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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 494 added, 556 removed, 236 unchanged (82% of the section changed)

2 unchanged sentences

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

Advances from Sponsor

Total liabilities

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

PERMIANVILLE ROYALTY TRUST

Statements of Distributable

Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

Cash reserves withheld for Trust expenses

Distributable income

Distributable income per unit (33,000,000

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

The accompanying notes are an integral part of

2 unchanged sentences

Statements of Changes in Trust Corpus

Ended June 30,

Trust corpus, beginning

Cash reserves

(used) withheld for Trust expenses

Distributable

Distributions

to unitholders

of net profits interest

Trust corpus,

end of period

Distributable

income per unit (33,000,000 units)

Three Months Ended September 30,

Nine Months Ended September 30,

Trust corpus, beginning of period

Cash reserves withheld for Trust expenses

Distributable income

Distributions to unitholders

Amortization of net profits interest

Trust corpus, end of period

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

The accompanying notes are

an integral part of these financial statements.

ORGANIZATION AND PROVISIONS

Permianville Royalty Trust (the “Trust”),

PERMIANVILLE ROYALTY

NOTES TO FINANCIAL STATEMENTS

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 (as subsequently

amended and restated, 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

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

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

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

The properties in which the Trust

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

In connection with the closing of the initial

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

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

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

The Trust was created to acquire and hold for the

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

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

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

The properties in which the Trust holds

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

In connection with the closing of the initial public

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

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

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 June 30, 2024, the Sponsor owned 7,363,961 Trust Units, or 22% of the issued

As of September 30, 2024, 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

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

The Net Profits Interest is passive in nature and

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

The Trust Agreement provides, among other provisions, that:

the Trust’s business

activities are limited to owning the Net Profits Interest and any activity reasonably related

to such ownership, including activities required or permitted by the terms of the Conveyance

of Net Profits Interest, dated effective as of July 1, 2011 (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

OF PRESENTATION

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;

PERMIANVILLE ROYALTY

NOTES TO FINANCIAL STATEMENTS

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.

BASIS OF PRESENTATION

The Statement of Assets, Liabilities and Trust

Corpus as of December 31, 2023, which has been derived from audited financial statements, and the unaudited interim financial statements

as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 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, 2023 (the “2023 Annual Report on Form 10-K”).

as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 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.

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, 2023 (the “2023 Annual Report on Form 10-K”).

In the opinion of the Trustee, the accompanying

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Monthly operating expenses

and capital expenditures represent estimated incurred expenses and, as a result, represent accrued expenses as well as expenses paid

during the period.

and capital expenditures represent estimated incurred expenses and, as a result, represent accrued expenses as well as expenses paid during

The financial statements of the Trust are prepared

on the following basis:

(a) Income from Net Profits Interest is recorded when distributions are

received by the Trust;

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

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

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

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

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

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

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

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

(f) The Net Profits Interest in oil and natural gas properties is periodically

assessed whenever events or circumstances indicate that the aggregate value may have been

impaired below its total capitalized cost based on the Underlying Properties.

If an impairment

loss is indicated by the carrying amount of the assets exceeding the sum of the undiscounted

expected future net cash flows of the Net Profits Interest, then an impairment loss is recognized

for the amount by which the carrying amount of the asset exceeds its estimated fair value

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

other professional fees) are recorded when paid;

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

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

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

directly to the Trust corpus;

PERMIANVILLE ROYALTY

NOTES TO FINANCIAL STATEMENTS

(f) The Net Profits Interest in oil and natural gas properties is periodically assessed whenever events or circumstances indicate that

the aggregate value may have been impaired below its total capitalized cost based on the Underlying Properties.

If an impairment loss

is indicated by the carrying amount of the assets exceeding the sum of the undiscounted expected future net cash flows of the Net Profits

Interest, then an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value

determined using discounted cash flows.

1 unchanged sentence

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

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

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

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;

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

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.

2 unchanged sentences

Statements of Royalty Trusts .

During the three months ended March 31, 2024,

the Trust recorded an advance of approximately $169,000 from the Sponsor to pay general and administrative expenses of the Trust;

these funds were actual net profits that were reflected in the results of operations.

The Statement of Distributable Income and Statements

of Changes in Trust Corpus for the six months ended June 30, 2024 have been corrected to reflect that the Trust withheld the entire

amount of income from net profits interest during the three months ended March 31, 2024 to pay general and administrative expenses,

and no distributions were made to Trust unitholders during the period.

PROFITS INTEREST IN OIL AND NATURAL GAS PROPERTIES

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 reserves.

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

of proved reserves.

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

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 June 30, 2024 and December 31, 2023 was $306,110,312 and

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, 2024 and December 31, 2023 was $309,327,359 and $302,693,874,

respectively.

3 unchanged sentences

While the Trust did not record an impairment during the three

and six months ended June 30, 2024 or 2023, 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

and nine months ended September 30, 2024 or 2023, 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

For federal income tax purposes, the Trust is

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

Trust unitholders are treated as owning a direct interest in

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

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

of the Trust.

