# Permianville Royalty Trust: Form 10-Q for the period ended Jun 30, 2025

- Company: [Permianville Royalty Trust](/companies/pvl.md) (CIK 1520048)
- Form: 10-Q
- Filed: 2025-08-14
- Accepted by EDGAR: Aug 14, 2025, 20:05 ET
- Period: 2025-06-30
- Accession: 0001104659-25-078581
- Inline XBRL: no
- Main document: https://www.sec.gov/Archives/edgar/data/1520048/000110465925078581/tm2516763d1_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1520048/000110465925078581/

## Management's discussion and analysis

As filed, 35,824 characters.

References to the “Trust” in this document refer to Permianville Royalty Trust, previously known as Enduro Royalty Trust, while references to “COERT” or the “Sponsor” in this document refer to COERT Holdings 1 LLC. References to “Enduro” in this document refer to Enduro Resource Partners LLC, the original sponsor of the Trust. The following review of the Trust’s financial condition and results of operations should be read in conjunction with the financial statements and notes thereto, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report on Form 10-K”). The Trust’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all other filings with the SEC are available on the SEC’s website at www.sec.gov.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q, including without limitation the statements under this “Trustee’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements. Such statements may be influenced by factors that could cause actual outcomes and results to differ materially from those projected. Such expectations may not prove to have been correct. When used in this document, the words “believes,” “expects,” “anticipates,” “intends” or similar expressions are intended to identify such forward-looking statements. The following important factors, in addition to those discussed elsewhere in this Form 10-Q, in the Trust’s 2024 Annual Report on Form 10-K and the Trust’s other filings with the SEC could affect the future results of the energy industry in general, and COERT and the Trust in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

- risks associated with the drilling and operation of oil and natural gas wells;
- the amount of future direct operating expenses and development expenses;
- the occurrence or threat of epidemic or pandemic diseases or other public health event or any government response to such occurrence or threat;
- the impact of geopolitical developments and tensions, war and uncertainty involving or in the geographical region of oil producing countries (including the ongoing armed conflicts between Russia and Ukraine and between Israel and Iran and its proxies and any related political or economic responses and counter-responses or otherwise by various global actors or the general effect on the global economy);
- global economic conditions, such as a general slowdown in the global economy, trade barriers and tariffs, supply chain disruptions, inflationary pressures, currency fluctuations, changes in interest rates, and instability of financial institutions;
- the effects of actions by, or disputes among or between members of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil-exporting nations with respect to production levels or other matters related to the prices of oil and natural gas;
- the effect of existing and future laws and regulatory actions;
- the effect of changes in commodity prices or alternative fuel prices;
- the prohibition on the Trust’s entry into any new hedging arrangements under the terms of the Conveyance;
- conditions in the capital markets;
- competition from others in the energy industry;
- uncertainty of estimates of oil and natural gas reserves and production;
- potential impacts on the Sponsor’s business resulting from climate change, greenhouse gas regulations, and the impact of climate change related changes in the frequency and severity of weather patterns; and
- other risks described under the caption “Risk Factors” in Part I, Item 1A of the 2024 Annual Report on Form 10-K.

You should not place undue reliance on these forward-looking statements. All forward-looking statements speak only as of the date of this Form 10-Q. The Trust does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, unless the securities laws require the Trust to do so.

This Form 10-Q describes other important factors that could cause actual results to differ materially from expectations of the Sponsor and the Trust. All forward-looking statements in this report and all subsequent written and oral forward-looking statements attributable to the Sponsor or the Trust or persons acting on behalf of the Sponsor or the Trust are expressly qualified in their entirety by such factors. The Trust assumes no obligation, and disclaims any duty, to update these forward-looking statements.

