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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8033 PERMIAN BASIN ROYALTY TRUST (Exact Name of
Registrant as Specified in the Permian Basin Royalty Trust Indenture)  Texas

75-6280532(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer Identification No.) Argent Trust Company 2911 Turtle Creek Boulevard Suite 850 Dallas, Texas 75219 (Address of Principal
Executive Offices; Zip Code) (855) 588-7839 (Registrants Telephone Number, Including Area Code) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  Title of Each Class

Trading Symbol

Name of Each Exchange on Which
RegisteredUnits of Beneficial Interest

PBT

New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes  ☐    No  ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes  ☐    No  ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒        No  ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☐        No  ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company and emerging growth company in Rule 12b-2 of the Exchange Act.:  Large accelerated filer  ☒

Accelerated filer  ☐

Non-accelerated filer☐

Smaller Reporting Company  ☐

Emerging Growth Company  ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report.  ☒ If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrants executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No
  ☒ The aggregate market value of the voting and
non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently completed second fiscal quarter was $771,375,574. At
February 28, 2023, there were 46,608,796 Units of Beneficial Interest of the Trust outstanding. DOCUMENTS INCORPORATED BY REFERENCE None.




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FORWARD LOOKING INFORMATION Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission
(as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes,
hydrocarbon prices and the results thereof, and regulatory matters. Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties
and the Trustee can give no assurance that they will prove correct. There are many factors, none of which are within the Trustees control, that may cause such expectations not to be realized, including, among other things, factors such as
actual oil and gas prices and the recoverability of reserves, capital expenditures, general economic conditions, actions and policies of petroleum-producing nations and other changes in the domestic and international energy markets and the factors
identified under Item 1A, Risk Factors. Such forward looking statements generally are accompanied by words such as estimate, expect, predict, anticipate, goal,
should, assume, believe, or other words that convey the uncertainty of future events or outcomes.  i




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TABLE OF CONTENTS  PART IItem 1.

Business


1Item 1A.

Risk Factors


3Item 1B.

Unresolved Staff Comments


10Item 2.

Properties


10Item 3.

Legal Proceedings


24Item 4.

Mine Safety Disclosures


24PART IIItem 5.

Market for Units of the Trust, Related Security Holder Matters and Trust Purchases of Units


25Item 6.

Removed and Reserved.


25Item 7.

Managements Discussion and Analysis of Financial Condition and Results of Operation


27Item 7A.

Quantitative and Qualitative Disclosures about Market Risk


31Item 8.

Financial Statements and Supplementary Data


32Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


44Item 9A.

Controls and Procedures


44Item 9B.

Other Information


46Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspection


46PART IIIItem 10.

Directors and Executive Officers of the Registrant


47Item 11.

Executive Compensation


47Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
 Matters


48Item 13.

Certain Relationships and Related Transactions, and Director
Independence


48Item 14.

Principal Accounting Fees and Services


48PART IVItem 15.

Exhibits, Financial Statement Schedules


49SIGNATURE


51Consent of Cawley, Gillespie & Associates, Inc.Certification Required by Rule
13a-14(a)/15d-14(a)Certification Required by Rule
13a-14(b)/15d-14(b) and Section 906Report of Cawley, Gillespie & Associates, Inc.  ii




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PART I  Item 1.
Business The Permian Basin Royalty Trust (the Trust) is an express trust created under the laws of the state of Texas by the Permian Basin Royalty
Trust Indenture (the Trust Indenture) entered into on November 3, 1980, between Southland Royalty Company (Southland Royalty) and The First National Bank of Fort Worth, as Trustee. Simmons Bank, an Arkansas
state-chartered bank (Simmons Bank), was previously the Trustee of the Trust. Effective December 30, 2022, Argent Trust Company, a Tennessee chartered trust company (Argent), became the Trustee of the Trust. The
principal office of the Trust (sometimes referred to herein as the Registrant) is located at 2911 Turtle Creek Boulevard, Suite 850, Dallas, Texas (telephone number (855) 588-7839). On January 9, 2014, Bank of America N.A. (as successor to The First National Bank of Fort Worth) gave notice to Unit holders that it would be
resigning as trustee of the Trust subject to certain conditions that included the appointment of Southwest Bank as successor trustee. At a Special Meeting of Trust Unit holders, the Unit holders approved the appointment of Southwest Bank as
successor trustee of the Trust once the resignation of Bank of America N.A. took effect and also approved certain amendments to the Trust Indenture. The effective date of Bank of America N.A.s resignation and the effective date of Southwest
Banks appointment as successor trustee was August 29, 2014. Effective October 19, 2017, Simmons First National Corporation
(SFNC) completed its acquisition of First Texas BHC, Inc., the parent company of Southwest Bank. SFNC is the parent company of Simmons Bank. SFNC merged Southwest Bank with Simmons Bank effective February 20, 2018. The defined term
Trustee as used herein shall refer to Bank of America N.A. for periods prior to August 29, 2014, shall refer to Southwest Bank for periods from August 29, 2014 through February 19, 2018, shall refer to Simmons Bank for
periods from February 20, 2018 through December 29, 2022, and shall refer to Argent (as defined below) for periods on and after December 30, 2022. On November 4, 2021, Simmons Bank announced that it had entered into an agreement with Argent pursuant to which Simmons Bank would be resigning as
trustee of the Trust and would nominate Argent as successor trustee of the Trust. The effective date of Simmons Banks resignation and Argents appointment as successor trustee was December 30, 2022. On October 23, 1980, the stockholders of Southland Royalty approved and authorized that companys conveyance of net overriding royalty
interests (equivalent to net profits interests) to the Trust for the benefit of the stockholders of Southland Royalty of record at the close of business on the date of the conveyance consisting of a 75% net overriding royalty interest carved out of
that companys fee mineral interests in the Waddell Ranch properties in Crane County, Texas and a 95% net overriding royalty interest carved out of that companys major producing royalty properties in Texas. The conveyance of these
interests (the Royalties) was made on November 3, 1980, effective as to production from and after November 1, 1980 at 7:00 a.m. The properties and interests from which the Royalties were carved and which the Royalties now
burden are collectively referred to herein as the Underlying Properties. The Underlying Properties are more particularly described under Item 2. Properties herein. The function of the Trustee is to collect the income attributable to the Royalties, to pay all expenses and charges of the Trust, and then to distribute
the remaining available income to the Unit holders. The Trust is not empowered to carry on any business activity and has no employees, all administrative functions being performed by the Trustee. The Royalties constitute the principal asset of the Trust and the beneficial interests in the Royalties are divided into that number of Units of
Beneficial Interest (the Units) of the Trust equal to the number of shares of the common stock of Southland Royalty outstanding as of the close of business on November 3, 1980. Each stockholder of Southland Royalty of record at the
close of business on November 3, 1980, received one Unit for each share of the common stock of Southland Royalty then held. In 1985, Southland
Royalty became a wholly-owned subsidiary of Burlington Northern Inc. (BNI). In 1988, BNI transferred its natural resource operations to Burlington Resources Inc. (BRI) as a result of which Southland Royalty  1




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became a wholly-owned indirect subsidiary of BRI. As a result of this transfer, Meridian Oil Inc., a Delaware corporation (MOI), which was the parent company of Southland Royalty,
became a wholly owned direct subsidiary of BRI. Effective January 1, 1996, Southland Royalty was merged with and into MOI. As a result of this merger, the separate corporate existence of Southland Royalty ceased and MOI survived and succeeded
to the ownership of all of the assets of Southland Royalty and assumed all of its rights, powers, privileges, liabilities and obligations. Effective July 11, 1996, MOI changed its name to Burlington Resources Oil & Gas Company, now
Burlington Oil & Gas Company LP (BROG). Any reference to BROG hereafter for periods prior to the occurrence of the aforementioned name change or merger should, as applicable, be construed to be a reference to MOI or Southland
Royalty. Further, BROG notified the Trust that, on February 14, 1997, the Texas Royalty properties (as defined herein on page 10) that are subject to the Net Overriding Royalty Conveyance dated November 1, 1980 (the Texas Royalty
Conveyance), were sold to Riverhill Energy Corporation (Riverhill Energy) of Midland, Texas. Effective March 31, 2006, ConocoPhillips acquired BRI pursuant to a merger between BRI and a wholly-owned subsidiary of
ConocoPhillips. As a result of this acquisition, BRI and BROG are both wholly-owned subsidiaries of ConocoPhillips. BROG notified the Trust, that
on November 1, 2019, the Waddell Ranch properties (as defined herein on page 10) that are subject to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust  Waddell Ranch) dated November 1, 1980 (the Waddell
Ranch Conveyance), were sold to Blackbeard Operating, LLC (Blackbeard) of Fort Worth, Texas. Blackbeard became the operator effective as of April 1, 2020. The term net proceeds is used in the above described conveyance and means the excess of gross proceeds received by the owner of
the Underlying Properties during a particular period over production costs for such period. Gross proceeds means the amount received by the owner of the Underlying Properties from the sale of the production attributable to
the Underlying Properties, subject to certain adjustments. Production costs means, generally, costs incurred on an accrual basis in operating the Underlying Properties, including both capital and
non-capital costs; for example, development drilling, production and processing costs, applicable taxes, and operating charges. If production costs exceed gross proceeds in any month, the excess is recovered
out of future gross proceeds prior to the making of further payment to the Trust, but the Trust is not liable for any production costs or liabilities attributable to these properties and interests or the minerals produced therefrom. If at any time
the Trust receives more than the amount due from the Royalties, it shall not be obligated to return such overpayment, but the amounts payable to it for any subsequent period shall be reduced by such overpaid amount, plus interest, at a rate
specified in the conveyance. To the extent it has the legal right to do so, the owner of the Underlying Properties is responsible for marketing the
production from such properties and interests, either under existing sales contracts or under future arrangements at the best prices and on the best terms it shall deem reasonably obtainable in the circumstances. The owner of the Underlying
Properties also has the obligation to maintain books and records sufficient to determine the amounts payable to the Trustee. The owner of the Underlying Properties, however, can sell its interests in the Underlying Properties. Proceeds from production in the first month are generally received by Blackbeard in the second month, the net proceeds attributable to the Royalties are
paid by Blackbeard to the Trustee in the third month and distribution by the Trustee to the Unit holders is made in the fourth month. The identity of Unit holders entitled to a distribution will generally be determined as of the last business day of
each calendar month (the monthly record date). The amount of each monthly distribution will generally be determined and announced ten days before the monthly record date. Unit holders of record as of the monthly record date will be
entitled to receive the calculated monthly distribution amount for each month on or before ten business days after the monthly record date. The aggregate monthly distribution amount is the excess of (i) net revenues from the Trust properties,
plus any decrease in cash reserves previously established for contingent liabilities and any other cash receipts of the Trust over (ii) the expenses and payments of liabilities of the Trust plus any net increase in cash reserves for contingent
liabilities. Cash held by the Trustee as a reserve for liabilities or contingencies (which reserves may be established by the Trustee in its
discretion) or pending distribution is placed, at the Trustees discretion, in obligations issued by (or unconditionally guaranteed by) the United States or any agency thereof, repurchase agreements secured by obligations issued by the United
States or any agency thereof, certificates of deposit of banks having a capital surplus and undivided profits in excess  2