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

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

For federal income tax purposes, the Trust is a

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

Trust unitholders are treated as owning a direct interest in the

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

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

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

the Trust rather than when distributed by the Trust.

PERMIANVILLE ROYALTY

NOTES TO FINANCIAL STATEMENTS

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.

Each unitholder is entitled

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

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

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

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.

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

Some Trust Units are held by a middleman, as such

3 unchanged sentences

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

trust (“WHFIT”) for U.S.

federal income tax purposes.

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

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

in accordance with applicable U.S.

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

accordance with applicable U.S.

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

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

Notwithstanding the foregoing, the middlemen holding

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

requirements under the U.S.

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

written tax statements.

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

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

Tax information

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

Notwithstanding the foregoing, the middlemen holding units on

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

under the U.S.

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

Unitholders whose units are held by middlemen should consult with such middlemen regarding the information that will be reported

to them by the middlemen with respect to the Trust Units.

The tax consequences to a unitholder of ownership

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.

8 unchanged sentences

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.

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

tax statutes.

Entities subject to tax generally include trusts unless otherwise exempt.

Trusts that receive at least 90% of

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

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

from the Texas franchise tax as “passive entities.” Although the Trust is intended to be exempt from Texas franchise tax

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

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

Each unitholder should consult his or her own

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

DISTRIBUTIONS

TO UNITHOLDERS

Each month, the Trustee determines the amount

of funds available for distribution to the Trust unitholders.

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

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

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

for future liabilities of the Trust.

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.

Trusts that receive at least 90% of their federal

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

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

Texas franchise tax as “passive entities.”

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

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

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

Each unitholder should consult his or her own tax

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

PERMIANVILLE ROYALTY

NOTES TO FINANCIAL STATEMENTS

DISTRIBUTIONS TO UNITHOLDERS

Each month, the Trustee determines the amount of

funds available for distribution to the Trust unitholders.

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

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

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

future liabilities of the Trust.

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

1 unchanged sentence

The following table provides information regarding

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

Declaration Date

Six Months Ended June 30, 2024:

Nine Months Ended September 30, 2024:

July 18, 2024

July 31, 2024

August 14, 2024

August 16, 2024

August 30, 2024

September 16, 2024

Year to Date –

Six Months Ended June 30, 2023:

Nine Months Ended September 30, 2023:

December 16, 2022

13 unchanged sentences

June 14, 2023

June 16, 2023

June 30, 2023

July 14, 2023

July 17, 2023

July 31, 2023

August 14, 2023

August 18, 2023

August 31, 2023

September 15, 2023

Year to Date –

the six months ended June 30, 2024, the Net Profits Interest generated positive income for several of the months in the period,

which reduced the cumulative Net Profits Interest shortfall of $1.2 million that existed as of December 31, 2023.

April 2024, direct operating and development expenses exceeded revenues, thereby causing net profits attributable to the Underlying

Properties to be negative and resulting in an approximately $3.9 million Net Profits Interest shortfall as of June 30, 2024, which

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

As a result, no net profits were distributed

in the first six months of 2024.

the first six months of 2024, the Net Profits Interest generated positive income for several of the months in the period, which

reduced the cumulative Net Profits Interest shortfall of $1.2 million that existed as of December 31, 2023;

however, because direct

operating and development expenses exceeded revenues in March and April 2024, the Net Profits Interest shortfall was $3.9 million

as of June 30, 2024.

During the three months ended September 30, 2024, the Net Profits Interest generated positive income, which

eliminated the cumulative outstanding Net Profits Interest shortfall of $3.9 million that existed as of June 30, 2024.

In July 2024,

the remaining amount of the shortfall and advances to the Trust were fully repaid, resulting in a distribution to the unitholders in August 2024

and September 2024.

There was no Net Profits Interest shortfall as of September 30, 2024.

Under the terms of the Trust Agreement, the Trust

1 unchanged sentence

During the three-

and six-month periods ended June 30, 2024 and 2023, the Trust paid $50,000 and $100,000, respectively, to the Trustee and $0 and

$0, respectively, to the Delaware Trustee pursuant to the terms of the Trust Agreement.

and nine-month periods ended September 30, 2024 and 2023, the Trust paid $50,000 and $150,000, respectively, to the Trustee and $0

and $0, respectively, to the Delaware Trustee pursuant to the terms of the Trust Agreement.

SUBSEQUENT EVENTS

Distributions Paid or Declared

In July 2024, revenues exceeded direct operating

and development expenses and were sufficient to fully repay the approximately $3.3 million Net Profits Interest shortfall described in

Note 5 above and advances to the Trust.

As a result, on July 18, 2024, the Trust declared a distribution of $0.0110000 per unit

to Trust unitholders of record as of July 31, 2024.

The distribution will be paid to Trust unitholders on August 14, 2024.