### Overview

Permianville Royalty Trust, a statutory trust created in May 2011, completed its initial public offering in November 2011. The Trust’s only asset and source of income is the net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico held by Enduro as of the date of the conveyance of the net profits interest to the Trust (the “Net Profits Interest”). The properties in which the Trust holds the Net Profits Interest are referred to as the “Underlying Properties.” The Net Profits Interest is passive in nature and neither the Trust nor the Trustee has any management control over or responsibility for costs relating to the operation of the Underlying Properties. Additionally, third parties operate substantially all of the wells on the Underlying Properties and, therefore, the Sponsor is not in a position to control the timing of development efforts, associated costs, or the rate of production of the reserves.

On August 31, 2018, COERT completed the acquisition from Enduro of the Underlying Properties and all of the outstanding Trust Units owned by Enduro (the “Sale Transaction”). In connection with the Sale Transaction, COERT assumed all of Enduro’s obligations under the Amended and Restated Trust Agreement of the Trust (the “Trust Agreement”) and other instruments to which Enduro and the Trustee were parties.

The Trust is required to make monthly cash distributions of substantially all of its monthly cash receipts, after deducting the Trust’s administrative expenses, to the holders of Trust Units as of the applicable record date (generally the last business day of each calendar month) on or before the 10th business day after the record date. The Net Profits Interest is entitled to a share of the profits from and after July 1, 2011 attributable to production occurring on or after June 1, 2011. The amount of Trust revenues and cash distributions to Trust unitholders depends on, among other things:

- oil and natural gas sales prices;
- volumes of oil and natural gas produced and sold attributable to the Underlying Properties;
- production and development costs;
- price differentials;
- potential reductions or suspensions of production;
- the amount and timing of Trust administrative expenses; and
- the establishment, increase, or decrease of reserves for approved development expenses or future liabilities of the Trust.

Generally, the Sponsor receives cash payment for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after it is produced.

### Outlook

The Sponsor has indicated to the Trustee that development activity on the Underlying Properties remained elevated through the first six months of 2025 compared to prior years, although activity in the first half of 2025 declined from the comparable period in 2024, which included a material amount of prior period production from certain Permian wells that had been delayed due to pending title work completed during the 2024 period. The Sponsor reports that most of the continued capital expenditures were associated with work undertaken by a super major oil conglomerate and the completion of three wells in the Haynesville region. Subsequent to June 30, 2025, the Sponsor indicates that it has received from the operator the initial revenues from these wells, which will be reflected in the net profits interest calculations in the third quarter. Otherwise, the Sponsor believes the remaining capital expenditure outlook for the operators of the Underlying Properties remains highly uncertain given current macroeconomic conditions. Nevertheless, although commodity prices remain volatile, the majority of the capital expenditures for the Underlying Properties are associated with large cap, investment-grade oil and gas operators that tend to spend through periods of volatility. Directionally, the Sponsor continues to expect oil-directed capital expenditures in the Permian basin to decline and gas-directed capital expenditures in the Haynesville region to remain stable or perhaps even slightly increase, consistent with the first six months of 2025. Specifically, the same operator that recently completed the three Haynesville wells described above has recently proposed three more Haynesville wells for 2026, fairly similar in size and profile to the prior three wells. Future capital expenditure expectations remain subject to revision from the operators of the Underlying Properties. With the revenue recently received from the new Haynesville wells, the Sponsor expects the net profits interest to return to positive monthly payments in calendar year 2025.

The Sponsor believes that the outlook for the oil and gas industry remains increasingly complicated since the start of 2025, albeit somewhat relatively more stable at the end of the quarter ended June 30, 2025 compared to the beginning of the quarter. OPEC continues to indicate increasing oil production and supply, which has weighed on oil prices, although these price impacts are somewhat offset by elevated geopolitical uncertainty. Oil prices have ranged from just over $80 per Bbl to as low as $57 per Bbl between December 2024 and August 2025, with several public oil and gas companies indicating that the volatility has affected their budget planning for the remainder of 2025. Natural gas prices have experienced similar volatility, ranging from a low of $2.93 per MMBtu to a high of $4.49 per MMBtu over the same period, as previous forecasts of increasing demand for U.S. liquified natural gas exports have been called into question given the uncertain global trade environment. Meanwhile, mergers and acquisitions continue to change the makeup of companies in the sector, including one of the operators on the Underlying Properties. The Sponsor continues to believe that consolidation within the oil and gas sector could lead to lower operating costs given economies of scale, but could also lead to more binary swings in capital spending, as more assets and capital budgets are set by fewer operators than in years past.

