Permianville Rty Tr Stock Price, News & Analysis
Company Description
Permianville Royalty Trust (PVL) is a Delaware statutory trust that trades on the New York Stock Exchange and is focused on crude petroleum and natural gas extraction through royalty interests. According to the Trust’s public disclosures, Permianville Royalty Trust was formed to own a net profits interest that represents the right to receive 80% of the net profits from the sale of oil and natural gas production from certain, predominantly non-operated oil and gas properties located in the states of Texas, Louisiana and New Mexico.
The Trust’s assets are described as a net profits interest in underlying oil and gas properties (the “Underlying Properties”). These properties generate oil and natural gas production, and the Trust’s net profits interest entitles it to a share of net profits rather than direct ownership or operation of the wells. The Trust’s disclosures emphasize that the underlying properties include both oil and natural gas production and that the Trust’s interests are predominantly in non-operated properties, meaning that third-party operators manage day-to-day exploration, development and production activities.
Permianville Royalty Trust’s periodic cash distributions are based on the proceeds received from the Underlying Properties after deducting applicable costs. As described in its press releases and SEC filings, the amount of each distribution can fluctuate. Factors that affect the level of net profits available for distribution include actual production volumes of oil and natural gas, realized wellhead prices, the amount and timing of capital expenditures on the Underlying Properties, and accrued operating and administrative expenses. The Trust has also disclosed that it may experience periods in which operating and development expenses exceed cash receipts from the Underlying Properties, resulting in a net profits shortfall and the absence of a distribution for a given month.
The Trust’s sponsor, COERT Holdings 1 LLC (referred to as the “Sponsor”), plays an important role in the development activity on the Underlying Properties. Public communications from the Trust note that operators on the Underlying Properties have undertaken drilling and completion of Haynesville wells and that the Sponsor may establish cash reserves for approved, future development expenses associated with such wells. These reserves are funded by withholding amounts from current net profits that would otherwise be available for distribution. The Trust has explained that if development expenses are delayed or lower than expected, amounts reserved but unspent may later be released as incremental cash distributions.
In addition to oil and natural gas sales, the Trust has disclosed that transactions involving certain acreage can affect the net profits interest. For example, the Sponsor has reported the sale of a non-producing, partial Permian acreage stake that was free from and unburdened by the Trust’s net profits interest, with the portion of sale proceeds attributable to the net profits interest included in a subsequent net profits interest calculation. Such events can influence the cash flows available to the Trust in the periods when proceeds are recognized.
Permianville Royalty Trust has also described circumstances in which advances may be made to the Trust to cover ordinary course administrative expenses when net profits are insufficient. In these situations, the Trust has stated that future net profits must first be used to eliminate any cumulative net profits shortfall and to repay advances or amounts borrowed or drawn under a letter of credit before distributions to unitholders can resume. This structure underscores that unitholder distributions depend on both commodity-related cash flows and the recovery of any prior shortfalls or advances.
The Trust communicates regularly with investors through monthly press releases that outline the net profits interest calculation, reported underlying oil and natural gas sales volumes, average received wellhead prices, recorded cash receipts from the Underlying Properties, and accrued operating expenses and capital expenditures. These updates also indicate whether a monthly cash distribution will be paid, and if so, the per-unit amount and relevant record and payment dates. When no distribution is made, the Trust typically explains the reasons, such as net profits shortfalls or the need to repay advances for administrative expenses.
Permianville Royalty Trust’s regulatory reporting includes periodic filings with the Securities and Exchange Commission, such as Annual Reports on Form 10-K. The Trust has announced the filing of its Annual Report on Form 10-K for a completed fiscal year, noting that the report contains audited financial statements and is accessible through the SEC’s website and the Trust’s own SEC Filings section. In addition, the Trust files current reports on Form 8-K to furnish press releases that announce monthly distributions or net profits interest calculations.
