HOUSTON--(BUSINESS WIRE)--Permianville Royalty Trust (NYSE: PVL) today announced the net profits interest calculation for July 2020. The net profits interest calculation represents reported oil production for the month of April 2020 and reported natural gas production during March 2020. The calculation includes accrued costs incurred in May 2020.
Due to the significant decline in sales volumes and commodity prices compared to the prior month, direct operating and development expenses for the current month net profits interest calculation exceeded cash receipts, leading to a shortfall of $0.9 million. As a result, no distribution will be paid to the Trust’s unitholders in August 2020.
Recorded oil cash receipts from the oil and gas properties underlying the Trust (the “Underlying Properties”) totaled $0.6 million for the current month on realized wellhead prices of $15.58/Bbl, down $1.2 million from the prior month distribution period. Cash receipts declined materially in the current month as some operators of the Underlying Properties looked to defer sales, utilize infield storage and/or temporarily shut-in production to address the oil price volatility experienced in April 2020. Based on current data for the Underlying Properties, the Sponsor indicates that production and cash receipts have begun to normalize.
Recorded natural gas cash receipts from the Underlying Properties totaled $0.3 million for the current month on realized wellhead prices of $1.25/Mcf. Natural gas volumes decreased due to lower realized prices as well as lower production, which was partly due to operators undertaking operational responses similar to those described above with respect to oil production.
Total accrued operating expenses for the period were $1.9 million, a $0.1 million decrease month-over-month from April 2020. Capital expenditures remained steady at $0.1 million from the prior month. The monthly net profits interest calculation includes received oil and natural gas receipts from the operators of the Underlying Properties, but represents accrued operating expenses as well as expenses paid during the period, which for a month where production sales were curtailed can lead to higher operating expenses when compared to production receipts. In addition, in accordance with the terms of the Trust, since 2013, new hedging arrangements burdening the Trust have been prohibited. As a result, all production in which the Trust has an interest is unhedged, and the amount of cash distributions is subject to the possibility of greater fluctuations due to changes in oil and natural gas prices.
The cumulative shortfall in net profits for the current month will be deducted from any net profits in next month’s net profits interest calculation. At this time based on current commodity prices, the Sponsor anticipates that the Underlying Properties will return to generating positive net profits later this year.
About Permianville Royalty Trust
Permianville Royalty Trust is a Delaware statutory trust formed to own a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from certain, predominantly non-operated, oil and gas properties in the states of Texas, Louisiana and New Mexico. As described in the Trust’s filings with the Securities and Exchange Commission (the “SEC”), the amount of the periodic distributions is expected to fluctuate, depending on the proceeds received by the Trust as a result of actual production volumes, oil and gas prices, the amount and timing of capital expenditures, and the Trust’s administrative expenses, among other factors. Future distributions are expected to be made on a monthly basis. For additional information on the Trust, please visit www.permianvilleroyaltytrust.com.
