Permrock Royalty Trust

PermRock Royalty Trust (the “Trust”) was established in 2017 by a trust agreement among Boaz Energy II, LLC (“Boaz Energy”), as Trustor, Argent Trust Company, as Trustee (the “Trustee”) effective December 30, 2022 and Wilmington Trust, National Association, as Delaware Trustee.

No. The Trust is a grantor trust.

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).

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

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.

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

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.

You can download the Final Prospectus by clicking on the PDF

You can download the Conveyance by clicking on the PDF

You can download the Trust Agreement by clicking on the PDF

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.

The Trust does not have a distribution reinvestment program.

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.

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

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.

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.

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.

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.

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.

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

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

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.

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.

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

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.

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

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

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

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.

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.

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.