#United States #Dallas #Argent Trust Company #Permian Basin Royalty Trust #Waddell Ranch

Overview of December Cash Distribution for Permian Basin Royalty Trust

On December 20, 2024, Argent Trust Company, acting as Trustee of the Permian Basin Royalty Trust (NYSE: PBT), announced a cash distribution of $0.021939 per unit to the holders of beneficial interest units. This distribution is scheduled for payment on January 15, 2025, to unit holders who are on record by December 31, 2024.

However, it is important to note that this cash distribution does not include any proceeds from the Waddell Ranch properties. The production costs from these properties for November exceeded gross proceeds, leading to an excess cost position.

Highlights of the Distribution

This month's distribution saw a slight increase compared to the previous month. The primary reason for this increase was attributed to higher oil and gas production from Texas royalty properties, although this was somewhat countered by lower gas and oil prices during the reporting month.

Waddell Ranch Properties

Despite efforts from the Trustee to obtain essential production information from Blackbeard Operating, the operator responsible for the Waddell Ranch properties, they have faced difficulties. Blackbeard has not provided the necessary details to calculate the net profits interest (NPI) proceeds for December 2024 as of the distribution announcement date. This delay has significant implications, as any proceeds received for the Waddell Ranch properties up to the record date will be included in the subsequent January distribution.

For context, in October 2024, the total excess costs for the Underlying Properties amounted to $4,987,682, with $3,740,762 net to the Trust. These figures included accrued interest of $33,031 on the Underlying Properties, necessitating future proceeds from the Waddell Ranch before any distributions can be made to the Trust.

Texas Royalty Properties Performance

The production data from the previous month revealed 18,407 barrels of oil and 7,073 Mcf of gas produced from the underlying Texas royalty properties. Specifically, the allocated production volume for the Trust amounted to 16,432 barrels of oil and 6,315 Mcf of gas. The average price for oil stood at $70.83 per barrel, while gas prices averaged $11.05 per Mcf, showing a decline in comparison to the previous month.

The revenues for the Texas Royalty Properties reached $1,381,893, minus taxes and expenditures amounting to $144,874, thus resulting in a net profit of $1,237,019 for December. This led to a net contribution from the Texas Royalty Properties of $1,175,168 for the current distribution, factoring in the Trust's NPI of 95% of the underlying assets.

Legal Challenges Faced by the Trust

On another note, legal affairs surrounding the Trust have progressed since a lawsuit was filed against Blackbeard Operating on May 8, 2024. The lawsuit pertains to recoveries sought for damages amounting to over $15 million, related to what the Trustee claims are improper deductions from royalty payments. The case is currently in the early stages of fact discovery, with a trial set for November 17, 2025.

The Trustee has continuously undertaken audits on the revenue and expenses linked to royalty payments. These audits revealed concerns about certain expenses previously deducted, including questionable overhead charges and discrepancies regarding non-producing wells.

Despite attempts to negotiate a resolution, the contested charges remain unresolved. Blackbeard's response included motions for the right to deduct disputed overhead from Trust royalty payments and to limit the information provided to quarterly statements regarding net proceeds.

Looking Ahead

The ongoing conditions in the global market continue to influence pricing for domestic production, creating uncertainty regarding future distributions. The Trustee will keep stakeholders updated on shifts that may affect the Trust.

For further information, unit holders are encouraged to monitor the Trust's official communications and website, which includes financial reports and distribution history.