Despite this volatility, given the continued elevated capital expenditures during the first six months of 2025, the Sponsor is now guiding to the high end of its previously revised 2025 capital spending outlook of $10.0 million to $15.0 million, or $8.0 million to $12.0 million net to the Trust’s Net Profits Interest, as detailed in the prior Form 10-Q for the quarter ended March 31, 2025. The Sponsor expects a majority of the remaining anticipated capital expenditures in 2025 to be focused in the Haynesville area, given relatively higher industry rig counts compared to last year, versus the declining Permian rig count thus far in 2025. As in prior periods, the outlook for capital expenditures remains subject to change, as operators are expected to continue to reevaluate their planned capital expenditures, particularly given volatile capital markets and an uncertain geopolitical situation.

Over the first six months of 2025, the Sponsor continued to see a reduction in operating costs that had been affecting the Underlying Properties in prior periods on an aggregate basis, as seen in the continued decline in lease operating expenditures per barrel of oil equivalent for the six months ended June 30, 2025 compared to the same period in 2024. The Sponsor indicates that this decline continues to reflect the increased production from newer wells that feature lower operating costs than some of the legacy wells on the Underlying Properties. Nevertheless, the Sponsor indicates that some legacy producing properties of the Underlying Properties continue to experience operating cost and production issues consistent with late-life oil and gas properties, and currently it is unclear if some of these properties will be able to realize a return to prior period operating costs and cash flow profile. While the markets remain volatile and there remains an inherent delay in cash flows given the non-operated nature of the Underlying Properties, the Sponsor indicates that it continues to have access to adequate capital and liquidity to fund such operating and capital expenditures as they come due.

The Sponsor believes there could be further opportunity in the coming quarters for potential divestitures and/or leasing of some or all of the Underlying Properties, subject to the Trust’s Net Profits Interest, as certain operators of the Underlying Properties look to acquire assets, particularly in the Permian and Haynesville regions.

### Capex Drilling Activity Update

Presented below is a summary of the current status of certain notable capital projects recently undertaken on the Underlying Properties pursuant to the capital expenditure program described above. All information has been provided by the Sponsor.

The following table is not intended to be a comprehensive list reflecting all capital expenditures to date. In addition, there can often be a several-month delay from the time of capital expenditures to the time of production and cash flows attributable to the Underlying Properties, especially given the non-operated nature of the Underlying Properties.

| Operator | Region | Number of Wells | Underlying Properties W/I | Project | Capex Cumulative Total (in thousands) | Status |
| --- | --- | ---: | ---: | --- | ---: | --- |
| Large Cap E&P 1 | Delaware | 3 | 5.0% | D&C New Drills | – | 3 Pre Drills |
| Large Cap E&P 2 | Midland | 4 | 3.4% | D&C New Drills | $1,062 | 4 Drilling In-Process |
| Large Cap E&P 3 | Delaware | 19 | 1.0% | D&C New Drills | – | 19 Pre Drills |
| Large Major Cap E&P 1 | Haynesville | 3 | 8.9% | D&C New Drills | – | 3 Pre Drills |
| PE-Backed Private 1 | Delaware | 2 | 4.6% | D&C New Drills | – | 2 Pre Drills |
| PE-Backed Private 2 | Delaware | 4 | 0.7% | D&C New Drills | – | 4 Drilling in-Process |

The projects identified above are still in process or awaiting first revenues, and the Sponsor expects a majority of those projects to be completed and to begin producing during 2025.