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of $50,000,000, or other interest bearing accounts in FDIC-insured state or national banks, including the Trustee, so long as the entire amount in such account is at all times fully insured by
the FDIC, subject, in each case, to certain other qualifying conditions. The income to the Trust attributable to the Royalties is not subject in
material respects to seasonal factors nor in any manner related to or dependent upon patents, licenses, franchises or concessions. The Trust conducts no research activities. The Trust has no employees since all administrative functions are performed
by the Trustee. Blackbeard, as the current operator, has advised the Trustee that it believes that comparable revenues could be obtained in the
event of a change in purchasers of production. Website/SEC Filings Our Internet address iswww.pbt-permian.com. You can review, free of charge, the filings the Trust has
made with respect to its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. We shall post these reports to our Internet address as soon as reasonably practicable after we electronically file them
with, or furnish them to, the SEC. Widely Held Fixed Investment Trust Reporting Information Some Trust Units are held by middlemen, as such term is broadly defined in U.S. Treasury Regulations (and includes custodians, nominees, certain joint
owners, and brokers holding an interest for a customer in street name, collectively referred to herein as middlemen). Therefore, the Trustee considers the Trust to be a non-mortgage widely held
fixed investment trust (WHFIT) for U.S. federal income tax purposes. Argent Trust Company, EIN: 62-1437218, 2911 Turtle Creek Boulevard, Suite 850, Dallas, Texas 75219, telephone number (855) 588-7839, email address trustee@pbt-permian.com, is the representative of the Trust that will provide tax information in accordance with applicable U.S. Treasury Regulations
governing the information reporting requirements of the Trust as a WHFIT. Tax information is also posted by the Trustee at www.pbt-permian.com. Notwithstanding the foregoing, the middlemen holding Trust Units
on behalf of Unit holders, and not the Trustee of the Trust, are solely responsible for complying with the information reporting requirements under the U.S. Treasury Regulations with respect to such Trust Units, including the issuance of IRS Forms
1099 and certain written tax statements. Unit holders whose Trust Units are held by middlemen should consult with such middlemen regarding the information that will be reported to them by the middlemen with respect to the Trust Units.  Item 1A.
Risk Factors Crude oil and natural gas prices are volatile and fluctuate in response to a number of factors; Lower prices could reduce the net proceeds payable to the Trust and
Trust distributions. The Trusts income and monthly distributions are heavily influenced by commodity prices. Commodity prices may
fluctuate widely in response to (i) relatively minor changes in the supply of and demand for oil and natural gas, (ii) market uncertainty and (iii) a variety of additional factors that are beyond the Trustees control. Recently,
there has been volatility in oil and natural gas prices due in part to significantly decreased demand as a result of the novel coronavirus (COVID-19) pandemic, beginning in 2020, followed by
increasing prices in 2021, and the first half of 2022. A combination of these factors resulted in the price of oil falling below zero to $(37.63) per barrel of oil on April 20, 2020, recovering the following day to $10.01 per barrel of oil. As
of February 24, 2023, the price of oil was $76.45. It is uncertain how the war in Ukraine and resulting sanctions against Russia will affect oil prices in the coming months. Factors that may impact future commodity prices, including the price
of oil and natural gas, include but are not limited to:  

political conditions in major oil producing regions, especially in the Middle East and Russia;  

worldwide economic and geopolitical conditions;  

weather conditions;  3




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

trade barriers;  

public health concerns, such as COVID-19;  

the supply and price of domestic and foreign crude oil or natural gas;  

the level of consumer demand;  

the price and availability of alternative fuels;  

the proximity to, and capacity of, transportation facilities;  

the effect of worldwide energy conservation measures; and  

the nature and extent of governmental regulation and taxation. Although the Trustee cannot predict the occurrence of events that may affect future commodity prices or the degree to which these prices will be
affected, gas royalty income for a given period generally relates to production three months prior to the period and crude oil royalty income for a given period generally relates to production two months prior to the period and will generally
approximate current market prices in the geographic region of the production at the time of production. When crude oil and natural gas prices decline, the Trust is affected in two ways. First, distributable income from the Underlying Properties is
reduced. Second, exploration and development activity by operators on the Underlying Properties may decline as some projects may become uneconomic and are either delayed or eliminated. It is impossible to predict future crude oil and natural gas
price movements, and this reduces the predictability of future cash distributions to Unit holders. Increased production and development costs attributable to
the Royalties will result in decreased Trust distributions unless revenues also increase. Production and development costs attributable to the
Royalties are deducted in the calculation of the Trusts share of net proceeds. Accordingly, higher or lower production and development costs will directly decrease or increase the amount received by the Trust from the Royalties. Production and
development costs are impacted by increases in commodity prices, both directly, through commodity price dependent costs, such as electricity, and indirectly, as a result of demand driven increases in costs of oilfield goods and services. For
example, the costs of electricity that will be included in production and development costs deducted in calculating the Trusts share of 2023 net proceeds could increase compared to the electrical costs incurred during 2022 if higher fuel
surcharges are charged by the third party electricity provider in response to any increased costs of natural gas consumed to generate the electricity. These increased costs could reduce the Trusts share of 2023 net proceeds below the
level that would exist if such costs remained at the level experienced in 2022. Similarly, new or changes to existing laws or regulations with which the Underlying Properties must comply, including environmental regulations or regulation of
injection and disposal wells in connection with concerns regarding seismic activity, could result in increased production or development costs. If production and development costs attributable to the Royalties exceed the gross proceeds related to
production from the Underlying Properties, the Trust will not receive net proceeds until future proceeds from production exceed the total of the excess costs plus accrued interest during the deficit period. Development activities may not generate
sufficient additional proceeds to repay the costs. Trust reserve estimates depend on many assumptions that may prove to be inaccurate, which could cause both
estimated reserves and estimated future net revenues to be too high, leading to write-downs of estimated reserves. The value of the Units will
depend upon, among other things, the reserves attributable to the Royalties from the Underlying Properties. The calculations of proved reserves and estimating reserves is inherently uncertain. In addition, the estimates of future net revenues are
based upon various assumptions regarding future production levels, prices and costs that may prove to be incorrect over time. The accuracy of any
reserve estimate is a function of the quality of available data, engineering interpretation and judgment and the assumptions used regarding the quantities of recoverable crude oil and natural gas and the future prices  4




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of crude oil and natural gas. Petroleum engineers consider many factors and make many assumptions in estimating reserves. Those factors and assumptions include:  

historical production from the area compared with production rates from similar producing areas;  

the effects of governmental regulation;  

assumptions about future commodity prices, production and development costs, taxes, and capital expenditures;  

the availability of enhanced recovery techniques; and  

relationships with landowners, working interest partners, pipeline companies and others. Changes in any of these factors and assumptions can materially change reserve and future net revenue estimates. The Trusts estimate of reserves
and future net revenues is further complicated because the Trust holds an interest in net overriding royalties and does not own a specific percentage of the crude oil or natural gas reserves. Ultimately, actual production, revenues and expenditures
for the Underlying Properties, and therefore actual net proceeds payable to the Trust, will vary from estimates and those variations could be material. Results of drilling, testing and production after the date of those estimates may require
substantial downward revisions or write-downs of reserves. The assets of the Trust are depleting assets and, if the operators developing the Underlying
Properties do not perform additional development projects, the assets may deplete faster than expected. Eventually, the assets of the Trust will cease to produce in commercial quantities and the Trust will cease to receive proceeds from such assets.
In addition, a reduction in depletion tax benefits may reduce the market value of the Units. The net proceeds payable to the Trust are derived
from the sale of depleting assets. The reduction in proved reserve quantities is a common measure of depletion. Future maintenance and development projects on the Underlying Properties will affect the quantity of proved reserves and can offset the
reduction in proved reserves. The timing and size of these projects will depend on the market prices of crude oil and natural gas. If the operators developing the Underlying Properties do not implement additional maintenance and development
projects, the future rate of production decline of proved reserves may be higher than the rate currently expected by the Trust. Because the net
proceeds payable to the Trust are derived from the sale of depleting assets, the portion of distributions to Unit holders attributable to depletion may be considered a return of capital as opposed to a return on investment. Distributions that are a
return of capital will ultimately diminish the depletion tax benefits available to the Unit holders, which could reduce the market value of the Units over time. Eventually, the Royalties will cease to produce in commercial quantities and the Trust
will, therefore, cease to receive any distributions of net proceeds therefrom. Government action, policies or regulations designed to discourage production of,
reduce demand for, or promote alternatives to oil and natural gas could impact the price of oil and natural gas produced on the Underlying Properties, directly as intended or through unintended consequences. Governments around the world are considering actions intended to reduce greenhouse gas emissions by decreasing both the supply of and the demand for oil
and natural gas products or promote alternatives. These include the adoption of cap and trade regimes, carbon taxes, trade tariffs, minimum renewable usage requirements, restrictive permitting, increased mileage and other efficiency standards,
mandates for sales of electric vehicles, mandates for use of specific fuels or technologies, and other incentives or mandates designed to support transitioning to lower-emission energy sources. Political and other actors and their agents also
increasingly seek to advance climate change objectives indirectly, such as by seeking to reduce the availability or increase the cost of financing and investment in the oil and gas sector. Depending on how policies are formulated and applied, such
policies could impact the ability and costs of the operators of the Underlying Properties supply products, demand for their products, or the competitiveness of hydrocarbon-based products, which in turn, could reduce royalty income to the Trust Any
policy that increases the costs for operators of the Underlying Properties or decreased market prices could have a material impact on the distributable income of the Trust.  5




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Trustee may be subject to attempted cybersecurity disruptions from a variety of sources including state-sponsored
actors. The Trustee maintains robust cybersecurity protocols including, but not limited to technological capabilities that prevent and detect
disruptions; computer workstations and programs protected with passwords and passphrases, as well as employee training throughout the year on banking regulations and cybersecurity followed up by testing of that knowledge. Other, non-technical protocols include securing of documents and work areas that could contain person, non-public information. If the measures taken to protect against cybersecurity
disruptions prove to be insufficient or if proprietary data is otherwise not protected, the Trustee, or customer, employees, or third parties could be adversely affected. The Trust is also exposed to potential harm from cybersecurity events that may
affect the operations of third-parties, including suppliers, service providers (including providers of cloud-hosting services for our data or applications), and customers. Cybersecurity disruptions could cause physical harm to people or the
environment, damage or destroy assets; compromise business systems; result in proprietary information being altered, lost, or stolen; result in employee, customer, or third-party information being compromised; or otherwise disrupt business
operations. The Trust could incur significant costs to remedy the effects of a major cybersecurity disruption in addition to costs in connection with resulting regulatory actions, litigations, or reputational harm. Future royalty income may be subject to risks relating to the creditworthiness of third parties. The Trust does not lend money and has limited ability to borrow money, which the Trustee believes limits the Trusts risk from credit markets. The
Trusts future royalty income, however, may be subject to risks relating to the creditworthiness of the operators of the Underlying Properties and other purchasers of the crude oil and natural gas produced from the Underlying Properties, as
well as risks associated with fluctuations in the price of crude oil and natural gas. The market price for the Units may not reflect the value of the royalty
interests held by the Trust. The public trading price for the Units tends to be tied to the recent and expected levels of cash distribution on
the Units. The amounts available for distribution by the Trust vary in response to numerous factors outside the control of the Trust, including prevailing prices for crude oil and natural gas produced from the Royalties. The market price is not
necessarily indicative of the value that the Trust would realize if it sold those Royalties to a third party buyer. In addition, such market price is not necessarily reflective of the fact that since the assets of the Trust are depleting assets, a
portion of each cash distribution paid on the Units should be considered by investors as a return of capital, with the remainder being considered as a return on investment. There is no guarantee that distributions made to a Unit holder over the life
of these depleting assets will equal or exceed the purchase price paid by the Unit holder. Operational risks and hazards associated with the development of the
Underlying Properties may decrease Trust distributions. There are operational risks and hazards associated with the production and
transportation of crude oil and natural gas, including without limitation natural disasters, blowouts, explosions, fires, leakage of crude oil or natural gas, releases of other hazardous materials, mechanical failures, cratering, and pollution. Any
of these or similar occurrences could result in the interruption or cessation of operations, personal injury or loss of life, property damage, damage to productive formations or equipment, damage to the environment or natural resources, or cleanup
obligations. The operation of oil and gas properties is also subject to various laws and regulations. Non-compliance with such laws and regulations could subject the operator to additional costs, sanctions or
liabilities. The uninsured costs resulting from any of these or similar occurrences could be deducted as a cost of production in calculating the net proceeds payable to the Trust and would therefore reduce Trust distributions by the amount of such
uninsured costs. As of December 31, 2022, oil and gas production from the Waddell Ranch properties is processed through a single facility,
future distributions from those properties may be particularly susceptible to such risks. A partial or complete shut down of operations at that facility could disrupt the flow of royalty payments to the Trust and, accordingly, the Trusts
distributions to its Unit holders. In addition, although Blackbeard is the current operator of record of the properties burdened  6