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 Annual Report on Form 10-K for the year

ended December 31, 2023 (the “2023 Annual Report on Form 10-K”).

The 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 .

On September 16, 2024, the Trust declared

a distribution of $0.0140000 per unit to Trust unitholders of record as of September 30, 2024.

The distribution was paid to Trust

unitholders on October 15, 2024.

On October 18, 2024, the Trust declared a

distribution of $0.0150000 per unit to Trust unitholders of record as of October 31, 2024.

The distribution will be paid to Trust

unitholders on November 15, 2024.

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 Annual Report on Form 10-K for the year ended December 31,

2023 (the “2023 Annual Report on Form 10-K”).

The 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 Quarterly Report on Form 10-Q (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 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.

Such statements may be influenced

by factors that could cause actual outcomes and results to differ materially from those projected.

No assurance can be given that such

expectations will prove to have been correct.

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 2023 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 occurrence or threat

of epidemic or pandemic diseases, such as the COVID-19 pandemic, or any government response

to such occurrence or threat;

the impact of geopolitical

developments and tensions, war and uncertainty involving or in the geographical region of

oil producing countries (including the ongoing armed conflicts between Russia and Ukraine

and between Israel and Hamas and any related political or economic responses and counter-responses

or otherwise by various global actors or the general effect on the global economy);

global economic conditions,

such as a general slowdown in the global economy, supply chain disruptions, inflationary

pressures, currency fluctuations, changes in interest rates, and instability of financial

institutions;

the effects of actions

by, or disputes among or between members of the Organization of Petroleum Exporting Countries

(“OPEC”) and other oil-exporting nations with respect to production levels or

other matters related to the prices of oil and natural gas;

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;

conditions in the capital

competition from others

in the energy industry;

uncertainty of estimates

of oil and natural gas reserves and production;

potential impacts on

the Sponsor’s business resulting from climate change, greenhouse gas regulations, and

the impact of climate change related changes in the frequency and severity of weather patterns;

other risks described

under the caption “Risk Factors” in Part I, Item 1A of the 2023 Annual

Report on Form 10-K.

This Quarterly Report on Form 10-Q (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 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.

Such statements may be influenced by factors that could cause

actual outcomes and results to differ materially from those projected.

No assurance can be given that such expectations will prove to

have been correct.

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 2023 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 occurrence or threat of epidemic or pandemic diseases, such as the COVID-19 pandemic, or any government response to such occurrence

the impact of geopolitical developments and tensions, war and uncertainty involving or in the geographical region of oil producing

countries (including the ongoing armed conflicts between Russia and Ukraine and between Israel and Iran and its proxies and any related

political or economic responses and counter-responses or otherwise by various global actors or the general effect on the global economy);

global economic conditions, such as a general slowdown in the global economy, supply chain disruptions, inflationary pressures, currency

fluctuations, changes in interest rates, and instability of financial institutions;

the effects of actions by, or disputes among or between members of the Organization of Petroleum Exporting Countries (“OPEC”)

and other oil-exporting nations with respect to production levels or other matters related to the prices of oil and natural gas;

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;

conditions in the capital markets;

competition from others in the energy industry;

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

potential impacts on the Sponsor’s business resulting from climate change, greenhouse gas regulations, and the impact of climate

change related changes in the frequency and severity of weather patterns;

other risks described under the caption “Risk Factors”

in Part I, Item 1A of the 2023 Annual Report on Form 10-K.

You should not place undue reliance on these forward-looking

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or to reflect the occurrence of unanticipated events, unless the securities laws require the Trust to do so.

This Form 10-Q describes other important

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

All forward-looking statements

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

This Form 10-Q describes other important factors

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

All forward-looking statements in

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

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

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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 representing the right to receive 80% of the net profits from the sale of oil and natural gas production

from certain properties in the states of Texas, Louisiana and New Mexico held by Enduro as of the date of the conveyance of the net profits

interest to the Trust (the “Net Profits Interest”).

The properties in which the Trust holds the Net Profits Interest are

referred to as the “Underlying Properties.” The Net Profits Interest is passive in nature and neither the Trust nor the Trustee

has any management control over or responsibility for costs relating to the operation of the Underlying Properties.

Additionally, third

parties operate substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is not in a position to control

the timing of development efforts, associated costs, or the rate of production of the reserves.

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 representing the right to receive 80% of the net profits from the sale of oil and natural gas production from certain

properties in the states of Texas, Louisiana and New Mexico held by Enduro as of the date of the conveyance of the net profits interest

to the Trust (the “Net Profits Interest”).

The properties in which the Trust holds the Net Profits Interest are referred to

as the “Underlying Properties.”

The Net Profits Interest is passive in nature and neither the Trust nor the Trustee has any

management control over or responsibility for costs relating to the operation of the Underlying Properties.

Additionally, third parties

operate substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is not in a position to control the timing

of development efforts, associated costs, or the rate of production of the reserves.

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 (the “Trust Agreement”) and other instruments to which Enduro and the Trustee were parties.

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 (the “Trust Agreement”) 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

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on, among other things:

oil and natural gas

sales prices;

volumes of oil and

natural gas produced and sold attributable to the Underlying Properties;

production and development

oil and natural gas sales prices;

volumes of oil and natural gas produced and sold attributable to the Underlying Properties;

production and development costs;

price differentials;

potential reductions

or suspensions of production;

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.

potential reductions or suspensions of production;

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.

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.

Although development expenditures reported for

the Underlying Properties increased over 300% for the six-month period ended June 30, 2024 compared to the same period in 2023,

the Sponsor indicates that development activity for the remainder of 2024 is expected to decrease materially based on operator-forecasted

activity, continued volatility in commodity prices and the overall decline in active rig counts within the Permian and Haynesville regions.

As previously disclosed, development expenditures for the six-month period ended June 30, 2024 were elevated in part due to prior

period capital expenditures (and associated production) incurred by operators of the Underlying Properties but not yet allocated to COERT

and the Trust until pending title work could be completed.

The Sponsor expects the estimated activity reduction for the remainder of

the year will be driven by a normalization of capital expenditures in the Permian region and a continued decline in activity in the Haynesville

area of the Underlying Properties, given multi-year lows in recent natural gas pricing.

Although the global economy remains volatile,

reflecting, among other factors, the current hostilities between Israel and Hamas amid continued tensions in the Middle East, the ongoing

war between Russia and Ukraine and the lingering effects of the COVID-19 pandemic, the Sponsor does not expect that these events will

have a material impact on the Underlying Properties or the expected development activity during the remainder of 2024.

The West Texas

Intermediate spot price of crude oil has modestly improved from $71.89 per barrel on December 31, 2023 to $74.99 per barrel on August 2,

Natural gas prices have declined year-over-year, with the Henry Hub spot price decreasing from $2.58 per MMBtu on December 31,

2023 to $1.89 per MMBtu on August 2, 2024.

The Sponsor has indicated to the Trustee that development

activity on the Underlying Properties remained elevated through the nine-month period ended September 30, 2024, increasing over 150%

from the same period in 2023.

Some of this increase reflected prior period capital expenditures associated with 15 new Permian wells that

came online in the current period, for which production and revenues were attributable to prior periods.

While commodity prices remain

volatile, the majority of the capital expenditures for the Underlying Properties are associated with large cap, investment grade oil and

gas operators who tend to spend through periods of volatility.

Accordingly, although active rig counts within the Permian and Haynesville

regions declined during the first nine months of 2024, recent indications from operators of the Underlying Properties indicate that capital

expenditure activity for the Underlying Properties is expected to be relatively higher than the current industry level activity decline.

These indications remain subject to revision from the operators of the Underlying Properties, but in light of the current expectations

the Sponsor recently established a cash reserve for approved, future development expenses expected in the near-term.

Although the global economy remains volatile, reflecting,

among other factors, the current hostilities between Israel and Iran amid continued tensions in the Middle East, the ongoing war between

Russia and Ukraine and the lingering effects of the COVID-19 pandemic, the Sponsor does not expect that these events will have a material

impact on the Underlying Properties or the expected development activity during the remainder of 2024, due in part to the previously discussed,

investment grade nature of the majority of the operators of the Underlying Properties.

The West Texas Intermediate spot price of crude

oil has improved from $71.89 per barrel on December 31, 2023 to $69.58 per barrel on October 31, 2024.

Natural gas prices have

declined year-over-year, with the Henry Hub spot price decreasing from $2.58 per MMBtu on December 31, 2023 to $1.82 per MMBtu on

October 31, 2024.

Given the significant increase in capital expenditures

for the first six months of 2024, the Sponsor has revised its 2024 capital spend outlook from the prior range of $5.0 million to $9.0

million, or $4.0 million to $7.2 million net to the Trust’s Net Profits Interest, as detailed in the Trust’s 2023 Annual

Report on Form 10-K, to $18.0 million to $23.0 million, or $14.4 million to $18.4 million net to the Trust’s Net Profits Interest.

The significant majority of this increase represents the $12.9 million of capital expenditures incurred in the second quarter ended June 30,

2024 as discussed above.

Aside from those prior period capital expenditures, the Sponsor indicates that operators in the Permian Basin

continue to guide to flat to modest growth, while Haynesville operators continue to guide to production and activity declines for calendar

The Sponsor expects the remaining anticipated capital expenditures in 2024 to be primarily focused in the Permian basin, representing

activity by large-cap public operators, which compose the majority of the operators of the Underlying Properties.

The capital expenditure

outlook could change if there is a recovery in natural gas prices, but at current levels the Sponsor has observed a continued decline

in year-over-year spending activity in the Haynesville portion of the Underlying Properties.

