PERMIAN BASIN ROYALTY TRUST ANNOUNCES DECEMBER CASH DISTRIBUTION AND EXCESS COST POSITION ON WADDELL RANCH PROPERTIES

Rhea-AI Summary

Permian Basin Royalty Trust (NYSE: PBT) has announced a cash distribution of $0.021939 per unit, payable on January 15, 2025. The distribution shows a slight increase from the previous month due to higher oil and gas volumes from Texas Royalty Properties, despite lower prices. No proceeds were included from the Waddell Ranch properties due to excess costs of $4,987,682.

The Texas Royalty Properties produced 18,407 barrels of oil at $70.83 per bbl and 7,073 Mcf of gas at $11.05 per Mcf, generating net profits of $1,237,019. The Trust is currently engaged in litigation against Blackbeard Operating, seeking over $25 million in damages related to disputed overhead charges and expenses.

Positive

• Slight increase in monthly distribution compared to previous period
• Texas Royalty Properties showed higher oil and gas production volumes
• Net profit of $1,237,019 from Texas Royalty Properties

Negative

• Waddell Ranch properties showing excess costs of $4,987,682
• Lower oil prices ($70.83/bbl vs previous $75.68/bbl)
• Ongoing litigation with Blackbeard Operating over $25 million in disputed charges
• Blackbeard's refusal to provide monthly NPI information

Insights

Financial Analyst

The December distribution of $0.021939 per unit represents a complex financial situation for PBT. The distribution solely stems from Texas Royalty Properties, as Waddell Ranch properties remain in an excess cost position of $4,987,682 ($3,740,762 net to Trust). The Texas properties showed improved production volumes but faced lower commodity prices, with oil at $70.83/bbl (down from $75.68) and gas at $11.05/Mcf (down from $11.30).

The ongoing litigation with Blackbeard Operating is particularly concerning, with damages now sought exceeding $25 million, up from the initial $15 million. Blackbeard's refusal to provide monthly NPI information creates operational opacity and impacts trust distributions. The excess cost position and accrued interest of $33,031 on underlying properties suggest continued pressure on future distributions.

Legal Expert

The escalating legal dispute with Blackbeard Operating presents significant implications for the Trust's financial health. The amended petition expanding damages sought to $25 million from $15 million indicates substantial alleged improprieties in expense deductions. Blackbeard's counterclaim seeking declaratory judgment on overhead charges and information limitations could fundamentally alter the Trust's oversight capabilities. The operator's refusal to provide monthly NPI information marks a deterioration in operational transparency and potentially breaches established reporting practices. The trial date postponement to November 2025 suggests a protracted legal battle that could impact unitholder value and trust operations for an extended period.

Market Research Analyst

The market dynamics affecting PBT show concerning trends. The reduced oil prices ($70.83/bbl) and gas prices ($11.05/Mcf) reflect broader energy market pressures. The Texas Royalty Properties' increased production volumes (18,407 oil barrels vs. previous 16,035) provide some offset, but the Waddell Ranch's continued excess cost position significantly constrains distribution potential. The Trust's ability to maintain consistent distributions is further complicated by the legal dispute's impact on operational transparency and potential future expense structures. With $152,583 in administrative expenses and ongoing worldwide market conditions affecting domestic production pricing, unitholders face increased uncertainty in distribution stability.

DALLAS, Dec. 20, 2024 /PRNewswire/ -- Argent Trust Company, as Trustee of the Permian Basin Royalty Trust (NYSE: PBT) ("Permian" or the "Trust") today declared a cash distribution to the holders of its units of beneficial interest of $0.021939 per unit, payable on January 15, 2025, to unit holders of record on December 31, 2024. The distribution does not include proceeds from the Waddell Ranch properties, as total production costs ("Production Costs") exceeded gross proceeds ("Gross Proceeds") for the month of November, resulting in an excess cost position for the Waddell Ranch properties. More information regarding the Waddell Ranch properties is described below.

This month's distribution slightly increased from the previous month due primarily to the Texas Royalty Properties having higher oil and gas volumes, partially offset by lower gas and oil prices for the month reported.

WADDELL RANCH
Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, and the fact that prior to May 2024, Blackbeard has provided this information on a monthly basis since Argent Trust Company has become Trustee of the Trust, Blackbeard has refused to provide the Trustee information necessary to calculate the net profits interest ("NPI") proceeds for December 2024 as of the announcement date for this month's distribution. As a result of Blackbeard's failure to provide this information by the NYSE notification date for the distribution, in accordance with the Trust indenture, if NPI proceeds are received from the Waddell Ranch properties on or prior to the record date, they will be included in the January distribution.

As noted above, no proceeds were received by the Trustee in November 2024 to be included in the December distribution. The excess costs (Gross Proceeds minus Production Costs) totaled $4,987,682 on the Underlying Properties ($3,740,762 net to the Trust) for the month of October, the latest information from Blackbeard received by the Trustee. The excess costs included accrued interest of $33,031 on the Underlying Properties ($24,773 net to the Trust). All excess costs, including any accrued interest, will need to be recovered by future proceeds from the Waddell Ranch properties before any proceeds are distributed to the Trust.

TEXAS ROYALTY PROPERTIES
Production for the underlying Texas Royalty Properties was 18,407 barrels of oil and 7,073 Mcf of gas. The production for the Trust's allocated portion of the Texas Royalty Properties was 16,432 barrels of oil and 6,315 Mcf of gas. The average price for oil was $70.83 per bbl and for gas was $11.05, which includes significant NGL pricing, per Mcf. This would mainly reflect production and pricing in September for oil and August for gas. These allocated volumes were impacted by the pricing of both oil and gas. This production and pricing for the underlying properties resulted in revenues for the Texas Royalty Properties of $1,381,893. Deducted from these revenues were taxes and expenses of $144,874, resulting in a Net Profit of $1,237,019 for December. With the Trust's NPI of 95% of the Underlying Properties, this would result in a net contribution by the Texas Royalty Properties of $1,175,168 to this month's distribution.

