PermRock Royalty Trust (PRT)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 distributions declared (record dates within the quarter) were $0.030219 (Oct 31), $0.030271 (Nov 29), and $0.050326 (Dec 31) per unit, reflecting higher October distribution on lower capex and normalized taxes after the prior month’s ad valorem credit reversal .
• October production month (paid on Jan 15) saw oil receipts rise and operating and capital costs fall, lifting the December 31-record distribution; management cited higher oil prices/volumes and completion of recompletions as drivers .
• Boaz Energy drew on previously reserved funds during the quarter’s September production calculation ($380k net to the Trust), and smaller reserve applications continued into the subsequent months ($32k for October production; $96k for December production), which supported distributable cash flow .
• Subsequent event and 2025 catalyst: Boaz agreed to sell the Underlying Properties (burdened by the Trust’s NPI) and its 4.88M Trust units to T2S Permian Acquisition II LLC (announced Jan 13, 2025; closed Mar 31, 2025), introducing an operator change and potential strategy shifts in 2025 .

What Went Well and What Went Wrong

• What Went Well

  • October production (reflected in the Dec 20 release) benefited from higher oil prices/volumes and lower operating and capital costs, boosting distributable cash; management: “This increase was primarily due to an increase in oil sales prices and volumes,” and “Capital expenses were $0.11 million…primarily related to the conclusion of recompletion projects…” .
  • Distributions declared within Q4 were steady to slightly higher versus Q3 levels, with a notable step-up for the Dec 31 record date ($0.050326 per unit) .
  • Reserve applications supported cash flow: Boaz applied $380,000 (net) in September’s calculation and additional reserve allocations in later months, cushioning distributions despite cost/tax variability .

• What Went Wrong

  • September production (paid in December) reflected lower oil prices/volumes versus the prior month; per-unit distribution remained modest at $0.030271 .
  • Taxes normalized higher in October production (severance and ad valorem taxes of $74,108) after a $(100,000) ad valorem tax credit had driven unusually low taxes in the prior month’s calculation, removing a temporary tailwind .
  • Total direct operating expenses fluctuated materially month-to-month (e.g., $0.73m for August vs $0.59m for October production), reflecting ongoing field cost variability that can pressure net profits and distribution consistency .

Financial Results

Quarterly distribution declarations (record dates within the quarter):

Recent quarterly financials (trust-level, modified cash basis):

Q4 2024 underlying operational KPIs by production month (recorded in Q4’s Oct/Nov/Dec distribution declarations):

Notes: September tax line reflects the ad valorem tax credit of $(100,000), making total taxes negative for that month .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Oil cash receipts… totaled $1.75 million… an increase… primarily due to an increase in oil sales prices and volumes.”
• “Total direct operating expenses… were $0.59 million, a decrease of $0.14 million from the prior month’s distribution period.”
• “Capital expenses were $0.11 million… primarily related to the conclusion of recompletion projects in Permian Clearfork and Permian Platform…”
• “Severance and ad valorem taxes… decreased significantly to $(34,876)… due to an ad valorem tax credit of $(100,000) applied…”
• “Capital expenses were $0.71 million, an increase… primarily related to expenses associated with drilling a non-operated well in the Permian Shelf.”
• “Boaz Energy informed the Trust that this month’s net profits calculation included the application of $380,000 [net] of funds previously reserved….”

Q&A Highlights

• Not applicable. The Trust disseminated results via 8-K Item 2.02 press releases during the quarter; these filings do not include Q&A disclosures .

Estimates Context

• Wall Street consensus (S&P Global) EPS/Revenue estimates were not available for PRT this quarter; royalty trusts often have limited sell-side coverage. Accordingly, no estimate comparisons are presented.

Key Takeaways for Investors

• Distribution pattern improved intra-quarter with a strong Dec 31-record payment ($0.050326/unit) supported by higher oil receipts and lower capex in October production, while earlier months were modest amid softer oil pricing and normalizing taxes .
• Cost and tax variability remains a swing factor: ad valorem credits can temporarily amplify cash flow (September), but normalization can reverse the effect (October) .
• Reserve applications provided a buffer ($0.380m applied for September; smaller reserve movements thereafter), but reliance on reserves is not a structural driver and may ebb with operator priorities .
• Trend analysis of Q2→Q3 shows relatively stable quarterly distributable income, and Q4 declared distributions were broadly consistent/slightly higher on a per-unit basis compared to prior quarters, with October production the key driver .
• 2024 capex program (waterfloods, non-op drilling, one operated well) tapered into year-end as recompletions concluded; new operator (T2S) in 2025 is the principal narrative pivot and potential catalyst for development pacing and cost profile .
• Trading lens: Monthly distribution prints (and disclosures around operating costs, taxes, and reserve use) are near-term catalysts; watch for operator transition updates and any shifts to capex intensity and reserve applications going forward .

Sources

• Q4 2024 distribution declarations and underlying KPIs: Oct 21, Nov 18, Dec 20, 2024 8-K/press releases .
• Subsequent monthly detail (context for November/December production): Jan 21 and Feb 18, 2025 press releases / 8-K .
• Prior quarters’ financials and discussion: Q2 2024 10-Q and Q3 2024 10-Q .
• Operator transition: Jan 13, 2025 pending sale announcement; Mar 31, 2025 closing press release .