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Item 1. Financial Statements

2025-08-14 compared with 2025-05-15 · 369 added, 221 removed, 389 unchanged (60% of the section changed)

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PERMIANVILLE ROYALTY TRUST

Statements of Distributable Income

Three Months Ended March 31,

Statements of Distributable

Three Months Ended June 30,

Six Months Ended June 30,

Income from net profits interest

Interest and investment income

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Statements of Changes in Trust Corpus

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Trust corpus, beginning of period

Cash reserves withheld for Trust expenses

Cash reserves used 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.

Distributions per unit (33,000,000 units)

The accompanying notes are

an integral part of these financial statements.

PERMIANVILLE ROYALTY TRUST

NOTES TO FINANCIAL STATEMENTS

TRUST ORGANIZATION AND

TRUST ORGANIZATION

AND PROVISIONS

Permianville Royalty Trust (the “Trust”),

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as Delaware Trustee.

The Trust was created to acquire and hold for the

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

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

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

The properties in which the Trust holds

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

In connection with the closing of the initial public

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

The Trust was created to acquire and hold for

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

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

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

The properties in which the Trust

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

In connection with the closing of the initial

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

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

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to which Enduro and the Trustee were parties.

As of March 31, 2025, the Sponsor owned 7,363,961 Trust Units, or 22% of the issued and

outstanding Trust Units.

As of June 30, 2025, 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

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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 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;

however, 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 Trustee may create a cash reserve to pay for future liabilities of the

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;

however, the Trust will dissolve upon the earliest to occur

of the following:

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

Trust Units, sells the Net Profits Interest;

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

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

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

of dissolution;

the Trust is judicially dissolved.

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Corpus as of December 31, 2024, which has been derived from audited financial statements, and the unaudited interim financial statements

as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 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, 2024 (the “2024 Annual Report on Form 10-K”).

as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 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, 2024 (the “2024 Annual Report on Form 10-K”).

In the opinion of the Trustee, the accompanying

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

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

other professional fees) are recorded when paid;

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

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

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

directly to the Trust corpus;

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;

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

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Statements of Royalty Trusts .

NET 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

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income of the Trust.

Accumulated amortization as of March 31, 2025 and December 31, 2024 was $312,235,862 and $311,034,905, respectively.

Accumulated amortization as of June 30, 2025 and December 31, 2024 was $313,498,129 and $311,034,905, respectively.

The Net Profits Interest is periodically assessed

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While the Trust did not record an impairment during the three

months ended March 31, 2025, 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.

and six months ended June 30, 2025 or 2024, future downward revisions in actual production volumes relative to current forecasts,

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

Federal Income Taxes

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

The Trust did not make any regular monthly distributions

to Trust unitholders during the three months ended March 31, 2025 or 2024 due to the existence of a Net Profits Interest shortfall during

During the three months ended March 31, 2025, direct

operating and development expenses exceeded cash receipts, leading to a shortfall of approximately $1.4 million as of March

31, 2025, which will be 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 three months of 2025.

During the three months ended March 31, 2024, the

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

The following table provides information regarding

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

Declaration Date

Six Months Ended June 30, 2025:

March 17, 2025 (Special Distribution)

March 31, 2025

April 14, 2025

Year to Date –

Six Months Ended June 30, 2024:

Year to Date –

During the three months ended June 30, 2025,

the Net Profits Interest generated positive income, which eliminated the cumulative Net Profits Interest shortfall of $1.4 million that

existed as of March 31, 2025;

however, no distributions were made to Trust unitholders because of outstanding advances from the Sponsor

to the Trust for the payment of administrative expenses, which totaled $0.6 million as of June 30, 2025.

The Trust is not permitted

to make distributions to Trust unitholders until any Net Profits Interest shortfall has been recouped and outstanding advances from the

Sponsor have been repaid.

During 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.

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 $1.2

million Net Profits Interest shortfall as of March 31, 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 three months of 2024.

On March 17, 2025, the Trustee declared a special

cash distribution of $0.008548 per Trust Unit, payable on April 14, 2025 to Trust unitholders of record on March 31, 2025.

cash distribution reflected the release of the $250,000 withheld from the net proceeds allocable to the Trust from the August 2023

sale by the Sponsor of certain oil and gas properties in the Permian Basin, which amount was intended to cover possible indemnification

obligations arising during the indemnification period following the closing of the sale.

