Permianville Royalty Trust Announces Monthly Operational Update

Rhea-AI Summary

Permianville Royalty Trust (NYSE: PVL) announced no monthly distribution will be paid in February 2025 due to a shortfall of approximately $1.3 million, as operating and development expenses exceeded cash receipts. The cumulative net profits shortfall now totals $2.2 million.

For the current month, recorded oil cash receipts were $2.8 million at $76.92/Bbl (up $0.2 million from prior month), while natural gas receipts were $0.6 million at $1.63/Mcf (down $0.1 million). Operating expenses decreased by $0.2 million to $2.2 million, and capital expenditures decreased by $0.5 million to $2.9 million.

The high capital expenditures were driven by non-operated spending on two Permian wells and nine Haynesville wells drilled by major oil companies. The Sponsor anticipates the Underlying Properties will return to generating positive net profits in 2025.

Positive

• Oil price increased to $76.92/Bbl from $70.14/Bbl
• Operating expenses decreased by $0.2 million to $2.2 million
• Capital expenditures decreased by $0.5 million to $2.9 million

Negative

• No February 2025 distribution due to $1.3 million shortfall
• Cumulative net profits shortfall increased to $2.2 million
• Natural gas receipts declined by $0.1 million
• Oil production decreased from 37,649 to 36,977 Bbls
• Natural gas production decreased from 412,711 to 386,922 Mcf

Insights

Financial Analyst

The suspension of distributions due to a $1.3 million monthly shortfall and cumulative deficit of $2.2 million signals significant near-term challenges for PVL unitholders. This shortfall stems from capital expenditures outpacing cash receipts, primarily driven by drilling activities in partnership with major oil companies across Permian and Haynesville assets.

Production metrics show concerning trends: oil volumes declined 4.9% month-over-month to 36,977 barrels, while natural gas volumes dropped 6.2% to 386,922 Mcf. Despite higher realized prices ($76.92/Bbl for oil, up from $70.14), the increased capital expenditures of $2.9 million have overwhelmed the $3.4 million in total receipts.

The Trust's structure as a passive income vehicle makes it particularly vulnerable to these capital-intensive periods. While the Sponsor's optimism about returning to positive net profits in 2025 offers some hope, investors should note that any borrowed funds or advances must be repaid before distribution resumption, potentially extending the no-distribution period beyond the immediate shortfall recovery.

Energy Market Analyst

The current operational dynamics reflect broader industry trends in the Permian and Haynesville regions. The involvement of a super major oil company and a large private operator in drilling activities suggests strategic positioning in these premium basins, particularly in the Haynesville's natural gas plays despite current low gas prices of $1.63/Mcf.

The capital deployment pattern indicates a shift toward larger, more efficient well developments, typical of super major operations. While this may create short-term cash flow pressure, it could potentially enhance long-term production profiles and ultimate recovery rates. However, the Trust's non-operated position means control over capital allocation timing, creating cash flow volatility that's particularly challenging in the current commodity price environment.

HOUSTON--(BUSINESS WIRE)-- Permianville Royalty Trust (NYSE: PVL, the “Trust”) today announced the net profits interest calculation for January 2025. The net profits interest calculation represents reported oil production for the month of October 2024 and reported natural gas production during September 2024. The calculation includes accrued costs incurred in November 2024.

As a result of the elevated capital expenditures recorded this month as described below, for which timing is not always ratable month-to-month, direct operating and development expenses exceeded cash receipts, leading to a shortfall of approximately $1.3 million this month. As a result, no monthly distribution will be paid in February 2025 to the Trust’s unitholders of record on January 30, 2025. Distributions to the Trust will resume once the cumulative net profits shortfall, which now totals approximately $2.2 million, is eliminated.

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.

		Underlying Sales Volumes								Average Price
		Oil				Natural Gas				Oil			Natural Gas
		Bbls		Bbls/D		Mcf		Mcf/D		(per Bbl)			(per Mcf)
Current Month		36,977		1,193		386,922		12,897		$	76.92		$	1.63
Prior Month		37,649		1,255		412,711		13,313		$	70.14		$	1.60

Recorded oil cash receipts from the oil and gas properties underlying the Trust (the “Underlying Properties”) totaled $2.8 million for the current month on realized wellhead prices of $76.92/Bbl, up $0.2 million from the prior month’s oil cash receipts.

Recorded natural gas cash receipts from the Underlying Properties totaled $0.6 million for the current month on realized wellhead prices of $1.63/Mcf, down $0.1 million from the prior month.

Total accrued operating expenses decreased $0.2 million from the prior period to $2.2 million. Capital expenditures decreased $0.5 million from the prior period to $2.9 million. The continued high level of capital expenditures was driven by the non-operated spending for two Permian wells drilled by a public, super major oil company, three Haynesville wells drilled by a public, super major oil company, and six Haynesville wells drilled by a large private oil and gas exploration and production company.

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 COERT Holdings 1 LLC (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 in 2025.

About Permianville Royalty Trust

Permianville Royalty Trust is a Delaware statutory trust formed to own a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from certain, predominantly non-operated, oil and gas properties in the states of Texas, Louisiana and New Mexico. As described in the Trust’s filings with the Securities and Exchange Commission (the “SEC”), the amount of the periodic distributions is expected to fluctuate, depending on the proceeds received by the Trust as a result of actual production volumes, oil and gas prices, the amount and timing of capital expenditures, and the Trust’s administrative expenses, among other factors. Future distributions are expected to be made on a monthly basis. For additional information on the Trust, please visit www.permianvilleroyaltytrust.com.

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 and reserves for anticipated future expenses. In addition, future monthly capital expenditures may exceed the average levels experienced in 2024 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250117039149/en/

Permianville Royalty Trust

The Bank of New York Mellon Trust Company, N.A., as Trustee

601 Travis Street, 16^th Floor

Houston, Texas 77002

Sarah Newell 1 (512) 236-6555

Source: Permianville Royalty Trust

FAQ

Why is PVL not paying a distribution in February 2025?

PVL is not paying a February 2025 distribution because operating and development expenses exceeded cash receipts, resulting in a $1.3 million shortfall for the month.

What is the current cumulative net profits shortfall for PVL?

The current cumulative net profits shortfall for PVL totals approximately $2.2 million.

What were PVL's oil and gas production volumes for the current month?

PVL reported oil production of 36,977 Bbls (1,193 Bbls/D) and natural gas production of 386,922 Mcf (12,897 Mcf/D).

What caused the high capital expenditures for PVL in the current period?

The high capital expenditures were due to non-operated spending on two Permian wells and nine Haynesville wells drilled by major oil companies.

When does PVL expect to return to generating positive net profits?

Based on current commodity prices, the Sponsor anticipates the Underlying Properties will return to generating positive net profits in 2025.