PERMIAN BASIN ROYALTY TRUST ANNOUNCES JANUARY CASH DISTRIBUTION

Rhea-AI Summary

Argent Trust Company, as Trustee of the Permian Basin Royalty Trust (NYSE: PBT), declared a cash distribution of $0.031031 per unit, payable on February 14, 2024. The distribution decreased from the previous month due to a slight decrease in production and decreases in pricing of oil and gas. Net revenue for the underlying properties of the Waddell Ranch was $17,899,375 for November, with a positive Net Profit Interest (NPI) of $411,277. However, if current oil and gas pricing continues or declines, the Waddell Ranch Properties may or may not be able to continue to contribute to the distribution in the foreseeable future, after covering the ongoing CAPEX budget.

Positive

• Argent Trust Company declared a cash distribution of $0.031031 per unit, payable on February 14, 2024.
• Net revenue for the underlying properties of the Waddell Ranch was $17,899,375 for November, with a positive Net Profit Interest (NPI) of $411,277.

Negative

• The distribution decreased from the previous month due to a slight decrease in production and decreases in pricing of oil and gas.
• If current oil and gas pricing continues or declines, the Waddell Ranch Properties may or may not be able to continue to contribute to the distribution in the foreseeable future, after covering the ongoing CAPEX budget.

Insights

Financial Analyst

The recent announcement by Argent Trust Company regarding the Permian Basin Royalty Trust's distribution payout reflects underlying volatility in commodity prices and production. A financial analyst would note the direct correlation between the Trust's revenue and the fluctuating prices of oil and gas, as well as the production volumes. The decrease in distribution from the previous month signals a potential concern for investors regarding the stability of future payouts, especially given the significant capital expenditures (CAPEX) related to the Waddell Ranch Properties.

The announcement also underscores the importance of operational efficiency and cost management in the energy sector. The spike in CAPEX due to horizontal frac costs, which are often associated with unconventional oil and gas extraction methods, can have a substantial impact on net profit interest (NPI). Investors should monitor the Trust's ability to manage these costs effectively, as they could influence the Trust's financial performance and, by extension, the value of its units.

Market Research Analyst

From a market research perspective, the dynamics of the oil and gas industry are critical in understanding the Trust's performance. The reported decrease in gas volumes and pricing, particularly for the Texas Royalty Properties, could be indicative of broader market trends. Analysts would examine the implications of such trends on the Trust's competitive position and potential market share. Additionally, the Trust's disclosure about the possibility of not being able to continue contributions to the distribution if current pricing persists or declines is a noteworthy risk factor for market participants.

Understanding the industry's cyclicality and the impact of geopolitical events on commodity prices is essential for stakeholders to anticipate future performance. The Permian Basin Royalty Trust's reliance on the performance of the Waddell Ranch Properties further highlights the importance of geographic concentration risks in market analysis.

Energy Sector Analyst

An energy sector analyst would focus on the operational aspects of the Trust's announcement. The reported decrease in production and pricing for the Waddell Ranch Properties, coupled with increased capital costs, are critical factors affecting the Trust's financial health. The mention of a significant decrease in gas volumes due to the timing of revenue checks also suggests logistical and administrative challenges that can affect cash flow.

Furthermore, the analyst would evaluate the Trust's reserve replacement strategy, as indicated by the reported new drill wells and recompletions. The balance between maintaining production levels and managing capital expenditures is a delicate one, particularly in an environment of fluctuating oil and gas prices. The Trust's ability to sustain distributions while covering ongoing CAPEX will be a key factor in assessing its long-term viability.

DALLAS, Jan. 19, 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 $0.031031 per unit, payable on February 14, 2024, to unit holders of record on January 31, 2024.

This month's distribution decreased from the previous month due to a slight decrease in production and decreases in pricing of oil and pricing of gas for the Waddell Ranch Properties as well as increased capital costs on the Waddell Ranch Properties. There was a significant decrease in gas volumes produced on the Texas Royalty Properties. This is due to timing of receipt of revenue checks relative to the holidays and the month of December ending on a long weekend.

WADDELL RANCH
In reporting November production of the Underlying Properties for this month's press release, production for oil volumes was 243,384 (gross) with average pricing of approximately $76.54 per bbl. Production for gas volumes (including gas liquids) was 855,733 Mcf (gross) with average pricing of approximately $0.11 per Mcf, which now includes the value received from plant products and natural gas liquids. Net revenue for the underlying properties of the Waddell Ranch was $17,899,375 (gross) for November. Lease Operating Expenses were $5,601,315 (gross) and Capital Expenditures (CAPEX) were $11,886,206 (gross) for November, netting a positive Net Profit Interest (NPI) of $411,277. This would put the Trust's proceeds of 75% as a positive $308,458 (net) to contribute to this month's distribution. For the month of November, revenue decreased compared to the prior month. Overall, all products saw a decrease in pricing and volumes were down as the result of one less day of production. There was a spike in CAPEX that is related to the timing of horizontal frac costs. If current oil and gas pricing continues or declines, the Waddell Ranch Properties may or may not be able to continue to contribute to the distribution in the foreseeable future, after covering the ongoing CAPEX budget. The Waddell Ranch Properties NPI contributed to this month's distribution.