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by the Waddell Ranch overriding royalty interests, none of the Trustee, the Unit holders or Blackbeard, as the current operator, has an operating interest in the properties burdened by the Texas
Royalty properties (as defined herein on page 10) overriding royalty interests. As a result, these parties are not in a position to eliminate or mitigate the above or similar occurrences with respect to such properties and may not become
aware of such occurrences prior to any reduction in Trust distributions which may result therefrom. Increased concerns about climate change and environmental
sustainability. There is considerable debate as to the environmental effects of greenhouse gas emissions and associated consequences affecting
global climate, oceans, and ecosystems. We are not in a position to validate or repudiate the existence of climate change or various aspects of the scientific debate. However, climate change could have an impact on the operation of the Underlying
Properties. Underlying Properties in areas with limited water availability may be particularly impacted if droughts become more frequent or severe. Similarly, more extreme weather events such as ice storms or extended periods of freezing or high
temperatures could disrupt operation and production of the Underlying Properties. Changes in climate or weather may hinder exploration and production activities or increase or decrease the cost of production of oil and natural gas resources and
consequently affect demand. Changes in climate or weather may also affect consumer demand for energy or alter the overall energy mix. However, we are not in a position to predict the precise effects of climate change on energy markets or the
physical effects of climate change. We are providing this disclosure based on publicly available information on the matter. Finally, it should be
noted that, recently, concerns about the potential effects of climate change have resulted in certain financial institutions, funds and other sources of capital restricting or eliminating their investment in oil and natural gas activities. These
concerns have also led to the oil and gas industry facing growing demand for corporate transparency and a demonstrated commitment to sustainability goals. Furthermore, in March 2022 the U.S. Securities and Exchange Commission (SEC)
proposed rule amendments that would require public companies to disclose certain climate-related information in their public filings. If adopted, the new requirements would begin to phase-in starting in Fiscal
Year 2023 and would begin to apply to filings made in 2024. The comment period for the proposed amendments closed in June 2022, and the final rule has not yet been issued. Environmental, social, and governance (ESG) goals and programs,
which typically include extralegal targets related to environmental stewardship, social responsibility, and corporate governance, have also become an increasing focus of investors and shareholders across the industry. While reporting on ESG metrics
remains voluntary, access to capital and investors is likely to favor companies with robust ESG programs in place. Ultimately, these initiatives could make it more difficult for companies, including the companies that operate the Underlying
Properties, to secure funding for exploration and production activities. Notwithstanding potential risks related to climate change, the
International Energy Agency (IEA) estimates that global energy demand will continue to rise and will not peak until after 2030 and that oil and natural gas will continue to represent a substantial percentage of global energy use over
that time. However, for the first time, the IEAs World Energy Outlook for 2022 estimated that natural gas demand will plateau by the end of the decade, and oil demand will level off in the mid-2030s and
fall slightly by 2050. Terrorism and continued hostilities in the Middle East could decrease Trust distributions or the market price of the Units. Terrorist attacks and the threat of terrorist attacks, whether domestic or foreign, as well as the military or other actions taken in response, cause
instability in the global financial and energy markets. Terrorism and sustained military campaigns could adversely affect Trust distributions or the market price of the Units in unpredictable ways, including through the disruption of fuel supplies
and markets, increased volatility in crude oil and natural gas prices, or the possibility that the infrastructure on which the operators developing the Underlying Properties rely could be a direct target or an indirect casualty of an act of terror.  7




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##### Table of Contents

Unit holders and the Trustee have no influence over the operations on, or future development of, the Underlying
Properties. Neither the Trustee nor the Unit holders can influence or control the operations on, or future development of, the Underlying
Properties. The failure of an operator to conduct its operations, discharge its obligations, deal with regulatory agencies or comply with laws, rules and regulations, including environmental laws and regulations, in a proper manner could have an
adverse effect on the net proceeds payable to the Trust. The current operators developing the Underlying Properties are under no obligation to continue operations on the Underlying Properties. Neither the Trustee nor the Unit holders have the right
to replace an operator. The operators developing the Texas Royalty properties have no duty to protect the interests of the Unit holders and do not have sole
discretion regarding development activities on the Underlying Properties. Under the terms of a typical operating agreement relating to oil and
gas properties, the operator owes a duty to working interest owners to conduct its operations on the properties in a good and workmanlike manner and in accordance with its best judgment of what a prudent operator would do under the same or similar
circumstances. Blackbeard is currently the operator of record of the Waddell Ranch overriding royalty interests and in such capacity owes the Trust a contractual duty under the conveyance agreement for that overriding royalty interest to operate the
Waddell Ranch properties in good faith and in accordance with a prudent operator standard. The operators of the properties burdened by the Texas Royalty properties overriding royalty interests, however, have no contractual or fiduciary duty to
protect the interests of the Trust or the Unit holders other than indirectly through its duty of prudent operations to the unaffiliated owners of the working interests in those properties. In addition, even if an operator, including Blackbeard in the current case of the Waddell Ranch properties (as defined herein on page 10), concludes
that a particular development operation is prudent on a property, it may be unable to undertake such activity unless it is approved by the requisite approval of the working interest owners of such properties (typically the owners of at least a
majority of the working interests). Even if the Trust concludes that such activities in respect of any of its overriding royalty interests would be in its best interests, it has no right to cause those activities to be undertaken. The operator developing any Underlying Property may transfer its interest in the property without the consent of the Trust or the Unit holders. Any operator developing any of the Underlying Properties may at any time transfer all or part of its interest in the Underlying Properties to another
party. Neither the Trust nor the Unit holders are entitled to vote on any transfer of the properties underlying the Royalties, and the Trust will not receive any proceeds of any such transfer. Following any transfer, the transferred property will
continue to be subject to the Royalties, but the net proceeds from the transferred property will be calculated separately and paid by the transferee. The transferee will be responsible for all of the transferors obligations relating to
calculating, reporting and paying to the Trust the Royalties from the transferred property, and the transferor will have no continuing obligation to the Trust for that property. The operator developing any Underlying Property may abandon the property, thereby terminating the Royalties payable to the Trust. The operators developing the Underlying Properties, or any transferee thereof, may abandon any well or property without the consent of the Trust or the
Unit holders if they reasonably believe that the well or property can no longer produce in commercially economic quantities. This could result in the termination of the Royalties relating to the abandoned well or property. The Royalties can be sold and the Trust would be terminated. The Trustee must sell the Royalties if the holders of 75% or more of the Units approve the sale or vote to terminate the Trust. The Trustee must also
sell the Royalties if they fail to generate net revenue for the Trust of at least $1,000,000 per  8




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##### Table of Contents

year over any consecutive two-year period. Sale of all of the Royalties will terminate the Trust. The net proceeds of any sale will be distributed to the
Unit holders. The sale of the remaining Royalties and the termination of the Trust will be taxable events to the Unit holders. Generally, a Unit holder will realize gain or loss equal to the difference between the amount realized on the sale and
termination of the Trust and his adjusted basis in such Units. Gain or loss realized by a Unit holder who is not a dealer with respect to such Units and who has a holding period for the Units of more than one year will be treated as long-term
capital gain or loss except to the extent of any depletion recapture amount, which must be treated as ordinary income. Other federal and state tax issues concerning the Trust are discussed under Note 4 and Note 7 to the Trusts financial
statements, which are included herein. Each Unit holder should consult his own tax advisor regarding Trust tax compliance matters, including federal and state tax implications concerning the sale of the Royalties and the termination of the Trust. Unit holders have limited voting rights and have limited ability to enforce the Trusts rights against the current or future operators developing the
Underlying Properties. The voting rights of a Unit holder are more limited than those of stockholders of most public corporations. For example,
there is no requirement for annual meetings of Unit holders or for an annual or other periodic re-election of the Trustee. The Trust indenture and related trust law permit the Trustee and the Trust to sue Blackbeard, Riverhill Energy Corporation or any other future operators
developing the Underlying Properties to compel them to fulfill the terms of the conveyance of the Royalties. If the Trustee does not take appropriate action to enforce provisions of the conveyance, the recourse of the Unit holders would likely be
limited to bringing a lawsuit against the Trustee to compel the Trustee to take specified actions. Unit holders probably would not be able to sue Blackbeard, Riverhill Energy Corporation or any other future operators developing the Underlying
Properties. Financial information of the Trust is not prepared in accordance with GAAP. The financial statements of the Trust are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than
accounting principles generally accepted in the United States (GAAP). Although this basis of accounting is permitted for royalty trusts by the SEC, the financial statements of the Trust differ from GAAP financial statements mainly
because revenues are not accrued in the month of production and cash reserves may be established which would not be accrued in GAAP financial statements. Further, Trust expenses are recorded when paid and not in the month they were incurred. The limited liability of the Unit holders is uncertain. The
Unit holders are not protected from the liabilities of the Trust to the same extent that a shareholder would be protected from a corporations liabilities. The structure of the Trust does not include the interposition of a limited liability
entity such as a corporation or limited partnership which would provide further limited liability protection to Unit holders. While the Trustee is liable for any excess liabilities incurred if the Trustee fails to insure that such liabilities are to
be satisfied only out of Trust assets, under the laws of Texas, which are unsettled on this point, a holder of Units may be jointly and severally liable for any liability of the Trust if the satisfaction of such liability was not contractually
limited to the assets of the Trust and the assets of the Trust and the Trustee are not adequate to satisfy such liability. As a result, Unit holders may be exposed to personal liability. The tax treatment of an investment in Trust Units could be affected by recent and potential legislative changes, possibly on a retroactive basis. U.S. federal tax reform legislation known as the Tax Cuts and Jobs Act (the TCJA) was enacted December 22, 2017, and made significant
changes to the federal income tax rules applicable to both individuals and entities, including changes to the effective tax rate on a Unit holders allocable share of certain income from the Trust. The TCJA is complex, thus, Unit holders should
consult their tax advisor regarding the TCJA and its effect on an investment in Trust Units. In addition, President Bidens administration has generally proposed repealing fossil fuel tax subsidies, which could impact certain tax benefits
available to Trust Unit holders.  9