Together with interest, the amount distributed

equated to $282,072.

In March and April 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.

On March 17, 2025, the Trustee declared a

special cash distribution of $0.008548 per Trust Unit, which was paid on April 14, 2025 to Trust unitholders of record on March 31,

The special cash distribution reflected the release of the $250,000 withheld from the net proceeds allocable to the Trust from the

August 2023 sale by the Sponsor of certain oil and natural gas properties in the Permian Basin, which amount was intended to cover

possible indemnification obligations arising during the indemnification period following the closing of the sale.

Together with interest,

the amount distributed equated to $282,072.

Under the terms of the Trust Agreement, the Trust

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

During the three-month

periods ended March 31, 2025 and 2024, the Trust paid $50,000 to the Trustee and $2,010 and $0, respectively, to the Delaware Trustee

pursuant to the terms of the Trust Agreement.

During the three-

and six-month periods ended June 30, 2025 and 2024, the Trust paid $50,000 and $100,000, respectively, to the Trustee and $0 and

$2,010, respectively, to the Delaware Trustee pursuant to the terms of the Trust Agreement.

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

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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, 2024 (the

“2024 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 .

Condition and Results of Operations contained in the Trust’s Annual Report on Form 10-K for the year ended December 31,

2024 (the “2024 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,”

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.

Such statements may be influenced by factors that could cause

actual outcomes and results to differ materially from those projected.

Such expectations may not prove to have been correct.

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

in this document, the words “believes,”

“expects,”

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“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 2024 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:

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 2024 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 or other public health event 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, trade barriers and tariffs, 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 occurrence or threat of epidemic or pandemic diseases or other public

health event 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 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,

trade barriers and tariffs, 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;

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

under the terms of the Conveyance;

conditions in the capital markets;

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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;

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 2024 Annual Report on Form 10-K.

in Part I, Item

1A of the 2024 Annual Report on Form 10-K.

You should not place undue reliance on these forward-looking

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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 day after the record date.

The Trust is required to make monthly cash distributions

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

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

day after the record date.

The Net Profits Interest is entitled to a share of the profits from and after July 1, 2011 attributable

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oil and natural gas sales prices;

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

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

production and development costs;

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the amount and timing of Trust administrative expenses;

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

the establishment, increase, or decrease of reserves for approved development

expenses or future liabilities of the Trust.

Generally, the Sponsor receives cash payment for

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The Sponsor has indicated to the Trustee that development

activity on the Underlying Properties remained elevated through the first three months of 2025, increasing over 130% from the same period

Most of the increase reflected continued capital expenditures by a super major oil conglomerate associated with Haynesville wells

that are expected to come online in the coming months.

Otherwise, the remaining capital expenditure outlook for the operators of the Underlying

Properties remains highly uncertain given current macroeconomic conditions.

Nevertheless, although 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

that tend to spend through periods of volatility.

Directionally, the Sponsor expects oil-directed capital expenditures in the Permian

basin to decline and gas-directed capital expenditures in the Haynesville to remain stable or perhaps even slightly increase, consistent

with the first quarter of 2025.

These indications remain subject to revision from the operators of the Underlying Properties;

in light of the current expectations, the Sponsor continues to maintain its previously established cash reserve for approved, future development

expenses expected in the near-term.

activity on the Underlying Properties remained elevated through the first six months of 2025 compared to prior years, although activity

in the first half of 2025 declined from the comparable period in 2024, which included a material amount of prior period production from

certain Permian wells that had been delayed due to pending title work completed during the 2024 period.

The Sponsor reports that most

of the continued capital expenditures were associated with work undertaken by a super major oil conglomerate and the completion of three

wells in the Haynesville region.

Subsequent to June 30, 2025, the Sponsor indicates that it has received from the operator the initial

revenues from these wells, which will be reflected in the net profits interest calculations in the third quarter.

Otherwise, the Sponsor

believes the remaining capital expenditure outlook for the operators of the Underlying Properties remains highly uncertain given current

macroeconomic conditions.

