[10-Q] Permian Basin Royalty Trust Quarterly Earnings Report

Rhea-AI Filing Summary

Permian Basin Royalty Trust (PBT) reported sharply lower royalty receipts and distributions for the periods ended June 30, 2025 due largely to a deficit on the Waddell Ranch properties and delayed operator reporting. Total assets were $1,867,939 with cash and short-term investments of $1,704,817 and net overriding royalty interests of $163,122. The Trust had a distribution payable of $604,817 and 46,608,796 units outstanding.

Royalty income for the three months ended June 30, 2025 was $3,089,889 versus $8,803,389 a year earlier, producing distributable income of $2,397,255 ($0.05 per unit) compared with $8,436,688 ($0.18 per unit) in Q2 2024. For six months, distributable income was $4,993,467 ($0.11 per unit) versus $13,928,894 ($0.30). The Waddell Ranch properties remain in deficit and the Trust reports total remaining to be recovered of $37,057,982 gross ($27,793,486 net to the Trust) as of June 30, 2025. The Trustee has ongoing litigation against Blackbeard seeking more than $9 million; trial is scheduled for November 17, 2025. The Trustee declared a distribution of $0.015311 per unit on July 21, 2025 payable August 14, 2025.

Positive

• Trust maintains cash and short-term investments of $1,704,817 providing near-term liquidity for distributions and obligations
• Independent review by Weaver and Tidwell, L.L.P. identified no material modifications to the condensed interim financial statements under the modified cash basis
• Trust declared a post-period distribution of $0.015311 per unit on July 21, 2025 payable August 14, 2025
• Expense reserve of $1,100,000 available to pay obligations if royalty income is insufficient

Negative

• Large cumulative deficit on underlying properties with total remaining to be recovered of $37,057,982 gross ($27,793,486 net to the Trust) as of June 30, 2025
• Significant decline in royalty income: Q2 2025 royalty income $3,089,889 versus $8,803,389 in Q2 2024
• Distributable income fell to $2,397,255 ($0.05 per unit) in Q2 2025 from $8,436,688 ($0.18 per unit) in Q2 2024
• Waddell Ranch produced no royalty income for multiple months (Nov 2024 through Jun 2025) due to an NPI deficit and operator reporting timing
• Ongoing litigation with Blackbeard seeking more than $9 million and Blackbeard's refusal to provide timely monthly net-proceeds data, increasing legal costs and uncertainty
• Increased G&A and legal expenses contributed to lower distributable income

Insights

Energy Financial Analyst

TL;DR: Distributions and royalty receipts materially declined; large recoverable excess-cost balance and operator reporting delays are main drivers.

The Trust's operating cash flows weakened as the Waddell Ranch conveyance produced no royalty income in several months due to an NPI deficit and Blackbeard's delayed reporting. Reported distributable income fell to $2.397 million in Q2 2025 from $8.437 million a year earlier, and the six-month distributable income fell to $4.993 million. The Trust reports $37.06 million gross remaining to be recovered (about $27.79 million net). These items directly reduce near-term cash available for Unitholders and increase uncertainty around future monthly distributions.

Litigation and Risk Analyst

TL;DR: Operator disputes and litigation pose material recovery and timing risk to distributions and reported royalty income.

The Trustee has sued Blackbeard alleging improper deductions and seeks more than $9 million for April 2020 through December 2023 months; trial set for November 17, 2025. Blackbeard's refusal to provide monthly net-proceeds data since May 2024 has caused timing mismatches and contributed to the Waddell Ranch deficit. The Trust has incurred higher G&A on professional/legal services. These facts heighten counterparty and operational risks that could affect timing and amount of future distributions.

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to________

Commission File Number: 001-08033

PERMIAN BASIN ROYALTY TRUST

(Exact name of registrant as Specified in the Permian Basin Trust Indenture)

Texas	75-6280532
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Argent Trust Company 3838 Oak Lawn Ave, Suite 1720 Dallas, Texas 75219
(Address of Principal Executive Offices; Zip Code)

(855) 588-7839

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

			Trading Symbol(s)		Name of each exchange on which registered
Title of each class
Units of Beneficial Interest			PBT		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No ☒

Number of units of beneficial interest outstanding at August 13, 2025: 46,608,796

Table of Contents

PERMIAN BASIN ROYALTY TRUST

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The condensed interim financial statements included herein have been prepared by Argent Trust Company as Trustee for the Permian Basin Royalty Trust (the “Trust”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations, although the Trustee believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed interim financial statements and notes thereto be read in conjunction with the financial statements and the notes thereto included in the Trust’s latest annual report on Form 10-K. In the opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the assets, liabilities and trust corpus of the Trust as of June 30, 2025, and the distributable income and the changes in trust corpus for the three and six months ended June 30, 2025 and 2024, have been included. The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year. Unless specified otherwise, all amounts included herein are presented in US dollars.

The unaudited condensed interim financial statements as of the three and six months ended June 30, 2025 and 2024, included herein, have been reviewed by Weaver and Tidwell, L.L.P., an independent registered public accounting firm, as stated in their report appearing herein, which does not express an opinion on those condensed financial statements.

		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 410)		3
Condensed Interim Statements of Assets, Liabilities and Trust Corpus		4
Condensed Interim Statements of Distributable Income (Unaudited)		5
Condensed Interim Statements of Changes in Trust Corpus (Unaudited)		6

2

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Unitholders of Permian Basin Royalty Trust

and Argent Trust Company, Trustee

Results of Review of Condensed Interim Financial Statements

We have reviewed the accompanying condensed statements of assets, liabilities and trust corpus of Permian Basin Royalty Trust (the Trust) as of June 30, 2025 and the related condensed statements of distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 2025 and 2024, and the related notes (collectively referred to as the “condensed interim financial statements”). Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed interim financial statements for them to be in conformity with the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

As described in Note 2 to the condensed interim financial statements, these condensed interim financial statements were prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the statement of assets, liabilities, and trust corpus as of December 31, 2024, and the related statements of distributable income and changes in trust corpus for the year then ended (not presented herein); and in our report dated March 14, 2025, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed statement of assets, liabilities and trust corpus as of December 31, 2024, is fairly stated, in all material respects, in relation to the statement of assets, liabilities, and trust corpus from which it has been derived.

