Permianville Royalty Trust Annual Report - How They Did This Year

Hey there! Thinking about Permianville Royalty Trust? Let's look at their latest annual report for the fiscal year ended December 31, 2025. We'll break down their past year in plain English. We'll cover their performance, successes, challenges, and future outlook.

1. What does this company do and how did they perform this year? Permianville Royalty Trust (PVL) doesn't drill for oil and gas. It's a "Royalty Trust." This means it gets a share of the money from oil and natural gas production. It doesn't drill or operate wells itself. The Trust holds a "Net Profits Interest." This gives it 80% of the net profits (money left after certain costs). These profits come from oil and gas produced in Texas, Louisiana, and New Mexico.

   COERT Holdings 1 LLC, called the "Sponsor," finds and produces the oil and gas. COERT took over from the original operator, Enduro, in 2018. The Trust is hands-off. It has no employees. Its job is to collect income, pay its expenses, and distribute the rest to you, its owners. Properties that generate this income can change. For example, in 2023, owners approved selling some Permian Basin properties for about $6.7 million. The Trust no longer gets income from those areas. So, the Trust's performance depends on COERT's well production and oil and gas prices.

   COERT also markets the oil and gas from these properties. They sell oil to other companies, usually at regional market prices. They sell natural gas to other companies on month-to-month contracts, also at local market prices. The Trust's share of net profits comes from these same prices. COERT can make deals to develop properties without the Trust's or your approval. Your right to profits usually stays with those properties. COERT also keeps detailed records of all income and costs. They send monthly and annual reports to the Trustee. This shows how they calculate net profits.

   How they calculate "Net Profits" (and what that means for you): This is super important. It directly impacts how much money the Trust gets, and how much you get.

   • First, they figure out "Gross Profits." This is COERT's total money from selling oil and gas. They subtract existing royalties and similar charges. It excludes money from selling properties (unless the Trust's right is released). It also excludes oil or gas lost or used in operations.
   • Then, they subtract many costs to get "Net Profits." This is detailed! These costs cover almost everything to find, drill, produce, and maintain wells. Think:
     • Drilling, development, production, and abandonment costs.
     • Labor, services, and materials for operations.
     • Treatment, dehydration, compression, separation, and transportation costs.
     • Costs from lawsuits, claims, and legal issues related to the properties.
     • Taxes (but not income taxes), insurance premiums.
     • Rent, delay rentals (payments to keep a lease active without drilling), and minimum royalties.
     • Overhead and administrative charges from the operator (COERT).
     • Amounts previously counted as income but later refunded.
     • A significant detail: COERT, the operator, can set aside up to $2.0 million for approved development projects. This includes drilling new wells or improving old ones. They deduct this money before calculating net profits. This reduces the amount available for the Trust and you in the short term. It does, however, aim for future growth and property value.

   The Trust then gets 80% of what remains after all deductions. COERT might have "offset amounts." These are like money from treating hydrocarbons or selling old equipment. These can reduce the costs deducted.

   In 2025, a few major customers drove much of the Trust's income:

   • Pioneer Natural Resources USA: 19% of sales (down from 23% in 2024)
   • Phillips 66: 18% of sales (same as 2024)
   • BPX Operating Company: 14% of sales (up from 2% in 2024) The Trust's 2025 financial performance, income, and distributions depend directly on these sales, oil and gas prices, and COERT's operational costs.

2. Financial performance - revenue, profit, growth metrics Understanding how they calculate the Trust's financial performance is important for owners. Here's one key detail: if net profits are negative for a month (costs exceed sales), the Trust gets no payment. Worse, that negative amount (plus interest) comes out of the next month's gross profits. This happens before they calculate the next net profit payment. So, a bad month impacts future payments. You will effectively pay interest on that "debt" to the operator. This could reduce your future payments.

3. Major wins and challenges this year The Trustee made a notable move: building a cash reserve. Since April 2023, the Trustee sets aside $50,000 monthly. This money would otherwise go to owners. The goal is a $2.3 million reserve. As of December 31, 2025, this reserve reached $1,441,386. This helps the Trust's stability, giving it money for future costs. But it also means slightly lower payments to owners in the short term, since money goes to this reserve.

4. Financial health - cash, debt, liquidity The Trust actively builds its cash reserves. This is a good sign for its financial strength. As noted, the cash reserve was $1,441,386 at the end of 2025. They aim for $2.3 million. This reserve invests in safe options like U.S. government bonds or money market funds. This gives the Trust a stable base for its costs.

   COERT, the operator, also gave the Trust a $1.2 million letter of credit. This protects against unexpected costs. If the Trust needs more cash than it has for administrative expenses, it can use this credit line. If $1.2 million isn't enough, COERT agreed to lend the Trust more money. However, here's a big catch for you: if the Trust borrows money or uses this credit line, no more payments go to owners until they repay these amounts. This is important for your income, as it could temporarily stop payments.

   The Trust has no employees or active operations. Its direct expenses are mainly administrative. Its main cash source is the net profits from oil and gas sales.

   Also, if COERT, the Sponsor, accidentally overpays the Trust, they can get that money back, plus interest, from money usually paid to the Trust. This means your future payments could shrink to pay back COERT.

5. Key risks that could hurt the stock price Okay, what could hurt Permianville? The company lists several things that could affect its future and your investment:

   • The usual oil & gas stuff: This includes how well they drill and operate wells. It also covers the costs to extract oil and gas. Poor efficiency or high drilling costs directly reduce the Trust's net profits.
   • Global headaches: Big issues like ongoing wars (Ukraine, Persian Gulf), economic slowdowns, trade problems, rising inflation, changing interest rates, and bank instability. All these can impact oil and gas demand and prices. This directly affects the Trust's income.
   • Health scares: Widespread illnesses or pandemics, and government reactions, could hurt the industry. They might reduce demand or disrupt supply chains.
   • OPEC's moves: Decisions by major oil-producing countries (like OPEC) about production directly change prices. The Trust is fully exposed to these changes.
   • Government rules: New laws or regulations, especially for energy, could change operations or increase costs. This includes local drilling permit restrictions. However, Texas state law generally prevents local bans on hydraulic fracturing.
   • Environmental Regulations and Liabilities: The oil and gas industry is heavily regulated. COERT, the operator, faces big risks from environmental laws. These rules aren't just abstract. They can lead to real costs that reduce the Trust's profits:
     • Hazardous Substances (like Superfund laws): Laws like CERCLA (the Superfund law) mean COERT could be responsible for cleaning up hazardous substances. This applies even if they weren't at fault or if the release happened long ago. Costs include cleanup, natural resource damages, and health studies. Crude oil and natural gas are usually excluded. But COERT handles other regulated materials. This also applies to past operations by COERT or Enduro. They could be responsible for past contamination.
     • Waste Management (like RCRA): COERT creates different wastes, including oil-related ones. Many oil and gas wastes are now called "non-hazardous." Still, they must follow strict state and federal rules for handling and disposal. Any changes to these rules or stricter enforcement could increase COERT's costs.
     • Water Pollution and Waste Disposal (including seismic activity): Strict rules exist for discharging into water. COERT needs permits for any discharges. Some wastewater discharges from land-based oil and gas operations are already banned. The EPA considers stricter rules for treating and discharging produced water (water from oil and gas wells). This could raise COERT's wastewater management costs. In Texas, the Railroad Commission (RRC) is also active. For example, in October 2023, they proposed changes to water protection rules. These aim to encourage waste recycling. Their 2014 rules require seismic activity data for disposal well permits. The RRC can change, suspend, or end permits if a well causes earthquakes. These rules directly affect COERT's operations and costs.
     • Air Emissions (and methane rules): The federal Clean Air Act and similar state laws limit air pollutants released. COERT might need special permits. They could face delays building or changing facilities. They must also use specific equipment to control pollution. The EPA has tightened these rules:
       • Since 2012 and 2016, "New Source Performance Standards" (NSPS) require less VOCs and sulfur dioxide from new or changed natural gas wells. This often means "green completions," which capture emissions.
       • In 2024, the EPA finalized a rule directly regulating VOC and methane emissions. This applies to oil and gas sources built or changed after December 2022. It requires reductions from flaring, compressors, pumps, storage tanks, and more.
       • Crucially, the EPA also issued guidelines for existing oil and gas sources. Older wells and facilities must also reduce VOC and methane emissions. State plans should be ready by 2029.
       • These rules mean higher operating costs for COERT. They must invest in new technology and processes to comply. Politics, like the 2024 election or a focus on domestic oil and gas, could also affect how strictly they enforce or change these rules.