### Results of Operations

#### Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

The Trust’s net profits income consists of monthly net profits attributable to the Net Profits Interest, which was determined as shown in the following table:

| Gross profits: | Three Months Ended June 30, 2025 | 2024 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Oil sales | $7,978,067 | $15,754,950 | (49)% |
| Natural gas sales | 3,240,447 | 2,690,578 | 20% |
| Total | 11,218,514 | 18,445,528 | (39)% |
| Costs: |  |  |  |
| Direct operating expenses: |  |  |  |
| Lease operating expenses | 4,787,000 | 8,408,000 | (43)% |
| Compression, gathering and transportation | 968,000 | 898,000 | 8% |
| Production, ad valorem and other taxes | 720,000 | 1,273,000 | (43)% |
| Development expenses | 2,798,000 | 12,895,000 | (78)% |
| Total | 9,273,000 | 23,474,000 | (60)% |
| Gross proceeds from sale of assets | – | 146,400 | (100)% |
| Net profits | 1,945,514 | (4,882,072) | 140% |
| Percentage allocable to Net Profits Interest | 80% | 80% |  |
| Net profits allocable to Net Profits Interest | 1,556,412 | (3,905,657) | 140% |
| Negative Net Profits Carryforward | (1,418,895) | – | (100)% |
| Less: Repayment of Sponsor Loan | (137,517) | – | (100)% |
| Plus: Release of Escrow | 282,072 | – | 100% |
| Plus: Net profits allocable to Net Profits Interest shortfall | – | 3,905,657 | (100)% |
| Distributable income | $282,072 | $– | 100% |

During the three months ended June 30, 2025, the Net Profits Interest generated positive income, which eliminated the cumulative Net Profits Interest shortfall of $1.4 million that existed as of March 31, 2025; however, no distributions were made to Trust unitholders because of outstanding advances from the Sponsor to the Trust for the payment of administrative expenses, which totaled $0.6 million as of June 30, 2025. The Trust is not permitted to make distributions to Trust unitholders until any Net Profits Interest shortfall has been recouped and outstanding advances from the Sponsor have been repaid.

During the three months ended June 30, 2024, direct operating and development expenses exceeded revenues, thereby causing net profits attributable to the Underlying Properties to be negative and resulting in an approximately $3.9 million Net Profits Interest shortfall as of June 30, 2024, which was carried forward to be deducted from future net profits generated by the Underlying Properties. As a result, there were no net profits reported or distributed in the second quarter of 2024.

On March 17, 2025, the Trustee declared a special cash distribution of $0.008548 per Trust Unit, which was paid on April 14, 2025 to Trust unitholders of record on March 31, 2025. The special cash distribution reflected the release of the $250,000 withheld from the net proceeds allocable to the Trust from the August 2023 sale by the Sponsor of certain oil and gas properties in the Permian Basin, which amount was intended to cover possible indemnification obligations arising during the indemnification period following the closing of the sale. Together with interest, the amount distributed equated to $282,072.

The following table displays reported oil and natural gas sales volumes and average prices from the Underlying Properties, representing the amounts included in the net profits calculation for distributions paid or payable during the three months ended June 30, 2025 and 2024:

| Underlying Properties Production Volumes: | Three Months Ended June 30, 2025 | 2024 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Oil (Bbls) | 108,972 | 205,150 | (47)% |
| Natural Gas (Mcf) | 1,308,205 | 1,050,147 | 25% |
| Combined (Boe) | 327,006 | 380,175 | (14)% |
| Average Prices: |  |  |  |
| Oil - NYMEX (applicable NPI period) ($/Bbl) | $72.00 | $74.99 | (4)% |
| Differential | $1.21 | $1.81 | (33)% |
| Oil prices realized ($/Bbl) | $73.21 | $76.80 | (5)% |
| Natural gas - NYMEX (applicable NPI period) ($/Mcf) | $3.09 | $2.85 | 8% |
| Differential | $(0.61) | $(0.29) | (112)% |
| Natural gas prices realized ($/Mcf) | $2.48 | $2.56 | (3)% |