First sales received for the month of November 2023 wells were as follows: (all net to the Trust), 1.5 new drill wells, including 0.0 horizontal wells, 3.0 recompleted wells. Waiting on completion, as of November 30, 2023, were 2.3 drill wells, including 1.1 horizontal wells and 3.8 recompletion wells. Also, 3.8 wells, plugged and abandoned, were completed.

Blackbeard has estimated the projected 2023 capital expenditure budget for the Waddell Ranch Properties to be $96.8 million (net to the Trust) with a projection of about 30.75 new drill wells and 45 recompletions, along with about 37.5 plug and abandoned wells. Approximately 84% of that budget has been incurred and is related to January through November activity.

TEXAS ROYALTY PROPERTIES
Production for the underlying Texas Royalty Properties was 16,739 barrels of oil and 9,503 Mcf of gas. The production for the Trust's allocated portion of the Texas Royalty Properties was 14,965 barrels of oil and 8,510 Mcf of gas. The average price for oil was $80.33 per bbl and for gas was $7.67 which includes significant NGL pricing per Mcf. This would primarily reflect production and pricing for the month of October for oil and the month of September 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 $1,417,599. Deducted from these revenues were taxes of $150,130, resulting in a Net Profit of $1,267,469 for the month of November. With the Trust's Net Profit Interest (NPI) of 95% of the Underlying Properties, this would result in a net contribution by the Texas Royalty Properties of $1,204,095 to this month's distribution.

	Underlying Properties		Net to Trust Sales
	Volumes		Volumes		Average	Price
	Oil  (bbls)	Gas  (Mcf)	Oil  (bbls)	Gas  (Mcf)	Oil (per bbl)	Gas  (per Mcf)
Current Month
Waddell Ranch	243,384	855,733	182,538	641,800	$76.54	$0.11**
Texas Royalties	16,739	9,503	14,965	8,510*	$80.33	$7.67**
Prior Month
Waddell Ranch	268,044	886,479	201,033	664,859*	$84.60	$1.41**
Texas Royalties	16,522	20,507	14,833	18,418*	$86.51	$4.25**

*These volumes are the net to the Trust, after allocation of expenses to Trust's net profit interest, including any prior period adjustments.
**This pricing includes sales of gas liquid products.

General and Administrative Expenses deducted for the month were $85,667 resulting in a distribution of $1,446,325 to 46,608,796 units outstanding, or $0.031031 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 December 18, 2023, Argent Trust Company, as Trustee (the "Trustee") of the Trust, filed its Original Complaint against defendant Blackbeard Operating, LLC ("Blackbeard"). The Trustee seeks to recover more than $15 million in damages resulting from Blackbeard's alleged failure to properly calculate and pay royalties due and owing to the Trust. The Trustee will provide material updates as they become available.

The 2023 tax information packets are expected to begin mailing directly to unit holders in early March 2024. A copy of Permian's 2023 tax information booklet is expected to be posted on Permian's website by February 29, 2024. In addition to the tax booklet, the Permian website also offers two simple calculators for computing the income and expense amounts and the cost depletion. To facilitate unit holder tax preparation, both the income and expense and the depletion calculators are expected to be updated on Permian's website by late February 2024 for 2023 tax reporting.

The 2022 Annual Report with Form 10-K and the December 31, 2022 Reserve Summary are 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.

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

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SOURCE Permian Basin Royalty Trust

FAQ

What is the cash distribution declared for Permian Basin Royalty Trust (NYSE: PBT)?

The cash distribution declared for Permian Basin Royalty Trust (NYSE: PBT) is $0.031031 per unit, payable on February 14, 2024.

What was the net revenue for the underlying properties of the Waddell Ranch in November?

The net revenue for the underlying properties of the Waddell Ranch was $17,899,375 for November, with a positive Net Profit Interest (NPI) of $411,277.

What factors contributed to the decrease in distribution from the previous month?

The distribution decreased from the previous month due to a slight decrease in production and decreases in pricing of oil and gas.

What may affect the Waddell Ranch Properties' ability to continue contributing to the distribution in the future?

If current oil and gas pricing continues or declines, the Waddell Ranch Properties may or may not be able to continue to contribute to the distribution in the foreseeable future, after covering the ongoing CAPEX budget.