine months ended September 30, 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.

Downward revisions

in proved reserves may result in an increased rate of amortization.

Amortization is charged directly to the Trust corpus balance and

does not affect the distributable income of the Trust.

Accumulated amortization as of March 31, 2023 and December 31, 2022

was $298,607,686 and $297,449,526, respectively.

The Net Profits Interest

is periodically assessed for impairment whenever events or circumstances indicate that the current fair value based on expected future

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

While the Trust did not record

an impairment during the three months ended March 31, 2023 or 2022, future downward revisions in actual production volumes relative

to current forecasts, higher than expected operating costs, or lower than anticipated commodity prices could result in recognition of

impairment in future periods.

Federal Income Taxes

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Trust unitholders are treated as owning a direct

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

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

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

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

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

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

the assets of the Trust.

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

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

The deductions of the Trust

consist of severance taxes and administrative expenses.

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

Profits Interest constitutes “economic interests” in oil and natural gas properties for federal income tax purposes.

unitholder is entitled to amortize the cost of the Trust Units through cost depletion over the life of the Net Profits Interest or, if

greater, through percentage depletion.

Unlike cost depletion, percentage depletion is not limited to a unitholder’s depletable tax

basis in the Trust Units.

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

Net Profits Interest constitutes “economic interests”

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

Each unitholder is entitled to amortize the cost of the Trust Units through cost depletion over the life of the Net Profits Interest

or, if greater, through percentage depletion.

Unlike cost depletion, percentage depletion is not limited to a unitholder’s depletable

tax basis in the Trust Units.

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

generate gross income.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

Some Trust Units are held

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

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

federal income tax purposes.

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

The tax consequences to a

unitholder of ownership of Trust Units will depend in part on the unitholder’s tax circumstances.

Unitholders should consult their

tax advisors about the federal tax consequences relating to owning the Trust Units.

The Trust’s revenues

The tax consequences to

a unitholder of ownership of Trust Units will depend in part on the unitholder’s tax circumstances.

Unitholders should consult

their tax advisors about the federal tax consequences relating to owning the Trust Units.

The Trust’s revenues

are from sources in the states of Louisiana, New Mexico, and Texas.

Because it distributes all of its net income to unitholders, the Trust

is not taxed at the trust level in Louisiana or New Mexico.

Although the Trust does not owe tax, the Trustee is required to file

a return with Louisiana reflecting the income and deductions of the Trust attributable to properties located in that state.

Because it distributes all of its net income to unitholders, the

Trust is not taxed at the trust level in Louisiana or New Mexico.

Although the Trust does not owe tax, the Trustee is required to

file a return with Louisiana reflecting the income and deductions of the Trust attributable to properties located in that state.

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

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income tax which may apply to unitholders organized as corporations.

Texas does not impose a state

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

Texas imposes a franchise tax at a rate

of 0.75% on gross revenues less certain deductions for returns originally due on or after January 1, 2016, as specifically set forth

in the Texas franchise tax statutes.

Texas does not impose a

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

Texas imposes a franchise tax

at a rate of 0.75% on gross revenues less certain deductions for returns originally due on or after January 1, 2016, as specifically

set forth in the Texas franchise tax statutes.

Entities subject to tax generally include trusts unless otherwise exempt.

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.

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

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

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

Although the Trust is intended to be exempt

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

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

Each unitholder should consult

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

DISTRIBUTIONS

TO UNITHOLDERS

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

DISTRIBUTIONS TO UNITHOLDERS

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

Available funds are the excess

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

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

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

No distributions will be made to Trust unitholders

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

Distributions are

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

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

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.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

The following table provides

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

Declaration Date

Nine Months Ended September 30, 2022:

Three Months Ended March 31, 2023:

December 16, 2022

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March 13, 2023

March 18, 2022

March 31, 2022

April 14, 2022

April 18, 2022

April 29, 2022

June 14, 2022

June 17, 2022

June 30, 2022

July 15, 2022

July 18, 2022

July 29, 2022

August 12, 2022

August 18, 2022

August 31, 2022

September 15, 2022

Year to Date –

Nine Months Ended September 30, 2021:

August 16, 2021

August 31, 2022

September 15, 2021

Three Months Ended March 31, 2022:

December 17, 2021

December 31, 2021

January 14, 2022

January 18, 2022

January 31, 2022

February 14, 2022

February 18, 2022

February 28, 2022

March 14, 2022

Year to Date –

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.