Net profits attributable to the Underlying Properties for the three months ended June 30, 2025 were $1.9 million compared to $(4.9) million for the three months ended June 30, 2024. The $6.8 million increase in net profits attributable to the Underlying Properties from the 2024 period to the 2025 period was primarily due to the following items:

- Oil sales decreased $7.8 million due to lower produced volumes and lower realized prices. The 47% reduction in produced volumes decreased revenues by $7.4 million. This decrease was primarily due to the 15 new Permian wells that either turned to sales or completed title work in the 2024 period, thereby allowing production attributable to prior periods to be released by the operators of the Underlying Properties. Realized oil sales prices decreased 5% in the 2025 period compared to the 2024 period, which decreased revenues by $0.4 million.
- Natural gas sales increased $0.5 million compared to the 2024 period, reflecting a $0.6 million increase due to higher produced volumes, partially offset by a $0.1 million decrease due to lower realized prices. The average natural gas price received decreased 3% primarily due to the decrease in the average realized natural gas price for the relevant production months.
- Lease operating expenses during the three months ended June 30, 2025 decreased $3.6 million compared to the three months ended June 30, 2024.
- Compression, gathering and transportation costs increased $0.1 million, primarily due to the increase in natural gas production during the three months ended June 30, 2025.
- Production, ad valorem and other taxes decreased $0.6 million during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
- Development expenses decreased $10.1 million during the three months ended June 30, 2025 compared to the same period in 2024, due to a decrease in drilling and completion costs incurred.

For the three months ended June 30, 2025, the Trust withheld $0.0 million and paid $0.3 million for general and administrative expenses. Expenses paid during the period primarily consisted of fees for the preparation of the Trust’s monthly press releases, insurance expense, Trustee fees, and New York Stock Exchange listing fees. For the three months ended June 30, 2024, the Trust withheld $0.0 million and paid $0.4 million for general and administrative expenses.

#### Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The Trust’s net profits income consists of monthly net profits attributable to the Net Profits Interest, which was determined as shown in the following table:

| Gross profits: | Six Months Ended June 30, 2025 | 2024 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Oil sales | $16,508,772 | $25,460,484 | (35)% |
| Natural gas sales | 5,282,124 | 4,378,759 | 21% |
| Total | 21,790,896 | 29,839,243 | (27)% |
| Costs: |  |  |  |
| Direct operating expenses: |  |  |  |
| Lease operating expenses | 9,516,000 | 15,016,000 | (37)% |
| Compression, gathering and transportation | 1,970,000 | 1,497,000 | 32% |
| Production, ad valorem and other taxes | 1,428,000 | 2,175,000 | (34)% |
| Development expenses | 9,955,000 | 15,968,000 | (38)% |
| Total | 22,869,000 | 34,656,000 | (34)% |
| Gross proceeds from sale of assets | – | 146,400 | (100)% |
| Net profits | (1,078,104) | (4,670,357) | 77% |
| Percentage allocable to Net Profits Interest | 80% | 80% |  |
| Net profits allocable to Net Profits Interest | (862,483) | (3,736,285) | 77% |
| Plus: Sponsor reserve release for capital expenditures | 1,000,000 | – | (100)% |
| Less: Repayment of Sponsor Loan | (137,517) | – | (100)% |
| Plus: Release of Escrow | 282,072 | – | 100% |
| Plus: Net profits allocable to Net Profits Interest shortfall | – | 3,905,657 | (100)% |
| Less: Trust general and administrative expenses and cash withheld for expenses net of interest income | – | (169,372) | 100% |
| Distributable income | $282,072 | $– | 100% |

During the six months ended June 30, 2025, although the Net Profits Interest shortfall that existed throughout the first five months of the period was eliminated by the end of the period, no distributions were made to Trust unitholders because of outstanding advances from the Sponsor to the Trust for the payment of administrative expenses, which totaled $0.6 million as of June 30, 2025. The Trust is not permitted to make distributions to Trust unitholders until any Net Profits Interest shortfall has been recouped and outstanding advances from the Sponsor have been repaid.