     • Environmental Review Process (NEPA): COERT needs federal permits for projects, like pipelines or drilling on federal land. These projects often undergo an environmental review under NEPA. This process considers environmental impacts. Until 2025, reviews followed strict rules from the White House Council on Environmental Quality (CEQ). But federal courts ruled CEQ lacked authority to make those rules binding. So, CEQ withdrew them. Now, different federal agencies (like the Army Corps of Engineers, which issues key permits) have their own NEPA procedures. These are often guidance, not strict rules. These changes aim to speed up reviews. Yet, inconsistencies exist between agencies. This includes public comment and considered impacts. This shifting landscape means COERT might face a less predictable or consistent permit process. This could affect project timelines and costs.
     • Accidental Spills: Beyond regulations, accidental spills can happen. These lead to big costs and responsibilities for COERT. This includes claims from others for damages. All these environmental factors mean COERT might face higher operating costs, potential fines, or expensive cleanup. The Trust gets a percentage of COERT's net profits (after costs). So, any rise in COERT's environmental expenses directly reduces money for the Trust and your payments.
   • No hedging allowed: The Trust cannot make special financial deals, called 'hedging.' These would protect it from big oil and gas price changes. So, it is fully exposed to market ups and downs. It has no way to lessen price swings.
   • Money market jitters: The financial markets' overall health can affect investor confidence and the Trust's unit price.
   • Who's the competition? Other energy companies always compete for resources and market share. This can affect COERT's operational costs and efficiency.
   • Guessing game: Estimating oil and gas in the ground, and how much they can produce, is an educated guess. Sometimes these guesses are wrong. Overestimated reserves could mean lower future income than expected.
   • Cyber worries: Like many companies, they risk cyberattacks. These could disrupt their systems or data. This might halt operations or cause data breaches.
   • Climate change impact: Climate changes, new greenhouse gas rules, and extreme weather could affect operations and costs. For example, they might face higher maintenance or insurance costs.
   • Customer Concentration: Much of the Trust's income comes from a few big buyers (Pioneer, Phillips 66, BPX). If one buys less or faces financial trouble, it could directly impact the Trust's cash flow and your payments.
   • Payment Halt: As noted, if the Trust borrows money or uses COERT's credit line for expenses, all payments to owners will stop. They will not resume until repayment. This could greatly disrupt your income for an unknown time.
   • Dissolution Trigger: The Trust could automatically end if its annual cash from net profits falls below $2 million for two years in a row. This clear limit could end the Trust. Owners would get a share of asset sales. But it risks your ongoing income and the Trust's long-term future.
   • Limited Liability Caveat: Owners generally have limited personal responsibility, like stock owners. However, the Trust notes that courts outside Delaware might not always protect them. This could expose owners to more risk in some areas.
   • Owner Voting Power: You have voting rights. But a large majority is needed for big changes. For example, ending the Trust, making major changes to the Trust Agreement, or selling all Trust assets needs approval from 75% of all Trust Units. However, a 2017 amendment made it easier for the operator (then Enduro, now COERT) to sell parts of the properties. It only requires 50% owner approval for those sales. This gives the operator more flexibility to sell assets.
   • Operator's Control Over Properties: COERT, the Sponsor, can transfer its rights in the oil and gas properties to another company. They don't need your approval as an owner. The Trust's right to net profits usually stays with the property. But you get no money from that sale. COERT can also abandon properties. This happens if they no longer produce enough profitable oil or gas. They can also abandon properties for health, safety, or environmental reasons. Or if oil/gas from that spot can come from other wells. When they abandon a property, the Trust loses its income right from that property. This means the Trust's income-generating properties can shrink over time. This depends on the operator's decisions. Also, the Sponsor can require the Trustee to release the Trust's rights on very small leases (under 0.25% of total production) without owner consent.
   • Overpayments to the Trust: If the Sponsor accidentally overpays the Trust, they can get those funds back, plus interest, from your future payments.
   • Operator's Development Reserve: As noted in Section 1, the operator can set aside up to $2.0 million for development projects. This happens before calculating net profits. This directly reduces cash available for payments to owners in the short term. The operator keeps funds for reinvestment.

6. Competitive positioning The oil and natural gas industry is tough, with much competition. COERT, the operator, competes with major oil and gas companies and many independent players. All fight for resources, equipment, skilled workers, and customers. Many competitors are bigger and financially stronger than COERT. They have more money and operate on a larger scale. Permianville's income depends on COERT's success. So, the Trust indirectly faces this competition.

   Oil and natural gas also compete with other energy forms, like electricity, coal, and other fuels. Price is key. Changes in alternative energy availability or cost affect demand. So do conservation efforts, new laws, and customers switching fuels. All the Trust's assets and sales are in the United States.

