Permianville Royalty Trust Announces Monthly Operational Update
Permianville Royalty Trust (NYSE: PVL) announced its net profits interest calculation for June 2024, covering oil production from March 2024 and natural gas production from February 2024. The outstanding net profits shortfall reduced from $3.9 million to $3.3 million. Due to this shortfall, no distribution will be paid to unitholders in July 2024. Excluding the shortfall, the income would have been $0.6 million, or $0.01772 per unit. Oil production increased to 43,568 Bbls at an average price of $77.57 per Bbl, while natural gas production surged to 599,059 Mcf at $1.66 per Mcf. The total revenue from oil and gas was $4.4 million, with a $2.8 million operating expense and $0.9 million in capital expenditures. The Trust anticipates generating positive net profits later in 2024.
- Oil production increased to 43,568 Bbls in March 2024.
- Natural gas production surged to 599,059 Mcf in February 2024.
- Recorded oil cash receipts increased by $0.5 million to $3.4 million.
- Natural gas cash receipts grew by $0.4 million to $1.0 million.
- Addition of revenues from five new Haynesville wells.
- Outstanding net profits shortfall remains at $3.3 million.
- No distribution to unitholders in July 2024.
- Operating expenses increased by $0.5 million to $2.8 million.
- Capital expenditures rose by $0.4 million to $0.9 million.
- Distributions cannot resume until the net profits shortfall is eliminated.
Insights
The announcement from Permianville Royalty Trust reveals a persistent net profits shortfall, which directly affects potential distributions to unitholders. The shortfall has decreased from
Despite an increase in both oil and gas production volumes (oil rising to 43,568 Bbls from 38,824 Bbls and gas to 599,059 Mcf from 253,759 Mcf) and higher realized wellhead oil prices (
The announcement mentions potential positive net profits later in 2024, contingent on commodity price stability and continued operational efficiency. Investors should monitor commodity price trends and the Trust's operational updates closely as these will be critical for future distributions.
The increase in production volumes, particularly in natural gas, can be attributed to the addition of new Haynesville wells. This development is noteworthy as it shows active management and expansion of the Trust's underlying properties, which could lead to improved production efficiency in the future. However, average wellhead prices for natural gas fell from
For investors, this mixed scenario implies a complex risk profile: although production is increasing, the revenue per unit of production for gas has decreased significantly. Understanding the broader market trends for oil and natural gas prices is essential to predict future performances accurately. Additionally, the market should keep an eye on geopolitical factors and supply chain issues that could impact these commodities' prices.
The Trust’s legal structure as a Delaware statutory trust means that it operates under specific regulations that impact its distribution policies. The detailed explanation of the net profits shortfall and the conditions under which distributions can resume provides transparency but also highlights the legal and structural limitations faced by the Trust. The clause that no further distributions will be made until any borrowed funds are repaid adds another layer of certainty for creditors but potentially delays returns for unitholders.
Investors should be aware of these structural constraints and understand that while the Trust’s operational performance is crucial, these legal stipulations govern the timing and likelihood of future distributions. It’s essential to review the Trust’s SEC filings and keep abreast of any legal updates or changes in the regulatory environment that might affect operations and distributions.
As a result of the cumulative outstanding net profits shortfall, which declined from approximately
The following table displays reported underlying oil and natural gas sales volumes and average received wellhead prices attributable to the current and prior month recorded net profits interest calculations.
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Underlying Sales Volumes |
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Average Price |
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|
Oil |
|
Natural Gas |
|
Oil |
|
Natural Gas |
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|
Bbls |
|
Bbls/D |
|
Mcf |
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Mcf/D |
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(per Bbl) |
|
(per Mcf) |
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Current Month |
|
43,568 |
|
1,405 |
|
599,059 |
|
20,657 |
|
$ |
77.57 |
|
$ |
1.66 |
Prior Month |
|
38,824 |
|
1,339 |
|
253,759 |
|
8,186 |
|
$ |
74.93 |
|
$ |
2.43 |
Recorded oil cash receipts from the oil and gas properties underlying the Trust (the “Underlying Properties”) totaled
Recorded natural gas cash receipts from the Underlying Properties totaled
Total accrued operating expenses for the period were
The cumulative shortfall in net profits for the current month will be deducted from any net profits in next month’s net profits interest calculation. The Trust will not receive proceeds pursuant to its net profits interest until the cumulative net profits shortfall is eliminated. In addition, if the Trust’s cash on hand is not sufficient to pay ordinary course administrative expenses and the Trust borrows funds or draws on the letter of credit that has been provided to the Trust, or if the Sponsor advances funds to the Trust to pay such expenses, no further distributions will be made to Trust unitholders until such amounts borrowed or drawn, or advanced to the Trust, are repaid. At this time based on current commodity prices, the Sponsor anticipates that the Underlying Properties will return to generating positive net profits later in 2024.
About Permianville Royalty Trust
Permianville Royalty Trust is a
Forward-Looking Statements and Cautionary Statements
This press release contains statements that are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release, other than statements of historical facts, are “forward-looking statements” for purposes of these provisions. These forward-looking statements include the amount and date of any anticipated distribution to unitholders and expectations regarding the future generation of net profits from the Underlying Properties. The anticipated distribution is based, in large part, on the amount of cash received or expected to be received by the Trust from the Sponsor with respect to the relevant period. The amount of such cash received or expected to be received by the Trust (and its ability to pay distributions) has been and will continue to be directly affected by the volatility in commodity prices, which can fluctuate significantly as a result of a variety of factors that are beyond the control of the Trust and the Sponsor. Low oil and natural gas prices will reduce profits to which the Trust is entitled, which will reduce the amount of cash available for distribution to unitholders and in certain periods could result in no distributions to unitholders. Other important factors that could cause actual results to differ materially include expenses of the Trust, reserves for anticipated future expenses, and public health concerns, such as the COVID‑19 pandemic. In addition, future monthly capital expenditures may exceed the average levels experienced in 2023 and prior periods, which could reduce the amount of cash available for distribution to unitholders and in certain periods could result in no distributions to unitholders. Statements made in this press release are qualified by the cautionary statements made in this press release. Neither the Sponsor nor the Trustee intends, and neither assumes any obligation, to update any of the statements included in this press release. An investment in units issued by the Trust is subject to the risks described in the Trust’s filings with the SEC, including the risks described in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 22, 2024. The Trust’s quarterly and other filed reports are or will be available over the Internet at the SEC’s website at http://www.sec.gov.
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Permianville Royalty Trust
The Bank of New York Mellon Trust Company, N.A., as Trustee
Sarah Newell 1 (512) 236-6555
Source: Permianville Royalty Trust
FAQ
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