Permianville Royalty Trust Announces Monthly Operational Update

Rhea-AI Summary

Permianville Royalty Trust (NYSE: PVL) announced no monthly distribution will be paid in January 2025 due to a net profits shortfall of approximately $1.9 million in December 2024. The shortfall was reduced to $0.9 million after the Sponsor released a $1.0 million cash reserve.

The Trust reported oil sales of 37,649 barrels at $70.14/Bbl (down from 40,886 barrels at $75.88/Bbl) and natural gas sales of 412,711 Mcf at $1.60/Mcf (up from 384,143 Mcf at $1.78/Mcf). Oil cash receipts decreased by $0.5 million to $2.6 million, while natural gas receipts remained at $0.7 million.

Capital expenditures increased by $3.2 million to $3.4 million, driven by drilling activities in Permian and Haynesville wells. The Sponsor expects the Underlying Properties to return to generating positive net profits in 2025.

Positive

• Natural gas sales volume increased to 412,711 Mcf from 384,143 Mcf

Negative

• No monthly distribution to unitholders in January 2025
• Net profits shortfall of $0.9 million after reserve release
• Oil sales volume decreased to 37,649 barrels from 40,886 barrels
• Oil price declined to $70.14/Bbl from $75.88/Bbl
• Natural gas price decreased to $1.60/Mcf from $1.78/Mcf
• Capital expenditures increased by $3.2 million to $3.4 million

Insights

Financial Analyst

The latest operational update reveals concerning financial metrics for Permianville Royalty Trust. The Trust reported a significant $1.9 million shortfall due to elevated capital expenditures exceeding cash receipts. Despite the Sponsor releasing $1.0 million from cash reserves, a $0.9 million deficit remains, resulting in no January 2025 distribution to unitholders.

Revenue deterioration is evident with oil receipts declining $0.5 million month-over-month, driven by lower realized prices ($70.14/Bbl vs $75.88/Bbl) and reduced production volumes. The substantial increase in capital expenditures to $3.4 million for multiple well developments, while potentially beneficial long-term, is creating near-term distribution challenges. This situation could persist until the cumulative shortfall is eliminated and any borrowed funds are repaid.

Energy Industry Analyst

The operational metrics show concerning trends in both production and pricing. Oil volumes dropped 7.9% to 37,649 barrels (1,255 Bbl/D), while natural gas production increased to 412,711 Mcf. However, realized prices declined across both commodities, with oil down 7.6% to $70.14/Bbl and natural gas down 10.1% to $1.60/Mcf.

The significant capital expenditure increase for drilling activities in both the Permian and Haynesville regions, involving major operators, suggests potential future production growth. However, the Trust's non-operated position means control over capital allocation timing, creating cash flow volatility. The Sponsor's expectation of returning to positive net profits in 2025 indicates a potentially extended recovery period.

HOUSTON--(BUSINESS WIRE)-- Permianville Royalty Trust (NYSE: PVL, the “Trust”) today announced the net profits interest calculation for December 2024. The net profits interest calculation represents reported oil production for the month of September 2024 and reported natural gas production during August 2024. The calculation includes accrued costs incurred in October 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 $1.9 million this month. COERT Holdings 1 LLC (the “Sponsor”) is releasing this month the full $1.0 million cash reserve previously established for expected capital expenditures, which will reduce the shortfall to approximately $0.9 million. As a result, no monthly distribution will be paid in January 2025 to the Trust’s unitholders of record on December 31, 2024.

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		37,649		1,255		412,711		13,313		$	70.14		$	1.60
Prior Month		40,886		1,319		384,143		12,392		$	75.88		$	1.78

Recorded oil cash receipts from the oil and gas properties underlying the Trust (the “Underlying Properties”) totaled $2.6 million for the current month on realized wellhead prices of $70.14/Bbl, down $0.5 million from the prior month’s oil cash receipts.

Recorded natural gas cash receipts from the Underlying Properties totaled $0.7 million for the current month on realized wellhead prices of $1.60/Mcf, consistent with the prior month.

Total accrued operating expenses remained consistent with the prior period at $2.3 million. Capital expenditures increased $3.2 million from the prior period to $3.4 million. The increase in 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 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, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241216448928/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 January 2025?

PVL is not paying a distribution due to a net profits shortfall of $0.9 million after operating and development expenses exceeded cash receipts, even after using a $1.0 million cash reserve.

What caused the increase in PVL's capital expenditures in December 2024?

Capital expenditures increased by $3.2 million due to non-operated spending on two Permian wells and nine Haynesville wells drilled by major oil companies.

How did PVL's oil and gas production volumes change in the latest report?

Oil production decreased from 40,886 to 37,649 barrels, while natural gas production increased from 384,143 to 412,711 Mcf.

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

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

How much did PVL's oil and gas prices decline in the latest report?

Oil prices decreased from $75.88/Bbl to $70.14/Bbl, and natural gas prices declined from $1.78/Mcf to $1.60/Mcf.