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Perm Rock Royalty Trust
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  • News Releases
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Permrock Royalty Trust

  • Financial Reports
  • News Releases
  • Tax Info
  • SEC Filings
  • Cash Distributions
  • FAQs
  • Contact Us

General Questions

How long has the Trust been in existence? Is this a master limited partnership? How does the Trust work? Who owns and operates the Underlying Properties? Can the Trust acquire additional properties? How often are distributions paid? What is the estimated life of the Trust? Is there a termination date for the Trust? How will the Trust end? Where can I find the Prospectus? Where can I find the Conveyance? Where can I find the Trust Agreement? Units – Why are “units” not called “shares”? Do you have a DRIP (distribution reinvestment program)? My address information is incorrect or has changed. Can the Trustee update its records? Who is the Transfer Agent / Paying Agent / Registrar?

How long has the Trust been in existence?

PermRock Royalty Trust (the “Trust”) was established in 2017 by a trust agreement among Boaz Energy II, LLC (“Boaz Energy”), as Trustor, Simmons Bank, as Trustee (the “Trustee”) and Wilmington Trust, National Association, as Delaware Trustee.

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Is this a master limited partnership?

No. The Trust is a grantor trust.

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How does the Trust work?

Unitholders receive monthly distributions of the Trust’s net cash flow. The Trust is a Delaware statutory trust formed to own an 80% net profits interest (the “NPI”) in certain oil and natural gas producing properties in the Permian Basin of West Texas (the “Underlying Properties”) on a perpetual basis.

The Trust is a flow-through, grantor trust for federal income tax purposes. Unitholders receive annual Forms 1099 reporting their income from the Trust. Information will be provided on the Trust’s website and in a tax information booklet regarding deductions, including depletion deductions, that shield a portion of a unitholder’s income from tax and reduce a unitholder’s basis in their units (calculated as the greater of cost depletion or, if allowable, percentage depletion). The Trust cannot acquire additional properties, have any leverage or hedge its oil and gas production (other than hedges put in place by Boaz Energy at the time of the Trust’s initial public offering).

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Who owns and operates the Underlying Properties?

Boaz Energy is the current owner and operator of a majority of the Underlying Properties.

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Can the Trust acquire additional properties?

No. Unlike actively managed trusts where a management team is empowered to grow the trust’s assets through new acquisitions, the Trustee is not empowered to engage in any business or commercial activity, nor can the Trustee use any portion of the trust estate to acquire additional properties.

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How often are distributions paid?

Distributions are paid monthly to unitholders who hold units on the record date (the “Record Date”), which is typically the last business day of each month. The distributions are paid 10 business days following the Record Date.

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What is the estimated life of the Trust?

Based on third-party reserve reports, economic production from the Underlying Properties is expected for at least 75 years.

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Is there a termination date for the Trust? How will the Trust end?

The Trust does not have a specific termination date. However, some events that could cause the Trust to dissolve include:

  • the Trust, upon the approval of the holders of at least 75% of the outstanding units could sell the NPI;
  • the annual cash available for distribution to the Trust is less than $2 million for each of any two consecutive years;
  • the holders of 75% of the outstanding trust units vote in favor of dissolution; or
  • the Trust is judicially dissolved.

Once the decision has been made to dissolve the Trust, the Trust’s assets will be sold either by private sale or public auction and the cash received from the sale, after payment or the making of reasonable provision for payment of all claims and obligations of the Trust, will be distributed to the unitholders of record at that time.

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Where can I find the Prospectus?

You can download the Final Prospectus by clicking on the PDF

Final Prospectus
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Where can I find the Conveyance?

You can download the Conveyance by clicking on the PDF

Conveyance
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Where can I find the Trust Agreement?

You can download the Trust Agreement by clicking on the PDF

Trust Agreement
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Units – Why are “units” not called “shares”?

The equity of the Trust is made up of units of beneficial interest in the Trust. These units are not shares of stock and the legal rights of an owner of units differ from those of a stockholder in some ways. However, the units of the Trust are traded on the NYSE similar to how shares of stock are traded for other companies.

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Do you have a DRIP (distribution reinvestment program)?

The Trust does not have a distribution reinvestment program.

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My address information is incorrect or has changed. Can the Trustee update its records?

No. The Trustee does not maintain any unitholder records. You will need to contact your investment broker if you are a beneficial holder, or the Transfer Agent if you have a registered account, to make sure they have the correct address in their records.

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Who is the Transfer Agent / Paying Agent / Registrar?

American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
1-800-358-5861
www.astfinancial.com

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Tax Questions

When will the tax information be available? Why did I receive a tax booklet? Why aren’t you providing me with a K-1? What information do I need to use the tax calculator? What information do I need to use the cost depletion calculator? Are the distribution payments I receive from the Trust qualified dividends? Are the distribution payments taxed at the 15% rate? The 1099-MISC I received from my broker shows an amount that is different from what I calculate using the tax booklet. Why? How much of the distributions are a return of capital? I own my units in an IRA/tax-deferred account. Do I need to report this information on my tax return? What do I do with Form 1099-MISC and Form 1099-INT that I received, and which report Trust income to the IRS?

When will the tax information be available?

The deadline imposed by the IRS is April 1st. However, the tax information booklet may be posted to this website and mailed prior to this deadline.

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Why did I receive a tax booklet?