During the six months ended June 30, 2024, the Net Profits Interest generated positive income for the first two months in the period, which eliminated the cumulative Net Profits Interest shortfall of $1.2 million that existed as of December 31, 2023. In March 2024, however, direct operating and development expenses exceeded revenues, thereby causing net profits attributable to the Underlying Properties to be negative and resulting in an approximately $3.9 million Net Profits Interest shortfall as of June 30, 2024, which was carried forward to be deducted from future net profits generated by the Underlying Properties. As a result, there were no net profits reported or distributed in the first six months of 2024.

On March 17, 2025, the Trustee declared a special cash distribution of $0.008548 per Trust Unit, which was paid on April 14, 2025 to Trust unitholders of record on March 31, 2025. The special cash distribution reflected the release of the $250,000 withheld from the net proceeds allocable to the Trust from the August 2023 sale by the Sponsor of certain oil and natural gas properties in the Permian Basin, which amount was intended to cover possible indemnification obligations arising during the indemnification period following the closing of the sale. Together with interest, the amount distributed equated to $282,072.

The following table displays reported oil and natural gas sales volumes and average prices from the Underlying Properties, representing the amounts included in the net profits calculation for distributions paid or payable during the six months ended June 30, 2025 and 2024:

| Underlying Properties Production Volumes: | Six Months Ended June 30, 2025 | 2024 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Oil (Bbls) | 223,352 | 320,493 | (30)% |
| Natural Gas (Mcf) | 2,488,665 | 1,761,271 | 41% |
| Combined (Boe) | 638,130 | 614,038 | 4% |
| Average Prices: |  |  |  |
| Oil - NYMEX (applicable NPI period) ($/Bbl) | $73.86 | $79.54 | (7)% |
| Differential | $0.06 | $(0.10) | 158% |
| Oil prices realized ($/Bbl) | $73.92 | $79.44 | (7)% |
| Natural gas - NYMEX (applicable NPI period) ($/Mcf) | $2.11 | $2.46 | (14)% |
| Differential | $0.01 | $0.03 | (65)% |
| Natural gas prices realized ($/Mcf) | $2.12 | $2.49 | (15)% |

Net profits attributable to the Underlying Properties for the six months ended June 30, 2025 were $(1.1) million compared to $(4.7) million for the six months ended June 30, 2024. The $3.6 million increase in net profits attributable to the Underlying Properties from the 2024 period to the 2025 period was primarily due to the following items:

- Oil sales decreased $8.9 million due to lower produced volumes and lower realized prices. The 30% decrease in produced volumes decreased revenues by $7.7 million. This decrease was primarily due to the 15 new Permian wells that either turned to sales or completed title work in the 2024 period, thereby allowing production attributable to prior periods to be released by the operators of the Underlying Properties. Realized oil sales prices decreased 7% in the 2025 period compared to the 2024 period, which increased revenues by $1.2 million.
- Natural gas sales increased $0.9 million compared to the 2024 period, reflecting a $1.8 million increase due to higher produced volumes, offset by a $0.9 million decrease due to lower realized prices. The average natural gas price received decreased 15% primarily due to the decrease in the average realized natural gas price for the relevant production months.
- Lease operating expenses during the six months ended June 30, 2025 decreased $5.5 million compared to the six months ended June 30, 2024.
- Compression, gathering and transportation costs increased $0.5 million, primarily due to the increase in natural gas production during the six months ended June 30, 2025.
- Production, ad valorem and other taxes decreased $0.7 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
- Development expenses decreased $6.0 million during the six months ended June 30, 2025 compared to the same period in 2024, due to a decrease in drilling and completion costs incurred.

