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Item 8. Financial Statements and Supplementary Data

2024-03-22 compared with 2023-03-23 · 204 added, 147 removed, 385 unchanged (48% of the section changed)

Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting

Financial Statements and Supplementary

Report of Independent

Registered Public Accounting Firm

To the Trustee and Unitholders of Permianville

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Opinion on the Financial Statements

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

We have audited the accompanying statements of assets, liabilities

and trust corpus of Permianville Royalty Trust (the Trust) as of December 31, 2023 and 2022, 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 as of December 31, 2023 and 2022, 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 accounting

principles generally accepted in the United States of America.

Basis of Accounting

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 accounting principles generally accepted in the United States of America.

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

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.

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 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.

These 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.

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 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 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

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.

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.

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

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

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

Critical audit matters are matters arising from the current period

audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective,

or complex judgments.

We determined that there are no critical audit matters.

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PERMIANVILLE ROYALTY TRUST

Statements of Assets, Liabilities and Trust Corpus

Statements of Assets,

Liabilities and Trust Corpus

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 to financial statements

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PERMIANVILLE ROYALTY TRUST

Statements of Distributable Income

Year Ended December 31,

Income from net profits interest

Income from sale/lease of assets

Interest and investment income

General and administrative expenses

Cash reserves used (withheld) for Trust expenses

Distributable income

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

Statements of Distributable

from net profits interest

Income from sale/lease

Income from sale

of producing properties

Interest and investment

General and administrative

reserves used (withheld) for Trust expenses

Distributable

income per unit (33,000,000 units)

The accompanying notes to financial statements

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PERMIANVILLE ROYALTY TRUST

Statements of Changes in Trust Corpus

Year Ended December 31,

Trust corpus, beginning of period

Cash reserves (used) withheld for Trust expenses

Statements of Changes

in Trust Corpus

Trust corpus, beginning

Sale of net profits

interest of producing properties

Cash reserves (used)

withheld for Trust expenses

Distributable income

Distributions to unitholders

Distributions to

(14,113,110 )

Amortization of net profits interest

Trust corpus, end of period

(13,480,500 )

of net profits interest

Trust corpus,

end of period

The accompanying notes to financial statements

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NOTES TO FINANCIAL STATEMENTS

TRUST ORGANIZATION AND PROVISIONS

ORGANIZATION AND PROVISIONS

Permianville Royalty Trust (the “Trust”),

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

Agreement”) among Enduro Resource Partners LLC (“Enduro”), as trustor, The Bank of New York Mellon Trust Company, N.A.

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

previously known as Enduro Royalty Trust, is a Delaware statutory trust formed in May 2011 pursuant to a trust agreement (as amended

and restated, and as further amended, 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.

The Trust was created to acquire and hold for

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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.

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 December 31, 2022, the Sponsor owned 8,145,800 Trust Units,

or 25% of the issued and outstanding Trust Units.

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

or the “Sponsor”) acquired the Underlying Properties and

all of the outstanding Trust Units owned by Enduro (the “Sale Transaction”).

In connection with the Sale Transaction,

the Sponsor assumed all of Enduro’s obligations under the Trust Agreement and other instruments to which Enduro and the Trustee

were parties.

As of December 31, 2023, the Sponsor owned 7,363,961 Trust Units, or 22% of the issued and outstanding Trust Units.

The Net Profits Interest is passive in nature

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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;

in that event, 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

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Trust is judicially dissolved.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

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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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NOTES TO FINANCIAL STATEMENTS—Continued

NET PROFITS INTEREST IN OIL AND NATURAL GAS PROPERTIES

PROFITS INTEREST IN OIL AND NATURAL GAS PROPERTIES

The Net Profits Interest in oil and natural gas

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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.

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, 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.

Sale of 2023 Divestiture Properties

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

“2023 Divestiture Properties”) that constituted part of the Underlying Properties and were therefore burdened by the Trust’s

Net Profits Interest, for a total purchase price of approximately $6.7 million.