The Trustee does not maintain any unitholder records, including payment records. The tax booklet sets out the tax consequences for one unit, which allows the unitholder to make the appropriate calculations from the tax schedules. Tax booklets are forwarded to beneficial unitholders from brokers. The Trustee forwards booklets to unitholders who have requested to be placed on a mailing list.

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Why aren’t you providing me with a K-1?

The Trust is a grantor trust, not a partnership, and we do not have the same reporting requirements as a partnership. Unitholders should receive a copy of Form 1099 MISC and Form 1099 INT from their broker and a tax information booklet which allows those holders to make the appropriate calculations from the tax schedules. Holders may also use the calculators on this website to compute the items of income and deduction to be reported.

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What information do I need to use the tax calculator?

You will need to know the number of units held as of each monthly Record Date, which is typically the last business day of each month. Since the Trustee does not maintain any unitholder records, you should consult your broker or review your files for that information. Enter the number of units in each of the boxes adjacent to the months units were held.

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What information do I need to use the cost depletion calculator?

You will need to know your original cost basis for each block of units. The cost basis is the total purchase price of the units, plus any commissions paid. You will also need to know the purchase date, and sale date if units were sold during the year. Since the Trustee does not maintain any unitholder records, you should consult your broker or review your files for that information.

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Are the distribution payments I receive from the Trust qualified dividends?

No. The distributions are considered royalty income and are ordinary income, taxed at your marginal rate.

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Are the distribution payments taxed at the 15% rate?

No. The distributions are considered ordinary income, taxed at your marginal rate.

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The 1099-MISC I received from my broker shows an amount that is different from what I calculate using the tax booklet. Why?

Since the income of the Trust is deemed to have been received by each unitholder at the time the Trust receives the income on the last business day of each month, rather than when the income is actually paid to unitholders in the following month, this is likely due to a timing difference. The income to be reported is associated with amounts distributed in February of one year through January of the next year. Although the 1099-MISC received from your broker should report income taxable in January through December (but received in February through the following January), it may not. Unitholders should use the tax booklet or the calculators on this website to report the income from the Trust correctly.

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How much of the distributions are a return of capital?

The distribution itself is not a return of capital. However, unitholders are entitled to a recovery of their capital investment via a sale of units and through cost depletion deductions. The depletion allowance may be considered a return of capital.

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I own my units in an IRA/tax-deferred account. Do I need to report this information on my tax return?

No. You do not report Trust income in an IRA or other tax-deferred account.

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What do I do with Form 1099-MISC and Form 1099-INT that I received, and which report Trust income to the IRS?

If you accurately report the tax information as instructed in the tax information booklet, you should not also report the amounts set forth on any variant of Form 1099 since such amounts are already included in the tax information booklet calculations.

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Depletion Questions

What is the definition of ‘cost basis?’ Can you tell me what the cost basis for my Units is? I purchased more than one block of Units. Can I input the basis for all of those Units at one time? What information do I need to use the cost depletion calculator? Do I have to take the full cost depletion amount? Cost Depletion or Percentage Depletion: which method should I use?

What is the definition of ‘cost basis?’

The cost basis is the total purchase price of the units, plus any commissions paid.

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Can you tell me what the cost basis for my Units is?

No. Since the Trustee does not maintain any unitholder records, you should consult your broker or review your files for that information.

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I purchased more than one block of Units. Can I input the basis for all of those Units at one time?

No. You will need to calculate the depletion for each block of units purchased separately.

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What information do I need to use the cost depletion calculator?

You will need to know your original cost basis for each block of units purchased. The cost basis is the total purchase price of the units, plus any commissions paid. You will also need to know the purchase date and sale date if units were sold during the year.

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Do I have to take the full cost depletion amount?

No. You do not have to take the full cost depletion amount on your tax return. However, you must reduce your cost basis by the full amount allowable.

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Cost Depletion or Percentage Depletion: which method should I use?

Percentage depletion is an alternate method of calculating the depletion allowance for mineral property and some oil or natural gas wells. The allowance is a percentage (usually 15% for oil and natural gas) of the gross income from such property or wells during a given year. A taxpayer is allowed the greater of cost depletion or percentage depletion. In either case, you must reduce your cost basis by the full amount allowable.

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Perm Rock Royalty Trust
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Disclaimer

The information contained in this section of our website is concise and is intended to only be a summary. Therefore any information provided herein may not be complete. Unitholders are encouraged to read the Amended and Restated Trust Agreement of PermRock Royalty Trust (the “Trust”) dated May 4, 2018 among Boaz Energy II, LLC, Simmons Bank, as Trustee and Wilmington Bank, National Association, as Delaware Trustee (the “Trust Agreement”), which is the document that describes the rights of unitholders and is available at the link provided under “FAQs – Where Can I Find the Trust Agreement?” In the event anything described on this website conflicts with the terms of the Trust Agreement or any other document binding upon the Trust, the Trust Agreement or such other document shall control. Furthermore, the federal, state and local tax consequences to, and associated tax filing responsibilities of, a unitholder regarding the ownership and sale of units is dependent in part on each unitholder’s specific tax circumstances. Unitholders should consult their own tax advisors regarding all tax issues concerning the ownership and sale of units. The Trust exercises thorough efforts to ensure the accuracy of the content of this website, but makes no warranties as to the site’s accuracy or completeness and shall in no way be responsible for any loss or damages resulting from any inaccuracy or incompleteness of information provided herein or any alterations made hereto by third parties.
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