For the six months ended June 30, 2025, the Trust withheld $0.0 million and paid $0.5 million for general and administrative expenses. Expenses paid during the period primarily consisted of fees for the preparation of the Trust’s monthly press releases, insurance expense, Trustee fees, and New York Stock Exchange listing fees. For the six months ended June 30, 2024, the Trust withheld $0.2 million and paid $0.6 million for general and administrative expenses.

### Liquidity and Capital Resources

The Trust’s principal sources of liquidity are cash flow generated from the Net Profits Interest and borrowing capacity under the letter of credit described below. Other than Trust administrative expenses, including any reserves established by the Trustee for future liabilities, the Trust’s only use of cash is for distributions to Trust unitholders. Available funds are the excess cash, if any, received by the Trust from the Net Profits Interest and other sources (such as interest earned on any amounts reserved by the Trustee) in any given month, over the Trust’s expenses paid for that month. Available funds are reduced by any cash the Trustee determines to hold as a reserve against future expenses.

The Trustee may create a cash reserve to pay for future liabilities of the Trust. In February 2022, the Trustee began withholding $37,833 from the funds otherwise available for distribution each month to gradually build a cash reserve of approximately $2.3 million for the payment of future known, anticipated or contingent expenses or liabilities of the Trust. Commencing with the distribution to Trust unitholders payable in April 2023, the Trustee has been withholding, and in the future intends to withhold, $50,000 from the funds otherwise available for distribution each month to gradually build the reserve. The Trustee may increase or decrease the targeted cash reserve amount at any time, and may increase or decrease the rate at which it is withholding funds to build the cash reserve at any time, without advance notice to the Trust unitholders. Cash held in reserve will be invested as required by the Trust Agreement. Any cash reserved in excess of the amount necessary to pay or provide for the payment of future known, anticipated or contingent expenses or liabilities eventually will be distributed to Trust unitholders, together with interest earned on the funds. As of June 30, 2025, the Trustee has withheld $1,241,386 toward this cash reserve. Due to the cumulative Net Profits Interest shortfall, no amounts were withheld toward this cash reserve during the six months ended June 30, 2025.

If the Trustee determines that the cash on hand and the cash to be received are, or will be, insufficient to cover the Trust’s liabilities, the Trustee may authorize the Trust to borrow money to pay administrative or incidental expenses of the Trust that exceed cash held by the Trust. The Trustee may authorize the Trust to borrow from any person, including the Trustee or the Delaware Trustee or an affiliate thereof, although none of the Trustee, the Delaware Trustee or any affiliate thereof intends to lend funds to the Trust. The Trustee may also cause the Trust to mortgage its assets to secure payment of the indebtedness. The terms of such indebtedness and security interest, if funds were to be loaned by the entity serving as Trustee or Delaware Trustee or an affiliate thereof, would be similar to the terms which such entity would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship. In addition, COERT has provided the Trust with a $1.2 million letter of credit to be used by the Trust if its cash on hand (including available cash reserves) is insufficient to pay ordinary course administrative expenses. Further, if the Trust requires more than the $1.2 million under the letter of credit to pay administrative expenses, COERT has agreed to loan funds to the Trust necessary to pay such expenses. Any loan made by COERT to the Trust would be evidenced by a written promissory note, be on an unsecured basis, and have terms that are no less favorable to COERT than those that would be obtained in an arm’s length transaction between COERT and an unaffiliated third party. If the Trust borrows funds or draws on the letter of credit, no further distributions will be made to Trust unitholders until such amounts borrowed or drawn are repaid. Except for the foregoing, the Trust has no source of liquidity or capital resources. The Trustee has no current plans to authorize the Trust to borrow any funds. As of June 30, 2025 and December 31, 2024, including the aggregate amounts withheld as of such dates toward the approximately $2.3 million cash reserve discussed above, the Trust had cash of $2,239,884 and $2,193,787, respectively, to be used towards future Trust expenses. Since its formation, the Trust has not borrowed any funds and no amounts have been drawn on the letter of credit.

