Permianville Royalty Trust(US:PVL)2023-08-14 20:10Financial Performance - For the three months ended June 30, 2023, total gross profits decreased by 20% to $11.33 million compared to $14.18 million in the same period of 2022 [90]. - Oil sales decreased by 14% to $8.64 million, while natural gas sales decreased by 36% to $2.69 million, leading to a total net profit decrease of 44% to $2.95 million [90]. - For the six months ended June 30, 2023, total gross profits decreased by 6% to $25.53 million compared to $27.27 million in the same period of 2022 [93]. - Net profits for the six months ended June 30, 2023 were $7.82 million, a decrease of 17% from $9.46 million in the same period of 2022 [94]. - The Trust's distributable income for the six months ended June 30, 2023 increased by 16% to $6.47 million compared to $5.56 million in the same period of 2022 [93]. Production and Sales - Oil production volumes decreased by 11% to 225,538 barrels, and natural gas production volumes decreased by 22% to 1,327,294 Mcf for the six months ended June 30, 2023 [93]. - The average realized oil price decreased to $76.28 per barrel, down from $78.03 per barrel, while the average realized natural gas price decreased to $4.23 per Mcf from $4.72 per Mcf [91]. Capital Expenditures and Liquidity - The Trust's capital spending outlook has been updated to a range of $8.0 million to $12.0 million, up from the previous range of $6.0 million to $9.0 million, reflecting increased activity in the Permian basin [80]. - The Trust's principal sources of liquidity are cash flow from the Net Profits Interest and borrowing capacity under a letter of credit [96]. - As of June 30, 2023, the Trust had cash of $1,240,033, an increase from $922,913 as of December 31, 2022 [99]. - The Trust has a $1.2 million letter of credit provided by COERT to cover administrative expenses if cash on hand is insufficient [99]. - The Trustee has established a cash reserve of approximately $2.3 million for future liabilities, with $666,053 withheld as of June 30, 2023 [98]. Distributions - The Trust is required to make monthly cash distributions of substantially all its monthly cash receipts after deducting administrative expenses [76]. - On July 14, 2023, the Trust paid a distribution of $0.012500 per unit to unitholders of record as of June 30, 2023 [106]. - A subsequent distribution of $0.053500 per unit was declared on July 17, 2023, for unitholders of record as of July 31, 2023 [106]. Market Conditions - The West Texas Intermediate spot price of crude oil increased from $80.26 per barrel on December 30, 2022, to $82.82 per barrel on August 10, 2023, while natural gas prices decreased from $3.52 per MMBtu to $2.83 per MMBtu in the same period [79]. - The overall outlook for development activity on the Underlying Properties remained stable during the first half of 2023 despite commodity price volatility [79]. - The Sponsor has begun to see moderation in inflationary pressures and supply chain bottlenecks affecting the Underlying Properties [81]. Asset and Ownership Structure - The Trust's only asset is the Net Profits Interest, which entitles it to receive 80% of the net profits from oil and natural gas production from the Underlying Properties [74]. - The Trust's revenues and cash distributions depend on oil and natural gas sales prices, production volumes, and associated costs [78]. Other Financial Information - A cash revenue catch-up of approximately $3.7 million, or about $2.9 million net to the Trust's Net Profits Interest, was recognized from three wells that began generating revenues in 2022 but were finalized in 2023 [85]. - The Sponsor sold non-producing acreage for approximately $0.3 million, with the Trust's share amounting to about $240,000, to be included in the distribution on August 14, 2023 [88]. - The divestiture of certain acreage in the Permian Basin was completed for a total purchase price of approximately $6.7 million, with net proceeds expected to be distributed to Trust unitholders by September 22, 2023 [89]. - Development expenses increased by 28% to $4.21 million due to drilling and completion costs for new wells in the Permian area [93]. - The Trust pays an annual administrative fee of $200,000 to the Trustee and $2,000 to the Delaware Trustee, along with other operational expenses [102]. - There are no off-balance sheet arrangements or guarantees of debt for the Trust [104]. - The Trust has no transactions or relationships with unconsolidated entities that could affect liquidity or capital resources [103]. - There were no material changes to the Trust's critical accounting policies or estimates during the three months ended June 30, 2023 [105]. - COERT may advance funds to the Trust for administrative expenses if cash on hand is insufficient, with no outstanding balance as of the reporting dates [100].