On July 19, 2023, at a special meeting of Trust

unitholders, the unitholders approved the foregoing transaction and the release of the Trust’s Net Profits Interest in the 2023

Divestiture Properties.

On August 9, 2023, the Sponsor completed the sale of the 2023 Divestiture Properties, and the Trustee, on

behalf of the Trust, reconveyed, terminated and released to the Sponsor the Net Profits Interest with respect to the 2023 Divestiture

The total proceeds received by the Sponsor from the 2023 Divestiture Properties, after preliminary closing adjustments, were

approximately $6.5 million, inclusive of the escrow funded by the buyer and partial expense reimbursement associated with the proxy

solicitation.

The Sponsor deducted the final transaction expenses from the sales proceeds, along with an escrow amount of $250,000 to

cover possible indemnification obligations under the purchase and sale agreement (the “Indemnification Escrow Amount”), to

arrive at final net proceeds, based upon the Trust’s Net Profits Interest.

September 20, 2023, the Trust announced a special cash distribution to Trust unitholders of $0.069670 per Trust Unit, payable on

October 13, 2023 to Trust unitholders of record on October 2, 2023, reflecting 50% of the Trust’s share of the net proceeds,

after accounting for the Indemnification Escrow Amount.

The following table displays the aggregate net proceeds from the sale

of the 2023 Divestiture Properties and the aggregate net proceeds allocable to Trust unitholders for this distribution:

Net Proceeds from sale of 2023 Divestiture

Transaction expenses

Buyer proxy expense reimbursement

Net proceeds from sale of 2023 Divestiture Properties

Amount allocable to the Sponsor’s

Net proceeds allocable to the Trust’s 80% Interest

Indemnification Escrow amount

Estimated Settlement Escrow

Initial Cash available for distribution by the Trust

Number of units

Initial special cash distribution per unit

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

The remaining 50% of the Trust’s share of

the net proceeds was temporarily retained by the Sponsor as a source of payment of the Trust’s proportionate share of any post-closing

purchase price adjustments, with any amount remaining (less any amounts in dispute) after such adjustments to be paid to the Trust within

five business days after finalization of the settlement statement and included in a distribution to Trust unitholders.

November 6, 2023, the Trust announced a special cash distribution to Trust unitholders of $0.077250 per Trust Unit, payable on November 22,

2023 to Trust unitholders of record on November 16, 2023, reflecting the remaining 50% of the Trust’s share of the net proceeds

(net of the Indemnification Escrow Amount).

The following table displays the aggregate net proceeds from the sales of the 2023

Divestiture Properties and the aggregate net proceeds allocable to Trust unitholders for this distribution:

Net Proceeds from sale of 2023 Divestiture

Transaction expenses

Buyer proxy expense reimbursement

Net proceeds from sale of 2023 Divestiture Properties

Amount allocable to the Sponsor’s

Net proceeds allocable to the Trust’s 80% Interest

Indemnification Escrow amount

October 13, 2023 Initial

Cash Distribution

Remaining cash available for distribution by the Trust

Number of units

Remaining special cash distribution per unit

Within 12 months after the closing of the

sale, any remaining amount from the Indemnification Escrow Amount (less any amounts in dispute) will be released to the Trust and included

in a distribution to Trust unitholders.

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

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.

Federal Income Taxes

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

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

Some Trust Units are held by a middleman, as such

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

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

The tax consequences to a unitholder of ownership

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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

DISTRIBUTIONS

TO UNITHOLDERS

Each month, the Trustee determines the amount

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

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS—Continued

The following table provides information regarding

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October 13, 2023

September 20, 2023 –

Special Distribution

October 02, 2023

October 13, 2023

October 16, 2023

October 31, 2023

November 13, 2023

November 06, 2023 –

Special Distribution

November 16, 2023

November 22, 2023

December 13, 2022

Total—2023

August 16, 2021

August 31, 2021

September 15,

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September 30,

October 15, 2021

October 18, 2021

October 29, 2021

November 15, 2021

November 17, 2021

November 30, 2021

December 15, 2021

Total—2022

TRUSTEE FEES AND RELATED PARTY TRANSACTIONS

FEES AND RELATED PARTY TRANSACTIONS

Administrative Fee.