Nevertheless, although 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 that tend to spend through periods of volatility.

Directionally,

the Sponsor continues to expect oil-directed capital expenditures in the Permian basin to decline and gas-directed capital expenditures

in the Haynesville region to remain stable or perhaps even slightly increase, consistent with the first six months of 2025.

Specifically,

the same operator that recently completed the three Haynesville wells described above has recently proposed three more Haynesville wells

for 2026, fairly similar in size and profile to the prior three wells.

Future capital expenditure expectations remain subject to revision

from the operators of the Underlying Properties.

With the revenue recently received from the new Haynesville wells, the Sponsor expects

the net profits interest to return to positive monthly payments in calendar year 2025.

The Sponsor believes that the outlook for the oil

and gas industry has become increasingly complicated since the start of 2025, especially with the development of trade disputes and indications

that OPEC may increase oil production.

Oil prices have ranged from just over $80 per Bbl to as low as $57 per Bbl between December 2024

and May 2025, with several public oil and gas companies indicating that the volatility has affected their budget planning for the remainder

Natural gas prices have experienced similar volatility, ranging from a low of $2.93 per MMBtu to a high of $4.49 per MMBtu over

the same period, as previous forecasts of increasing demand for U.S.

liquified natural gas exports have been called into question given

the uncertain global trade environment.

Meanwhile, mergers and acquisitions continue to change the makeup of companies in the sector,

including one of the operators on the Underlying Properties.

The Sponsor believes that consolidation within the oil and gas sector could

lead to lower operating costs given economies of scale, but could also lead to more binary swings in capital spending, as more assets

and capital budgets are set by fewer operators than in years past.

Despite this volatility, given the significant

increase in capital expenditures during the first three months of 2025, the Sponsor is revising its 2025 capital spending outlook from

the prior range of $7.0 million to $13.0 million, or $5.6 million to $10.4 million net to the Trust’s Net Profits Interest, as detailed

in the Trust’s 2024 Annual Report on Form 10-K, to $10.0 million to $15.0 million, or $8.0 million to $12.0 million net to

the Trust’s Net Profits Interest.

The Sponsor expects the remaining anticipated capital expenditures in 2025 to be focused in the

Haynesville area, given relatively strong natural gas prices and ongoing capital expenditure projects in that region which began during

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 markets and an uncertain geopolitical situation.

Over the first three months of 2025, 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 continued decline in lease operating expenditures per barrel of oil equivalent for the three

months ended March 31, 2025 compared to the same period in 2024.

The Sponsor indicates that 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.

Nevertheless,

the Sponsor indicates that 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 properties will be able to realize

a return to prior period operating costs and cash flow profile .

While the markets remain volatile

and there remains an inherent delay in cash flows given the non-operated nature of the Underlying Properties, the Sponsor indicates that

it continues to have access to adequate capital and liquidity to fund such operating and capital expenditures as they come due.

and gas industry remains increasingly complicated since the start of 2025, albeit somewhat relatively more stable at the end of the quarter

ended June 30, 2025 compared to the beginning of the quarter.

OPEC continues to indicate increasing oil production and supply, which

has weighed on oil prices, although these price impacts are somewhat offset by elevated geopolitical uncertainty.

Oil prices have ranged

from just over $80 per Bbl to as low as $57 per Bbl between December 2024 and August 2025, with several public oil and gas companies

indicating that the volatility has affected their budget planning for the remainder of 2025.

Natural gas prices have experienced similar

volatility, ranging from a low of $2.93 per MMBtu to a high of $4.49 per MMBtu over the same period, as previous forecasts of increasing

demand for U.S.

liquified natural gas exports have been called into question given the uncertain global trade environment.

mergers and acquisitions continue to change the makeup of companies in the sector, including one of the operators on the Underlying Properties.

The Sponsor continues to believe that consolidation within the oil and gas sector could lead to lower operating costs given economies

of scale, but could also lead to more binary swings in capital spending, as more assets and capital budgets are set by fewer operators

than in years past.

