PermRock Royalty Trust

Previous wording

The Trust is required to make monthly cash distributions of substantially all of its monthly cash receipts, after deduction of fees and expenses for the administration of the Trust and any cash reserves, to holders of its Trust units as of the applicable record date on or before the 10th business day after the record date. The Net Profits Interest is entitled to a share of the profits attributable to production. Boaz Energy typically receives payment for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after it is produced. The Trust is not subject to pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage of time. The amount of Trust revenues and cash distributions to Trust unitholders depends on, among other things:

Current wording

The Trust is required to make monthly cash distributions of substantially all of its monthly cash receipts, after deduction of fees and expenses for the administration of the Trust and any cash reserves, to holders of its Trust units as of the applicable record date on or before the 10th business day after the record date. The Net Profits Interest is entitled to a share of the profits attributable to production. T2S typically receives payment for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after it is produced. The Trust is not subject to pre-set termination provisions based on a maximum volume of oil or natural gas to be produced or the passage of time. The amount of Trust revenues and cash distributions to Trust unitholders depends on, among other things:

Previous wording

Boaz Energy’s capital expenditure by the end of 2024 was $3.8 million.

Current wording

T2S and its predecessor, Boaz Energy, initially established a $4.5 million capital and workover budget for 2025 for the Underlying Properties (the "2025 Plan"). In response to the market environment and economic pressures affecting the oil and gas sector during the second half of 2025, including continued commodity price volatility, increased service and labor costs, and tightening capital markets, T2S revised the Plan downward to approximately $1.0 million (the “Revised 2025 Plan”). The reduction under the Revised 2025 Plan was made to preserve liquidity, maintain financial flexibility, and align spending levels with prevailing industry and macroeconomic conditions, and was primarily related to the postponement of the drilling of two wells originally scheduled for 2025 in Crane County, Texas—one injector well and one producer well. The drilling of these two wells was postponed until T2S makes a decision to move forward based on improved market visibility and commodity price stability. The Revised 2025 Plan included T2S’s participation in two non-operated wells in the Permian Shelf Area, which were successfully drilled in 2025, but not completed until the first quarter 2026, as well as ongoing investments in workovers, waterflood pattern optimization, and the reactivation of certain shut-in wells to sustain production levels. Total capital expenditure by the end of 2025 was $515,530. T2S advised the Trustee that it believed this revision provided an appropriate balance between near-term cash preservation and the continued development of the Underlying Properties.

Previous wording

The decrease in net profits income was primarily due to decreased oil and natural gas sales volumes and prices. See “Computation of Income from the Net Profits Interest Received by the Trust” below.

Current wording

The decrease in net profits income was primarily due to decreased oil and natural gas sales volumes and oil prices, offset somewhat by a slight increase in natural gas prices. See “Computation of Income from the Net Profits Interest Received by the Trust” below.

Previous wording

Interest Income. Interest income decreased slightly for the year ended December 31, 2024, as compared to the prior year, primarily due to lower income to invest.

Current wording

Interest Income. Interest income decreased slightly for the year ended December 31, 2025, as compared to the prior year, primarily due to the decrease in income available for investment, along with lower interest rates.

Previous wording

General and Administrative Expenditures. General and administrative expenditures decreased for the year ended December 31, 2024, as compared to the prior year, primarily due to a decrease in legal expenses and differences in the timing and payment of some expenses.

Current wording

General and Administrative Expenditures. General and administrative expenditures increased for the year ended December 31, 2025, as compared to the prior year, primarily due to an increase in legal expenses and differences in the timing and payment of some expenses.

Previous wording

Interest Income. Interest income increased for the year ended December 31, 2023, as compared to the prior year, primarily due to higher interest rates.

Current wording

Interest Income. Interest income decreased for the year ended December 31, 2024, as compared to the prior year, primarily due to lower interest rates, along with less cash available for investment.

Previous wording

General and Administrative Expenditures. General and administrative expenditures increased for the year ended December 31, 2023, as compared to the prior year, primarily because of differences in the timing and payment of some expenses.

