PERMIAN BASIN ROYALTY TRUST ANNOUNCES JUNE CASH DISTRIBUTION

Rhea-AI Summary

Permian Basin Royalty Trust (NYSE: PBT) announced a June cash distribution of $0.072743 per unit, payable on July 15, 2024, to unit holders of record on June 28, 2024. The distribution includes $2,247,045 from May's Waddell Ranch properties. The increase in distribution is due to May's proceeds and higher oil prices, despite lower production and gas prices. Production for Texas Royalty Properties was 16,053 barrels of oil and 6,912 Mcf of gas, generating $1,393,281 in revenues, yielding a Net Profit of $1,246,693 for June. Administrative expenses were $40,933. Notably, Blackbeard Operating, , has not provided necessary data for June, affecting the distribution timeline. Additionally, the Trust is involved in litigation against Blackbeard for over $15 million in damages due to alleged improper overhead charges.

Positive

• June distribution of $0.072743 per unit.
• May's Waddell Ranch proceeds amount to $2,247,045.
• Higher oil prices contributing to increased distribution.
• Texas Royalty Properties generated $1,393,281 in revenues.
• Net Profit from Texas Royalty Properties is $1,246,693 for June.

Negative

• Delayed data from Blackbeard affecting June distribution.
• Lower oil and gas production for the reported month.
• Decreased natural gas prices impacting revenues.
• Administrative expenses amounted to $40,933.
• Ongoing litigation against Blackbeard involving over $15 million in damages.

Insights

Financial Analyst

The Permian Basin Royalty Trust's announcement of a cash distribution of $0.072743 per unit is a positive short-term signal for income-focused investors. This distribution, payable on July 15, 2024, reflects the inclusion of May proceeds from the Waddell Ranch properties amounting to $2,247,045. The increase from the previous month is attributed to higher oil prices for the Texas Royalty Properties, despite lower overall production and natural gas prices. For a retail investor, this implies a relatively stable income stream from the Trust, albeit influenced by fluctuating commodity prices.

However, the legal dispute with Blackbeard Operating, LLC could imply potential risks. This litigation, seeking over $15 million in damages for alleged improper expense deductions, introduces uncertainty about future distributions. If the Trust prevails, this could positively impact future profitability. Conversely, any prolonged litigation could result in increased administrative costs and distractions.

From an industry perspective, the Trust's revenues are highly dependent on oil and gas prices, which are volatile and subject to global supply-demand dynamics. The recent increase in oil prices is a favorable sign, but investors should remain cognizant of potential future fluctuations. Additionally, the lack of timely information from Blackbeard highlights a transparency issue that could affect investor confidence.

Overall, while the current cash distribution is a reassuring sign, the ongoing litigation and dependency on commodity prices introduce elements of risk that investors should carefully weigh.

Legal Expert

The ongoing lawsuit between the Trustee of the Permian Basin Royalty Trust and Blackbeard Operating, LLC represents a significant factor that could influence investor sentiment. The Trustee's claim for more than $15 million in allegedly improper deductions highlights potential issues with expense management and allocation. If the Trustee can successfully demonstrate that Blackbeard's charges were indeed impermissible, this could result in a substantial financial recovery for the Trust, positively impacting future distributions.

Conversely, Blackbeard's counterclaim requests declaratory judgments that could affect the Trust's ability to monitor and control expenses. If the court sides with Blackbeard, this might limit the Trust's oversight and potentially reduce transparency in financial reporting. This scenario could lead to ongoing financial disputes and erode investor confidence.

Retail investors should understand that litigation outcomes are inherently uncertain and may take considerable time to resolve. The preliminary trial date is set for April 21, 2025, which means that interim distributions could continue to be affected by this legal uncertainty. The financial implications of the lawsuit, both in terms of potential recovery and costs associated with prolonged legal proceedings, are critical factors to monitor.

DALLAS, June 17, 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 $0.072743 per unit, payable on July 15, 2024, to unit holders of record on June 28, 2024. The distribution does not include proceeds from the Waddell Ranch properties for the current month, but does include the proceeds from May in the amount of $2,247,045. More information regarding the Waddell Ranch properties is described below.

     This month's distribution increased from the previous month due mainly to the inclusion of the May proceeds from the Waddell Ranch properties and, for the Texas Royalty Properties, higher oil prices, partially offset by lower oil and gas production along with lower natural gas prices for the month reported.

WADDELL RANCH

     Notwithstanding requests from the Trustee to Blackbeard Operating, LLC ("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 June 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 July distribution, rather than the June distribution. As noted above, proceeds of $2,247,045 received by the Trustee in May 2024 after the announcement date for the May distribution will be included in the June distribution.

TEXAS ROYALTY PROPERTIES

     Production for the underlying Texas Royalty Properties was 16,053 barrels of oil and 6,912 Mcf of gas. The production for the Trust's allocated portion of the Texas Royalty Properties was 14,339 barrels of oil and 6,173 Mcf of gas. The average price for oil was $82.22 per bbl and for gas was $10.63, which includes significant NGL pricing, per Mcf. This would mainly reflect production and pricing in March for oil and February 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 $1,393,281. Deducted from these revenues were taxes of $146,588, resulting in a Net Profit of $1,246,693 for June. 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 $1,184,358 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	16,053	6,912	14,339	6,173	$82.22	$10.63
Prior Month
Waddell Ranch	(3)	(3)	(3)	(3)	(3)	(3)
Texas Royalties	16,335	7,699	14,569	6,865	$78.00	$11.16

(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 not available as of the date hereof.

     General and Administrative Expenses deducted for the month, net of interest earned were $40,933 resulting in a distribution of $3,390,470 to 46,608,796 units outstanding, or $0.072743 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 District Court of Tarrant County also has set a preliminary trial date of April 21, 2025, 8:30 a.m., Central Time.

     Pursuant to the petition, the Trustee seeks 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. 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.

     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-june-cash-distribution-302173827.html

SOURCE Permian Basin Royalty Trust

FAQ

What is the June 2024 distribution for PBT?

The June 2024 distribution for Permian Basin Royalty Trust (PBT) is $0.072743 per unit.

When is the PBT June 2024 distribution payable?

The PBT June 2024 distribution is payable on July 15, 2024.

What is the record date for the PBT June 2024 distribution?

The record date for the PBT June 2024 distribution is June 28, 2024.

Why did the PBT June distribution increase?

The PBT June distribution increased due to May's proceeds from Waddell Ranch properties and higher oil prices.

What is the production data for Texas Royalty Properties in the PBT June distribution?

Texas Royalty Properties produced 16,053 barrels of oil and 6,912 Mcf of gas.

How much revenue did Texas Royalty Properties generate for PBT in June 2024?

Texas Royalty Properties generated $1,393,281 in revenues for PBT in June 2024.

What are the administrative expenses for PBT in June 2024?

The administrative expenses for PBT in June 2024 were $40,933.

What litigation is PBT involved in as of June 2024?

PBT is involved in litigation against Blackbeard Operating, , seeking over $15 million in damages.