Basis for Review Results

These condensed interim financial statements are the responsibility of the Trustee. We conducted our review in accordance with the standards of the PCAOB. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

A review of condensed interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

WEAVER AND TIDWELL, L.L.P.

Houston, Texas

August 13, 2025

3

Table of Contents

PERMIAN BASIN ROYALTY TRUST

CONDENSED INTERIM STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS

		June 30, 2025 (Unaudited)				December 31, 2024
ASSETS
Cash and short-term investments		$	1,704,817			$	2,122,585
Net overriding royalty interests in producing oil and gas properties (net of accumulated    amortization of $10,812,094 and $10,810,809 at June 30, 2025 and    December 31, 2024, respectively)			163,122				164,407
TOTAL ASSETS		$	1,867,939			$	2,286,992
LIABILITIES AND TRUST CORPUS
Distribution payable to Unitholders		$	604,817			$	1,022,585
Commitments and reserves for contingencies (Note 7)			1,100,000				1,100,000
Total Liabilities		$	1,704,817			$	2,122,585
Trust corpus – 46,608,796 Units of beneficial interest authorized and outstanding			163,122				164,407
TOTAL LIABILITIES AND TRUST CORPUS		$	1,867,939			$	2,286,992

The accompanying notes are an integral part of these condensed interim financial statements.

4

Table of Contents

PERMIAN BASIN ROYALTY TRUST

CONDENSED INTERIM STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)

		Three Months Ended June 30, 2025				Three Months Ended June 30, 2024
Royalty income		$	3,089,889			$	8,803,389
Interest income			15,751				29,106
Total Income			3,105,640				8,832,495
General and administrative expenditures			(708,385	)			(395,807	)
Distributable income		$	2,397,255			$	8,436,688
Distributable income per Unit (46,608,796 Units outstanding)		$	0.05			$	0.18

The accompanying notes are an integral part of these condensed interim financial statements.

		Six Months Ended June 30, 2025				Six Months Ended June 30, 2024
Royalty income		$	6,144,586			$	14,809,031
Interest income			32,274				68,153
Total Income			6,176,860				14,877,184
General and administrative expenditures			(1,183,393	)			(948,290	)
Distributable income		$	4,993,467			$	13,928,894
Distributable income per Unit (46,608,796 Units outstanding)		$	0.11			$	0.30

The accompanying notes are an integral part of these condensed interim financial statements.

5

Table of Contents

PERMIAN BASIN ROYALTY TRUST

CONDENSED INTERIM STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)

		Three Months Ended June 30, 2025				Three Months Ended June 30, 2024
Trust corpus, beginning of period		$	163,765			$	209,625
Amortization of net overriding royalty interests			(643	)			(12,000	)
Distributable income			2,397,255				8,436,688
Distributions declared			(2,397,255	)			(8,436,688	)
Total Trust Corpus, end of period		$	163,122			$	197,625
Distributions per Unit (46,608,796 Units outstanding)		$	0.05			$	0.18

The accompanying notes are an integral part of these condensed interim financial statements.

		Six Months Ended June 30, 2025				Six Months Ended June 30, 2024
Trust corpus, beginning of period		$	164,407			$	221,474
Amortization of net overriding royalty interests			(1,285	)			(23,849	)
Distributable income			4,993,467				13,928,894
Distributions declared			(4,993,467	)			(13,928,894	)
Total Trust Corpus, end of period		$	163,122			$	197,625
Distributions per Unit (46,608,796 Units outstanding)		$	0.11			$	0.30

The accompanying notes are an integral part of these condensed interim financial statements.

6

Table of Contents

PERMIAN BASIN ROYALTY TRUST

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

1.TRUST ORGANIZATION AND PROVISIONS

The Permian Basin Royalty Trust (“Trust”) was established as of November 1, 1980. Argent Trust Company, a Tennessee chartered trust company (“Argent”) is Trustee for the Trust. The net overriding royalties conveyed to the Trust include (1) a 75% net overriding royalty in Southland Royalty Company’s fee mineral interest in the Waddell Ranch in Crane County, Texas (the “Waddell Ranch properties”) and (2) a 95% net overriding royalty carved out of Southland Royalty Company’s major producing royalty properties in Texas (the “Texas Royalty properties”). The net overriding royalty for the Texas Royalty properties is subject to the provisions of the lease agreements under which such royalties were created. The net overriding royalties above are collectively referred to as the “Royalties.”

On November 3, 1980, Units of Beneficial Interest (“Units”) in the Trust were distributed to the Trustee for the benefit of Southland Royalty Company’s shareholders of record as of November 3, 1980, who received one Unit in the Trust for each share of Southland Royalty Company common stock held. The Units are traded on the New York Stock Exchange.

Burlington Resources Oil & Gas Company LP (“BROG”), a subsidiary of ConocoPhillips, was the interest owner for the Waddell Ranch properties and Riverhill Energy Corporation (“Riverhill Energy”), formerly a wholly owned subsidiary of Riverhill Capital Corporation (“Riverhill Capital”) and formerly an affiliate of Coastal Management Corporation (“CMC”), was the interest owner for the Texas Royalty properties. In February 1997, BROG sold its interest in the Texas Royalty properties to Riverhill Energy. Riverhill Energy currently conducts all field, technical and accounting operations for the Texas Royalty properties. BROG notified the Trust that on November 1, 2019, the Waddell Ranch properties that are subject to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust-Waddell Ranch) dated November 1, 1980, were sold to Blackbeard Operating, LLC (“Blackbeard”) of Fort Worth, Texas. Blackbeard became the operator effective as of April 1, 2020.

The Trustee was advised that in the first quarter of 1998, Schlumberger Technology Corporation (“STC”) acquired all of the shares of stock of Riverhill Capital. Prior to such acquisition by STC, CMC and Riverhill Energy were wholly owned subsidiaries of Riverhill Capital. The Trustee was further advised that in connection with STC’s acquisition of Riverhill Capital, the shareholders of Riverhill Capital acquired ownership of all of the shares of stock of Riverhill Energy. Thus, the ownership in the Texas Royalty properties referenced above remained in Riverhill Energy, the stock ownership of which was acquired by the former shareholders of Riverhill Capital.

On January 9, 2014, Bank of America N.A. (as successor to The First National Bank of Fort Worth) gave notice to the holders of units (the “Unitholders”) that it would be resigning as trustee of the Trust subject to certain conditions that included the appointment of Southwest Bank as successor trustee. At a Special Meeting of Trust Unitholders, the Unitholders approved the appointment of Southwest Bank as successor trustee of the Trust once the resignation of Bank of America N.A. took effect and also approved certain amendments to the Trust Indenture. The effective date of Bank of America N.A.’s resignation and the effective date of Southwest Bank’s appointment as successor trustee was August 29, 2014. Effective October 19, 2017, Simmons First National Corporation (“SFNC”) completed its acquisition of First Texas BHC, Inc., the parent company of Southwest Bank. SFNC is the parent company of Simmons Bank. SFNC merged Southwest Bank with Simmons Bank effective February 20, 2018.

On November 4, 2021, Simmons Bank announced that it had entered into an agreement with Argent, pursuant to which Simmons Bank would be resigning as trustee of the Trust and would nominate Argent as successor trustee of the Trust. The effective date of Simmons Bank’s resignation and Argent’s appointment as successor trustee was December 30, 2022. The defined term “Trustee” as used herein shall refer to Bank of America N.A. for periods prior to August 29, 2014, shall refer to Southwest Bank for periods from August 29, 2014 through February 19, 2018, shall refer to Simmons Bank for periods from February 20, 2018 through December 29, 2022, and shall refer to Argent for periods on and after December 30, 2022.

The terms of the Trust Indenture provide, among other things, that:

•the Trust shall not engage in any business or commercial activity of any kind or acquire any assets other than those initially conveyed to the Trust;

•the Trustee may not sell all or any part of the Royalties unless approved by holders of 75% of all Units outstanding in which case the sale must be for cash and the proceeds promptly distributed;

•the Trustee may establish a cash reserve for the payment of any liability which is contingent or uncertain in amount;

7

Table of Contents

•the Trustee is authorized to borrow funds to pay liabilities of the Trust; and

•the Trustee will make monthly cash distributions to Unitholders (see Note 3).

The Trustee believes such information includes all the disclosures necessary to make the information presented not misleading. The information furnished reflects all adjustments which are, in the opinion of the Trustee, necessary for a fair presentation of the results for the interim periods presented. The financial information should be read in conjunction with the financial statements and notes thereto included in the Trust's Annual Report on Form 10-K for the year ended December 31, 2024. The Trust considers all highly liquid investments with a maturity of three months or less to be cash equivalents. Net overriding royalty interests are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If circumstances require the net overriding royalty interests to be tested for possible impairment, the Trust first compares undiscounted cash flows expected to be generated by the net overriding royalty interests to its carrying value. If the carrying value of the net overriding royalty interests is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. The fair value of the net overriding royalty interests is measured using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount.

2.ACCOUNTING POLICIES

Basis of Accounting

The condensed interim financial statements of the Trust are prepared on the following modified cash basis of accounting and are not intended to present financial position and results of operations in conformity with accounting principles generally accepted in the United States of America (“GAAP”):

•Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the interest owners. Royalty income consists of the amounts received and available for distribution by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges and other costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties. Royalty income for the Waddell Ranch properties was not received for the three and six months ended June 30, 2025.

•Trust expenses, consisting principally of routine general and administrative costs, as recorded are based on liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.

•Distributions to Unitholders are recorded when declared by the Trustee.

•Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust. If monthly costs exceed revenues for any conveyance (“excess costs”), such excess costs cannot reduce royalty income from other conveyances, but are carried forward with accrued interest to be recovered from future net proceeds of that conveyance.

The condensed interim financial statements of the Trust differ from financial statements prepared in accordance with accounting principles generally accepted in GAAP because revenues are not accrued in the month of production, expenses are recorded when paid and certain cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with GAAP. Amortization of the Royalties calculated on a unit-of-production basis is charged directly to trust corpus. This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the U.S. Securities and Exchange Commission as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Use of Estimates

The preparation of financial statements in conformity with the basis of accounting described above requires management to make estimates and assumptions that affect reported amounts of certain assets, liabilities, income and expenses as of and for the reporting periods. Actual results may differ from such estimates.

Contingencies

Contingencies related to the properties from which the royalties are carved (“Underlying Properties”) that are unfavorably resolved would generally be reflected by the Trust as reductions to future royalty income payments to the Trust with corresponding reductions to cash distributions to Unitholders.

Distributable Income Per Unit

Basic distributable income per Unit is computed by dividing distributable income by the weighted average of Units outstanding. Distributable income per Unit assuming dilution is computed by dividing distributable income by the weighted average number of Units and equivalent Units outstanding. The Trust had no equivalent Units outstanding for any period presented. Therefore, basic distributable income per Unit and distributable income per Unit assuming dilution are the same.

8

Table of Contents

New Accounting Pronouncements

There are no new accounting pronouncements that are expected to have significant impact on the Trust’s financial statements.

3.NET OVERRIDING ROYALTY INTERESTS AND DISTRIBUTION TO UNITHOLDERS

The amounts to be distributed to Unitholders (“Monthly Distribution Amounts”) are determined on a monthly basis. The Monthly Distribution Amount is an amount equal to the sum of cash received by the Trustee during a calendar month attributable to the Royalties, any reduction in cash reserves and any other cash receipts of the Trust, including interest, reduced by the sum of liabilities paid and any increase in cash reserves. If the Monthly Distribution Amount for any monthly period is a negative number, then the distribution will be zero for such month. To the extent the distribution amount is a negative number, that amount will be carried forward and deducted from future monthly distributions until the cumulative distribution calculation becomes a positive number, at which time a distribution will be made. Unitholders of record will be entitled to receive the calculated Monthly Distribution Amount for each month on or before 10 business days after the monthly record date, which is generally the last business day of each calendar month.

The cash received by the Trustee consists of the amounts received by owners of the interest burdened by the Royalties from the sale of production less the sum of applicable taxes, accrued production costs, development and drilling costs, operating charges and other costs and deductions, multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, and the fact that Blackbeard has provided this information on a monthly basis since Argent Trust Company has become Trustee of the Trust, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the announcement date for monthly distributions starting in May 2024. As a result of Blackbeard's failure to provide this information by the NYSE notification date for the monthly distribution, in accordance with the Trust Indenture, if royalty income is received from the Waddell Ranch properties on or prior to the record date, it will be included in the following month's distribution, rather than the current month's distribution.

As a result of excess costs, there was no royalty income received from Blackbeard for the three and six months ended June 30, 2025.

4.EXCESS COSTS

If monthly costs exceed revenues for the Waddell Ranch properties or Texas Royalty properties, such excess costs must be recovered, with accrued interest, from future net proceeds and cannot reduce net proceeds from the other conveyance. The Waddell Ranch properties did not contribute to royalty income for the reporting months of October 2024 through May 2025 (due to Blackbeard’s reporting being one month in arrears), such that the Waddell Ranch properties remain in a deficit position as of June 30, 2025.

The following table summarizes excess costs activity, cumulative excess costs balance, and accrued interest to be recovered as calculated by Blackbeard.

	Underlying Properties			Net to the Trust
Cumulative excess costs remaining at 12/31/2024	$	13,623,356		$	10,217,517
Net excess costs (recovery) for the quarter ended 3/31/25		13,918,276			10,438,707
Net excess costs (recovery) for the quarter ended 6/30/25		8,337,807			6,253,355
Cumulative excess costs remaining at 6/30/2025	$	35,879,439		$	26,909,579
Accrued interest at 6/30/25		1,178,543			883,907
Total remaining to be recovered at 6/30/25	$	37,057,982		$	27,793,486

5.FEDERAL INCOME TAXES

For federal income tax purposes, the Trust constitutes a fixed investment trust that is taxed as a grantor trust. A grantor trust is not subject to federal income tax at the trust level. The Unitholders are considered for federal income tax purposes to own the Trust’s income and principal as though no trust were in existence. The income of the Trust is deemed to have been received or accrued by each Unitholder at the time such income is received or accrued by the Trust and not when distributed by the Trust. If the Trust borrows funds to pay liabilities of the Trust, as contemplated in the Trust Indenture, tax-exempt Unitholders could be required to recognize unrelated business taxable income.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes significant federal
income tax provisions, such as the permanent extension of the income tax rates set by the Tax Cuts and Jobs Act, the continued
suspension of miscellaneous itemized deductions and the restoration of favorable tax treatment for certain business provisions.

9

Table of Contents

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Unitholders should consult their tax advisors regarding the potential tax consequences of the OBBBA and its impact on such
person’s ownership of Units.

6.STATE TAX CONSIDERATIONS

All revenues from the Trust are from sources within Texas, which does not impose an individual income tax. Texas imposes a franchise tax at a rate of 0.75% on gross revenues less certain deductions, as specifically set forth in the Texas franchise tax statutes. Entities subject to the Texas franchise tax generally include trusts and most other types of entities that provide limited liability protection, unless otherwise exempt. Trusts that receive at least 90% of their federal gross income from certain passive sources, including royalties from mineral properties and other non-operated mineral interest income, and do not receive more than 10% of their income from operating an active trade or business, generally are exempt from the Texas franchise tax as “passive entities.” The Trust has been and expects to continue to be exempt from Texas franchise tax as a passive entity. Because the Trust should be exempt from Texas franchise tax at the Trust level as a passive entity, each Unitholder that is a taxable entity under the Texas franchise tax generally will be required to include its portion of Trust revenues in its own Texas franchise tax computation. This revenue is sourced to Texas under provisions of the Texas Administrative Code providing that such income is sourced according to the principal place of business of the Trust, which is Texas.

Unitholders should consult their tax advisors regarding state tax requirements, if any, applicable to such Unitholder’s ownership of Units.

7.COMMITMENTS AND CONTINGENCIES

Contingencies related to the Underlying Properties that are unfavorably resolved would generally be reflected by the Trust as reductions to future royalty income payments to the Trust with corresponding reductions to cash distributions to Unitholders. The Trustee maintains an expense reserve, which is currently $1,100,000, that allows the Trustee to pay obligations of the Trust in the event there is not sufficient royalty income to pay such expenses.

8. TRUSTEE FEES

Trustee fees for the three month periods ending June 30, 2025 and June 30, 2024, were $29,136 and $35,922, respectively. For the six months ended June 30, 2025 and 2024, Trustee fees were $60,501 and $68,549, respectively.

9. SUBSEQUENT EVENTS

Subsequent events were evaluated through the issuance date of the financial statements. Subsequent to June 30, 2025, the Trust declared a distribution on July 21, 2025 of $0.015311 per Unit outstanding payable on August 14, 2025 to Unitholders of record on July 31, 2025.

* * * * *

10

Table of Contents

Item 2. Trustee’s Discussion and Analysis

Forward Looking Information

Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, litigation, information to be received by operators of the Waddell Ranch properties or Texas Royalty properties, and regulatory matters. Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove correct. There are many factors, none of which are within the Trustee’s control, that may cause such expectations not to be realized, including, among other things, factors such as actual oil and gas prices and the recoverability of reserves, capital expenditures, general economic conditions, actions and policies of petroleum-producing nations and other changes in the domestic and international energy markets. Such forward looking statements generally are accompanied by words such as “estimate,” “expect,” “predict,” “anticipate,” “goal,” “should,” “assume,” “believe,” or other words that convey the uncertainty of future events or outcomes.

Commodity Prices

The Trust’s income and monthly distributions are heavily influenced by commodity prices. Commodity prices may fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market uncertainty and (iii) a variety of additional factors that are beyond the Trustee’s control. Recently, there has been volatility in oil and natural gas prices due in part to geopolitical conditions in Eastern Europe and the Middle East. In the first half of 2024, the price of oil and gas began to increase over 2023 prices, due to tensions in the Middle East and OPEC cutting oil production; however, the price began to decrease in the third quarter of 2024 due to lower demand. The price of oil hit a high price of $79.28 per barrel on January 17, 2025 and steadily decreased through May 2025. Since that time, the price of oil has increased slightly such that as of July 28, 2025 the price of oil was $67.81 per barrel. Factors that may impact future commodity prices, including the price of oil and natural gas, include but are not limited to:

•political conditions in major oil producing regions, including the conflicts in Eastern Europe and the Middle East

•worldwide economic and geopolitical conditions;

•weather conditions;

•trade barriers and tariffs;

•public health concerns;

•the supply and price of domestic and foreign crude oil or natural gas;

•the level of consumer demand;

•the price and availability of alternative fuels;

•the proximity to, and capacity of, transportation facilities;

•the effect of worldwide energy conservation measures and governmental policies and regulatory incentives for investment in non-fossil fuel energy sources; and

•the nature and extent of governmental regulation and taxation.

Although the Trustee cannot predict the occurrence of events that may affect future commodity prices or the degree to which these prices will be affected, gas royalty income for a given period generally relates to production three months prior to the period and crude oil royalty income for a given period generally relates to production two months prior to the period and will generally approximate current market prices in the geographic region of the production at the time of production. When crude oil and natural gas prices decline, the Trust is affected in two ways. First, distributable income from the Royalty properties is reduced. Second, exploration and development activity by operators on the Royalty properties may decline as some projects may become uneconomic and are either delayed or eliminated. It is impossible to predict future crude oil and natural gas price movements, and this reduces the predictability of future cash distributions to Unitholders.

Liquidity and Capital Resources

As stipulated in the Trust Indenture, the Trust is intended to be passive in nature, and the Trustee does not have any control over or any responsibility relating to the operation of the Underlying Properties. The Trustee has powers to collect and distribute proceeds received by the Trust and pay Trust liabilities and expenses and its actions have been limited to those activities. The Trust is a passive

11

Table of Contents

entity and other than the Trust’s ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in borrowing transactions. As a result, other than such borrowings, if any, the Trust has no source of liquidity or capital resources other than the Royalties.

Results of Operations

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

For the quarter ended June 30, 2025, royalty income received by the Trust amounted to $3,089,889 compared to royalty income of $8,803,389 during the second quarter of 2024. Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for March, April and May 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the second quarter of 2025). For the Waddell Ranch properties, the average realized oil and gas prices were $70.27 per barrel (Bbl) and $2.41 per thousand cubic feet (Mcf), respectively for the three months ended May 31, 2025, compared to $73.40 and $1.83 for the months of April and May 2024 (reflecting the two months for which proceeds were distributed to Unitholders in the second quarter of 2024). The average realized price of gas was calculated by dividing the total gas and plant product sales by the total gas and plant product volumes (converted to an Mcf equivalent). For the Texas Royalty properties, the average realized oil and gas prices were $68.61 per Bbl and $10.15 per Mcf, respectively for the quarter ended June 30, 2025, compared to $78.00 per Bbl and $10.04 per Mcf, respectively for the quarter ended June 30, 2024. The lower royalty income reported in the three months ended June 30, 2025, compared to the same time period in 2024 is attributable to a deficit position in the second quarter of 2025, resulting in no royalty income being received from the Waddell Ranch properties due to an excess in working interest costs during the second quarter of 2025. No deficit position existed during the second quarter of 2024, and royalty income was received from the Waddell Ranch properties during such period. Blackbeard continues to refuse to provide information regarding monthly net proceeds in time for the monthly distribution announcement.

Interest income for the quarter ended June 30, 2025 was $15,751 compared to $29,106 during the second quarter of 2024. The decrease in interest income is primarily attributable to decreased amounts of funds available for investment. Total expenses during the second quarter of 2025 amounted to $708,385 compared to $395,807 during the second quarter of 2024. The increase in total expenses can be primarily attributed to increased expenses for professional services associated with legal proceedings with Blackbeard.

These transactions resulted in distributable income for the quarter ended June 30, 2025 of $2,397,255 or $0.05 per Unit outstanding of beneficial interest. Distributions of $0.019615, $0.018841 and $0.012976 per Unit were made to Unitholders of record as of April 30, 2025, May 31, 2025, and June 30, 2025, respectively. For the second quarter of 2024, distributable income was $8,436,688 or $0.18 per Unit outstanding of beneficial interest.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024 such that royalty income for the Trust for the second quarter of the calendar year is associated with actual oil and gas production for January, February, and March 2025 for the Waddell Ranch properties from which "Royalties" were carved. Royalty income for the Trust for the second quarter of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from February, March, and April 2025.

Beginning in May 2024, Blackbeard has also refused to provide production, product sales, capital expenditure, and development information for the Waddell Ranch properties from which the Trust's Royalties are carved for each distribution month, information Blackbeard has previously provided on a monthly basis since Argent Trust Company has become Trustee of the Trust. Blackbeard has opted to provide this information quarterly, approximately 30 days after the end of each fiscal quarter. On July 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended June 30, 2025. For the quarter ended June 30, 2024, only the months of April and May are shown below, as those were the only two months for which the Trust received information in time to distribute proceeds for the Waddell Ranch properties during the second quarter of 2024. Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:

12

Table of Contents

		Waddell Ranch Properties
		2025													2024
		March			April			May			Total				April			May			Total
Royalties
Oil sales (Bbls)			247,367			245,459			276,448			769,274				182,168			191,222			373,390
Gas sales (Mcf)			1,168,967			1,158,514			1,331,903			3,659,384				1,046,589			1,122,492			2,169,081
Properties From Which The Royalties Were Carved:
Oil:
Total oil sales (Bbls)			329,823			327,279			368,597			1,025,699				242,891			254,963			497,854
Average per day (Bbls)			10,639			10,909			11,890			11,397				7,835			8,792			8,162
Average realized price per Bbl		$	73.03		$	70.87		$	66.90			70.27			$	76.54		$	70.25		$	73.40
Gas:
Total gas sales (Mcf)			1,558,623			1,544,685			1,775,871			4,879,179				1,395,453			1,496,656			2,892,109
Average per day (Mcf)			50,278			51,490			57,286			54,213				45,015			51,609			47,412
Average realized price per Mcf		$	3.03		$	2.71		$	1.61		$	2.41			$	1.55		$	2.10		$	1.83

		Texas Royalty Properties
		2025													2024
		April			May			June			Total				April			May			June			Total
Royalties
Oil sales (Bbls)			15,292			13,619			14,430			43,341				15,152			14,569			14,339			44,060
Gas sales (Mcf)			8,991			9,894			8,278			27,163				8,744			6,865			6,173			21,782
Properties From Which The Royalties Were Carved:
Oil:
Total oil sales (Bbls)			17,157			15,442			16,367			48,966				17,006			16,335			16,053			49,394
Average per day (Bbls)			572			498			546			544				567			527			535			543
Average realized price per Bbl		$	71.97		$	68.39		$	65.46			68.61			$	73.77		$	78.00		$	82.22			78.00
Gas:
Total gas sales (Mcf)			10,093			11,198			9,392			30,683				9,815			7,699			6,912			24,426
Average per day (Mcf)			336			361			313			341				327			248			230			268
Average realized price per Mcf		$	11.54		$	9.42		$	9.48		$	10.15			$	8.76		$	11.16		$	10.63		$	10.04

Pricing and Production Discussion

For the Waddell Ranch properties, the average realized price of oil decreased to $70.27 per Bbl for the production months of January through March 2025 compared to $73.40 per Bbl for February and March of 2024 due to worldwide market variables. The average realized price of gas increased to $2.41 per Mcf for the production months of January through March 2025 from $1.83 per Mcf for the production months of February and March of 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.61 per Bbl in the second quarter of 2025, compared to $78.00 per Bbl in the second quarter of 2024 due to worldwide market variables. The average realized price of gas (including natural gas liquids) for the Texas Royalty properties increased from $10.04 per Mcf in the second quarter of 2024 to $10.15 per Mcf in the second quarter of 2025 in part due to change in overall market variables.

Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), the production amounts in the Royalties section of the above table do not always provide a meaningful comparison. However, for the Texas Royalty properties, oil volumes slightly decreased and gas volumes increased from the Underlying Properties for the applicable period in 2025 compared to 2024, while for the Waddell Ranch properties, oil volumes and natural gas volumes (including plant products) increased for the applicable period in 2025 compared to 2024.

Blackbeard Capital Expense Discussion

Blackbeard advised the Trustee that capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 2025 totaled $61.3 million (gross) as compared to $15.6 million (gross) for the second quarter of 2024. The three months ended June 30, 2025, for the Waddell Ranch properties includes January through March 2025 expenditures, whereas the three months ended June 30, 2024 includes April and May 2024 expenditures only. Blackbeard has not provided updated 2025 capital expenditures budget information.

Development information for the Waddell Ranch properties such as well completions, workovers, remedial activities, and plugging and abandonment, was not provided by Blackbeard. This information has previously been provided monthly since Argent Trust Company has become Trustee of the Trust until May 2024.

13

Table of Contents

Blackbeard advised the Trustee that lease operating expenses and property taxes totaled $19.8 million (gross) for the second quarter of 2025, compared to $14.7 million (gross) for the same period in 2024 on the Waddell Ranch properties. The quarter ended June 30, 2025, for the Waddell Ranch properties includes January through March 2025 expenditures, whereas the three months ended June 30, 2024 includes April and May 2024 expenditures only.

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

For the six months ended June 30, 2025, royalty income received by the Trust amounted to $6,144,586 compared to royalty income of $14,809,031 for the six months ended June 30, 2024. Due to Blackbeard refusing to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024, pricing information for the Waddell Ranch properties is for the six month period of December 2024 through May 2025 (reflecting the period for which proceeds would have been distributed to Unitholders in the first six months of 2025). The average realized oil and gas prices for the Waddell Ranch properties were $69.55 per Bbl and $2.06 per Mcf, respectively for the six months ended June 30, 2025 compared to $74.75 per Bbl and $1.87 per Mcf for the six months ended June 30, 2024. For the Texas Royalty properties, the average realized oil and gas prices were $68.78 per Bbl and $9.36 per Mcf, respectively for the six months ended June 30, 2025 compared to $76.53 per Bbl and $9.35 per Mcf, respectively for the six months ended June 30, 2024. The decrease in royalty income reported in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is attributable to the deficit position of the Waddell Ranch properties due to an excess in working interest costs during the first six months of 2025. No deficit position existed during the first six months of 2024 and royalty income was received from the Waddell Ranch properties for the months of January through May of 2024.

Interest income for the six months ended June 30, 2025, was $32,274 compared to $68,153 during the six months ended June 30, 2024. The decrease in interest income is primarily attributable to a decrease in the amounts of funds available for investment and the length of time of such investment. Total expenses during the six months ended June 30, 2025, amounted to $1,183,393 compared to $948,290 during the six months ended June 30, 2024. The increase in total expenses can be primarily attributed to increased expenses for professional services associated with legal proceedings with Blackbeard.

These transactions resulted in distributable income for the six months ended June 30, 2025 of $4,993,467, or $0.11 per Unit. For the six months ended June 30, 2024, distributable income was $13,928,894 or $0.30 per Unit.

Notwithstanding requests from the Trustee to Blackbeard, the operator of the Waddell Ranch properties, Blackbeard has refused to provide the Trustee information necessary to calculate the net proceeds as of the NYSE notification date beginning May 2024 such that royalty income for the Trust for the first six months of the calendar year is associated with actual oil and gas production for October 2024 through March 2025 for the Waddell Ranch properties from which "Royalties" were carved. Royalty income for the Trust for the first six months of the calendar year for the Texas Royalty properties is associated with actual oil and gas production from November 2024 through April 2025.

Beginning in May 2024, Blackbeard has also refused to provide production, product sales, capital expenditure, and development information for the Waddell Ranch properties from which the Trust's Royalties are carved for each distribution month, information Blackbeard has previously provided on a monthly basis since Argent Trust Company has become Trustee of the Trust. Blackbeard has opted to provide this information quarterly, approximately 30 days after the end of each fiscal quarter. On July 30, 2025, Blackbeard provided the Trustee a quarterly statement showing the production volumes and computation of net proceeds to the Trust for each month of the quarter ended June 30, 2025. Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:

14

Table of Contents

		For the Six Months Ended June 30,
		2025								2024
		WADDELL RANCH PROPERTIES(1)				TEXAS ROYALTY PROPERTIES				WADDELL RANCH PROPERTIES				TEXAS ROYALTY PROPERTIES
Royalties
Oil sales (Bbls)			1,397,075				86,681				935,368				89,038
Gas sales (Mcf)			7,065,970				53,612				5,373,315				43,600
Properties From Which The Royalties Were Carved:
Oil:
Total oil sales (Bbls)			1,862,767				97,951				1,247,157				99,898
Average per day (Bbls)			10,235				541				8,205				549
Average price per Bbl		$	69.55			$	68.78				74.75			$	76.53
Gas:
Total gas sales (Mcf)			9,421,293				60,596				7,164,420				48,879
Average per day (Mcf)			51,765				335				47,134				269
Average price per Mcf		$	2.06			$	9.36			$	1.87			$	9.35

(1) Due to the timing of information received from Blackbeard, information reflects Royalty income received by the Trust during the six-month period of December 2024 through May 2025. See Note 2 to the Condensed Financial Statements.

Pricing and Production Discussion

Production and pricing information for the Waddell Ranch properties is shown for the months of December 2024 through May 2025. The average realized price of oil decreased to $69.55 per Bbl for December 2024 through May 2025 compared to $74.75 per Bbl for the five month period ended May 31, 2024 due to worldwide market variables. The average realized price of gas for the six months ended May 31, 2025, was $2.06 per Mcf an increase from $1.87 for the five month period ending May 31, 2024.

For the Texas Royalty properties, the average realized price of oil decreased to $68.78 per Bbl for the six months ended June 30, 2025, compared to $76.53 per Bbl for the same period of 2024 due to worldwide market variables. The average realized price of gas (including natural gas liquids) for the Texas Royalty properties increased from $9.35 per Mcf in the six months ended June 30, 2024 to $9.36 per Mcf in the same period of 2025 due to change in overall market variables.

Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), the production amounts in the Royalties section of the above table do not provide a meaningful comparison. However, for the Texas Royalty properties, oil sales volumes decreased slightly and gas sales volumes increased for the properties from which the Royalties are carved for the applicable period of 2025 compared to 2024, while for the Waddell Ranch properties, oil and natural gas volumes (including plant products) increased for the applicable period in 2025 compared to 2024.

Blackbeard Capital Expense Discussion

Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties for the six months ended June 30, 2025 totaled $109.2 million (gross). For the six months ended June 30, 2024, capital expenditures were $43.9 million (gross) to the Trust. The six months ended June 30, 2025 for the Waddell Ranch properties includes December 2024 through May 2025 expenditures and the six months ended June 30, 2024 include the five months of January through May 2024.

Development information for the Waddell Ranch properties, such as well activity, completions, workovers, remedial activities, and plugging and abandonment, was not provided by Blackbeard. This information has previously been provided on a monthly basis since Argent Trust Company has become Trustee of the Trust until May 2024.

Lease operating expenses and property taxes totaled $41.2 million (gross) for the six months ended June 30, 2025, compared to $37.5 million (gross) for the same period in 2024. The six months ended June 30, 2025, for the Waddell Ranch properties only includes December 2024 through May 2025 expenses and taxes and the 2024 expenses and taxes include the months of January through May 2024.

Calculation of Royalty Income

The Trust’s royalty income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding royalty interests. The royalty income received and recorded by the Trust was determined by the operator as noted below. These percentages of net profits are 75% and 95% in the case of the Waddell Ranch properties and the Texas Royalty properties,

15

Table of Contents

respectively. Royalty income received and available for distribution by the Trust for the three months ended June 30, 2025 and 2024, respectively, was computed as shown in the table below:

		Three Months Ended June 30,
		2025								2024
		WADDELL RANCH PROPERTIES (1)				TEXAS ROYALTY PROPERTIES				WADDELL RANCH PROPERTIES				TEXAS ROYALTY PROPERTIES
Gross proceeds of sales from the Underlying Properties
Oil proceeds		$	71,937,685			$	3,362,228			$	38,486,468			$	3,848,548
Gas proceeds			11,755,670				310,899				4,811,189				245,355
Total			83,693,355				3,673,127				43,297,657				4,093,903
Less:
Severance tax:
Oil			3,315,545				137,047				1,749,807				148,632
Gas			219,485				11,380				52,354				9,991
Gathering and Transportation Costs			8,013,849				32,185				4,178,629				37,642
Lease operating expense and property tax:
Oil and gas			19,815,512				240,000				14,661,781				240,000
Capital expenditures			61,280,461				—				15,550,243				—
Total			92,644,852				420,612				36,192,814				436,265
Net profits			(8,951,497	)			3,252,515				7,104,843				3,657,638
Net overriding royalty interests			75	%			95	%			75	%			95	%
Royalty income		$	(6,713,623	)			3,089,889			$	5,328,632				3,474,756

(1) Due to an NPI deficit, the Waddell Ranch properties did not contribute to royalty income from November 2024 through June 2025.

Critical Accounting Policies and Estimates

A disclosure of critical accounting policies and the more significant judgments and estimates used in the preparation of the Trust’s financial statements is included in Item 7 of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to the critical accounting policies during the six months ended June 30, 2025.

Distributable Income Per Unit

Basic distributable income per Unit is computed by dividing distributable income by the weighted average of Units outstanding. Distributable income per Unit assuming dilution is computed by dividing distributable income by the weighted average number of Units and equivalent Units outstanding. The Trust had no equivalent Units outstanding for any period presented. Therefore, basic distributable income per Unit and distributable income per Unit assuming dilution are the same.

New Accounting Pronouncements

There are no new accounting pronouncements that are expected to have significant impact on the Trust’s financial statements.

Item 3. Qualitative and Quantitative Disclosures About Market Risk

The Trust is a passive entity and other than the Trust’s ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in borrowing transactions. The amount of any such borrowings is unlikely to be material to the Trust. The Trust periodically holds short-term investments acquired with funds held by the Trust pending distribution to Unitholders and funds held in reserve for the payment of Trust expenses and liabilities. Because of the short-term nature of these borrowings and investments and certain limitations upon the types of such investments which may be held by the Trust, the Trustee believes that the Trust is not subject to any material interest rate risk. The Trust does not engage in transactions in foreign currencies which could expose the Trust or Unitholders to any foreign currency related market risk. The Trust invests in no derivative financial instruments and has no foreign operations or long- term debt instruments.

Item 4. Controls and Procedures

On May 14, 2013, the Committee of Sponsoring Organizations of the Treadway Commission issued an updated version of its Internal Control – Integrated Framework (the “2013 Framework”) which helps organizations design, implement and evaluate the effectiveness of internal control concepts and simplify their use and application. As of the end of the period covered by this report, the Trustee carried out an evaluation of the effectiveness of the design and operation of the Trust’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 based on the criteria established in the 2013 Framework. Based upon that evaluation, the Trustee concluded that the Trust’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Trust in the reports that it files or submits under the Securities

16

Table of Contents

Exchange Act of 1934 and are effective in ensuring that information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Trustee to allow timely decisions regarding required disclosure. In its evaluation of disclosure controls and procedures, the Trustee has relied, to the extent considered reasonable, on information provided by Blackbeard, the owner of the Waddell Ranch properties, and Riverhill Energy Corporation, the owner of the Texas Royalty properties.

There has not been any change in the Trust’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.

17

Table of Contents

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On May 27, 2025, the Trustee announced that it had filed a Second Amended Petition in the District Court of Tarrant County, Texas in connection with its lawsuit against Blackbeard, the operator of properties in Waddell Ranch, in Crane County, Texas, in which the Trust holds a 75% net overriding royalty. On May 8, 2024, the Trustee announced that it had initiated the lawsuit by filing a petition in the District Court of Tarrant County, Texas, and on June 10, 2024, Blackbeard filed its original answer and counterclaim to the lawsuit. The trial date in the District Court of Tarrant County is scheduled for November 17, 2025, 8:30 a.m., Central Time. Discovery is ongoing.

Under the Second Amended Petition, the Trustee seeks to recover more than $9 million in damages to the Trust it alleges result from Blackbeard’s failure to properly calculate and pay royalties due and owing to the Trust. Specifically, the Trustee alleges that Blackbeard impermissibly calculated and deducted overhead costs, labor expenses, and saltwater disposal fees. The Trustee also claims Blackbeard failed to pay on all volumes of oil, gas, and other minerals produced by Blackbeard from the relevant lands and failed to provide annual reports required by the Conveyance. The claims relate to the April 2020 through December 2023 production months. A joint venture audit of the 2024 production months is underway, and the Trustee reserved the right in the petition to bring any additional claims revealed by such audit. Certain additional claims raised in the Trustee’s original and first amended petitions have been resolved through prior joint venture audits.

Except as described above, there are no material pending legal proceedings to which the Trust is a party or of which any of its property is the subject.

Item 1A. Risk Factors

Risk factors relating to the Trust are contained in Item 1A of the Trust's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Except as set forth in such filing, no material change to such risk factors has occurred during the six months ended June 30, 2025.

Items 2 through 4

Not applicable.

Item 5. Other Information

The Trust does not have any directors or officers, and as a result, no such persons adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement, as defined in Item 408(a) of Regulation S-K.

18

Table of Contents

Item 6. Exhibits

4.1	Permian Basin Amended and Restated Royalty Trust Indenture dated June 20, 2014, between Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) and The First National Bank of Fort Worth (now Argent Trust Company), as Trustee, heretofore filed as Exhibit 4.1 to the Trust’s Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the quarterly period ended June 30, 2014, is incorporated herein by reference. *
4.2	Amendment No. 1 to the Amended and Restated Royalty Trust Indenture of Permian Basin Royalty Trust, dated May 4, 2022, heretofore filed as Exhibit 4.1 to the Trust’s Form 8-K to the Securities and Exchange Commission filed on May 6, 2022, is incorporated herein by reference. *
4.3	Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) to The First National Bank of Fort Worth (now Argent Trust Company), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trust’s Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980, is incorporated herein by reference. * (P)
4.4	Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) to The First National Bank of Fort Worth (now Argent Trust Company), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trust’s Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980, is incorporated herein by reference. * (P)
31.1	Certification by Jana Egeler, Vice President of Argent Trust Company, Trustee of Permian Basin Royalty Trust, dated August 13, 2025, and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certificate by Argent Trust Company, Trustee of Permian Basin Royalty Trust, dated August 13, 2025 and submitted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

* A copy of this Exhibit is available to any Unitholder, at the actual cost of reproduction, upon written request to the Trustee, Argent Trust Company, 3838 Oak Lawn Avenue, Suite 1720, Dallas, Texas 75219.

(P)Paper exhibits.

19

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		ARGENT TRUST COMPANY, TRUSTEE FOR THE PERMIAN BASIN ROYALTY TRUST
Date: August 13, 2025		By:	/s/ JANA EGELER
			Jana Egeler
			Vice President

(The Trust has no directors or executive Officers.)

20

FAQ

What were PBT's distributable income and per-unit distribution for Q2 2025?

Distributable income for Q2 2025 was $2,397,255, equal to $0.05 per unit (46,608,796 units outstanding).

How much cumulative excess cost recovery remains for PBT as of June 30, 2025?

Total remaining to be recovered at June 30, 2025 was $37,057,982 gross and $27,793,486 net to the Trust (including accrued interest).

Why did Waddell Ranch not contribute royalties to PBT in 2025?

The Waddell Ranch properties were in an NPI (net profit interest) deficit and Blackbeard did not provide timely monthly net-proceeds information, resulting in no royalty income from Waddell Ranch for the period.

Is there litigation affecting PBT and what is its status?

The Trustee filed suit against Blackbeard seeking more than $9 million for alleged improper deductions; the trial is scheduled for November 17, 2025 and discovery is ongoing.

Did PBT declare any distribution after June 30, 2025?

Yes. On July 21, 2025 the Trust declared a distribution of $0.015311 per unit payable on August 14, 2025 to unitholders of record on July 31, 2025.