Current wording

General and Administrative Expenditures. General and administrative expenditures decreased for the year ended December 31, 2024, as compared to the prior year, primarily because of a decrease in legal fees and differences in the timing and payment of some expenses.

Previous wording

Boaz Energy is entitled under the Conveyance to reserve up to $3 million from the net profits for certain taxes and development expenses. As of December 31, 2024, the balance of funds held back to cover certain future capital expenses was $526,174 net to the Trust. The balance of funds held, net to the Trust, as of December 31, 2023 and 2022 was $650,157 and $1,478,157, respectively.

Current wording

T2S is entitled under the Conveyance to reserve up to $3 million from the net profits for certain taxes and development expenses. As of December 31, 2025, the balance of funds held back to cover certain future capital expenses was $74,933 net to the Trust. The balance of funds held, net to the Trust, as of December 31, 2024 and 2023 was $526,174 and $650,157, respectively.

Previous wording

Oil. The average realized oil price per Bbl decreased for the year ended December 31, 2023, as compared to the prior year. The average realized oil price per Bbl for the year ended December 31, 2023, is primarily related to production from November 2022 through October 2023, when the average NYMEX price was $78.57 per Bbl.

Current wording

Oil. The average realized oil price per Bbl decreased for the year ended December 31, 2025, as compared to the prior year. The average realized oil price per Bbl for the year ended December 31, 2025, is primarily related to production from November 2024 through October 2025, when the average NYMEX price was $67.18 per Bbl.

Previous wording

Natural Gas. The average realized natural gas price per Mcf decreased for the year ended December 31, 2023, as compared to the prior year. The average realized natural gas price per Mcf for the year ended December 31, 2023, is primarily related to production from November 2022 through October 2023, when the average NYMEX price was $3.01 per Mcf.

Current wording

Natural Gas. The average realized natural gas price per Mcf increased for the year ended December 31, 2025, as compared to the prior year. The average realized natural gas price per Mcf for the year ended December 31, 2025, is primarily related to production from November 2024 through October 2025, when the average NYMEX price was $3.28 per Mcf.

Previous wording

Capital Reserve and Operator Advance. Boaz Energy is entitled under the Conveyance to reserve up to $3 million from the net profits for certain taxes and development expenses. As of December 31, 2024, the balance of funds held back to cover certain future capital expenses was $526,174 net to the Trust.

Current wording

Capital Reserve and Operator Advance. T2S is entitled under the Conveyance to reserve up to $3 million from the net profits for certain taxes and development expenses. As of December 31, 2025, the balance of funds held back by T2S to cover certain future capital expenses was $74,933 net to the Trust.

Previous wording

Capital Reserve and Operator Advance. Boaz Energy is entitled under the Conveyance to reserve up to $3 million from the net profits for certain taxes and development expenses. As of December 31, 2023, the balance of funds held back to cover certain future capital expenses was $650,157 net to the Trust.

Current wording

Capital Reserve and Operator Advance. Boaz Energy, as predecessor to T2S, was entitled under the Conveyance to reserve up to $3 million from the net profits for certain taxes and development expenses. As of December 31, 2024, the balance of funds held back by Boaz Energy to cover certain future capital expenses was $526,174 net to the Trust.

Previous wording

On May 4, 2018, the Trust entered into a registration rights agreement for the benefit of Boaz Energy and certain of its affiliates and transferees, pursuant to which the Trust agreed to register the offering of the Trust units held by Boaz Energy and certain of its affiliates and permitted transferees upon request by Boaz Energy. As of March 31, 2022, Boaz Energy owned 5,878,332 Trust units of the 12,165,732 Trust units issued and outstanding. The Trust filed a Registration Statement on Form S-3 on April 28, 2022 (the “Registration Statement”) seeking the registration of 5,801,675 Trust units held by Boaz Energy. The SEC confirmed the effectiveness of the Registration Statement on May 9, 2022. The Trust has not and will not receive any of the proceeds received from the sale of the Trust units. The selling unitholder will bear all costs and expenses incidental to the preparation and filing of the Registration Statement, excluding certain internal expenses of the Trust, which will be borne by the Trust, and any underwriting discounts and commissions, which will be borne by the selling unitholder as the seller of the Trust units. As of March 25, 2025, Boaz Energy owned 4,884,861 Trust units of the 12,165,732 units issued and outstanding.