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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.

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

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 standby letter of credit was issued by West Texas National

Bank and matures on December 31, 2024.

The letter of credit to the Trustee is unfunded as of December 31, 2023.

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

SUBSEQUENT EVENTS

Distributions Paid or Declared

Subsequent to December 31, 2022, the Trust

declared or paid the following distributions:

Declaration Date

December 16, 2022

December 30, 2022

January 17, 2023

January 18, 2023

January 31, 2023

February 14, 2023

February 17, 2023

February 28, 2023

March 13, 2023

March 16, 2023

March 31, 2023

April 14, 2023

PERMIANVILLE ROYALTY TRUST

UNAUDITED SUPPLEMENTARY INFORMATION

UNAUDITED SUPPLEMENTARY

Supplementary Oil and Natural Gas Information (Unaudited)

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Natural gas (per MMBTU)

Proved reserve quantity estimates are subject to numerous uncertainties

inherent in the estimation of proved reserves and in the projection of future rates of production and the timing of development expenditures.

The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment.

Results of subsequent drilling, testing and production may cause either upward or downward revisions of previous estimates.

the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs.

The process of estimating

quantities of oil and natural gas reserves is very complex, requiring significant subjective decisions in the evaluation of all available

geological, engineering and economic data for each reserve.

Consequently, these estimates are expected to change as additional information

becomes available in the future.

Proved reserve quantity estimates are subject

to numerous uncertainties inherent in the estimation of proved reserves and in the projection of future rates of production and the timing

of development expenditures.

The accuracy of such estimates is a function of the quality of available data and of engineering and geological

interpretation and judgment.

Results of subsequent drilling, testing and production may cause either upward or downward revisions of

previous estimates.

Further, the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs.

The process of estimating quantities of oil and natural gas reserves is very complex, requiring significant subjective decisions in the

evaluation of all available geological, engineering and economic data for each reserve.

Consequently, these estimates are expected to

change as additional information becomes available in the future.

As of December 31, 2023 and 2022, all of

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

Trust Net Profits Interest

Net Profits Interest

Balance—January 1, 2022

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Revisions of previous estimates

Divestiture of Reserves

Income from Net Profits Interest

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December 31, 2023

(1) Reserves for natural gas liquids

are immaterial and included as a component of oil reserves.

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

PERMIANVILLE ROYALTY TRUST

UNAUDITED SUPPLEMENTARY INFORMATION -- Continued

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.

During the year ended December 31, 2023, revisions of previous estimates decreased oil reserves

by 31%, primarily due to a decrease in the average oil price used to estimate future net reserves.

The NYMEX average oil price of $78.22

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.

per Bbl used to determine reserves as of December 31, 2023 was 16% lower than the $93.67 per Bbl average NYMEX oil price as of December 31,

During the year ended December 31, 2022,

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(in thousands)

Future cash inflows

Future production taxes

Future net cash flows

production taxes

Future net cash

annual discount for estimated timing of cash flows

Standardized measure of discounted future net cash flows

measure of discounted future net cash flows

The changes in standardized measure of discounted

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(in thousands):

Year Ended December 31,

Extensions, discoveries, and other additions

Ended December 31,

Extensions, discoveries, and other

Accretion of discount

Revisions of previous estimates and other

Divestiture of reserves

Income from Net Profits Interest

Change in present value of future net revenues

Change in present value

of future net revenues

Balance, beginning of period

Balance, end of year

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure.

Not applicable.

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