Despite this volatility, given the continued elevated

capital expenditures during the first six months of 2025, the Sponsor is now guiding to the high end of its previously revised 2025 capital

spending outlook of $10.0 million to $15.0 million, or $8.0 million to $12.0 million net to the Trust’s Net Profits Interest, as

detailed in the prior Form 10-Q for the quarter ended March 31, 2025.

The Sponsor expects a majority of the remaining anticipated

capital expenditures in 2025 to be focused in the Haynesville area, given relatively higher industry rig counts compared to last year,

versus the declining Permian rig count thus far in 2025.

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 markets

and an uncertain geopolitical situation.

Over the first six months of 2025, the Sponsor

continued to see a reduction in operating costs that had been affecting the Underlying Properties in prior periods on an aggregate basis,

as seen in the continued decline in lease operating expenditures per barrel of oil equivalent for the six months ended June 30, 2025

compared to the same period in 2024.

The Sponsor indicates that this decline continues to reflect the increased production from newer

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

Nevertheless, the Sponsor indicates

that 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 properties will be able to realize a return to prior

period operating costs and cash flow profile .

While the markets remain volatile and there remains

an inherent delay in cash flows given the non-operated nature of the Underlying Properties, the Sponsor indicates that it continues to

have access to adequate capital and liquidity to fund such operating and capital expenditures as they come due.

The Sponsor believes there could be further opportunity

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D&C New Drills

Large Cap E&P 2

D&C New Drills

4 Drilling In-Process

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D&C New Drills

PE-Backed Private 1

D&C New Drills

PE-Backed Private 2

D&C New Drills

4 Drilling in-Process

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Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended

March 31, 2024

Three Months Ended June 30, 2025 Compared to Three Months Ended

June 30, 2024

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 March 31,

Three Months Ended June 30,

Gross profits:

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Development expenses

Net (loss) profits

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Negative Net Profits Carryforward

Repayment of Sponsor Loan

Release of Escrow

Net profits allocable to Net Profits Interest shortfall

Distributable income

During the three months ended June 30, 2025,

the Net Profits Interest generated positive income, which eliminated the cumulative Net Profits Interest shortfall of $1.4 million that

existed as of March 31, 2025;

however, no distributions were made to Trust unitholders because of outstanding advances from the Sponsor

to the Trust for the payment of administrative expenses, which totaled $0.6 million as of June 30, 2025.

The Trust is not permitted

to make distributions to Trust unitholders until any Net Profits Interest shortfall has been recouped and outstanding advances from the

Sponsor have been repaid.

During 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.

As a result, there were no net profits reported

or distributed in the second quarter of 2024.

On March 17, 2025, the Trustee declared a

special cash distribution of $0.008548 per Trust Unit, which was paid on April 14, 2025 to Trust unitholders of record on March 31,

The special cash distribution reflected the release of the $250,000 withheld from the net proceeds allocable to the Trust from the

August 2023 sale by the Sponsor of certain oil and gas properties in the Permian Basin, which amount was intended to cover possible

indemnification obligations arising during the indemnification period following the closing of the sale.

Together with interest, the amount

distributed equated to $282,072.

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, 2025 and 2024:

Three Months Ended June 30,

Underlying Properties Production Volumes:

Natural Gas (Mcf)

Combined (Boe)

Average Prices:

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

Oil prices realized ($/Bbl)

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

Natural gas prices realized ($/Mcf)

Net profits attributable to the Underlying Properties

for the three months ended June 30, 2025 were $1.9 million compared to $(4.9) million for the three months ended June 30,

The $6.8 million increase in net profits attributable to the Underlying Properties from the 2024 period to the 2025 period

was primarily due to the following items:

Oil sales decreased $7.8 million due to lower produced volumes and lower

realized prices.

The 47% reduction in produced volumes decreased revenues by $7.4 million.

This decrease was primarily due to the 15 new

Permian wells that either turned to sales or completed title work in the 2024 period, thereby allowing production attributable to prior

periods to be released by the operators of the Underlying Properties.

Realized oil sales prices decreased 5% in the 2025 period compared

to the 2024 period, which decreased revenues by $0.4 million.

