PERMIAN BASIN ROYALTY TRUST ANNOUNCES MARCH CASH DISTRIBUTION

Rhea-AI Summary

Permian Basin Royalty Trust (PBT) declares a cash distribution of $0.041340 per unit for April 12, 2024, due to increased oil production, higher oil and gas pricing, and reduced capital costs. The Trust's revenue rose slightly from the previous month, with positive net profit interests from Waddell Ranch and Texas Royalty Properties contributing to the distribution.

Positive

• Increased cash distribution due to higher oil and gas pricing.
• Positive net profit interests from Waddell Ranch and Texas Royalty Properties.
• Revenue growth compared to the previous month.
• Detailed production and pricing data provided for Waddell Ranch and Texas Royalty Properties.
• Potential impact of market conditions on future distributions.
• 2023 tax information and 2022 Annual Report available on Permian's website.

Negative

• Uncertainty due to ongoing trust litigation with Blackbeard.
• Potential future distribution impact from market conditions.
• Incomplete finalization of the 2024 capital expenditure budget.
• Dismissed lawsuit against Blackbeard without resolution.

Insights

Energy Sector Financial Analyst

The recent announcement by Permian Basin Royalty Trust regarding its cash distribution is a reflection of several underlying factors that are pertinent to investors and stakeholders. Firstly, the increase in distribution is a result of improved production and pricing dynamics for oil and to a lesser extent gas, which indicates a favorable short-term operational environment for the Trust. The slight decrease in capital costs on the Waddell Ranch Properties is also financially beneficial as it implies a more efficient allocation of capital towards production.

However, the mention of potential challenges in maintaining future distributions if current oil and gas pricing continues or declines introduces uncertainty. This statement underscores the volatile nature of commodity prices and their direct impact on revenue streams for royalty trusts. Investors should be cognizant of the potential risks associated with such price fluctuations.

Moreover, the preliminary capital expenditure budget provided by Blackbeard Operating, LLC for the year 2024, which includes substantial investments in horizontal and vertical wells, suggests a strategic focus on maintaining and possibly increasing production levels. This could be seen as a positive indicator of the Trust's commitment to growth, yet it also highlights the need for continuous capital investment to sustain production, which can be a concern if revenues are not sufficient to cover these expenditures.

Market Research Analyst

From a market perspective, the distribution announcement from Permian Basin Royalty Trust is indicative of broader trends in the energy sector. The increase in oil and gas pricing aligns with global market conditions, which have been experiencing volatility due in part to geopolitical tensions and supply-demand imbalances. These conditions have a direct bearing on the financial performance of companies like Permian, which are heavily reliant on commodity prices.

Additionally, the Trust's performance, as evidenced by the distribution, could impact investor sentiment towards the energy sector, particularly in the royalty trust subcategory. Positive cash flow distributions often attract income-focused investors, which could potentially lead to increased demand for PBT units. However, the Trust's cautionary note about the unpredictability of future distributions may temper investor enthusiasm.

The dismissal of the lawsuit against Blackbeard without prejudice, although not immediately impacting the distribution, is a legal development that investors should monitor. While it does not currently affect financials, any future material updates regarding this litigation could influence the Trust's financial stability and investor confidence.

Legal Expert

Regarding the legal aspects, the dismissal of the lawsuit against Blackbeard is a significant event, even though it was without prejudice, meaning it could be brought again in the future. Legal disputes can have material impacts on a company's operations and financials and their resolution or lack thereof can influence investor trust and the company's reputation. Stakeholders should remain vigilant about any future developments in this area, as they could have implications for the Trust's financial health and governance.

Furthermore, the Trust's transparency in providing tax information and financial reports on its website is a positive governance practice. This accessibility of information is beneficial for unit holders and potential investors, as it aids in the assessment of the Trust's financial condition and tax implications associated with their investments.

DALLAS, March 18, 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 $0.041340 per unit, payable on April 12, 2024, to unit holders of record on March 28, 2024.

This month's distribution increased from the previous month due to a slight increase in production of oil and increases in the pricing of both oil and gas, as well as a slight decrease in capital costs on the Waddell Ranch Properties, partially offset by a decrease in the production of gas. There was a decrease in oil volumes produced on the Texas Royalty Properties, along with a decrease in the price of oil. The gas pricing for the Texas Royalty Properties increased, partially offset by a decrease in gas volumes for the month.

