PERMIAN BASIN ROYALTY TRUST (PBT)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 distributable income rose 15.8% year over year to $5.49M ($0.12 per unit) on higher oil and gas volumes despite lower commodity prices; royalty income was $6.01M, up 15.3% YoY .
• Waddell Ranch contributed $2.61M in royalty income and Texas Royalty properties $3.40M; volumes increased across both, while average oil/gas prices fell to $73.17/bbl and $2.05/Mcf .
• April’s cash distribution stepped up sharply to $0.088214 per unit, reflecting a stronger Waddell NPI and lower capex timing; January–March distributions were $0.031031, $0.045460, and $0.041340 per unit, respectively .
• Legal and operating frictions with Blackbeard (Waddell operator) are a key near-term narrative: Trustee filed suit seeking >$15M in damages; Blackbeard withheld NPI support in May causing an omission of Waddell proceeds in that month’s distribution .

What Went Well and What Went Wrong

What Went Well

• Higher volumes drove Q1 royalty and distributable income growth YoY despite price headwinds; oil sales rose to 799,806 bbls and gas to 4,296,765 Mcf on the underlying properties .
• Waddell Ranch was again a positive NPI contributor in Q1, delivering $2.61M in royalty income, aided by capex timing relief vs prior periods and operational activity (6.0 new wells completed, 8.7 workovers in progress) .
• April distribution strength: “This month’s distribution increased… due mainly to a decrease in capital costs and a higher average oil price” with Waddell NPI of $4.11M gross driving 75% Trust proceeds of $3.08M net to the distribution .

What Went Wrong

• Commodity prices were lower YoY: average oil price fell to $73.17/bbl (from $77.63) and gas to $2.05/Mcf (from $3.19), muting revenue per unit of production .
• Waddell lease operating expenses rose materially YoY; Q1 2024 LOE and property taxes totaled $22.8M gross vs $16.4M in Q1 2023, reflecting increased maintenance work .
• Operator dispute risk: in May, Blackbeard refused to provide NPI support by the NYSE notification date, forcing omission of Waddell proceeds from the May distribution; litigation seeking >$15M continues, with missing documentation cited upon receipt of late May proceeds .

Financial Results

Quarterly headline metrics

Note: EBITDA/margins not applicable for a passive royalty trust reporting on a modified cash basis (limited operating metrics beyond G&A) .

Year-over-year (Q1)

Segment breakdown

KPI trends (underlying properties)

Monthly distributions (Q1 and immediately after)

Guidance Changes

Note: The Trust does not issue formal revenue/margin/tax guidance; distributions are declared monthly based on received net proceeds .

Earnings Call Themes & Trends

No earnings call transcript was available for Q1 2024; PBT typically does not host quarterly calls. Themes below reflect 10-Q and press releases.

Management Commentary

• “This month’s distribution increased from the previous month due mainly to a decrease in capital costs and a higher average oil price…” (April PR, on Waddell NPI and capex timing) .
• “Blackbeard… provided the Trustee with a preliminary capital expenditures budget of approximately $301.4 million (gross), $106.1 million (net) for the Waddell Ranch properties.” (Trustee’s discussion) .
• “The Trust’s income and monthly distributions are heavily influenced by commodity prices… subject to numerous risks and uncertainties.” (Q1 10-Q) .

Q&A Highlights

No analyst Q&A or call transcript was available for Q1 2024.

Estimates Context

• Wall Street consensus EPS/Revenue estimates via S&P Global were unavailable at the time of this analysis due to request limits; PBT has limited traditional sell-side coverage for quarterly EPS/Revenue. As a result, beat/miss vs consensus cannot be assessed for Q1 2024.
• Distributions and net proceeds are inherently volatile and driven by operator-reported net profits and capex timing rather than GAAP earnings constructs .

Key Takeaways for Investors

• Q1 execution benefited from materially higher volumes, offsetting lower price realizations; distributable income per unit rose to $0.12 and April’s distribution surged, signaling positive Waddell NPI momentum and favorable capex timing in late winter months .
• Watch the operator dispute path: documentation frictions and litigation (> $15M claim) introduce near-term uncertainty over monthly proceeds, transparency, and timing; these events can swing distributions materially month-to-month .
• 2024 prelim Waddell capex budget is significantly larger than 2023 actuals; this supports production but can depress near-term NPI if capital outlays outpace revenue, elevating distribution volatility quarter-to-quarter .
• LOE inflation and maintenance intensity at Waddell (LOE and property taxes up to $22.8M gross in Q1) remain headwinds; monitor operator efficiency and capex phasing to gauge NPI sustainability .
• Commodity sensitivity is high: lower gas realizations and modest oil price support were visible in Q1; geopolitical and macro dynamics will continue to dominate distribution cadence .
• Segments: Texas Royalty properties provide a steadier baseline; incremental Waddell contributions drive upside when NPI is positive—diversification across the two streams helps cushion operator-specific shocks .
• Near-term trading: distribution headlines (monthly PRs/8-Ks) and any legal updates are likely primary catalysts; medium-term thesis hinges on resolving operator frictions, stabilizing documentation/reporting, and disciplined capex translating into sustained NPI and production growth .