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##### Table of Contents

Any modification to the U.S. federal income tax laws or interpretations thereof (including
administrative guidance relating to the TCJA) may be applied retroactively and could adversely affect the Trusts business, financial condition or results of operations. The Trust is unable to predict whether any changes or other proposals will
ultimately be enacted, or whether any adverse interpretations will be issued. Any such changes or interpretations could negatively impact the value of an investment in the Trust Units. The recent spread of COVID-19, or the novel coronavirus, and the measures taken to mitigate the impact of the COVID-19 pandemic, are likely adversely affecting the business and operations of the operators of the Waddell Ranch properties and the Texas royalty properties, which in turn could have an adverse effect on trust
distributions. Demand for oil and gas, and the business and operations of the operators of the properties underlying the net profits interests,
had and may in the future be adversely impacted by the different variants of the COVID-19 pandemic and measures being taken to mitigate its impact. As past coronavirus outbreaks and government responses
escalated and de-escalated regionally and sporadically, the extent of the impact on domestic sales of crude oil and natural gas remains unknown. The industry experienced a sharp and rapid decline in the demand
for crude oil and natural gas as the U.S. and global economy in 2020, and commodity prices were negatively impacted as economic activity was curtailed in response to the COVID-19 pandemic, as well as due to
other geopolitical factors. At this time, the full extent to which COVID-19 will negatively impact the global economy and the oil and gas industry is uncertain, but pandemics or other significant public health
events will most likely have a material adverse effect on the operators business and financial condition which would likely have an adverse effect on trust distributions.  Item 1B.
Unresolved Staff Comments The Trust has not received any written comments from the Securities and Exchange Commission staff regarding its periodic or current reports under the Act
not less than 180 days before December 31, 2022, which comments remain unresolved.  Item 2.
Properties The net overriding royalties conveyed to the Trust (the Royalties) include: (1) a 75% net overriding royalty carved out of Southland
Royaltys fee mineral interests in the Waddell Ranch in Crane County, Texas (the Waddell Ranch properties); and (2) a 95% net overriding royalty carved out of Southland Royaltys major producing royalty interests in Texas
(the Texas Royalty properties). The interests out of which the Trusts net overriding royalty interests were carved were in all cases less than 100%. The Trusts net overriding royalty interests represent burdens against the
properties in favor of the Trust without regard to ownership of the properties from which the overriding royalty interests were carved. The net overriding royalty for the Texas Royalty properties is subject to the provisions of the lease agreements
under which such royalties were created. References below to net wells and acres are to the interests of the owner of the Underlying Properties (from which the Royalties were carved) in the gross wells and acres. A production index for oil and gas properties is the number of years derived by dividing remaining reserves by current production. The production index
for the Trust properties based on the reserve report prepared by independent petroleum engineers as of December 31, 2022, is approximately 15 years. The following information under this Item 2 is based upon data and information, including audited computation statements, furnished to the Trustee by
Blackbeard, the owner of the Waddell Ranch properties and BROG, the former owner of the Waddell Ranch properties, and Riverhill Energy, the owner of the Texas Royalty properties. PRODUCING ACREAGE, WELLS AND DRILLING Waddell Ranch Properties.    The net profits/overriding royalty interest in the Waddell Ranch properties is the largest asset
of the Trust. The mineral interests in the Waddell Ranch, from which such net royalty interests are carved, vary from  10




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##### Table of Contents

37.5% (Trust net interest) to 50% (Trust net interest) in 78,715 gross (34,205 net) producing acres. A majority of the proved reserves are attributable to six fields: Dune, Sand Hills (Judkins),
Sand Hills (McKnight), Sand Hills (Tubb), University-Waddell (Devonian) and Waddell. At December 31, 2022, the Waddell Ranch properties contained 918 (net) productive oil wells and 111 (net) productive gas wells. As of April 1, 2020, Blackbeard Operating, LLC (Blackbeard) became operator of record of the Waddell Ranch properties. All field,
technical and accounting operations have been contracted by agreements between the working interest owners and Schlumberger Integrated Project Management (IPM) and Riverhill Capital Corporation (Riverhill Capital), but remain
under the direction of Blackbeard, as of December 31, 2022. Six major fields on the Waddell Ranch properties account for more than 80% of the
total production. In the six fields, there are 12 producing zones ranging in depth from 2,800 to 10,600 feet. Most prolific of these zones are the Grayburg and San Andres, which produce from depths between 2,800 and 3,400 feet. Also productive from
the San Andres are the Sand Hills (Judkins) gas field and the Sand Hills (McKnight) oil field, the Dune (Grayburg/San Andres) oil field, and the Waddell (Grayburg/San Andres) oil field. The Dune and Waddell oil fields are productive from both the Grayburg and San Andres formations. The Sand Hills (Tubb) oil fields produce from the Tubb
formation at depths averaging 4,300 feet, and the University Waddell (Devonian) oil field is productive from the Devonian formation between 8,400 and 9,200 feet. The Waddell Ranch properties are mature producing properties, and all of the major oil fields are currently being waterflooded for the purpose of
facilitating enhanced recovery. Proved reserves and estimated future net revenues attributable to the properties are included in the reserve reports summarized below. The owner of the Underlying Properties for Waddell Ranch does not own the full
working interest in any of the tracts constituting the Waddell Ranch properties and, therefore, implementation of any development programs will require approvals of other working interest holders as well as the owner of the Underlying Properties. In
addition, implementation of any development programs will be dependent upon oil and gas prices currently being received and anticipated to be received in the future. There were 46.1 net drill wells completed on the Waddell Ranch properties during
2022. At December 31, 2022, there were 46.9 drill wells and 38.7 workover in progress on the Waddell Ranch properties. There were 79 gross (30 net) drill wells completed on the Waddell Ranch properties during 2021. At December 31, 2021,
there were 11 drill wells and 11 workover in progress on the Waddell Ranch properties. There were 16 gross (6 net) drill wells completed on the Waddell Ranch properties during 2020. At December 31, 2020, there were 4 drill wells and 3 workover
in progress on the Waddell Ranch properties. Blackbeard has advised the Trustee that the total amount of capital expenditures for 2022 with regard
to the Waddell Ranch properties totaled $124 million (gross). Capital expenditures include the cost of remedial and maintenance activities. The amount spent on remedial and maintenance activities is approximately $89 million of the amount
expended by Blackbeard in 2022. Blackbeard has advised the Trustee that the capital expenditures budget for 2023 totals approximately
$122 million net to the Trust, of which approximately $8.1 million (gross) is attributable to facilities. Accordingly, there is a 32% increasein capital expenditures for 2023 as compared with the 2022 capital expenditures. There
are expected to be 48.75 new drill wells and 45 recompletions in 2023 as compared to 46.88 new drill wells and 45.06 recompletion in 2022. The
Trustee has been advised that, effective November 1, 2019, BROG sold its interests in the Waddell Ranch properties to Blackbeard. In conjunction with the transfer and assignment of the Waddell Ranch properties, BROG also assigned to Blackbeard
all of its rights, title and interest in and to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) dated November 1, 1980. BROG handled all operations and accounting on
behalf of Blackbeard until March 31, 2020. Texas Royalty Properties.    The Texas Royalty properties consist of
royalty interests in mature producing oil fields, such as Yates, Wasson, Sand Hills, East Texas, Kelly-Snyder, Panhandle Regular, N. Cowden, Todd, Keystone, Kermit, McElroy, Howard-Glasscock, Seminole and others located in 33 counties across Texas.
The Texas Royalty properties consist  11




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##### Table of Contents

of approximately 125 separate royalty interests containing approximately 303,000 gross (approximately 51,000 net) producing acres. Approximately 39% of the future net revenues discounted at 10%
attributable to Texas Royalty properties are located in the Wasson and Yates fields. Detailed information concerning the number of wells on royalty properties is not generally available to the owners of royalty interests. Consequently, an accurate
count of the number of wells located on the Texas Royalty properties cannot readily be obtained. In February 1997, BROG sold its interests in the
Texas Royalty properties that are subject to the Net Overriding Royalty Conveyance to the Trust dated effective November 1, 1980 (Texas Royalty Conveyance) to Riverhill Energy Corporation (Riverhill Energy), which was
then a wholly-owned subsidiary of Riverhill Capital and an affiliate of Coastal Management Corporation (CMC). At the time of such sale, Riverhill Capital was a privately owned Texas corporation with offices in Bryan and Midland, Texas.
The Trustee was informed by BROG that, as required by the Texas Royalty Conveyance, Riverhill Energy succeeded to all of the requirements upon, and the responsibilities of BROG under, the Texas Royalty Conveyance with regard to the Texas Royalty
properties. BROG and Riverhill Energy further advised the Trustee that all accounting operations pertaining to the Texas Royalty properties were being performed by Riverhill Energy. The Trustee has been advised that, effective April 1, 1998, Schlumberger Technology Corporation (STC) acquired all of the shares of
stock of Riverhill Capital. Prior to the acquisition by STC, CMC and Riverhill Energy were wholly-owned subsidiaries of Riverhill Capital. The Trustee has further been advised, in accordance with the STC acquisition of Riverhill Capital, the
shareholders of Riverhill Capital acquired ownership of all shares of stock of Riverhill Energy. Effective January 1, 2001 CMC merged into STC. Thus, the ownership in the Texas Royalty properties remained in Riverhill Energy. The Trustee has been advised that as of May 1, 2000, the accounting operations pertaining to the Texas Royalty properties were transferred from STC
to Riverhill Energy. As of January 1, 2012, ConocoPhillips assumed all field, technical and accounting operations, on behalf of BROG, with regard to the Waddell Ranch properties. ConocoPhillips currently provides summary reporting of monthly
results for the Waddell Ranch properties. Well Count and Acreage Summary.    The following table shows as of
December 31, 2022, the gross and net producing wells and acres for the Blackbeard interests on the Waddell Ranch. The net wells and acres are determined by multiplying the gross wells or acres by the Blackbeard interests owners working
interest in the wells or acres as of December 31, 2022. Similar information is not available for the Riverhill Energy interests. There is no undeveloped acreage on the Waddell Ranch properties.  NUMBER OF WELLS


ACRESGross


Net


Gross


NetBlackbeard Interests


1,029



351



78,715



34,205  12




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##### Table of Contents

OIL AND GAS PRODUCTION The Trust recognizes production during the month in which the related distribution is received. Production of oil and gas attributable to the Royalties
and the Underlying Properties, the related average sales prices and the average production cost per unit of production attributable to the Underlying Properties for the three years ended December 31, 2022, excluding portions attributable to the
adjustments discussed below, were as follows:  Waddell Ranch Properties


Texas RoyaltyProperties


Total2022


2021


2020


2022


2021


2020


2022


2021


2020Royalties:ProductionOil (barrels)


1,5244,038



775,230



219,634



206,433



191,876



215,685



1,760,471



967,106



435,319Gas (Mcf)


9,346,780



3,754,386



1,282,070



114,307



122,262



155,292



9,461,087



3,876,648



1,437,362Underlying Properties:ProductionOil (barrels)


2,072,051



1,033,640



583,386



225,514



215,710



247,755



2,297,565



1,249,350



831,141Gas (Mcf)


12,462,373



5,005,848



3,341,590



124,670



137,578



178,925



12,587,044



5,143,426



3,520,515Average Sales PriceOil/barrel

$
94.38


$
64.17


$
39.02


$
91.64


$
59.34


$
40.74


$
94.11


$
63.34


$
39.51Gas/Mcf

$
5.48


$
3.45


$
1.37


$
10.89


$
6.59


$
3.33


$
5.54


$
3.53


$
1.47Average Production Cost Oil/Gas BOE

$
17.58


$
17.71


$
32.92


$
6.81


$
5.36


$
4.27


$
16.82


$
16.01


$
26.54 Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such
factors as price and cost (including capital expenditures), production amounts do not necessarily provide a meaningful comparison. Waddell Ranch
properties lease operating expense for 2022 was $44 million (gross). The lease operating expense increased from $23 million in 2021 primarily because of increasing activity and facilities maintenance. Waddell Ranch lifting cost on a barrel
of oil equivalent (BOE) basis was $17.58 bbl as compared to $17.71 in 2021 and $32.92 in 2020. PRICING INFORMATION Reference is made to the caption entitled Regulation for information as to federal regulation of prices of natural gas. The following
paragraphs provide information regarding sales of oil and gas from the Waddell Ranch properties. As a royalty owner, Riverhill Energy is not furnished detailed information regarding sales of oil and gas from the Texas Royalty properties. Oil.    The Trustee has been advised by the operator that since June 2006, the oil from the Waddell Ranch has been marketed
by the operator by soliciting bids from third parties on an outright sale basis of production listed in bid packages. Gas.    The gas produced from the Waddell Ranch properties is processed through a natural gas processing plant and sold at
the tailgate of the plant. Plant products are marketed by Burlington Resources Trading Inc., an indirect subsidiary of BRI. The processor of the gas (Warren Petroleum Company, L.P.) receives 15% of the liquids and residue gas as a fee for gathering,
compression, treating and processing the gas.  13




