PERMIAN BASIN ROYALTY TRUST ANNOUNCES OCTOBER CASH DISTRIBUTION

Rhea-AI Summary

Permian Basin Royalty Trust (NYSE: PBT) announced a cash distribution of $0.029986 per unit, payable on November 15, 2024, to unit holders of record on October 31, 2024. The distribution includes $267,781 from September proceeds but excludes current month proceeds from Waddell Ranch properties. The decrease from the previous month is due to lower September proceeds from Waddell Ranch and reduced oil volumes and prices for Texas Royalty Properties.

For Texas Royalty Properties, production was 16,103 barrels of oil and 7,106 Mcf of gas, with average prices of $77.19 per bbl for oil and $10.02 per Mcf for gas. This resulted in a net contribution of $1,234,959 to the distribution.

The Trust is currently engaged in litigation against Blackbeard Operating, , seeking over $25 million in damages related to disputed overhead charges and other expenses. A preliminary trial date is set for April 21, 2025.

Positive

• Cash distribution of $0.029986 per unit declared
• Texas Royalty Properties contributed $1,234,959 to the distribution
• Average oil price of $77.19 per bbl and gas price of $10.02 per Mcf for Texas Royalty Properties

Negative

• Distribution decreased from the previous month
• Lower oil volumes and prices for Texas Royalty Properties
• Blackbeard Operating refused to provide information for Waddell Ranch properties
• Ongoing litigation against Blackbeard Operating, seeking over $25 million in damages

Insights

Financial Analyst

The October cash distribution of $0.029986 per unit represents a decrease from the previous month, primarily due to lower oil volumes and prices from the Texas Royalty Properties. This decline is partially offset by higher gas volumes and prices. The distribution includes $267,781 from September's Waddell Ranch properties proceeds, but notably excludes October's Waddell Ranch data due to the operator's refusal to provide necessary information.

The Texas Royalty Properties contributed $1,234,959 to this month's distribution, based on production of 16,103 barrels of oil at $77.19 per barrel and 7,106 Mcf of gas at $10.02 per Mcf. These figures reflect a slight decrease in oil price and volume compared to the previous month.

The ongoing litigation against Blackbeard Operating, has expanded, with the Trustee now seeking over $25 million in damages related to disputed expense deductions. This legal action could potentially impact future distributions if resolved in the Trust's favor.

Legal Expert

The ongoing litigation between the Permian Basin Royalty Trust and Blackbeard Operating, is a significant development with potential long-term implications for unitholders. The Trustee's amended petition, now seeking over $25 million in damages, alleges improper deductions from royalty payments, including incorrect overhead charges and ineligible expenses.

Blackbeard's counterclaim for declaratory judgment on overhead charges and information disclosure limitations adds complexity to the case. The trial set for April 21, 2025, could result in substantial financial recovery for the Trust if successful, potentially boosting future distributions.

However, Blackbeard's current refusal to provide monthly NPI information for Waddell Ranch properties is concerning, as it hampers transparency and complicates distribution calculations. This behavior may be interpreted unfavorably by the court and could strengthen the Trust's position in the ongoing litigation.

DALLAS, Oct. 21, 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 $0.029986 per unit, payable on November 15, 2024, to unit holders of record on October 31, 2024. The distribution does not include proceeds from the Waddell Ranch properties for the current month but does include the proceeds from September in the amount of $267,781. More information regarding the Waddell Ranch properties is described below.

This month's distribution decreased from the previous month due primarily to the September proceeds being less than the August proceeds from Waddell Ranch properties and, for the Texas Royalty Properties, lower oil volumes and prices, slightly offset by higher gas volumes and 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 September 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 October distribution, rather than the September distribution. As noted above, proceeds of $267,781 received by the Trustee in September 2024 after the announcement date for the September distribution will be included in the October distribution. The Trustee has continued to request information from Blackbeard, including production and pricing information, however, there can be no assurances that additional information will be forthcoming or on what time frame.

TEXAS ROYALTY PROPERTIES
Production for the underlying Texas Royalty Properties was 17,969 barrels of oil and 7,932 Mcf of gas. The production for the Trust's allocated portion of the Texas Royalty Properties was 16,103 barrels of oil and 7,106 Mcf of gas. The average price for oil was $77.19 per bbl and for gas was $10.02, which includes significant NGL pricing, per Mcf. This would mainly reflect production and pricing in July for oil and June 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 $1,466,585. Deducted from these revenues were taxes and expenses of $166,627, resulting in a Net Profit of $1,299,958 for October. 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 $1,234,959 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	17,969	7,932	16,103	7,106	$77.19	$10.02
Prior Month
Waddell Ranch	(3)	(3)	(3)	(3)	(3)	(3)
Texas Royalties	20,846	7,012	18,843	6,337	$79.03	$10.00

(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 $105,091 resulting in a distribution of $1,397,649 to 46,608,796 units outstanding, or $0.029986 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 parties are currently engaged in discovery, and the District Court of Tarrant County has set a preliminary trial date of April 21, 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.

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 amount for Permian Basin Royalty Trust (PBT) in October 2024?

Permian Basin Royalty Trust (PBT) declared a cash distribution of $0.029986 per unit for October 2024.

When is the payment date for PBT's October 2024 distribution?

The payment date for PBT's October 2024 distribution is November 15, 2024.

What caused the decrease in PBT's distribution compared to the previous month?

The decrease was primarily due to lower September proceeds from Waddell Ranch properties and reduced oil volumes and prices for Texas Royalty Properties.

What is the current status of PBT's litigation against Blackbeard Operating, ?

PBT is seeking over $25 million in damages from Blackbeard Operating, , with a preliminary trial date set for April 21, 2025.

What were the production volumes for PBT's Texas Royalty Properties in the latest report?

The production for PBT's allocated portion of Texas Royalty Properties was 16,103 barrels of oil and 7,106 Mcf of gas.