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, 2022 and 2021, the Trust paid $150,000 to the Trustee and $0

to the Delaware Trustee pursuant to the terms of the Trust Agreement.

During each of the three-month periods ended March 31, 2023 and 2022, 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 17, 2022,

a distribution of $0.050500 per unit, which was declared on September 16, 2022, was paid to Trust unitholders of record as of September 30,

On October 17, 2022,

the Trust declared a distribution of $0.051000 per unit to unitholders of record as of October 31, 2022.

The distribution was paid

to unitholders on November 14, 2022.

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

References to the “Trust”

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

or the “Sponsor” in this document refer to COERT Holdings 1 LLC.

References to “Enduro” in this document refer

On April 14, 2023, a

distribution of $0.019350 per unit, which was declared on March 16, 2023, was paid to Trust unitholders of record as of March 31,

On April 17, 2023, the

Trust declared a distribution of $0.030000 per unit to unitholders of record as of April 28, 2023.

The distribution was paid to

unitholders on May 12, 2023.

Proposed Property Divestitures

On May 3, 2023, the

Sponsor notified the Trustee that the Sponsor had entered into an agreement to divest certain acreage and associated production in the

Permian Basin (the “Divestiture Properties”) that constitute part of the Underlying Properties and are therefore burdened

by the Trust’s Net Profits Interest, for a total purchase price of approximately $6.7 million.

Accordingly, the Sponsor will seek,

through a vote at a special meeting of unitholders, unitholder approval of the release of the Net Profits Interest with respect to the

Divestiture Properties.

If the transactions are approved, unitholders will receive 80% of the net proceeds of the sale of the Divestiture

The income from net profits interest from the Divestiture Properties has not been significant historically and represented

less than 6% and less than 5% of total proved reserves attributable to the Trust and the PV-10 of the Underlying Properties at December 31,

2022, respectively.

The Divestiture Properties are being acquired by the Operator of the Divestiture Properties, whom the Sponsor views

as the most logical acquirer.

On May 12, 2023, the

Trust filed a preliminary proxy statement with the SEC with respect to a special meeting of unitholders to be held in 2023 for the purpose

of considering and acting on proposals to approve:

transaction pursuant to which (a) the Sponsor will sell its interests in the Divestiture

Properties, (b) the Trust will release the related Net Profits Interest associated with

the Divestiture Properties, and (c) the net proceeds received by the Trust with respect

to such sale will be distributed to the Trust unitholders;

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

to the Trust Agreement to raise certain threshold requirements for a vote of Trust unitholders

in connection with similar future transactions;

to the Conveyance to raise certain threshold requirements for a vote of Trust unitholders

in connection with similar future transactions;

adjournment of the special meeting, if necessary or appropriate, to permit solicitation of

additional proxies in favor of the above proposals.

The Trustee makes no recommendation

regarding any of the foregoing proposals.

Unitholders should review carefully the definitive proxy statement that will be filed with

the SEC with respect to the special meeting, when it becomes available, because it will contain important information about the release

of the Trust’s Net Profits Interest with respect to the Divestiture Properties in connection with the proposed transaction.

Trustee’s Discussion and Analysis of Financial Condition

and Results of Operations.

References to the “Trust”

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

or the “Sponsor”

in this document refer to COERT Holdings 1 LLC.

References to “Enduro”

in this document refer

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

The following review of the Trust’s financial condition and

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

and Analysis of Financial Condition and Results of Operations contained in the Trust’s 2021 Annual Report on Form 10-K.

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

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

The following review of the Trust’s financial condition and

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

and Analysis of Financial Condition and Results of Operations contained in the Trust’s 2022 Annual Report on Form 10-K.

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

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

Forward-Looking Statements

This Form 10-Q includes

“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E

“forward-looking statements”

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

of the Securities Exchange Act of 1934, as amended.

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

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

of Operations” are forward-looking statements.

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

of Operations”

are forward-looking statements.