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##### Table of Contents

OIL AND GAS RESERVES The following are definitions adopted by the SEC and the Financial Accounting Standards Board which are applicable to terms used within this Item: Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated
with reasonable certainty to be economically producible  from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations  prior to the time at which contracts
providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have
commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. (i) The area of the reservoir
considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain
economically producible oil or gas on the basis of available geoscience and engineering data. (ii) In the absence of data on fluid contacts, proved
quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty. (iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an
associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. (iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection)
are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with
properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering
analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties
and entities, including governmental entities. (v) Existing economic conditions include prices and costs at which economic producibility from a
reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of
the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements,
excluding escalations based upon future conditions. Developed oil and gas reserves are reserves of any category that can be expected to
be recovered (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment
and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. Estimated future net
revenues are computed by applying average prices during the 12-month period prior to fiscal year-end determined as an unweighted arithmetic average of the first-day-of-the-month benchmark price for each month  14




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##### Table of Contents

within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions to estimated future production of proved oil and gas reserves as of
the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, and assuming continuation of existing economic conditions. Estimated
future net revenues are sometimes referred to herein as estimated future net cash flows. Present value of estimated future net
revenues is computed using the estimated future net revenues and a discount factor of 10%. Reserves are estimated remaining
quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation
that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project. Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is required for recompletion. (i) Reserves on undrilled acreage shall be limited to those
directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. (ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled
to be drilled within five years, unless the specific circumstances, justify a longer time. (iii) Under no circumstances shall estimates for
undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an
analogous reservoir, as defined in 17 CFR 210.4-10(a)(2), or by other evidence using reliable technology establishing reasonable certainty. The process of estimating oil and gas reserves is complex and requires significant judgment. As a result, the Trustee has developed internal policies
and controls for estimating reserves. As described above, the Trust does not have information that would be available to a company with oil and gas operations because detailed information is not generally available to owners of royalty interests.
The Trustee gathers production information (which information is net to the Trusts interests in the Underlying Properties) and provides such information to Cawley, Gillespie & Associates, Inc., who extrapolates from such information
estimates of the reserves attributable to the Underlying Properties based on its expertise in the oil and gas fields where the Underlying Properties are situated, as well as publicly available information. The Trusts policies regarding reserve
estimates require proved reserves to be in compliance with the SEC definitions and guidance. The independent petroleum engineers reports as
to the proved oil and gas reserves attributable to the Royalties conveyed to the Trust were prepared by Cawley, Gillespie & Associates, Inc.(CG&A). CG&A, whose firm registration number is
F-693, was founded in 1961 and is nationally recognized in the evaluation of oil and natural gas properties. The technical person at CG&A primarily responsible for overseeing the reserves estimates with
respect to the Trust is Zane Meekins. Mr. Meekins has been a practicing petroleum engineering consultant since 1989 with over 35 years of practice experience in petroleum engineering, and is a registered professional engineer in the State of
Texas (License No. 71055). Mr. Meekins graduated from Texas A&M University in 1987, Summa Cum Laude, with a B.S. degree in Petroleum Engineering. Both CG&A and Mr. Meekins have indicated that they meet or exceed all
requirements set forth in Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers.  15




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##### Table of Contents

Cawley, Gillespie & Associates, Inc.s reports are attached as exhibits to this Form 10-K. The following table presents a reconciliation of proved reserve quantities from January 1, 2020 through December 31, 2022 (in thousands):  Waddell RanchProperties


Texas RoyaltyProperties


TotalOil(Bbls)


Gas(Mcf)


Oil(Bbls)


Gas(Mcf)


Oil(Bbls)


Gas(Mcf)January 1, 2020


920



3,695



3,109



1,691



4,029



5,386Extensions, discoveries, and other additions


615



1,327











615



1,327Revisions of previous estimates


155



1,060



87



62



242



1,122Production


(220
)


(1,282
)


(216
)


(155
)


(436
)


(1,437
)December 31, 2020


1,470



4,800



2,980



1,598



4,450



6,398Extensions, discoveries, and other additions


1,309



2,123











1,309



2,123Revisions of previous estimates


1,982



6,611



(151
)


9



1,831



6,620Production


(775
)


(3,754
)


(192
)


(122
)


(967
)


(3,877
)December 31, 2021


3,986



9,780



2,637



1,485



6,623



11,264Extensions, discoveries, and other additions


3,714



5,206











3,914



5,206Revisions of previous estimates


2,747



18,778



229



(50
)


2,976



(18,728
)Production


(1,554
)


(9,347
)


(206
)


(114
)


(1,760
)


(9,461
)December 31, 2022


8,893



24,417



2,660



1,321



11,553



25,737 Estimated quantities of proved reserves and net cash flow as of December 31, 2022 are as follows:  Waddell RanchPropertiesOil(Mstb)


Gas(Mcf)


Net CashFlow, M$


10% Disc.Cash Flow,M$Proved Developed Producing


5,179



19,210


$
590,399


$
378,215Proved Developed Non-Producing


183



685


$
20,882


$
10,852Proved Developed


5,362



19,895


$
611,282


$
388,867Proved Undeveloped


3,531



4,521


$
343,913


$
190,587Total Proved


8,893



24,416


$
955,914


$
579,454  Texas RoyaltyPropertiesOil(Mstb)


Gas(Mcf)


Net CashFlow, M$


10% Disc.Cash Flow,M$Proved Developed Producing


2,660



1,321


$
250,033


$
107,013Proved Developed


2,660



1,321


$
250,033


$
107,013Total Proved


2,660



1,321


$
250,033


$
107,013  Total Waddell Ranch Plus Texas RoyaltyPropertiesOil(Mstb)


Gas(Mcf)


Net CashFlow, M$


10% Disc.Cash Flow,M$Proved Developed Producing


7,839



20,531


$
840,432


$
485,228Proved Developed Non-Producing


183



685


$
20,882


$
10,652Proved Developed


8,022



21,216


$
861,315


$
495,880Proved Undeveloped


3,531



4,521


$
343,913


$
190,587Total Proved


11,553



25,737


$
1,205,228


$
686,467  16




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##### Table of Contents

Estimated quantities of proved developed reserves of oil and gas as of the dates indicated were as
follows (in thousands):  Proved Developed Reserves:

Oil(Barrels)


Gas(Mcf)January 1, 2020


4,029



5,386December 31, 2020


4,450



6,398December 31, 2021


6,623



11,264December 31, 2022


11,553



25,737 The SEC requires supplemental disclosures for oil and gas producers based on a standardized measure of discounted future
net cash flows relating to proved oil and gas reserve quantities. Under this disclosure, future cash inflows are computed by applying the average prices during the 12-month period prior to fiscal year-end, determined as an unweighted arithmetic average of the
first-day-of-the-month benchmark price for each month within such period, unless prices
are defined by contractual arrangements, excluding escalations based upon future conditions. Future price changes are only considered to the extent provided by contractual arrangements in existence at year end. The standardized measure of discounted
future net cash flows is achieved by using a discount rate of 10% a year to reflect the timing of future cash flows relating to proved oil and gas reserves. Estimates of proved oil and gas reserves are by their very nature imprecise. Estimates of future net revenue attributable to proved reserves are
sensitive to the unpredictable prices of oil and gas and other variables. The 2022, 2021 and 2020 change in the standardized measure of discounted
future net cash revenues related to future royalty income from proved reserves attributable to the Royalties discounted at 10% is as follows (in thousands):  Waddell RanchProperties


Texas RoyaltyProperties


Total2022


2021


2020


2022


2021


2020


2022


2021


2020January 1

$
188,329


$
33,852


$
34,239


$
71,528


$
46,239


$
68,516


$
259,857


$
80,091


$
102,755Extensions, discoveries, and other additions


201,239



51,245



10,240















201,239



51,245



10,240Accretion of discount


18,883



3,385



3,424



7,153



4,624



6,852



25,896



8,009



10,276Revisions of previous estimates and other


206,142



99,847



(11,039
)


47,662



32,470



(20,101
)


253,804



132,317



(31,140
)Royalty income


(35,089
)






(3,012
)


(19,329
)


(11,806
)


(9,028
)


(54,418
)


(11,806
)


(12,040
)December 31

$
579,453


$
188,329


$
33,852


$
107,014


$
71,527


$
46,239


$
686,468


$
259,856


$
80,091 Average oil and gas prices of $93.67 per barrel and $6.36 per Mcf were used to determine the estimated future net
revenues from the Waddell Ranch properties and the Texas Royalty properties, respectively, at December 31, 2022. The upward revisions of both reserves and discounted future net cash flows for the Waddell Ranch properties are primarily due to
stronger pricing for oil and by stronger gas pricing. The Texas Royalty properties are revised upward due to stronger pricing for oil. Average oil
and gas prices of $66.56 per barrel and $3.65 per Mcf were used to determine the estimated future net revenues from the Waddell Ranch properties and the Texas Royalty properties, respectively, at December 31, 2021. The upward revisions of both
reserves and discounted future net cash flows for the Waddell Ranch properties are primarily due to stronger pricing for oil and by stronger gas pricing. The Texas Royalty properties are revised upward due to stronger pricing for oil. Average oil and gas prices of $39.57 per barrel and $2.00 per Mcf were used to determine the estimated future net revenues from the Waddell Ranch
properties and the Texas Royalty properties, respectively, at December 31, 2020. The downward revisions of both reserves and discounted future net cash flows for the Waddell Ranch properties are primarily due to weaker pricing for oil and by
weaker gas pricing. The Texas Royalty properties are revised downward due to weaker pricing for oil.  17




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##### Table of Contents

The following presents estimated future net revenue and the present value of estimated future net
revenue attributable to the Royalties, for each of the years ended December 31, 2022, 2021 and 2020 (in thousands):  2022


2021


2020EstimatedFuture NetRevenue


PresentValue at10%


EstimatedFuture NetRevenue


PresentValue at10%


EstimatedFuture NetRevenue


PresentValue at10%Total ProvedWaddell Ranch properties

$
955,195


$
579,454


$
297,181


$
188,329


$
61,731


$
33,852Texas Royalty properties


250,033



107,014



167,968



71,527



108,715



46,239Total

$
1,205,228


$
686,468


$
465,149


$
259,856


$
170,446


$
80,091 Reserve quantities and revenues shown in the preceding tables for the Royalties were estimated from projections of
reserves and revenue attributable to the combined Blackbeard, River Hill Energy and Trust interests in the Waddell Ranch properties and Texas Royalty properties. Reserve quantities attributable to the Royalties were estimated by allocating to the
Royalties a portion of the total estimated net reserve quantities of the interests, based upon gross revenue less production taxes. Because the reserve quantities attributable to the Royalties are estimated using an allocation of the reserves, any
changes in prices or costs will result in changes in the estimated reserve quantities allocated to the Royalties. Therefore, the reserve quantities estimated will vary if different future price and cost assumptions occur. Proved reserve quantities are estimates based on information available at the time of preparation and such estimates are subject to change as additional
information becomes available. The reserves actually recovered and the timing of production of those reserves may be substantially different from the original estimate. Moreover, the present values shown above should not be considered as the market
values of such oil and gas reserves or the costs that would be incurred to acquire equivalent reserves. A market value determination would include many additional factors. Detailed information concerning the number of wells on royalty properties is not generally available to the owner of royalty interests. Consequently,
the Registrant does not have information that would be disclosed by a company with oil and gas operations, such as an accurate account of the number of wells located on the above royalty properties, the number of exploratory or development wells
drilled on the above royalty properties during the periods presented by this report, or the number of wells in process or other present activities on the above royalty properties, and the Registrant cannot readily obtain such information. REGULATION Many aspects of the production,
pricing, transportation and marketing of crude oil and natural gas are regulated by federal and state agencies. Legislation affecting the oil and gas industry is under constant review for amendment or expansion, frequently increasing the regulatory
burden on affected members of the industry. Exploration and production operations are subject to various types of regulation at the federal,
tribal, state and local levels. Such regulation includes requiring permits for the drilling and production of wells, maintaining bonding requirements in order to drill or operate wells, and regulating the location of wells, the method of drilling
and casing wells, controlling and remediating pollution from exploration and production activities, proper handling and disposal of waste generated from exploration and production operations, the surface use and restoration of properties upon which
wells are drilled and the plugging and abandonment of wells. Natural gas and oil operations are also subject to various conservation laws and regulations that regulate the size of drilling and spacing units or proration units and the density of
wells which may be drilled and unitization or pooling of oil and gas properties. In addition, state conservation laws establish maximum allowable production from natural gas and oil wells, generally prohibit the venting or flaring of natural gas and
impose certain requirements regarding the ratability of production. The effect of these regulations is to limit the amounts of natural gas and oil that can be produced, potentially to raise prices, and to limit the number of wells or the locations
which can be drilled.  18