Natural gas sales increased $0.5 million compared to the 2024 period, reflecting

a $0.6 million increase due to higher produced volumes, partially offset by a $0.1 million decrease due to lower realized prices.

average natural gas price received decreased 3% primarily due to the decrease in the average realized natural gas price for the relevant

production months.

Lease operating expenses during the three months ended June 30, 2025

decreased $3.6 million compared to the three months ended June 30, 2024.

Compression, gathering and transportation costs increased $0.1 million, primarily

due to the increase in natural gas production during the three months ended June 30, 2025.

Production, ad valorem and other taxes decreased $0.6 million during the

three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Development expenses decreased $10.1 million during the three months ended

June 30, 2025 compared to the same period in 2024, due to a decrease in drilling and completion costs incurred.

For the three months ended June 30, 2025,

the Trust withheld $0.0 million and paid $0.3 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, 2024, the Trust withheld $0.0 million and paid $0.4 million for general

and administrative expenses.

Six Months Ended June 30, 2025 Compared to Six Months Ended

June 30, 2024

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:

Six Months Ended June 30,

Gross profits:

Natural gas sales

Direct operating expenses:

Lease operating expenses

Compression, gathering and transportation

Production, ad valorem and other taxes

Development expenses

Gross proceeds from sale of assets

Percentage allocable to Net Profits Interest

Net profits allocable to Net Profits Interest

Sponsor reserve release for capital expenditures

Repayment of Sponsor Loan

Release of Escrow

Net profits allocable to Net Profits Interest shortfall

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

Distributable income

During the three months ended March 31, 2025, direct

operating and development expenses exceeded cash receipts, leading to a shortfall of approximately $1.4 million as of March

31, 2025, which will be 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 three months of 2025.

During the three months ended March 31, 2024, the

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, direct operating and development expenses exceeded revenues,

thereby causing net profits attributable to the Underlying Properties to be negative and resulting in an approximately $1.2 million Net

Profits Interest shortfall as of March 31, 2024, which was carried forward to be deducted from future net profits generated by the Underlying

As a result, there were no net profits reported or distributed in the first three months of 2024.

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 March 31, 2025 and 2024:

Three Months Ended March 31,

During the six months ended June 30, 2025,

although the Net Profits Interest shortfall that existed throughout the first five months of the period was eliminated by the end of the

period, no distributions were made to Trust unitholders because of outstanding advances from the Sponsor to the Trust for the payment

of administrative expenses, which totaled $0.6 million as of June 30, 2025.

The Trust is not permitted to make distributions to Trust

unitholders until any Net Profits Interest shortfall has been recouped and outstanding advances from the Sponsor have been repaid.

During the six months ended June 30, 2024,

the 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.

On March 17, 2025, the Trustee declared a

special cash distribution of $0.008548 per Trust Unit, which was paid on April 14, 2025 to Trust unitholders of record on March 31,

The special cash distribution reflected the release of the $250,000 withheld from the net proceeds allocable to the Trust from the

August 2023 sale by the Sponsor of certain oil and natural gas properties in the Permian Basin, which amount was intended to cover

possible indemnification obligations arising during the indemnification period following the closing of the sale.

Together with interest,

the amount distributed equated to $282,072.

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, 2025 and 2024:

Six Months Ended June 30,

Underlying Properties Production Volumes:

6 unchanged sentences

Natural gas prices realized ($/Mcf)

Net (loss) profits attributable to the Underlying

Properties for the three months ended March 31, 2025 were $(3.0) million compared to $0.2 million for the three months ended

March 31, 2024.

The $3.2 million decrease in net profits attributable to the Underlying Properties from the 2024 period to the

2025 period was primarily due to the following items:

Oil sales decreased $1.2 million compared to the 2024 period, reflecting a $0.1 million decrease due to lower produced volumes

and a $1.1 million decrease due to lower realized prices.

The average oil price received decreased 11% as a result of the corresponding

decrease in the average NYMEX oil price for the relevant production months.

Natural gas sales increased $0.4 million compared to the 2024 period, reflecting a $1.1 million increase due to higher produced volumes,

partially offset by a $0.7 million decrease due to lower realized prices.

The average natural gas price received decreased 27% 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 March 31, 2025 decreased $1.9 million compared to the three months ended

March 31, 2024.