	Underlying Properties		Net to Trust Sales
	Volumes		Volumes		Average Price
	Oil (bbls)	Gas (Mcf)	Oil (bbls)	Gas (Mcf) (1)	Oil  (per bbl)	Gas (per Mcf) (2)
Current Month
Waddell Ranch	(3)	(3)	(3)	(3)	(3)	(3)
Texas Royalties	18,407	7,073	16,432	6,315	$70.83	$11.05
Prior Month
Waddell Ranch	(3)	(3)	(3)	(3)	(3)	(3)
Texas Royalties	16,035	6,521	14,246	5,788	$75.68	$11.30
(1) These volumes are net to the Trust, after allocation of expenses to Trust's net profit interest, including any prior period adjustments.
(2) This pricing includes sales of gas liquid products.
(3) Information is not being made available monthly, but may be provided within 30 days next following the close of each calendar quarter.

General and Administrative Expenses deducted for the month, net of interest earned were $152,583 resulting in a distribution of $1,022,585 to 46,608,796 units outstanding, or $0.021939 per unit.

The worldwide market conditions continue to affect the pricing for domestic production. It is difficult to predict what effect these conditions will have on future distributions.

TRUST LITIGATION
On May 8, 2024, the Trustee announced that it had initiated a lawsuit by filing a petition in the District Court of Tarrant County, Texas against Blackbeard Operating, LLC ("Blackbeard"), the operator of properties in the Waddell Ranch, in Crane County, Texas, in which the Trust holds a 75% net overriding royalty. On June 10, 2024, Blackbeard filed its original answer and counterclaim to the lawsuit. The case is in the early fact discovery phase, and the trial date in the District Court of Tarrant County has been moved to November 17, 2025, 8:30 a.m., Central Time.

Under the original petition, the Trustee sought to recover more than $15 million in damages to the Trust resulting from overhead costs and other expenses the Trustee alleges were impermissibly deducted from royalty payments to the Trust. The Trustee routinely engages in audits of the revenues and expenses with respect to the Trust's royalty payments. In connection with its audit for the period from 2020-2022 the Trustee identified exceptions to certain expenses deducted from the Trust's royalty payments, including among other things, incorrect overhead charges, application of overhead charges to non-producing wells, duplicate charges for services, materials and utilities as well as other expenses the Trustee alleges are ineligible charges. The Trustee's petition was amended in September 2024 to add additional claims relating to the 2023 audit and production volumes, seeking damages of more than $25 million. Attempts to resolve the disputed charges outside of court have been unsuccessful to date. Included in Blackbeard's original answer and counterclaim are requests for declaratory judgment by the court that it may deduct certain disputed overhead charges from Trust royalty payments and that it may limit information it provides to the Trust to quarterly statements of the net proceeds computation and inspection of books and record during normal business hours.

The 2023 Annual Report with Form 10-K, which includes the December 31, 2023, Reserve Summary, is posted on Permian's website. Permian's cash distribution history, current and prior year financial reports, tax information booklets, and a link to filings made with the Securities and Exchange Commission, all can be found on Permian's website at http://www.pbt-permian.com/. Additionally, printed reports can be requested and are mailed free of charge.

FORWARD-LOOKING STATEMENTS
Any statements in this press release about future events or conditions, and other statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," "may," "intends," and similar expressions, other than historical facts, constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors or risks that could cause the Trust's actual results to differ materially from the results the Trustee anticipates include, but are not limited to the factors described in Part I, Item 1A, "Risk Factors" of the Trust's Annual Report on Form 10-K for the year ended December 31, 2023, and Part II, Item 1A, "Risk Factors" of subsequently filed Quarterly Reports on Form 10-Q.

Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements included in this press release represent the Trustee's views as of the date hereof. The Trustee anticipates that subsequent events and developments may cause its views to change. However, while the Trustee may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Trustee's views as of any date subsequent to the date hereof.

Contact: Jana Egeler, Vice President, Argent Trust Company, Trustee, Toll Free – 1.855.588.7839

View original content:https://www.prnewswire.com/news-releases/permian-basin-royalty-trust-announces-december-cash-distribution-and-excess-cost-position-on-waddell-ranch-properties-302336298.html

SOURCE Permian Basin Royalty Trust

FAQ

What is PBT's December 2024 distribution amount per unit?

PBT announced a cash distribution of $0.021939 per unit, payable on January 15, 2025, to unitholders of record on December 31, 2024.

Why are there no Waddell Ranch proceeds in PBT's December distribution?

The Waddell Ranch properties had excess costs of $4,987,682, with production costs exceeding gross proceeds, resulting in no distribution from these properties.

What are the current production volumes for PBT's Texas Royalty Properties?

The Texas Royalty Properties produced 18,407 barrels of oil and 7,073 Mcf of gas, with the Trust's allocated portion being 16,432 barrels of oil and 6,315 Mcf of gas.

How much is PBT seeking in damages from Blackbeard Operating in the current litigation?

PBT is seeking over $25 million in damages from Blackbeard Operating related to disputed overhead charges and expenses from 2020-2023.

What were the oil and gas prices for PBT's Texas Royalty Properties?

The average price for oil was $70.83 per barrel and for gas was $11.05 per Mcf, including NGL pricing.