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##### Table of Contents

Federal Natural Gas Regulation The Federal Energy Regulatory Commission (the FERC) is primarily responsible for federal regulation of natural gas. The interstate
transportation and sale for resale of natural gas is subject to federal governmental regulation, including regulation of transportation and storage tariffs and various other matters, by the FERC. On August 8, 2005, Congress enacted the Energy
Policy Act of 2005. The Energy Policy Act, among other things, amended the Natural Gas Act to prohibit market manipulation by any entity, to direct the FERC to facilitate market transparency in the market for sale or transportation of physical
natural gas in interstate commerce, and to significantly increase the penalties for violations of the Natural Gas Act, the Natural Gas Policy Act of 1978, or the FERC rules, regulations or orders thereunder. Wellhead sales of domestic natural gas
are not subject to regulation. Consequently, sales of natural gas may be made at market prices, subject to applicable contract provisions. Sales of
natural gas are affected by the availability, terms and cost of transportation. The price and terms for access to pipeline transportation remain subject to extensive federal and state regulation. Several major regulatory changes have been
implemented by Congress and the FERC from 1985 to the present that affect the economics of natural gas production, transportation, and sales. In addition, the FERC continues to promulgate revisions to various aspects of the rules and regulations
affecting those segments of the natural gas industry, most notably interstate natural gas transmission companies, that remain subject to the FERCs jurisdiction. These initiatives may also affect the intrastate transportation of gas under
certain circumstances. The stated purpose of many of these regulatory changes is to promote competition among the various sectors of the natural gas industry and these initiatives generally reflect more light-handed regulation of the natural gas
industry. The ultimate impact of the rules and regulations issued by the FERC since 1985 cannot be predicted. In addition, many aspects of these regulatory developments have not become final but are still pending judicial decisions and final
decisions by the FERC. New proposals and proceedings that might affect the natural gas industry are considered from time to time by Congress, the
FERC, state regulatory bodies and the courts. The Trust cannot predict when or if any such proposals might become effective, or their effect, if any, on the Trust. The natural gas industry historically has been very heavily regulated; therefore,
there is no assurance that the less stringent regulatory approach recently pursued by the FERC and Congress will continue. Sales of crude oil,
condensate and natural gas liquids are not currently regulated and are made at market prices. Crude oil prices are affected by a variety of factors. Since domestic crude price controls were lifted in 1981, the principal factors influencing the
prices received by producers of domestic crude oil have been the pricing and production of the members of the Organization of Petroleum Export Countries (OPEC). On December 19, 2007, President Bush signed into law the Energy Independence & Security Act of 2007 (PL 110 140). The EISA, among other
things, prohibits market manipulation by any person in connection with the purchase or sale of crude oil, gasoline or petroleum distillates at wholesale in contravention of such rules and regulations that the Federal Trade Commission may prescribe,
directs the Federal Trade Commission to enforce the regulations, and establishes penalties for violations thereunder. State Regulation The various states regulate the production and sale of oil and natural gas, including imposing requirements for obtaining drilling permits, the method of
developing new fields, the spacing and operation of wells and the prevention of waste of oil and gas resources. The rates of production may be regulated and the maximum daily production allowables from both oil and gas wells may be established on a
market demand or conservation basis, or both. Local Regulation Drilling for and production and transportation of crude oil and natural gas are also regulated by local authorities. Local laws may include land use
regulations, permitting requirements, and noise and traffic ordinances. Such regulation could increase drilling and production costs or create delays in development and production of the Underlying Properties.  19




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##### Table of Contents

Environmental Regulation Companies in the oil and gas industry are subject to stringent and complex federal, tribal, state and local laws and regulations governing the health and
safety aspects of oil and gas operations, the management and discharge of materials into the environment, or otherwise relating to environmental protection. Those laws and regulations may impose numerous obligations that are applicable to the
operations of the Underlying Properties, including the acquisition of a permit before conducting drilling, production or underground injection activities; the restriction on the types, quantities and concentrations of materials that can be emitted
or released into the environment; the limitation or prohibition of drilling or other construction or operational activities on certain lands lying within wilderness, wetlands, endangered or threatened species habitat, and other protected areas; the
installation of emission monitoring and/or pollution control equipment; the reporting of the types and quantities of various substances that are stored, processed, released, or disposed of in connection with operation of the Underlying Properties;
the remediation of pollution from current or former operations, such as cleanup of releases, pit closure, removal of surface equipment and plugging of abandoned wells; the sourcing and disposal of water used in the drilling, fracturing and
completion processes; the planning and preparedness for spill and emergency response activities; the application of specific health and safety criteria addressing worker protection; and the imposition of substantial liabilities for pollution
resulting from operations including waste generation, air emissions, water discharges and current and historical waste disposal practices. Failure to comply with these laws and regulations may result in the suspension or revocation of necessary
permits, licenses and authorizations; the requirement that additional pollution controls be installed; the assessment of administrative, civil or criminal penalties; the imposition of investigatory or remedial obligations; and the issuance of
injunctions limiting or preventing some or all of the operations. Under certain environmental laws and regulations, the operators of the Underlying Properties could also be subject to joint and several, strict liability for the removal or
remediation of previously released materials or property contamination, in either case, whether at a drilling or other operations site or a waste disposal facility, regardless of whether the operators were responsible for the release or
contamination or if the operations were in compliance with all applicable laws at the time those actions were taken. In addition, climate change is
the subject of an important public policy debate and the basis for new legislation proposed by the United States Congress and certain states. President Biden has set ambitious goals related to mitigating climate change, including at least a
50 per cent reduction from 2005 levels in economy-wide net greenhouse gas pollution by 2030. Some states have also adopted climate change statutes and regulations. In response to the April 2007 U.S. Supreme Court decision in Massachusetts
vs. EPA finding that greenhouse gases (GHGs) are air pollutants under the Clean Air Act (CAA), the United States Environmental Protection Agency (the EPA) issued an Endangerment Finding under
Section 202(a) of the CAA, concluding that GHG pollution threatens the public health and welfare of future generations. Thereafter, EPA promulgated GHG monitoring and reporting regulations that, since 2011, have required annual reporting of
carbon dioxide, methane and nitrous oxide emissions from certain sources in the oil and natural gas industry sector, including in the onshore oil and natural gas production segment. The EPA indicated that it will use data collected through the
reporting rules to decide whether to promulgate future GHG emission limits. More recently, in August 2022, Congress passed the Inflation Reduction Act, which includes requirements to impose fees beginning in 2025 on methane emissions from oil and
gas operations that are required to report their GHG emissions under the EPAs GHG Reporting Rule. Pursuant to the CAA and state laws
concerning the permitting of air emissions, certain new and modified sources of air emissions are subject to air permitting authorizations for construction and operation, and sources of air emissions at the Underlying Properties are no exception to
these requirements. In addition to air permitting requirements, certain sources of emissions involved in oil and gas operations are subject to source-specific emission standards pursuant to CAA New Source Performance Standards (NSPS) and
National Emissions Standards for Hazardous Air Pollutants (NESHAPS). For example, on August 16, 2012, the EPA issued a final rule, known as NSPS Subpart OOOO, that established new source performance standards for volatile organic
compounds (VOCs) and sulfur dioxide, an air toxics standard for major sources of oil and natural gas production, and an air toxics standard for major sources of natural gas transmission and storage. The rule applied to certain oil and
natural gas sources that were constructed, modified, or reconstructed after August 23, 2011, and required that all hydraulically fractured or refractured natural gas wells be completed using reduced emission (green) completion
technology, which significantly reduces VOC emissions. Limiting emissions of VOCs will have the co-benefit of also limiting methane, a GHG. These regulations also include requirements applicable to storage
tanks and other equipment in the affected oil and natural gas industry segments. On June 3, 2016, EPA promulgated NSPS Subpart OOOOa,  20




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##### Table of Contents

establishing additional standards for the reduction of methane, VOCs, and other emissions from new and existing sources in the oil and gas sector. Among other requirements, these new standards
extended green completion requirements to new hydraulically fractured or refractured oil wells. Furthermore, EPA has also recently proposed to revise and add to the NSPS OOOO program rules, which, if adopted, could have a significant impact on the
upstream and midstream oil and gas sectors. The proposed rules would formally instate methane emissions limitations from new, modified, and reconstructed sources; and would regulate existing sources for the first time under the NSPS OOOO program by
requiring states to implement plans that meet or exceed federally established emission reduction guidelines for existing oil and natural gas facilities. Although the bulk of the 2012 and 2016 standards are currently in effect, future implementation
and the ultimate scope of the VOC and methane emissions standards for the oil and gas production, transmission, and storage industry segments are uncertain at this time as a result of ongoing rulemakings and ongoing and expected legal challenges. Congress and various states, including Texas, have proposed or adopted legislation regulating or requiring disclosure of the chemicals in the
hydraulic fracturing fluid that is used in the drilling operation. Texas requires oil and gas operators to disclose the chemicals on the Frac Focus website. Hydraulic fracturing has historically been regulated by state oil and natural gas
commissions. The EPA, however, has asserted federal regulatory authority over certain hydraulic fracturing activities involving diesel under the Safe Drinking Water Act (the SDWA). The EPA has issued permitting guidance for oil and
natural gas hydraulic fracturing activities using diesel fuels. Under the guidance, EPA defined the term diesel to include five categories of oils, including some such as kerosene, that are not traditionally considered to be diesel. The Federal Water Pollution Control Act, also known as the Clean Water Act (CWA), and analogous state laws impose restrictions and strict
controls on the discharge of pollutants, including produced waters and other oil and natural gas wastes, into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a
permit issued by EPA or the relevant state agency. The CWA also prohibits the discharge of dredge and fill material in regulated waters, including wetlands, unless authorized by a permit issued by the U.S. Army Corps of Engineers
(USACE). Whether CWA permitting is required depends upon whether and the extent to which Waters of the United States (WOTUS) may be impacted by the planned activity  for example, construction of drilling
pads, access roads, or pipelines. Rulemaking by EPA and the USACE to define WOTUS has been heavily litigated, resulting in the rule taking effect at times in some states but not others. Most recently, EPA and USACEs WOTUS definition rulemaking
on December 30, 2022, incorporated relatively permanent and significant nexus standards for determining jurisdiction over adjacent wetlands and additional waters. This WOTUS definition will become effective
March 20, 2023. Regardless, the applicable WOTUS definition affects what CWA permitting or other regulatory obligations, such as spill prevention, control, and countermeasure (SPCC) planning, may be triggered during development and
operation of the Underlying Properties, and changes to the WOTUS definition could cause delays in development and/or increase the cost of development and operation of the Underlying Properties. SPCC regulations promulgated under the CWA and later amended by the Oil Pollution Act of 1990 impose obligations and liabilities related to the
prevention of oil spills and damages resulting from such spills into or threatening waters of the United States or adjoining shorelines. For example, operators of certain oil and natural gas facilities that store oil in more than threshold
quantities, the release of which could reasonably be expected to reach jurisdictional waters, must develop, implement, and maintain SPCC Plans. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations. The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as the superfund law, imposes
liability, regardless of fault or the legality of the original conduct, on certain classes of persons that contributed to the release of a hazardous substance into the environment. These persons include the current or previous owner and
operator of a site where a hazardous substance has been disposed and persons who disposed or arranged for the disposal of a hazardous substance at a site, or transported a hazardous substance to a site for disposal. CERCLA also authorizes the EPA
and, in some cases, private parties to take actions in response to threats to the public health or the environment and to seek recovery from such responsible classes of persons of the costs of such an action. From time to time, EPA may designate
additional materials as hazardous substances under CERCLA, which could result in additional investigation and remediation at current Superfund sites, or reopener of Superfund sites that previously received  21