The 2024 period includes extra first expenses for several new Permian wells completed later in 2024.

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

three months ended March 31, 2025.

Production, ad valorem and other taxes decreased $0.2 million during the three months ended March 31, 2025 compared to the three

months ended March 31, 2024.

Development expenses increased $4.1 million during the three months ended March 31, 2025 compared to the same period in 2024,

due to an increase in drilling and completion costs incurred.

For the three months ended March 31, 2025, the

Net profits attributable to the Underlying Properties

for the six months ended June 30, 2025 were $(1.1) million compared to $(4.7) million for the six months ended June 30,

The $3.6 million increase in net profits attributable to the Underlying Properties from the 2024 period to the 2025 period

was primarily due to the following items:

Oil sales decreased $8.9 million due to lower produced volumes and lower

realized prices.

The 30% decrease in produced volumes decreased revenues by $7.7 million.

This decrease was primarily due to the 15 new

Permian wells that either turned to sales or completed title work in the 2024 period, thereby allowing production attributable to prior

periods to be released by the operators of the Underlying Properties.

Realized oil sales prices decreased 7% in the 2025 period compared

to the 2024 period, which increased revenues by $1.2 million.

Natural gas sales increased $0.9 million compared to the 2024 period, reflecting

a $1.8 million increase due to higher produced volumes, offset by a $0.9 million decrease due to lower realized prices.

The average natural

gas price received decreased 15% primarily due to the decrease in the average realized natural gas price for the relevant production months.

Lease operating expenses during the six months ended June 30, 2025 decreased

$5.5 million compared to the six months ended June 30, 2024.

Compression, gathering and transportation costs increased $0.5 million, primarily

due to the increase in natural gas production during the six months ended June 30, 2025.

Production, ad valorem and other taxes decreased $0.7 million during the

six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Development expenses decreased $6.0 million during the six months ended June 30,

2025 compared to the same period in 2024, due to a decrease in drilling and completion costs incurred.

For the six months ended June 30, 2025, the

Trust withheld $0.0 million and paid $0.5 million for general and administrative expenses.

2 unchanged sentences

listing fees.

For the three months ended March 31, 2024, the Trust withheld $0.2 million and paid $0.2 million for general and administrative

For the six months ended June 30, 2024, the Trust withheld $0.2 million and paid $0.6 million for general and administrative

Liquidity and Capital Resources

22 unchanged sentences

together with interest earned on the funds.

As of March 31, 2025, the Trustee has withheld $1,241,386 toward this cash reserve.

the cumulative Net Profits Interest shortfall, no amounts were withheld toward this cash reserve during the three months ended March 31,

As of June 30, 2025, the Trustee has withheld $1,241,386 toward this cash reserve.

to the cumulative Net Profits Interest shortfall, no amounts were withheld toward this cash reserve during the six months ended June 30,

If the Trustee determines that the cash on hand

22 unchanged sentences

the Trust to borrow any funds.

As of March 31, 2025 and December 31, 2024, including the aggregate amounts withheld as of such dates toward

the approximately $2.3 million cash reserve discussed above, the Trust had cash of $2,216,799 and $2,193,787, 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

As of June 30, 2025 and December 31, 2024, including the aggregate amounts withheld as of such

dates toward the approximately $2.3 million cash reserve discussed above, the Trust had cash of $2,239,884 and $2,193,787, 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.

From time to time, if the Trust’s cash on

2 unchanged sentences

such expenses.

At March 31, 2025 and December 31, 2024, there were outstanding advances of $398,568 and $150,000, respectively.

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

At June 30, 2025 and December 31, 2024, there were outstanding advances of $550,323 and $150,000, 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

2 unchanged sentences

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

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

repurchase agreements secured by interest-bearing obligations of the United

States government;

bank certificates of deposit.

20 unchanged sentences

2024 Annual Report on Form 10-K for additional information regarding the Trust’s critical accounting policies and estimates.

were no material changes to the Trust’s critical accounting policies or estimates during the three months ended March 31, 2025.

There were no material changes to the Trust’s critical accounting policies or estimates during the three months ended June 30,

Quantitative and Qualitative Disclosures About Market Risk.

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements