PermRock Royalty Trust

What they do

The Trust does not operate wells; it owns a net profits interest entitling it to receive 80% of net profits from the sale of oil and natural gas production from underlying properties in the Permian Basin of West Texas. Net profits are gross profits from production less applicable costs, as defined in the Conveyance. The Trust is overseen by Argent Trust Company as trustee, and T2S Permian Acquisition II LLC owns and operates the underlying properties. Cash received is distributed to unitholders after Trust expenses and reserves.

Revenue drivers

• Oil production — Oil is the dominant revenue source; for the month underlying the August 2026 distribution, oil sales volume was 16,087 Bbls (536 Bbls/D) at an average price of $88.13 per Bbl, generating $1.42 million in oil cash receipts.
• Natural gas production — A minor revenue contributor; current month natural gas volume was 19,905 Mcf (664 Mcf/D) at an average price of $0.64 per Mcf, producing only $0.01 million in natural gas cash receipts.
• Net profits interest percentage — The Trust receives 80% of net profits from T2S; net profits income is the amount paid to the Trust after applicable costs, and is referred to as royalty income for tax reporting.
• Commodity price realizations — Realized wellhead prices, net of differentials to benchmarks such as NYMEX, drive revenue; oil price fell from $104.89 per Bbl in the prior month to $88.13 per Bbl in the current month, reducing oil cash receipts by $0.16 million.

Recent performance

The Trust declared a monthly cash distribution on August 21, 2026 of $265,001.53, or $0.021782 per Trust Unit, based principally on June 2026 production. Oil cash receipts were $1.42 million, down $0.16 million from the prior month, primarily due to lower oil sales prices partially offset by higher oil sales volumes. Natural gas cash receipts were $0.01 million, essentially unchanged. Total direct operating expenses, including marketing, lease operating expenses and workover expenses, were $0.66 million, up $0.17 million from the prior month due to higher lease operating and workover expenses. Capital expenditures were $4,110, reflecting intangible and tangible completion costs on non-operated wells partially offset by a credit to tangible drilling costs.

Strategy

The Trust has no operational strategy of its own; it relies on T2S, the owner and operator of the underlying properties, for development and production decisions. The Trust's stated forward-looking items include T2S's capital expenditure budget, T2S's 2026 outlook, and estimated capital required for 2026 operations. The Trustee manages cash reserves and distribution timing, with the current month's net profits calculation including $100,000 net to the Trust of funds reserved by T2S to cover future ad valorem taxes. Distributions to unitholders may be affected by contingencies and future cash retentions from distributions.

Risks

• Commodity price volatility — Oil and natural gas prices are volatile, and lower prices could reduce proceeds to the Trust and cash distributions to unitholders.
• Reserve and production uncertainty — Actual reserves and future production may be less than current estimates, which could reduce cash distributions and the value of Trust units.
• Dependence on T2S and third-party facilities — The Trust relies on T2S and third-party operators for development and on gathering, transportation and processing facilities; limitations in facility availability could interfere with sales of production.
• Cost and expense increases — Developing and producing wells is costly and high-risk, and direct operating expenses, including lease operating and workover expenses, can increase and reduce net profits available for distribution.

Outlook

T2S's 2026 outlook and estimated capital required for 2026 operations are among the forward-looking items the Trust references, but no specific guidance figures are provided in the excerpts. The Trust states that the amount of cash received and its ability to pay distributions has been and will continue to be directly affected by volatility in commodity prices and oversupply. The current month's net profits calculation included $100,000 net to the Trust of funds reserved by T2S to cover future ad valorem taxes. Distributions to unitholders may be affected by future cash retentions, advancements or recoupments.