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##### Table of Contents

regulatory closure. For example, on August 26, 2022, EPA announced a proposal to designate as hazardous substances perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid
(PFOS), which have been commonly used in a variety of industrial and consumer products. In the course of operations, the working interest owner and/or the operator of the Underlying Properties may have generated and may generate wastes
that may fall within CERCLAs definition of hazardous substances. The operator of the Underlying Properties or the working interest owners may be responsible under CERCLA for all or part of the costs to clean up sites at which such
substances have been disposed. Although the Trust is not the operator of any of the Underlying Properties, or the owner of any working interest, its ownership of royalty interests could cause it to be responsible for all or part of such costs to the
extent CERCLA imposes responsibility on such parties as owners. The Underlying Properties have produced oil and/or gas for many years
and, in connection with that production, managed waste, such as drilling fluids and produced water, that is subject to regulation under environmental laws. Although the Trust has no knowledge of the procedures followed by the operators of the
Underlying Properties in this regard, hydrocarbons or other solid or hazardous wastes may have been or may be disposed or released on, under, or from the Underlying Properties by the current or previous operators or may have been disposed offsite of
the Underlying Properties. Federal, state and local laws and regulations applicable to oil and gas-related wastes and properties have become increasingly more stringent. Failure to comply with these laws and
regulations may result in the assessment of administrative, civil or criminal penalties, the imposition of investigatory, ongoing monitoring, or remedial obligations, and/or the issuance of injunctions limiting or preventing some or all of the
operations. Under these laws, removal or remediation of current releases of such materials or of previously disposed wastes or property contamination at a drill site or a waste disposal facility could be required by a governmental authority
regardless of whether the operators of the Underlying Properties were responsible for the release or contamination or if the operations were in compliance with all applicable laws at the time those actions were taken. The federal Safe Drinking Water Act (SDWA) and the Underground Injection Control (UIC) program promulgated under the SDWA and
analogous state programs regulate the drilling and operation of salt water disposal wells. EPA directly administers the UIC program in some states and in others administration is delegated to the state. Permits must be obtained before drilling salt
water disposal wells, and casing integrity monitoring must be conducted periodically to ensure that the disposed waters are not leaking into groundwater. In addition, because some states have become concerned that the injection or disposal of
produced water could, under certain circumstances, trigger or contribute to earthquakes, they have adopted or are considering additional regulations regarding such disposal methods. Changes in regulations or the inability to obtain permits for new
disposal wells in the future may affect the ability of the operators of the Underlying Properties to dispose of produced water and ultimately increase the cost of operation of the Underlying Properties or delay production schedules. For example, in
2014, the Railroad Commission of Texas (RRC) published a final rule governing permitting or re-permitting of disposal wells that would require, among other things, the submission of information on
seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections and structure maps relating to the disposal area in question. If the permittee or an applicant of a disposal well permit fails
to demonstrate that the injected fluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismic activity, then the RRC may deny, modify, suspend or terminate
the permit application or existing operating permit for that well. Furthermore, in response to a number of earthquakes in recent years in the Midland Basin, in September 2021 the RRC announced that it will not issue any new saltwater disposal
(SWD) well permits in an area known as the Gardendale Seismic Response Area (SRA), and will require existing SWD wells in that area to reduce their maximum daily injection rate to 10,000 barrels per day per well.. In December
2021, the RRC went on to suspend all well activity in deep formations in the Gardendale SRA, effectively terminating 33 disposal well permits. And in October 2021 and January 2022, respectively, the RRC identified two additional SRAs: the Northern
Culberson-Reeves SRA and the Stanton SRA. Operators in the Northern Culberson-Reeves and Stanton SRAs were required to develop and implement seismic response plans, which include expanded data collection efforts, contingency responses for future
seismicity, and scheduled checkpoint updates with RRC staff. Both the Gardendale and Northern Culberson-Reeves SRAs were expanded in December 2022 in response to additional earthquakes in the area. Such restrictions and requirements could limit the
Underlying Properties oil and gas well exploration and production activities or increase the cost of those activities if wastewater disposal options become limited.  22




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##### Table of Contents

In addition, several cases have in recent years put a spotlight on the issue of whether injection
wells may be regulated under the CWA if a direct hydrological connection to a jurisdictional surface water can be established. The split among federal circuit courts of appeals that decided these cases engendered two petitions for writ of certiorari
to the United States Supreme Court in August 2018, one of which was granted in February 2019. EPA has also brought attention to the reach of the CWAs jurisdiction in such instances by issuing a request for comment in February 2018 regarding
the applicability of the CWA permitting program to discharges into groundwater with a direct hydrological connection to jurisdictional surface water, which hydrological connections should be considered direct, and whether such discharges
would be better addressed through other federal or state programs. In a statement issued by EPA in April 2019, the Agency concluded that the CWA should not be interpreted to require permits for discharges of pollutants that reach surface waters via
groundwater. However, in April 2020, the Supreme Court issued a ruling in the case, County of Maui, Hawaii v. Hawaii Wildlife Fund, holding that discharges into groundwater may be regulated under the CWA if the discharge is the
functional equivalent of a direct discharge into navigable waters. On January 14, 2021, EPA issued guidance on the ruling that emphasized discharges to groundwater are not necessarily the functional equivalent of a
direct discharge based solely on proximity to jurisdictional waters, although EPA rescinded that guidance on September 16, 2021. If in the future CWA permitting is required for saltwater injection wells, as a result of the Supreme Courts
ruling in County of Maui, Hawaii v. Hawaii Wildlife Fund, the costs of permitting and compliance for injection well operations by the companies that operate the Underlying Properties could increase. Various state and federal statutes prohibit certain actions that adversely affect endangered or threatened species and their habitat, migratory birds
and their habitat, wetlands, and natural resources. These statutes include the Endangered Species Act, the Migratory Bird Treaty Act, the Bald and Golden Eagle Protection Act, the CWA, and CERCLA. The United States Fish and Wildlife Service
(USFWS) may designate critical habitat and suitable habitat areas that it believes are necessary for the survival of threatened or endangered species. A critical habitat or suitable habitat designation could result in further material
restrictions to federal land use and private land use and could delay or prohibit land access or development. Where takings of, or harm to, species or damages to wetlands, habitat or natural resources occur or may occur, government entities or at
times private parties may act to restrict or prevent oil and gas exploration or production activities or seek damages for harm to species, habitat or natural resources resulting from drilling or construction or production activities, including, for
example, for releases of oil, wastes, hazardous substances or other regulated materials, and may seek natural resources damages and, in some cases, criminal penalties. The Underlying Properties and operation thereof are subject to the requirements of the federal Occupational Safety and Health Act (OSHA) and
comparable state statutes. In addition to the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of CERCLA, the general duty
clause and Risk Management Planning regulations promulgated under section 112(r) of the Clean Air Act, and similar state statutes may also require disclosure of information about hazardous materials used, produced or otherwise managed during
operation of the Underlying Properties. Some of these laws also require the development of risk management plans for certain facilities to prevent accidental releases of pollutants. The Trustee is unable to predict the total impact of the current and potential regulations upon the operators of the Underlying Properties, but it is
possible that the operators of the Underlying Properties could face operational delays, increases in the operating costs to comply with climate change or any other environmental legislation or regulation, or decreases in the completion of new oil
and natural gas wells, each of which could reduce net proceeds payable to the Trust and Trust distributions. Other Regulation The petroleum industry is also subject to compliance with various other federal, tribal, state, and local regulations and laws, including, but not
limited to, occupational safety, resource conservation and equal employment opportunity. The Trustee does not believe that compliance with these laws by the operating parties will have any material adverse effect on Unit holders.  23




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##### Table of Contents

Item 3.
Legal Proceedings There are no material pending legal proceedings to which the Trust is a party or of which any of its property is the subject.  Item 4.
Mine Safety Disclosures This Item is not applicable to the Trust.  24




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##### Table of Contents

PART II  Item 5.
Market for Units of the Trust, Related Security Holder Matters and Trust Purchases of Units Units of Beneficial Interest Units
of Beneficial Interest (Units) of the Trust are traded on the New York Stock Exchange with the symbol PBT. Approximately 755Unit holders of record held the 46,608,796 Units of the Trust at February 28, 2023. The Trust has no equity compensation plans and has not
repurchased any Units during the period covered by this report.  Item 6.
Selected Financial Data REMOVED AND RESERVED.  25




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##### Table of Contents

Computation of Royalty Income Received by the Trust The Trusts royalty income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding
royalty interests. The percentages of net profits are 75% and 95% in the cases of the Waddell Ranch properties and the Texas Royalty properties, respectively. Royalty income received by the Trust for the five years ended December 31, 2022, was
computed as shown in the table on the next page.  Year Ended December 31,2022


2021


2020


2019


2018Gross Proceeds of Sales
From the Underlying Properties:

WaddellRanchProperties


TexasRoyaltyProperties


WaddellRanchProperties


TexasRoyaltyProperties


WaddellRanchProperties


TexasRoyaltyProperties


WaddellRanchProperties


TexasRoyaltyProperties


WaddellRanchProperties


TexasRoyaltyPropertiesOil Proceeds

$
195,554,348


$
20,665,465


$
66,328,817


$
12,799,649


$
22,745,332


$
10,093,604


$
31,769,427


$
13,325,221


$
31,631,883


$
12,932,547Gas Proceeds


37,108,451



1,357,568



17,259,346



906,335



4,584,768



595,961



7,655,763



1,169,754



12,007,971



1,644,306Other


31,318,921



































Adjustment


(20,315,365
)






9,423,956







8,583,304
(1)