As in prior periods, the outlook for capital

expenditures remains subject to change, as operators are expected to continue to reevaluate their planned capital expenditures, particularly

given volatile capital and geopolitical markets in addition to volatile capital markets.

Over the first six months of 2024, the Sponsor

for the first nine months of 2024, the Sponsor previously revised its 2024 capital spend outlook from the prior range of $5.0 million

to $9.0 million, or $4.0 million to $7.2 million net to the Trust’s Net Profits Interest, as detailed in the Trust’s 2023

Annual Report on Form 10-K, to $18.0 million to $23.0 million, or $14.4 million to $18.4 million net to the Trust’s Net Profits

Interest, as detailed in the Form 10-Q for the period ended June 30, 2024.

The Sponsor currently expects capital expenditures

for the year to be at the higher end of that guidance range.

The Sponsor expects the remaining anticipated capital expenditures in 2024

to be focused in both the Permian and Haynesville regions.

Despite lower natural gas prices, one of the operators of the Underlying Properties

in the Haynesville recently initiated a drilling program that is expected to turn to sales sometime in 2025.

Aside from that Haynesville

activity, the remaining natural gas directed expenditures are expected to remain more subdued until a further price recovery.

periods, the outlook for capital expenditures remains subject to change, as operators are expected to continue to reevaluate their planned

capital expenditures, particularly given volatile capital markets and an uncertain geopolitical situation.

Over the first nine months of 2024, the Sponsor

continued to see a stabilization of inflationary pressures and operating costs that had been affecting the Underlying Properties in prior

periods on an aggregate basis, as seen in the slight decline in lease operating expenditures per barrel of oil equivalent for the six

months ended June 30, 2024 compared to the same period in 2023.

However, some legacy producing properties of the Underlying Properties

continue to see operating cost and production issues consistent with late-life oil and gas properties, and currently it is unclear if

such legacy producing properties will be able to realize a return to prior period operating costs and cash flow profile .

This continued reduction in legacy properties has been somewhat offset by the new production and revenue from prior period capital expenditures

that have now been turned to sales.

periods on an aggregate basis, as seen in the continued decline in lease operating expenditures per barrel of oil equivalent for the nine

months ended September 30, 2024 compared to the same period in 2023.

This decline also benefited from the increased production from

newer wells that feature lower operating costs than some of the legacy wells on the Underlying Properties.

However, some legacy producing

properties of the Underlying Properties continue to experience operating cost and production issues consistent with late-life oil and

gas properties, and currently it is unclear if some of these legacy producing properties will be able to realize a return to prior period

operating costs and cash flow profile .

This continued decline in production from legacy properties

was offset by new production and revenue generated as a result of prior period capital expenditures that turned to sales during the nine-month

period ended September 30, 2024.

While the markets remain volatile and there remains an inherent delay in cash flows given the non-operated

2 unchanged sentences

The Sponsor believes there could be further opportunity

in 2024 for prospective divestitures and/or leasing of Underlying Properties, as certain operators of the Underlying Properties look

to acquire assets, particularly oil-weighted assets given the current consensus oil price outlook.

in the coming quarters for potential divestitures and/or leasing of some or all of the Underlying Properties, subject to the Trust’s

Net Profits Interest, as certain operators of the Underlying Properties look to acquire assets, particularly in the Permian and Haynesville

Capex Drilling Activity Update

6 unchanged sentences

to the time of production and cash flows attributable to the Underlying Properties, especially given the non-operated nature of the Underlying

(in thousands)

Large Cap E&P 1

1 unchanged sentence

2 Producing, Awaiting First Revenues;

In-Process, 2 Pre Drill

1 Drilling In-Process, 2 Pre Drills

Large Cap E&P 2

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19 Pre Drills

Large Cap E&P 4

Large Major Cap E&P 1

D&C New Drills

In addition to the updated cumulative capital

expenditures reported above and the commencement of a new Delaware project (undertaken by Large Cap E&P 4 in the table above), the

Sponsor has informed the Trustee that fifteen wells in the Midland operated by Large Cap E&P 1 began paying revenues in the second

quarter, following the completion of previously pending title work.

The other projects identified above are still in process or awaiting

first revenues, and the Sponsor expects a majority of those projects to be completed and to begin producing during 2024.

Lease of Non-producing Property

In February 2024, the Sponsor leased approximately

$0.1 million in non-producing, non-cash flowing acreage to two private oil companies, for upfront cash payments in addition to future

royalty revenues if the properties eventually turn to sales.

These properties remain burdened by the Trust’s Net Profits Interest.

The proceeds from this transaction attributable to the Trust’s Net Profits Interest were included in the distribution announcement

in April 2024.

In addition to the updated cumulative capital expenditures

reported above, the Sponsor has informed the Trustee that four wells in the Haynesville area operated by Large Cap E&P 4 began paying

revenues from first production during the three months ended September 30, 2024.