Current wording

On May 4, 2018, the Trust entered into a registration rights agreement for the benefit of Boaz Energy and certain of its affiliates and transferees, pursuant to which the Trust agreed to register the offering of the Trust units held by Boaz Energy and certain of its affiliates and permitted transferees upon request by Boaz Energy. As of March 31, 2022, Boaz Energy owned 5,878,332 Trust units of the 12,165,732 Trust units issued and outstanding. The Trust filed a Registration Statement on Form S-3 on April 28, 2022 (the “Registration Statement”) seeking the registration of 5,801,675 Trust units held by Boaz Energy. The SEC confirmed the effectiveness of the Registration Statement on May 9, 2022. The Trust has not and will not receive any of the proceeds received from the sale of the Trust units. Boaz Energy sold its remaining 4,884,861 units to Ustx, LLC as part of the sale of the assets underlying the Trust that was finalized on March 31, 2025. As of March 25, 2026, Ustx, LLC owned 4,884,861 Trust units of the 12,165,732 units issued and outstanding.

Previous wording

Impairment of Net Profits Interest. The Trustee reviews the Trust’s Net Profits Interest in oil and natural gas properties for impairment annually and whenever events or circumstances indicate that the carrying value of the Net Profits Interest may not be recoverable. In the event of material revisions, the Trustee reviews the impact of these revisions on the amortization of Trust Units and impairment estimates. During 2024, a material revision was made to reserves resulting in the additional recognition of amortization of Trust Units. The Trust recognized $3,496,231 of amortization of Trust Units for the year ended December 31, 2024. There was no impairment present for the year ended December 31, 2024, after revisions to undiscounted cash flows. There was also no impairment as of December 31, 2023. In general, neither the Trustee nor Boaz Energy view temporarily low prices as an indication of impairment. The markets for crude oil and natural gas have a history of significant price volatility and though prices will occasionally drop significantly, industry prices over the long term will continue to be driven by market supply and demand. If events and circumstances indicate that the carrying value may not be recoverable, the Trustee would use the estimated undiscounted future net cash flows from the Net Profits Interest to evaluate the recoverability of the Trust assets. If the undiscounted future net cash flows from the Net Profits Interest are less than the Net Profits Interest carrying value, the Trust would recognize an impairment loss for the difference between the Net Profits Interest carrying value and the estimated fair value of the Net Profits Interest. The determination as to whether the Net Profits Interest is impaired is based on the best information available to the Trustee at the time of the evaluation, including information provided by Boaz Energy such as estimates of future production and development and operating expenses.

Current wording

In general, neither the Trustee nor T2S view temporarily low prices as an indication of impairment. The markets for crude oil and natural gas have a history of significant price volatility and though prices will occasionally drop significantly, industry prices over the long term will continue to be driven by market supply and demand. However, the prolonged historically low prices for oil and natural gas in 2025 and into the future, coupled with no development budget for T2S for 2026, caused the future undiscounted net cash flows of the Net Profits Interest to be lower than the carrying value, resulting in events and circumstances indicating that the carrying value may not be recoverable. Since the undiscounted future net cash flows from the Net Profits Interest are less than the Net Profits Interest carrying value, the Trust has recognized an impairment loss for the difference between the Net Profits Interest carrying value and the estimated fair value of the Net Profits Interest. The determination as to whether the Net Profits Interest is impaired is based on the best information available to the Trustee at the time of the evaluation, including information provided by T2S such as estimates of future production and development and operating expenses.