From time to time, if the Trust’s cash on hand (including available cash reserves, if any) is not sufficient to pay the Trust’s ordinary course administrative expenses that are due prior to the monthly payment to the Trust of proceeds from the Net Profits Interest, COERT may advance funds to the Trust to pay such expenses. At June 30, 2025 and December 31, 2024, there were outstanding advances of $550,323 and $150,000, respectively. Any advances to the Trust will be carried forward to be repaid out of future net profits generated by the Underlying Properties.

Cash held by the Trustee as a reserve against future liabilities or for distribution at the next distribution date may be held in a noninterest-bearing account or may be invested in:

- interest-bearing obligations of the United States government;
- money market funds that invest only in United States government securities;
- repurchase agreements secured by interest-bearing obligations of the United States government; or
- bank certificates of deposit.

The Trust pays the Trustee an annual administrative fee of $200,000 and the Delaware Trustee an annual fee of $2,000. The Trust also incurs, either directly or as a reimbursement to the Trustee, legal, accounting, tax and engineering fees, printing costs and other expenses that are deducted by the Trust before distributions are made to Trust unitholders. The Trust also is responsible for paying other expenses incurred as a result of being a publicly traded entity, including costs associated with annual and quarterly reports to Trust unitholders, tax return and Form 1099 preparation and distribution, NYSE listing fees, independent auditor fees and registrar and transfer agent fees.

The Trust does not have any transactions, arrangements or other relationships with unconsolidated entities or persons that could materially affect the Trust’s liquidity or the availability of capital resources.

### Off-Balance Sheet Arrangements

The Trust has no off-balance sheet arrangements. The Trust has not guaranteed the debt of any other party, nor does the Trust have any other arrangements or relationships with other entities that could potentially result in unconsolidated debt, losses or contingent obligations.

### Critical Accounting Policies and Estimates

Please read “Item 7. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of the Trust’s 2024 Annual Report on Form 10-K for additional information regarding the Trust’s critical accounting policies and estimates. There were no material changes to the Trust’s critical accounting policies or estimates during the three months ended June 30, 2025.

## Market risk

As filed, 151 characters.

As a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, the Trust is not required to provide information required by this Item.

## Controls and procedures

As filed, 2,023 characters.

#### Evaluation of Disclosure Controls and Procedures

The Trustee conducted an evaluation of the Trust’s disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, the Trustee has concluded that the disclosure controls and procedures of the Trust were effective, as of the end of the period covered by this report, in ensuring that information required to be disclosed by the Trust in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Trustee to allow timely decisions regarding required disclosure.

Due to the nature of the Trust as a passive entity and in light of the contractual arrangements pursuant to which the Trust was created, including the provisions of (i) the Trust Agreement and (ii) the Conveyance, the Trustee’s disclosure controls and procedures related to the Trust necessarily rely on (A) information provided by the Sponsor, including information relating to results of operations, the costs and revenues attributable to the Trust’s interest under the Conveyance and other operating and historical data, plans for future operating and capital expenditures, reserve information, information relating to projected production, and other information relating to the status and results of operations of the Underlying Properties and the Net Profits Interest, and (B) conclusions and reports regarding reserves by the Trust’s independent reserve engineers.

#### Changes in Internal Control over Financial Reporting

During the quarter ended June 30, 2025, there were no changes in the Trust’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting. The Trustee notes for purposes of clarification that it has no authority over, and makes no statement concerning, the internal control over financial reporting of the Sponsor.

## Risk factors

As filed, 124 characters.

There have been no material changes to the risk factors contained in Item 1A of the Trust’s 2024 Annual Report on Form 10-K.

Filed Aug 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001104659-25-078581. Last ingested by Listed: Oct 24, 2026, 15:13 ET. No prices; not investment advice.