The other projects identified above are still in

process or awaiting first revenues, and the Sponsor expects a majority of those projects to be completed and to begin producing by early

Results of Operations

Three Months Ended June 30, 2024 Compared to Three Months

Ended June 30, 2023

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, 2024 Compared to Three Months

Ended September 30, 2023

The Trust’s net profits income consists of

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

Three Months Ended

September 30,

Increase (Decrease)

Gross profits:

Direct operating

Natural gas sales

Direct operating expenses:

Lease operating expenses

1 unchanged sentence

Production, ad valorem and other taxes

Gross proceeds from

sale of assets

allocable to Net Profits Interest

profits (shortfall) allocable to Net Profits Interest

reserve release for capital expenditures

general and administrative expenses and cash withheld for expenses net of interest income

Net profits allocable to Net Profits Interest shortfall

Distributable

the three months ended June 30, 2024, direct operating and development expenses exceeded revenues, thereby causing net profits

attributable to the Underlying Properties to be negative and resulting in an approximately $3.9 million Net Profits Interest shortfall

as of June 30, 2024, which was carried forward to be deducted from future net profits generated by the Underlying Properties.

a result, there were no net profits reported or distributed in the second quarter of 2024, although the Net Profits Interest shortfall

ultimately was fully recouped following the end of the quarter.

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 or payable during the three months ended June 30, 2024 and 2023:

Ended June 30,

Underlying Properties

Production Volumes:

Development expenses

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Negative Net Profits Carryforward

Trust general and administrative expenses and cash withheld for expenses net of interest income

Repayment of COERT Loan

Distributable income

For the three months ended September 30, 2024,

the Net Profits Interest generated positive income for each month in the period, which eliminated the cumulative Net Profits Interest

shortfall of $3.9 million as of June 30, 2024 and the cumulative outstanding Sponsor advances to the Trust of $0.5 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 or payable during the three months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Underlying Properties Production Volumes:

Natural Gas (Mcf)

1 unchanged sentence

Average Prices:

Oil - NYMEX (applicable

NPI period) ($/Bbl)

prices realized ($/Bbl)

Natural gas - NYMEX (applicable

NPI period) ($/Mcf)

gas prices realized ($/Mcf)

As reported net profits during the three months

ended June 30, 2024 were negative, after giving effect to the cumulative Net Profits Interest shortfall, no distributions were paid

to Trust unitholders with respect to these three months;

accordingly, the corresponding reported oil and natural gas sales volumes and

average prices from the Underlying Properties were excluded from the table above, consistent with prior periods of Net Profits Interest

shortfalls as reported by the Trust.

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 three months ended June 30, 2024 were $(4.9) million compared to $2.9 million for the three months ended June 30,

As a result of cumulative Net Profits Interest shortfall that was carried from March 2024, the Trust did not make any distributions

to Trust unitholders during the three months ended June 30, 2024.

The $7.8 million decrease in net profits attributable to the Underlying

Properties from the 2023 period to the 2024 period was primarily due to the following items:

Oil sales increased

$7.1 million due to increased produced volumes, slightly offset by lower realized prices.

The 82% increase in produced volumes increased revenues by $7.0 million.

This increase was

primarily due to the 15 new Permian wells that either turned to sales or completed title

work and thereby allowed production attributable to prior periods to be released by the operators

of the Underlying Properties.

Realized oil sales prices increased 1% in the 2024 period compared

to the 2023 period, which increased revenues by $0.1 million.

Natural gas sales remained

consistent with the prior period at $2.7 million.

The 65% increase in natural gas sales volumes

increased revenues by $1.7 million, which was offset by lower realized prices that decreased

revenues by $1.7 million.

Lease operating expenses

during the three months ended June 30, 2024 increased $2.9 million compared to the three

months ended June 30, 2023.

Compression, gathering

and transportation costs increased $0.4 million, primarily due to the new wells that came

online during the three months ended June 30, 2024.

Production, ad valorem

and other taxes increased $0.5 million during the three months ended June 30, 2024 compared

to the three months ended June 30, 2023, due to the increase in oil and natural gas

produced volumes.

Development expenses

increased $11.2 million in the 2024 period due to drilling and completion costs incurred

related to the drilling of multiple new wells in the Permian area.

For the three months ended June 30, 2024,

for the three months ended September 30, 2024 were $7.9 million compared to $3.6 million for the three months ended September 30,

The $4.3 million increase in net profits attributable to the Underlying Properties from the 2023 period to the 2024 period

was primarily due to the following items:

Oil sales increased $3.1 million compared to the 2023 period, reflecting a $2.8 million increase due to higher produced volumes

and a $0.3 million increase due to higher realized prices.

Oil sales volumes increased 25% primarily due to the several new Permian wells

that either turned to sales or completed title work during the 2024 period and thereby allowed production attributable to prior periods

to be released by the respective operators.

The average oil price received increased 2% as a result of the corresponding increase in the

average NYMEX oil price for the relevant production months.