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

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

used in this document, the words “believes,” “expects,” “anticipates,” “intends” or similar

expressions are intended to identify such forward-looking statements.

The following important factors, in addition to those discussed

elsewhere in this Form 10-Q, in the Trust’s 2021 Annual Report on Form 10-K and the Trust’s other filings with the

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

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

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

the amount of future direct operating expenses and development expenses;

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

the actions of the Organization of Petroleum Exporting Countries;

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;

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

“expects,”

“anticipates,”

“intends”

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

The following important factors, in addition to those

discussed elsewhere in this Form 10-Q, in the Trust’s 2022 Annual Report on Form 10-K and the Trust’s other filings

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

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

risks associated with the drilling and operation of oil and natural

the amount of future direct operating expenses and development

health concerns, including the COVID-19 pandemic;

actions of the Organization of Petroleum Exporting Countries;

the armed conflict between Russia and Ukraine and the potential

destabilizing effect such conflict may pose for the global oil and gas markets;

the effect of existing and future laws and regulatory actions;

the effect of changes in commodity prices or alternative fuel prices;

the prohibition on the Trust’s entry into any new hedging arrangements under the terms of the Conveyance;

the effect of changes in commodity prices or alternative fuel

the prohibition on the Trust’s entry into any new hedging

arrangements under the terms of the Conveyance;

conditions in the capital markets;

competition from others in the energy industry;

climate change and its potential impact on demand for fossil fuels;

uncertainty of estimates of oil and natural gas reserves and production;

climate change and the potential impact on fossil fuels;

uncertainty of estimates of oil and natural gas reserves and

cost inflation.

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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 the Trust

This Form 10-Q describes

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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.

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

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

The Trust assumes no

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

Permianville Royalty Trust,

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

The Trust’s only asset

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

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On August 31, 2018,

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

Transaction”).

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

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

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

“Sale Transaction”).

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

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

The Trust is required to

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

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

10 th business day after the record date.

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

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

The amount of Trust revenues and cash distributions to Trust

unitholders depends on, among other things:

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

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

the 10 th business day after the record date.

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

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

The amount of Trust revenues and cash distributions

to Trust unitholders depends on, among other things:

· oil and natural gas sales prices;

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· the amount and timing of Trust administrative expenses;

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

of the Trust.

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.

The outlook for development

activity for the Underlying Properties remained positive during the third quarter of 2022, despite the quarter-over-quarter decline in

commodity prices.

While the global economy remains volatile, reflecting, among other factors, the armed conflict between Russia and Ukraine

and lingering effects of the COVID-19 pandemic, the Sponsor does not expect such factors to have a material impact on the Underlying Properties

and the 2022 development activity, although volatile commodity prices and inflation are affecting third-party operators, and those effects

could be material.

The West Texas Intermediate spot price of crude oil has increased materially from $76.99 per barrel on December 31,

2021 to $85.70 per barrel on November 9, 2022.

Natural gas prices continue to show greater volatility and have increased and subsequently

decreased 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 $3.99 per MMBTU on November 9, 2022, while reaching a year-to-date high of $9.82 per MMBTU on August 22, 2022.

recent oilfield service inflationary pressures and supply chain bottlenecks, operators of the Underlying Properties have continued their

spending activity.

However, due to the current heightened market volatility and global macroeconomic uncertainty, it remains difficult

to reliably estimate the ultimate impact 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.

As previously disclosed, the Sponsor now expects

that the 2022 capital expenditure program will be between $10 million and $15 million attributable to the Underlying Properties, or between

$8 million and $12 million net to the Trust’s 80% Net Profits Interest.

This represents an increase from the previously expected

capital expenditure program of $6 million to $8 million, or $4.8 million to $6.4 million net to the Trust’s 80% Net Profits Interest.

To account for this increased activity level, the Sponsor has established a cash reserve for approved,

future development expenses this year.

This reserve is intended to fund the expected increase in development expenses;

if those expenses are ultimately delayed or are less than expected, or if the outlook changes, amounts reserved but unspent will be released

as an incremental cash distribution in a future period.

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, to the

extent operator capital expenditures remain elevated compared to recent years in response to current commodity prices.

The overall outlook for

development activity on the Underlying Properties remained stable during the first quarter of 2023, despite a quarter-over-quarter decline

in commodity prices.

Meanwhile, the global economy remains volatile, reflecting, among other factors, the armed conflict between Russia

and Ukraine and the lingering effects of the COVID-19 pandemic.

Further clouding the outlook for commodity demand is the banking sector

crisis and its potential impact on lending availability to consumers and businesses.

Nevertheless, the Sponsor does not expect that these

events will have a material impact on the Underlying Properties and the 2023 development activity compared to previously estimated levels

detailed in the Trust’s 2022 Annual Report on Form 10-K, aside from the effects of volatile commodity prices.

The West Texas

Intermediate spot price of crude oil has decreased materially from $80.26 per barrel on December 30, 2022 to $70.78 per barrel on

May 11, 2023.

Natural gas prices have experienced greater pressure, with the Henry Hub spot price decreasing from $3.52 per MMBTU

on December 30, 2022 to $2.12 per MMBTU on May 11, 2023.

the price volatility, the Sponsor currently expects the previously disclosed capital spending outlook to remain within the range

of $6.0 million to $9.0 million, or $4.8 million to $7.2 million net to the Trust’s 80% Net Profits Interest.

While operators continue

to evaluate their planned capital expenditures for 2023, taking into account the volatility in commodity prices, the majority of the

operators of the Underlying Properties are Permian-focused, large cap operators who have indicated to the Sponsor their intent to continue

with planned activities.

The Sponsor does expect some moderation in the previously expected capital expenditure activity in the Haynesville

area of the Underlying Properties.

The Sponsor also expects that some of the inflationary pressures and supply chain bottlenecks operators

of the Underlying Properties reported during 2022 will moderate this year.

Given the market volatility, the Sponsor may reestablish a

cash reserve for approved, future development expenses during 2023, similar to the cash reserve that the Sponsor had established in 2022.

The Sponsor indicates that it continues to have access to adequate capital and liquidity to fund such capital expenditures as they come

The Sponsor believes there

could be further opportunity in 2023 for prospective divestitures, as operators of some of the Underlying Properties look to acquire

assets at compelling valuations against the backdrop of favorable oil prices compared to prior years.

Capex Drilling Activity Update

Presented below is a summary

of the current status of certain notable capital projects recently undertaken on the Underlying Properties pursuant to the capital

expenditure program described above.

Since the last summary of 2022 capital projects included in the Trust’s September 2022

monthly cash distribution announcement, various operators of the Underlying Properties, have commenced eight new projects, and several

projects that had been identified as awaiting first revenues have begun producing.

The Sponsor expects that the cost of these new projects,

together with the other projects undertaken since the beginning of this year, will be within the range of the previously updated 2022

capital expenditure program, although total capital expenditures in 2022 ultimately could be at the higher end of the range disclosed

The following table is

not intended to be a comprehensive list reflecting all capital expenditures to date.

In addition, there can often be a several-month

delay from the time of capital expenditures to the time of production and cash flows attributable to the Underlying Properties, especially

of the current status of certain notable capital projects recently undertaken on the Underlying Properties pursuant to the capital expenditure

program described above.

The following table is not

intended to be a comprehensive list reflecting all capital expenditures to date.

In addition, there can often be a several-month delay

from the time of capital expenditures to the time of production and cash flows attributable to the Underlying Properties, especially

given the non-operated nature of the Underlying Properties.

Underlying Properties

Working Interest

(in thousands)

Large Cap Major 1

D&C New Drills

1 Drilled, Awaiting

1 Drilled, Awaiting First Revenues;

Large Cap E&P 1

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5 Producing, Awaiting First

5 Drilling In-Process/Pre Drill

Large Cap E&P 2

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Continual Program

Large Private E&P

Producing, Awaiting First

PE-Backed Private 1

D&C New Drills

4 Drilling In-Process

PE-Backed Private 2

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3 Producing, Awaiting First

PE-Backed Private 3

Large Cap E&P 3

D&C New Drills

Drilling In-Process

New Drills / Workovers

The Sponsor expects some of these projects to be

completed and to begin producing before year-end, while others are expected to be completed and to begin producing during 2023.

Private E&P 2

Of those projects identified above that are still

in process or awaiting first revenues, the Sponsor expects a majority to be completed and to begin producing during 2023.

Special Meeting of Unitholders to Consider Property Divestitures

May 12, 2023, the Trust filed a preliminary proxy statement with the SEC with respect to a special meeting of unitholders to be

held in 2023 for the purpose of considering and acting on proposals to approve:

(1) a transaction pursuant to which (a) the

Sponsor will sell its interests in certain oil and natural gas properties that constitute part of the oil and natural gas properties

burdened by the Net Profits Interest held by the Trust (the “Divestiture Properties”), (b) the Trust will release the

related Net Profits Interest associated with the Divestiture Properties, and (c) the net proceeds received by the Trust with respect

to such sale will be distributed to the Trust unitholders;

(2) amendments to the Trust Agreement to raise certain threshold requirements

for a vote of Trust unitholders in connection with similar future transactions;

(3) amendments to the Conveyance to raise certain

threshold requirements for a vote of Trust unitholders in connection with similar future transactions;

and (4) an adjournment of

the special meeting, if necessary or appropriate, to permit solicitation of additional proxies in favor of the above proposals.

makes no recommendation regarding any of the foregoing proposals.

Unitholders should review carefully the definitive proxy statement

that will be filed with the SEC with respect to the special meeting, when it becomes available, because it will contain important information

about the release of the Trust’s Net Profits Interest with respect to the Divestiture Properties in connection with the proposed

Results of Operations

Three Months Ended September 30, 2022

Compared to Three Months Ended September 30, 2021

The Trust’s net profits

Three Months Ended March 31, 2023 Compared

to Three Months Ended March 31, 2022

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,

Gross profits:

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Development expenses

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

2 unchanged sentences

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 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.

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, 2022 and 2021:

Three Months Ended

September 30,

net profits calculation for distributions paid during the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Underlying Properties Production Volumes:

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Net profits attributable

to the Underlying Properties for the three months ended September 30, 2022 were $3.0 million compared to $1.9 million for the three

months ended September 30, 2021.

to the Underlying Properties for the three months ended March 31, 2023 were $3.9 million compared to $3.4 million for the three

months ended March 31, 2022.

The $0.5 million increase in net profits attributable to the Underlying Properties from the 2023

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

Oil sales increased $5.1 million, due to higher realized prices and higher produced volumes.

The 69% increase

in realized oil sales prices in the 2022 period compared to the 2021 period increased revenues by $5.0 million, and higher produced volumes

increased revenues by $0.1 million.

Natural gas sales increased $2.6 million due to higher produced volumes and higher realized prices.

93% increase in realized gas prices and 13% increase in gas sales volumes in the 2022 period compared to the 2021 period decreased revenues

by $2.3 million and $0.3 million, respectively.

Lease operating expenses increased $0.4 million, primarily attributable to the increased number of producing

wells in the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021.

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

sales increased $0.3 million due to higher realized prices, which caused oil sales to increase

by $1.3 million.

The increase in oil sales due to higher realized prices was partially

offset by a $1.0 million decrease in oil sales due to reduced sales volumes.

oil price received increased 16% as a result of the corresponding increase in the average

NYMEX oil price for the relevant production months.

Oil sales volumes decreased 11% as a

result of natural production declines.

gas sales increased $0.8 million due to higher realized prices, which increased natural gas

sales by $1.4 million, partially offset by lower produced volumes, which decreased natural

gas sales by $0.6 million.

The average natural gas price received in the three months ended

March 31, 2023 increased 43% compared to the three months ended March 31, 2022

due to a 75% increase in the average NYMEX natural gas price.

Natural gas volumes decreased

16% primarily as a result of payment timing differences and natural production declines.

operating expenses increased $0.5 million, primarily attributable to the increased number

of producing wells in the three months ended March 31, 2023 compared to the three months

ended March 31, 2022.

· Compression,

gathering and transportation costs decreased $0.6 million, primarily due to the decrease

in natural gas volumes.

Production, ad valorem and other taxes increased $0.4 million during the three months ended September 30,

2022 compared to the three months ended September 30, 2021, due to the increase in oil and natural gas sales.

Development expenses increased $5.3 million due to drilling and completion costs for drilling multiple

· Production,

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

2023 compared to the three months ended March 31, 2022, due to the decrease in oil and

natural gas produced volumes.

· Development

expenses increased $0.7 million due to drilling and completion costs for drilling multiple

new wells in the Permian and Haynesville areas.

During the three months ended

September 30, 2022, COERT withheld from the net profits otherwise payable to the Trust an aggregate of $0.5 million and released

$0.9 million, with $0.7 million remaining for approved, future development expenses.

This reserve is intended to fund an expected increase

in development expenses;

however, if those expenses are ultimately delayed or are less than expected, or if the outlook changes, amounts

reserved but unspent will be released as an incremental cash distribution in a future period.

During the three months

ended March 31, 2023, COERT released the remaining $0.9 million from the cash reserve for future development expenses it had established

in 2022 through the withholding of net profits otherwise payable to the Trust.

For the three months ended

September 30, 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 September 30, 2021, the Trust withheld $0.2 million and paid $0.2 million for

March 31, 2023, the Trust withheld $0.4 million and paid $0.4 million for general and administrative expenses.

Expenses paid during

the period primarily consisted of fees for the preparation of the 2022 tax information for Trust unitholders, preparation of the Trust’s

2022 reserve report, financial statement audit fees, preparation of the Trust’s monthly press releases, Trustee fees, and New York

Stock Exchange listing fees.

For the three months ended March 31, 2022, the Trust withheld $0.4 million and paid $0.2 million for

general and administrative expenses.

Nine Months Ended September 30, 2022 Compared

to Nine Months Ended September 30, 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:

Nine Months Ended

September 30,

Gross profits:

Natural gas sales

Direct operating expenses:

Lease operating expenses

Compression, gathering and transportation

Production, ad valorem and other taxes

Development expenses

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Sponsor reserve for capital expenditures

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.

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, 2022 and 2021:

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, 2022 were $10.5 million compared to $3.1 million for the nine

months ended September 30, 2021.

As a result of the cumulative Net Profits Interest shortfall, there was only one distribution to

unitholders during the first nine months of 2021.

The $7.4 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 $13.0 million primarily due to higher realized prices.

The increase in realized prices

that led to higher sales of $13.7 million was partially offset by lower sales volumes, which reduced oil sales by $0.7 million.

oil price received increased 76% primarily due to a 70% increase in the average NYMEX oil price for the relevant production months.

sales volumes decreased 4% as a result of natural production declines.

Natural gas sales increased $7.3 million due to higher realized prices and produced volumes, which increased

natural gas sales by $7.0 million and $0.3 million, respectively.

The average natural gas price received increased 122% primarily due

to a 105% increase in the average NYMEX natural gas price for the relevant production months.

Lease operating expenses increased $2.0 million, primarily attributable to the increased number of producing

wells in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Compression, gathering and transportation costs increased $0.6 million, primarily due to the increase

in natural gas production.

Production, ad valorem and other taxes increased $0.9 million during the nine months ended September 30,

2022 compared to the nine months ended September 30, 2021, due to the increase in oil and natural gas sales.

Development expenses increased $7.6 million due to drilling and completion costs for drilling multiple

new wells in the Permian and Haynesville areas.

During the nine months ended September 30,

2022, COERT withheld from the net profits otherwise payable to the Trust an aggregate of $0.7 million for the establishment of a cash

reserve for approved, future development expenses.

This reserve is intended to fund an expected increase in development expenses;

if those expenses are ultimately delayed or are less than expected, or if the outlook changes, amounts reserved but unspent will be released

as an incremental cash distribution in a future period.

For the first nine months of 2022, the Trust withheld

$1.3 million and paid $0.6 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 nine months

ended September 30, 2021, the Trust withheld $0.2 million and paid $0.7 million for general and administrative expenses.

Liquidity and Capital Resources

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

credit described below.

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

liabilities, the Trust’s only use of cash is for distributions to Trust unitholders.

Available funds are the excess cash, if

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

Trustee) in any given month, over the Trust’s expenses paid for that month.

Available funds are reduced by any cash the

Trustee determines to hold as a reserve against future expenses.

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.

The Trust’s principal

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

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

only use of cash is for distributions to Trust unitholders.