Overall, Permianville Royalty Trust provides investors with exposure to net profits from oil and natural gas production in Texas, Louisiana and New Mexico through a royalty trust structure. Because the Trust’s interests are tied to production volumes, commodity prices, capital spending on the Underlying Properties and administrative and operating costs, its cash distributions can vary from month to month and may occasionally be suspended when net profits are insufficient or when prior shortfalls and advances must be recovered.
Business model and net profits interest
The core of Permianville Royalty Trust’s business model is its ownership of a net profits interest that entitles it to receive 80% of the net profits generated by specified oil and gas properties. Net profits are calculated based on cash receipts from the sale of oil and natural gas produced from the Underlying Properties, less applicable operating expenses, development costs and other charges described in the Trust’s governing documents and public disclosures. Because the Trust does not operate the properties directly, it depends on the operators and the Sponsor for production activities and capital investment decisions.
The Trust has explained that capital expenditures on the Underlying Properties can be elevated during periods of drilling and completion activity, such as the development of Haynesville wells by an operator described as a public super major oil company. During such periods, the combination of operating expenses and development costs can exceed cash receipts, resulting in a net profits shortfall. When this occurs, the Trust has reported that no distribution is made until the shortfall is eliminated in subsequent periods through positive net profits.
Geographic focus and asset base
According to the Trust’s descriptions, the Underlying Properties are located in the states of Texas, Louisiana and New Mexico. The Trust has characterized these properties as certain, predominantly non-operated oil and gas properties that produce both oil and natural gas. Prior descriptions have also referenced unconventional assets in the Permian and Haynesville basins, and recent communications highlight development activity and new production from Haynesville wells that contribute to natural gas volumes and revenues attributable to the net profits interest.
Distributions and variability
Permianville Royalty Trust has stated that future distributions are expected to be made on a monthly basis, but the actual amount of each distribution is not fixed. Instead, the Trust emphasizes that periodic distributions can fluctuate depending on proceeds received from production, commodity prices, capital expenditures, operating expenses and the Trust’s administrative expenses. The Trust has also described specific months in which no distribution was paid because net profits were insufficient after accounting for cumulative shortfalls and the repayment of advances for prior monthly expenses.
In several public updates, the Trust has outlined scenarios in which net profits shortfalls are carried forward and deducted from future net profits calculations. It has also noted that if the Trust’s cash on hand is not sufficient to pay ordinary course administrative expenses and it borrows funds, draws on a letter of credit, or receives advances from the Sponsor, no further distributions will be made until those amounts are repaid. These disclosures clarify that unitholder distributions are subordinate to the recovery of any such advances and the elimination of net profits shortfalls.
Regulatory reporting and transparency
Permianville Royalty Trust files reports with the SEC, including current reports on Form 8-K that furnish press releases announcing monthly distributions or net profits interest calculations, and Annual Reports on Form 10-K that contain audited financial statements. The Trust has highlighted that its Annual Report on Form 10-K is available through the SEC’s website and its own SEC Filings section, and that unitholders may request printed copies free of charge. These filings provide detailed information on the Trust’s financial condition, results of operations and the performance of the Underlying Properties.
Through its recurring press releases and SEC filings, the Trust provides data on underlying sales volumes for oil and natural gas, average received wellhead prices, recorded cash receipts from the Underlying Properties, accrued operating expenses and capital expenditures, as well as explanations of any reserves established for future development expenses. This information allows investors to understand how monthly net profits are determined and how those calculations translate into cash distributions or net profits shortfalls.
Key structural features
- Delaware statutory trust formed to own a net profits interest.
- Right to receive 80% of net profits from specified oil and natural gas properties.
- Underlying Properties located in Texas, Louisiana and New Mexico.
- Predominantly non-operated interests, with third-party operators managing production.
- Monthly net profits interest calculations and, when available, monthly cash distributions.
- Potential for net profits shortfalls, cash reserves for development expenses and advances for administrative costs that can affect distributions.