Natural gas sales increased $0.5 million compared to the 2023 period, reflecting a $2.4 million increase due to higher produced volumes,

partially offset by a $1.9 million decrease due to lower realized prices.

The average natural gas price received decreased 39% primarily

due to the decrease in the average NYMEX natural gas price for the relevant production months.

Lease operating expenses during the three months ended September 30, 2024 decreased $0.9 million compared to the three months

ended September 30, 2023.

Compression, gathering and transportation costs increased $0.4 million, primarily due to the new wells that came online during the

three months ended September 30, 2024.

Production, ad valorem and other taxes increased $0.1 million during the three months ended September 30, 2024 compared to the

three months ended September 30, 2023, due to the increase in oil and natural gas produced volumes.

Development expenses decreased $0.6 million in the 2024 period due to a decline in drilling and completion costs incurred as compared

to the same period in 2023.

For the three months ended September 30, 2024,

the Trust withheld $0.4 million and paid $0.1 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, insurance expense, Trustee fees, and New York Stock

Exchange listing fees.

For the three months ended June 30, 2023, the Trust withheld $0.4 million and paid $0.1 million for general

For the three months ended September 30, 2023, the Trust withheld $0.4 million and paid $0.3 million for general

and administrative expenses.

Six Months Ended June 30, 2024 Compared to Six Months Ended

June 30, 2023

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, 2024 Compared to Nine Months

Ended September 30, 2023

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:

Direct operating

Natural gas sales

Direct operating expenses:

Lease operating expenses

1 unchanged sentence

Production, ad valorem and other taxes

Gross proceeds from

sale of assets

allocable to Net Profits Interest

profits (shortfall) allocable to Net Profits Interest

reserve release for capital expenditures

general and administrative expenses and cash withheld for expenses net of interest income

Net profits allocable to Net Profits Interest Shortfall

Distributable

Net Profits Interest generated positive income for the first two months in the period, which eliminated the cumulative Net Profits

Interest shortfall of $1.2 million that existed as of December 31, 2023.

In March 2024, however, direct operating and development

expenses exceeded revenues, thereby causing net profits attributable to the Underlying Properties to be negative and resulting in an

approximately $3.9 million Net Profits Interest shortfall as of June 30, 2024, which was carried forward to be deducted from future

net profits generated by the Underlying Properties.

As a result, there were no net profits reported or distributed in the first six months

of 2024, although the Net Profits Interest shortfall ultimately was fully recouped following the end of the period.

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 or payable during the six months ended June 30, 2024 and 2023:

Ended June 30,

Development expenses

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Sponsor reserve release for capital expenditures

Trust general and administrative expenses and cash withheld for expenses net of interest income

Repayment of COERT Loan

Distributable income

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 or payable during the nine months ended September 30,

2024 and 2023:

Nine Months Ended September 30,

Underlying Properties Production Volumes:

6 unchanged sentences

Natural gas prices realized ($/Mcf)

As reported net profits during the six months

ended June 30, 2024 were negative, after giving effect to the cumulative Net Profits Interest shortfall, no distributions were paid

to Trust unitholders with respect to these six months;

accordingly, the corresponding reported oil and natural gas sales volumes and

average prices from the Underlying Properties were excluded from the table above, consistent with prior periods of Net Profits Interest

shortfalls as reported by the Trust.

Net profits attributable to the Underlying Properties

for the six months ended June 30, 2024 were $(4.7) million compared to $7.8 million for the six months ended June 30,

As a result of cumulative Net Profits Interest shortfall that was carried from 2023 and the subsequent Net Profits Interest shortfall

that arose in 2024, the Trust did not make any distributions to Trust unitholders during the first six months of 2024.

The $12.5 million

decrease in net profits attributable to the Underlying Properties from the 2023 period to the 2024 period was primarily due to the

following items:

Oil sales increased

$7.1 million due to increased produced volumes, and slightly offset by lower realized prices.

The 42% increase in produced volumes increased revenues by $7.7 million.

This increase was

primarily due to the 15 new Permian wells that either turned to sales or completed title

work and thereby allowed production attributable to prior periods to be released by the operators

of the Underlying Properties.

Realized oil sales prices decreased by 2% in the 2024 period

compared to the 2023 period, which increased revenues by $0.6 million.

Natural gas sales decreased

$2.8 million primarily due to lower realized prices.

The 33% increase in gas sales volumes

in the 2024 period compared to the 2023 period increased revenues by $2.3 million;

the 54% decrease in realized gas prices caused revenues to decrease by $5.1 million.

Lease operating expenses

during the six months ended June 30, 2024 increased $3.8 million compared to the six

months ended June 30, 2023.

Compression, gathering

and transportation costs increased $0.8 million, primarily due to the new wells that came

online during the six months ended June 30, 2024.

Production, ad valorem

and other taxes increased $0.6 million during the six months ended June 30, 2024 compared

to the six months ended June 30, 2023, due to the increase in oil and natural gas produced

Development expenses

increased $11.8 million in the 2024 period due to drilling and completion costs incurred

related to the drilling of multiple new wells in the Permian area.

For the six months ended June 30, 2024, the

Trust withheld $0.2 million and paid $0.6 million for general and administrative expenses.

for the nine months ended September 30, 2024 were $3.2 million compared to $11.4 million for the nine months ended September 30,

The $8.2 million decrease in net profits attributable to the Underlying Properties from the 2023 period to the 2024 period

was primarily due to the following items:

Oil sales increased $10.2 million compared to the 2023 period, reflecting a $10.5 million increase in oil sales due to higher produced

volumes, partially offset by a $0.3 million decrease in oil sales due to lower realized prices.

Oil sales volumes increased 35% primarily

due to the several new Permian wells that either turned to sales or completed title work during the 2024 period and thereby allowed

production attributable to prior periods to be released by the respective operators.

The average oil price received decreased 1% as a

result of the corresponding increase in the average NYMEX oil price for the relevant production months.

Natural gas sales decreased $2.3 million compared to the 2023 period, reflecting a $5.7 million increase in sales primarily due

to a 59% increase in gas sales volumes, offset by an $8.0 million decrease in sales due to a 52% decline in realized gas prices.

Lease operating expenses during the nine months ended September 30, 2024 increased $2.8 million compared to the nine months ended

September 30, 2023.

Compression, gathering and transportation costs increased $1.1 million, primarily due to the new wells that came online during the

nine months ended September 30, 2024.

Production, ad valorem and other taxes increased $0.8 million during the nine months ended September 30, 2024 compared to the

nine months ended September 30, 2023, due to the increase in oil and natural gas produced volumes.

Development expenses increased $11.2 million in the 2024 period due to drilling and completion costs incurred in connection with the

drilling of multiple new wells in the Permian area.

For the nine months ended September 30, 2024,

the Trust withheld $0.5 million and paid $0.7 million for general and administrative expenses.

Expenses paid during the period primarily

consisted of fees for the preparation of the Trust’s monthly press releases, insurance expense, Trustee fees, and New York Stock

Exchange listing fees.

For the six months ended June 30, 2023, the Trust withheld $0.8 million and paid $0.5 million for general

For the nine months ended September 30, 2023, the Trust withheld $1.2 million and paid $0.8 million for general

and administrative expenses.

Liquidity and Capital Resources

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 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.

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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

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 June 30, 2024, the Trustee has withheld $991,386 toward this

cash reserve.

Due to the cumulative Net Profits Interest shortfall, no amounts were withheld toward the cash reserve during the three

months ended June 30, 2024.

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.

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 September 30, 2024, the Trustee has withheld $1,091,386 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.

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In addition, COERT has provided the Trust

with a $1.2 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is insufficient

to pay ordinary course administrative expenses.

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

to pay administrative expenses, 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

funds or draws on the letter of credit, no further distributions will be made to Trust unitholders until such amounts borrowed or drawn

with a $1.2 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is insufficient to

pay ordinary course administrative expenses.

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

administrative expenses, 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 funds

or draws on the letter of credit, no further distributions will be made to Trust unitholders until such amounts borrowed or drawn are

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 June 30, 2024 and December 31, 2023, including the aggregate amounts withheld

as of such dates toward the approximately $2.3 million cash reserve discussed above, the Trust had cash of $1,519,676 and $1,394,697,

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 September 30, 2024 and December 31, 2023, including the aggregate amounts withheld as of

such dates toward the approximately $2.3 million cash reserve discussed above, the Trust had cash of $1,808,446 and $1,394,697, 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 June 30, 2024 and December 31, 2023, there was an outstanding

advance of $527,076 and $0, respectively.

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 as a reserve against

future liabilities or for distribution at the next distribution date may be held in a noninterest-bearing account or may be invested

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;

bank certificates of

At September 30, 2024 and December 31, 2023, there were no

outstanding advances.

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

Cash held by the Trustee as a reserve against future

liabilities or for distribution at the next distribution date may be held in a noninterest-bearing account or may be invested in:

interest-bearing obligations of the United States government;

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

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

bank certificates of deposit.

The Trust pays the Trustee an annual administrative

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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.

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.

1 unchanged sentence

The Trust has no off-balance sheet arrangements.

The Trust has not guaranteed the debt of any other party, nor does the Trust have any other arrangements or relationships with other

entities that could potentially result in unconsolidated debt, losses or contingent obligations.

The Trust has not guaranteed the debt of any other party, nor does the Trust have any other arrangements or relationships with other entities

that could potentially result in unconsolidated debt, losses or contingent obligations.

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

2023 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 six months ended June 30,

Quantitative and Qualitative Disclosures About Market

As a “smaller reporting company” as

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

2023 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 nine months ended September 30,

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company”

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

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

What changed 10-Q

Item 1. Financial Statements