WADDELL RANCH
In reporting January production of the Underlying Properties for this month's press release, production for oil volumes was 253,653 (gross) with average pricing of approximately $72.45 per bbl. Production for gas volumes (including gas liquids) was 847,835 Mcf (gross) with average pricing of approximately $2.38 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 $19,042,030 (gross) for January. Lease Operating Expenses were $6,021,813 (gross) and Capital Expenditures (CAPEX) were $11,547,978 (gross) for January, netting a positive Net Profit Interest (NPI) of $1,472,239. This would put the Trust's proceeds of 75% as a positive $1,104,179 (net) to contribute to this month's distribution. For January, revenue was increased slightly compared to the previous month. Oil products saw an increase in pricing and a slight increase in volumes. Gas products saw an increase in pricing, offset by a slight decrease in production in January. CAPEX increased due 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 January 2024 wells were as follows: (all net to the Trust), 1.1 new drill wells, including 0.4 horizontal wells, 1.9 recompleted wells. Waiting on completion, as of January 31, 2024, were 1.9 drill wells, including 1.9 horizontal wells and 3.0 recompletion wells. Also, 4.5 wells, plugged and abandoned, were completed.

TEXAS ROYALTY PROPERTIES
Production for the underlying Texas Royalty Properties was 16,538 barrels of oil and 5,430 Mcf of gas. The production for the Trust's allocated portion of the Texas Royalty Properties was 14,665 barrels of oil and 4,825 Mcf of gas. The average price for oil was $71.75 per bbl and for gas was $11.68 which includes significant NGL pricing per Mcf. This would mainly reflect production and pricing in December for oil and November 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 $1,250,043. Deducted from these revenues were taxes of $133,453, resulting in a Net Profit of $1,116,590 for January. 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 $1,060,760 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	253,653	847,835	190,240	635,876*	$72.45	$2.38**
Texas Royalties	16,538	5,430	14,665	4,825*	$71.75	$11.68**
Prior Month
Waddell Ranch	252,265	861,361	189,199	646,021*	$70.25	$0.93**
Texas Royalties	17,227	9,520	15,348	8,483*	$73.43	$7.93**

*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.

 

CAPITAL EXPENDITURE BUDGET
Blackbeard has advised the Trustee that the proposed budget for 2024 has not been finalized; however, it has provided the Trustee with a preliminary capital expenditure budget of approximately $301 million (gross) $106.11 million (net) and development plan reflecting that the 2024 budget will include amounts to be spent on 83 (gross) horizontal wells and 12 (gross) vertical wells along with 24 (gross) recompleted well prospects to be worked over and completed as well as infrastructure and plugging and abandonment costs. Blackbeard has advised the trustee that approximately 7% of that preliminary budget has been incurred related to January 2024 activity.

Blackbeard Operating, LLC
	Budget (1)
Year	Gross ($M)	Net ($M)
2023	325.12	121.92
2024	301.43	106.11
(1) 2024 data based on preliminary budget numbers provided by Blackbeard. Blackbeard has advised the trustee that these dollar amounts could change based on changes in their estimates

 

General and Administrative Expenses deducted for the month were $245,277 resulting in a distribution of $1,927,017 to 46,608,796 units outstanding, or $0.041340 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 March 5, 2024, the lawsuit against Blackbeard was dismissed without prejudice, but the dispute has not been resolved. The Trustee will provide material updates as they become available.

The 2023 tax information packets were mailed directly to unit holders in early March 2024. A copy of Permian's 2023 tax information booklet has been posted on Permian's website. 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 have been updated on Permian's website 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

 

View original content:https://www.prnewswire.com/news-releases/permian-basin-royalty-trust-announces-march-cash-distribution-302090871.html

SOURCE Permian Basin Royalty Trust

FAQ

What is the cash distribution declared by Permian Basin Royalty Trust for April 12, 2024?

Permian Basin Royalty Trust declared a cash distribution of $0.041340 per unit for April 12, 2024.

What factors contributed to the increase in this month's distribution?

Increased oil production, higher oil and gas pricing, and reduced capital costs contributed to the increase in this month's distribution.

What were the production volumes and pricing for Waddell Ranch in January 2024?

Waddell Ranch had 253,653 barrels of oil and 847,835 Mcf of gas with average pricing of $72.45 per bbl and $2.38 per Mcf.

What was the net revenue and Net Profit Interest for Waddell Ranch in January 2024?

Net revenue for Waddell Ranch was $19,042,030 with a positive Net Profit Interest (NPI) of $1,472,239.

What is the Trust's Net Profit Interest (NPI) for the Underlying Properties?

The Trust's Net Profit Interest (NPI) is 75% as a positive $1,104,179 (net) for this month's distribution.

What was the production and pricing for the Texas Royalty Properties in January 2024?

Texas Royalty Properties had 16,538 barrels of oil and 5,430 Mcf of gas with average pricing of $71.75 per bbl and $11.68 per Mcf.

What was the Net Profit of Texas Royalty Properties for January 2024?

The Net Profit of Texas Royalty Properties was $1,116,590 for January.

What is the preliminary capital expenditure budget for 2024 provided by Blackbeard?

Blackbeard provided a preliminary capital expenditure budget of approximately $301 million (gross) and $106.11 million (net) for 2024.

Where can unit holders find the 2023 tax information and the 2022 Annual Report for Permian Basin Royalty Trust?

Unit holders can find the 2023 tax information and the 2022 Annual Report on Permian's website at http://www.pbt-permian.com/.