Faqs
GENERAL QUESTIONS
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
Final Prospectus
You can download the Conveyance by clicking on the PDF
Conveyance
You can download the Trust Agreement by clicking on the PDF
Trust Agreement
No. The Trust is a grantor trust. The trust does not have a specific end date. There are, however, some events that could cause the trust to terminate:
- If there are two successive fiscal years In which the Trust’s gross revenues from the Royalty Properties are less than $2,000,000 per year,
- A vote of Unitholders.
American Stock Transfer & Trust Company, LLC
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www.astfinancial.com
TAX QUESTIONS
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.
SPECIFIC QUESTIONS
DEPLETION QUESTIONS
Disclaimer
The information contained in this section of our website is concise and is intended to only be a summary. Therefore, any information provided may not be complete. Unitholders are encouraged to read the Trust Agreement which is the document that describes the rights of Unitholders. Also, in the event of a conflict between anything described on our Website and the terms of the Trust Agreement, the Trust Agreement shall control. Furthermore, the federal, state and local tax consequences, and associated tax filing responsibilities, to a Unitholder of the ownership and sale of Units is dependent in part on each Unitholder’s specific tax circumstances; therefore, Unitholders should consult their own tax advisors regarding all tax issues concerning the ownership and sale of Units. The Trust exercises thorough effort 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 inaccuracies in information or any alterations made by third parties.