Permianville Royalty Trust announced on July 18, that it will not issue a monthly distribution to its unitholders in August 2025. This decision stems from a net profits shortfall of approximately $0.3 million in its July 2025 calculation, largely driven by elevated capital expenditures related to the completion of new wells.
The Trust's latest operational update, reflecting oil production from April 2025 and natural gas production from March 2025, along with accrued costs incurred in May 2025, revealed that direct operating and development expenses outpaced cash receipts. This marks a co ntinued trend of non-distributions for Permianville, as they also announced no distributions for June and July 2025 due to similar shortfalls and repayments of cash advances.
In the current reporting period, Permianville recorded oil cash receipts of $2.1 million, based on average wellhead prices of $63.10 per barrel. This represents a $0.2 million decrease from the previous month. Natural gas cash receipts, however, saw a slight increase of $0.1 million, totaling $1.2 million at an average wellhead price of $2.85 per Mcf.
While total accrued operating expenses remained consistent with the prior month at $2.4 million, capital expenditures experienced a significant rise, increasing by $0.2 million to $1.2 million. The Trust explicitly stated that these elevated capital expenditures are primarily due to the ongoing completion of three Haynesville wells. These wells are operated by a major oil company and were recently brought online in the second quarter of 2025. The Trust's Sponsor, COERT Holdings 1 LLC, anticipates that these new wells will begin generating working interest revenues attributable to the net profits interest in the coming months, which should help alleviate the current financial pressure.
Royalty trusts like Permianville often experience fluctuating distributions due to their direct exposure to commodity prices, production volumes, and the timing of capital expenditures. Elevated capital expenditures can significantly impact the cash available for distribution, especially when the costs are not offset by immediate increases in revenue. In the case of Permianville, the investment in the Haynesville wells, while promising for future revenues, has temporarily reduced distributable income.
The $0.3 million shortfall in net profits for the current month will be carried forward and deducted from any net profits generated in the next month's calculation. This means the Trust will not receive proceeds from its net profits interest until both this current shortfall and any prior monthly expense advancements have been fully recovered.
Despite the current challenges, the Sponsor remains optimistic. Based on current commodity prices, they anticipate that the Underlying Properties will return to generating positive net profits later in 2025.