7. Leadership or strategy changes A notable strategic change happened in 2017. They amended the Trust Agreement. This made it easier for the operator (then Enduro, now COERT) to sell rights in the oil and gas properties. This amendment reduced required owner approval for such sales from 75% to 50% of units. This gives the operator more flexibility to sell parts of income-generating properties. It lowered the bar for owner consent. This could change the Trust's assets without broad owner agreement.

8. Future outlook Looking ahead, the Trust's future depends on a few big things. These are global demand and prices for oil and natural gas. It also depends on how well COERT (their operator) finds and produces from its wells. They also note that external factors will play a big role. These include global economic health, geopolitical events, and regulatory changes.

   A key factor for the Trust's long-term survival is its dissolution conditions. Some trusts end after a certain time or production volume. Permianville, however, can continue indefinitely unless specific events occur. One major trigger for dissolution is if the annual cash the Trust receives falls below $2 million for two years in a row. This means sustained low oil and gas prices or production issues could eventually lead to the Trust ending. This impacts your long-term income.

   Building a cash reserve is a smart move for stability and future expenses. This should help the Trust handle challenges. However, the operator can deduct up to $2.0 million for development projects from net profits. This means some potential income for the Trust (and you) might be reinvested by the operator. This happens before it reaches the Trust, impacting short-term payments.

9. Market trends or regulatory changes affecting them Several big trends and potential rule changes could affect Permianville. These include:

   • Global economy: A slowing global economy, trade wars, supply chain issues, and inflation can all impact energy demand. This directly affects oil and gas prices.
   • Oil prices: The price of oil and natural gas is king here. It can be influenced by groups like OPEC or by rising alternative fuels. The Trust's income directly ties to these market prices.
   • Green regulations: New laws or rules for climate change and greenhouse gas emissions are important. We see stricter federal rules from the EPA. For example, the 2024 rule targets methane and VOC emissions from new and existing oil and gas facilities. State rules, like those from the Texas Railroad Commission for water protection and disposal wells, also add to the regulatory load. These changes mean COERT, the operator, will likely face higher costs for compliance, new equipment, and potential permit delays. All this can impact the Trust's net profits and income. The political climate, like the 2024 presidential election, could also influence how they enforce or change these environmental policies.
   • Geopolitical events: Conflicts or instability in oil-producing regions can cause large price changes and supply disruptions. This makes the Trust's income volatile.
   • Competition from other energy sources: The growing availability and competition from electricity, coal, and other fuels can impact oil and natural gas demand. This could potentially lower prices.
   • Seasonal Demand: Most factors don't have strong seasonal impacts. But natural gas demand is usually higher in winter. This can lead to seasonal changes in natural gas prices and the Trust's income.

10. Important Tax Stuff for You Okay, let's talk about taxes. This is a bit different from owning regular stock.

    • The Trust doesn't pay federal income tax: Good news! Permianville Royalty Trust doesn't pay taxes itself. It's treated as a "grantor trust" for federal income tax.
    • You pay the taxes directly: For tax purposes, you directly own a piece of the Trust's oil and gas properties. So, you pay taxes on your share of the Trust's income, gains, deductions, and expenses as they occur. This is not just when you get a cash payment. The Trust sends you an annual tax form (like a K-1). It shows your share of these items.
    • Timing matters: Your income is taxed when the Trust receives or earns it. This happens even if you get the cash later. This can create a timing difference between taxable income and cash received.
    • Potential IRS disagreements: The Trust assigns these income and deduction items based on who owns units on monthly record dates. The IRS might argue for a different method, like daily. This could mean tax return adjustments and potentially higher Trust costs.
    • Medicare Tax: Some individuals pay an extra 3.8% Medicare tax on some investment income. This could apply to your share of the Trust's interest and royalty income. It also applies to any profits you make selling your Trust Units. This depends on your total income.
    • Depletion Recapture: This is a specific rule for oil and gas investments. You might claim "depletion deductions." This is a tax benefit for the value decrease of extracted natural resources. If you later sell your units for a profit, some of that profit might be taxed as ordinary income, not capital gains (ordinary income usually has a higher tax rate). This could potentially raise your tax bill.
    • Always check with a tax pro: Tax rules are complex and depend on your situation. Always talk to a tax advisor about how owning Permianville Royalty Trust Units affects your taxes.

As of March 23, 2026, 33,000,000 Trust Units were available. Each unit represents an equal share of the Trust's payments. If you buy units after a monthly record date, you won't get that month's payment. So, own units before the record date to get the payment for that period.