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

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

Trust’s expenses paid for that month.

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

future expenses.

The Trustee may create a

cash reserve to pay for future liabilities of the Trust.

In February 2022, the Trustee began withholding $37,833 from the funds

otherwise available for distribution each month to gradually build a cash reserve of approximately $2.3 million for the payment of future

known, anticipated or contingent expenses or liabilities of the Trust.

Commencing with the distribution to Trust unitholders payable

in April 2023, the Trustee has been withholding, and in the future intends to withhold, $50,000 from the funds otherwise available

for distribution each month to gradually build the reserve.

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.

As of March 31, 2023, the Trustee has withheld

$516,053 toward this cash reserve.

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.

9 unchanged sentences

to pay ordinary course administrative expenses.

Further, if the Trust requires more than the $1.2 million under the letter of credit to

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

Any loan made by COERT to the

Trust would be evidenced by a written promissory note, be on an unsecured basis, and have terms that are no less favorable to COERT than

those that would be obtained in an arm’s length transaction between COERT and an unaffiliated third party.

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

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

Any loan made by COERT to

the Trust would be evidenced by a written promissory note, be on an unsecured basis, and have terms that are no less favorable to COERT

than those that would be obtained in an arm’s length transaction between COERT and an unaffiliated third party.

If the Trust borrows

1 unchanged sentence

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

The Trustee has no current plans to authorize

the Trust to borrow any funds.

As of September 30, 2022 and December 31, 2021, the Trust had cash of $720,501 and $67,116, respectively,

to be used towards future Trust expenses.

Since its formation, the Trust has not borrowed any funds and no amounts have been drawn on

the letter of credit.

time to time, if the Trust’s cash on hand (including available cash reserves, if any) is not sufficient to pay the Trust’s

The Trustee has no current plans to

authorize the Trust to borrow any funds.

As of March 31, 2023 and December 31, 2022, the Trust had cash of $958,007 and $922,913,

respectively, to be used towards future Trust expenses.

Since its formation, the Trust has not borrowed any funds and no amounts have

been drawn on the letter of credit.

time to time, if the Trust’s cash on hand (including available cash reserves, if any) is not sufficient to pay the Trust’s

ordinary course administrative expenses that are due prior to the monthly payment to the Trust of proceeds from the Net Profits Interest,

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

At September 30, 2022 and December 31, 2021, there was no

outstanding balance.

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

At March 31, 2023 and December 31, 2022, 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

1 unchanged sentence

or may be invested in:

interest-bearing obligations of the United States government;

money market funds that invest only in United States government securities;

repurchase agreements secured by interest-bearing obligations of the United States government;

interest-bearing

obligations of the United States government;

funds that invest only in United States government securities;

agreements secured by interest-bearing obligations of the United States government;

bank certificates of deposit.

1 unchanged sentence

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

The Trust also incurs, either directly or as

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

Trust before distributions are made to Trust unitholders.

The Trust also 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

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.

5 unchanged sentences

Critical Accounting Policies and Estimates

Please read “Item 7.

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

of the Trust’s 2021 Annual Report on Form 10-K for additional information regarding the Trust’s critical accounting policies

and estimates.

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

September 30, 2022.

Please read “Item

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

of the Trust’s 2022 Annual Report on Form 10-K for additional information regarding the Trust’s critical accounting

policies and estimates.

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

months ended March 31, 2023.

Subsequent Events

Distributions Paid or Declared

On October 17, 2022,

a distribution of $0.050500 per unit, which was declared on September 16, 2022, was paid to Trust unitholders of record as of September 30,

On October 17, 2022,

the Trust declared a distribution of $0.051000 per unit to unitholders of record as of October 31, 2022.

The distribution was paid

to unitholders on November 14, 2022.

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting

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

On April 14, 2023, a

distribution of $0.019350 per unit, which was declared on March 16, 2023, was paid to Trust unitholders of record as of March 31,

On April 17, 2023, the

Trust declared a distribution of $0.030000 per unit to unitholders of record as of April 28, 2023.

The distribution was paid to

unitholders on May 12, 2023.

Quantitative and Qualitative

Disclosures About Market Risk.

As a “smaller reporting

company”

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

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