#United States #Dallas #cash distribution #Permian Basin #Waddell Ranch

Permian Basin Royalty Trust's January Cash Distribution

The Permian Basin Royalty Trust, represented by Argent Trust Company, has recently announced its cash distribution for January 2026, amounting to $0.040056 per unit. This distribution will be payable to the unit holders of record on January 30, 2026, as confirmed in their latest press release. However, the announcement bears a significant note of caution as it reveals the ongoing financial complications stemming from the Waddell Ranch properties.

Overview of Cash Distribution

The January distribution, while a positive aspect, represents an increase compared to the previous month, primarily due to the second settlement payment from Blackbeard Operating LLC, coupled with higher oil volumes from the Texas Royalty Properties. These gains, however, were counterbalanced by lower natural gas volumes and pricing during the reporting period. The backdrop of continuing global market uncertainties creates a challenging landscape for future revenues and distributions.

Waddell Ranch Properties

The situation surrounding the Waddell Ranch is particularly concerning. Production costs have exceeded the gross proceeds, leading to an excess cost position. This means that the revenue generated from these properties is currently not sufficient to cover operational costs. As outlined in the press release, the crucial information required to calculate the net profits interest (NPI) proceeds for these properties typically arrives after the distribution announcement date. Consequently, any proceeds due to the Trust from the Waddell Ranch properties, if received, will only impact future distributions, thereby continuing the cycle of deferred revenues.

Given that Blackbeard, the operator of the Waddell Ranch, reports quarterly instead of monthly, any updates on production and cost will be reflected in subsequent quarterly filings. Therefore, stakeholders are advised to monitor the quarterly reports for the necessary updates on production and cost management assessments.

Texas Royalty Properties Contribution

On a brighter note, the Texas Royalty Properties generated a significant production output of 17,309 barrels of oil and 8,378 Mcf of gas. The Trust’s share amounted to 15,285 barrels of oil and 7,401 Mcf of gas. The average pricing during this period indicated oil at approximately $59.18 per barrel and gas at $8.49 per Mcf. After deducting taxes and expenses from the revenue—totaling over $1 million—the net profit for December stood at $963,069, contributing a net of $914,915 to the total distribution.

Financial Health and Future Outlook

Despite the uptick in January’s distribution, the long-term financial health of the Trust remains in question. The combination of global market conditions affecting pricing and the excessive costs related to the Waddell Ranch properties casts uncertainty over how sustainable these distributions may prove to be moving forward.

Legal Developments

Adding further complexity, a unit holder, SoftVest, L.P., has filed a petition in the District Court of Tarrant County, Texas for a modification of the Trust's indenture. This petition calls for the elimination of certain approval requirements, potentially changing how decisions are made regarding Trust amendments. A preliminary hearing is scheduled for January 28, 2026, which could have significant implications for the Trust's governance and strategy.

Conclusion

In conclusion, while the declaration of a cash distribution is a positive announcement for unit holders, the underlying challenges related to cost overruns from Waddell Ranch properties must not be understated. The upcoming developments, both in market conditions and the legal arena, will be pivotal in shaping the future of the Permian Basin Royalty Trust.