56,767



Total


243,566,355



22,023,033



93,012,119



13,705,984



35,913,404



10,689,565



39,425,195



14,494,975



43,696,621



14,576,853Less:Severance TaxOil


8,915,016



792,637



3,057,598



380,409



1,056,855



414,326



1,457,033



489,096



1,409,979



452,689Gas


4,481,839



83,552



194,140



48,894



164,243



32,666



269,932



36,693



273,048



75,623Other


15,427,633







173,640







726,596



















Lease Operating Expense and Property Tax Oil and Gas


43,673,061



800,380



23,026,783



849,824



19,635,387



738,915



23,371,924



1,103,052



16,402,257



639,920CapitalExpenditures


124,283,888







66,559,957







10,314,532







3,306,832







1,849,553



Total

$
196,781,437


$
1,676,539


$
93,012,118


$
1,279,127


$
31,897,613


$
1,185,907


$
28,405,719


$
1,628,841


$
19,934,837


$
1,168,232Net Profits

$
46,784,918


$
20,346,494


$
0


$
12,426,857


$
4,015,791


$
9,503,658


$
11,019,476


$
12,866,134


$
23,761,784


$
13,408,621Net Overriding Royalty Interest


75
%


95
%


75
%


95
%


75
%


95
%


75
%


95
%


75
%


95
%Total Royalty Income for Distribution

$
35,088,618


$
19,329,169


$
0


$
11,805,514


$
3,011,843


$
9,028,475


$
8,264,606


$
12,222,827


$
17,821,338


$
12,738,189  (1)
Due to beginning NPI deficit at 1/1/2022, the Waddell Ranch properties did not contribute to Royalty income from 1/1/2022
 4/30/2022. Beginning on 5/1/2022, the NPI deficit was fully recovered, therefore the Waddell Ranch properties began contributing to Royalty income.  26




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##### Table of Contents

Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operation Trustees Discussion and Analysis for the Three-Year Period Ended December 31, 2022 Liquidity and Capital Resources As stipulated in the Trust Agreement, the Trust is intended to be passive in nature and the Trustee does not have any control over or any responsibility
relating to the operation of the Underlying Properties. The Trustee has powers to collect and distribute proceeds received by the Trust and pay Trust liabilities and expenses and its actions have been limited to those activities. The Trust is a
passive entity and other than the Trusts ability to periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in
borrowing transactions. As a result, other than such borrowings, if any, the Trust has no source of liquidity or capital resources other than the Royalties. Results of Operations Royalty
income received by the Trust for the three-year period ended December 31, 2022, is reported in the following table:  Year Ended December 31,Royalties

2022


2021


2020Total Revenue

$
54,417,857100
%

$
11,805,514100
%

$
12,040,318100
%Oil Revenue


41,357,57176
%


9,562,46681
%


10,354,67286
%Gas Revenue


13,060,28624
%


2,243,04819
%


1,685,64614
%Total Revenue/Unit

$
1.167545


$
.253289


$
.258327 Royalty income of the Trust for the calendar year is associated with actual oil and gas production for the period
November of the prior year through October of the current year. Oil and gas production for 2022, 2021 and 2020 generated by the Royalties and the Underlying Properties, excluding portions attributable to the adjustments discussed hereafter, are
presented in the following table:  Year Ended December 31,Royalties

2022


2021


2020Oil Sales (Bbls)


1,760,471



967,106



435,319Gas Sales (Mcf)


9,461,087



3,876,648



1,437,362Underlying PropertiesOilTotal Oil Sales (Bbls)


2,297,565



1,249,350



831,141Average Per Day (Bbls)


6,295



3,423



2,277Average Price/Bbl

$
94.11


$
63.34


$
39.51GasTotal Gas Sales (Mcf)


12,587,044



5,143,426



3,520,515Average Per Day (Mcf)


34,485



14,092



9,645Average Price/Mcf

$
5.54


$
3.53


$
1.47 The average price of oil increased to $94.11 per barrel in 2022, up from $63.34 per barrel in 2021. The average price of
oil in 2020 was $39.51 per barrel. In addition, the average price of gas increased from $3.53 per Mcf in 2021 to $5.54 per Mcf in 2022. The average price of gas in 2020 was $1.47 per Mcf. Oil prices have increased primarily because of world market
conditions. Oil prices are expected to remain volatile. Gas liquids values remain stronger and keep the prices of gas stronger. Blackbeard, after assuming the role of operation of the Waddell Ranch Properties, immediately instituted a workover of
specific wells, which caused the Trust not to receive any royalty income from the Waddell Properties in 2021.  27




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##### Table of Contents

Subsequent to December 31, 2022, the price of both oil and gas continued to fluctuate, giving
rise to a correlating adjustment of the respective standardized measure of discounted future net cash flows. As of February 24, 2023, NYMEX posted oil prices were approximately $76.45 per barrel, which compared to the posted price of $93.67 per
barrel, used to calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a smaller standardized measure of discounted future net cash flows for oil. As of February 24, 2023, NYMEX posted
gas prices were $2.07 per million British thermal units. The use of such price, as compared to the posted price of $6.36 per million British thermal units, used to calculate the future net revenue of the Trusts proved developed reserves would
result in a smaller standardized measure of discounted future net cash flows for gas. Since the oil and gas sales attributable to the Royalties are
based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), production amounts do not necessarily provide a meaningful comparison. For the underlying properties total oil production increased
by approximately 84% from 2021 to 2022 primarily due to additional production on Waddell due to new drilling. For the underlying properties total gas production increased approximately 145% from 2021 to 2022 primarily due to production increase. Total capital expenditures in 2022 used in the net overriding royalty calculation were approximately $124.3 million (gross) compared to
$66.6 million (gross) in 2021 and $10.3 million (gross) in 2020. The operator of the Waddell Ranch properties has informed the Trustee that, in order to halt the production decline curve and to exploit the remaining potential of the
Trusts assets more fully, a more aggressive, robust capital expenditure budget will be necessary in the future and is being pursued. In 2021,
there were 28 recompletion wells completed and 47 wells permanently plugged on the Waddell Ranch properties. Actual costs for this program in 2021 approximated $66.6 million (gross). This cost is for the development program and base facilities.
In 2022, there were 46.1 new drill wells and 46.9 recompletion wells completed on the Waddell Ranch properties. Texas law requires all temporarily
abandoned wells to be either worked over and recompleted to functional status or permanently plugged and abandoned within a five year time frame. The Waddell Ranch properties contain over 700 such temporarily abandoned wells. In 2022, there were
46.9recompletion wells completed and 17.8 wells permanently plugged on the Waddell Ranch properties. There were 91 drill wells completed on
the Waddell Ranch properties during 2022. At December 31, 2021, there were 79 drill wells on the Waddell Ranch properties. Blackbeard has
advised the Trustee that the proposed budget for 2023 will be $122 million (net). The 2023 budget will include amounts to be spent on48.75 (net) horizontal wells targeting the Sandhills and McKnight formations, along with various other
recompleted wells prospects to be worked over and completed, and also amounts to be spent on additional facilities and infrastructure improvements and the completion of projects begun in 2022. Because the wide volatility of the pricing for both oil
and gas in the current market, Blackbeard could not make any accurate projections as to the anticipated revenue streams or production levels of both the 2022 and projected 2023 budget projects. In 2022, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $43.7 million. In 2021, lease
operating expense and property taxes on the Waddell Ranch properties amounted to approximately $23 million. In 2020, lease operating expense and property taxes on the Waddell Ranch properties amounted to approximately $19.6 million. The Trustee has been advised by the operator that since June 2006, the oil from the Waddell Ranch has been marketed by the operator by soliciting bids
from third parties on an outright sale basis of production listed in bid packages. During 2022, the monthly royalty receipts were invested by the
Trustee in cash and cash equivalents until the monthly distribution date, and earned interest totaled $48,371. Interest income for 2021 and 2020 was $5,112 and $9,603, respectively.  28




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##### Table of Contents

General and administrative expenses in 2022 were $922,404 compared to $1,088,851 in 2021 and
$1,041,303in 2020, primarily due to audit of properties and other professional services. The reserve for administrative expenses for any potentially extraordinary events and/or expenses was $1,100,000 as of December 31, 2022. Total
reserves for expenses for the years ended December 31, 2022, 2021 and 2020 was $0, $0 and $50,000, respectively. Distributable income for 2022
was $53,543,824 or $1.15 per Unit. Distributable income for 2021 was $10,721,775 or $0.23 per Unit. Distributable income for 2020 was $10,958,618 or $0.24 per Unit. Results of the Fourth Quarters of 2022 and 2021 Royalty
income received by the Trust for the fourth quarter of 2022 amounted to $15,385,233 or $0.33 per Unit. For the fourth quarter of 2021, the Trust received royalty income of $3,396,125 or $0.07per Unit. Interest income for the fourth quarter
of 2022 amounted to $33,117 compared to $1,253 for the fourth quarter of 2021. The increase in interest income can be attributed primarily to an increase of funds available. Total general and administrative expenses was $150,153 for the fourth
quarter of 2022 compared to $166,809 for the fourth quarter of 2021. The decrease in expenses primarily related to timing of payments of legal and auditor expenses. Royalty income for the Trust for the fourth quarter is associated with actual oil and gas production during August through October from the Underlying
Properties. Oil and gas production attributable to the Underlying Properties for the quarter and the comparable period for 2021 are as follows:  Fourth Quarter2022


2021RoyaltiesOil Sales (Bbls)


506,384



319,411Gas Sales (Mcf)


2,807,222



1,230,035Underlying PropertiesTotal Oil Sales (Bbls)


662,982



415,951Average Per Day (Bbls)


7,206



4,521Average Price/Bbls

$
88.24


$
72.44Total Gas Sales (Mcf)


3,737,313



1,633,976Average Per Day (Mcf)


40,623



17,761Average Price/Mcf

$
5.49


$
4.85 The posted price of oil increased for the fourth quarter of 2022 compared to the fourth quarter of 2021, resulting in an
average price per barrel of $88.24 compared to $72.44 in the same period of 2021. The average price of gas increased for the fourth quarter of 2022 compared to the same period in 2021, resulting in an average price per Mcf of $5.49 compared to $4.85
in the fourth quarter of 2021. The Trustee has been advised that oil and gas production increased in the fourth quarter of 2022 compared to the
same period in 2021 primarily due to additional drilling. The Trust has been advised that 18.5wells were drilled and completed during the
three months ended December 31, 2022, and there were 6.8 wells in progress. Use of Estimates The preparation of financial statements in conformity with the basis of accounting described above requires management to make estimates and assumptions
that affect reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting periods. Actual results may differ from such estimates.  29




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##### Table of Contents

Impairment The Trustee routinely reviews its royalty interests in oil and gas properties for impairment whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. If an impairment event occurs and it is determined that the carrying value of the Trusts royalty interests may not be recoverable, an impairment will be recognized as measured by the amount by which
the carrying amount of the royalty interests exceeds the fair value of these assets, which would likely be measured by discounting projected cash flows. There was no impairment of the assets as of December 31, 2022. Critical Accounting Policies and Estimates The Trusts financial statements reflect the selection and application of accounting policies that require the Trust to make significant estimates
and assumptions. The following are some of the more critical judgment areas in the application of accounting policies that currently affect the Trusts financial condition and results of operations. 1.    Basis of Accounting The financial statements of the Trust are prepared on the following basis:  

Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the interest
owners. Royalty income consists of the amounts received by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges and other
costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.  

Trust expenses, consisting principally of routine general and administrative costs, recorded are based on liabilities paid
and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.  

Distributions to Unit holders are recorded when declared by the Trustee.  

Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust. If
monthly costs exceed revenues for any conveyance (excess costs), such excess costs cannot reduce royalty income from other conveyances, but is carried forward with accrued interest to be recovered from future net proceeds of that
conveyance. The financial statements of the Trust differ from financial statements prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP) because revenues are not accrued in the month of production and certain cash reserves may be established for contingencies which would not be accrued in financial
statements prepared in accordance with GAAP. Amortization of the Royalties calculated on a unit-of-production basis is charged directly to trust corpus. This
comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the SEC as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts. 2.    Royalty Income Revenues from Royalty Interests are recognized in the period in which amounts are received by the Trust. Royalty income received by the Trust in a given
calendar year will generally reflect the proceeds from crude oil and natural gas produced for the twelve-month period ended October 31st in that calendar year. 3.    Reserve Disclosure Independent petroleum engineers estimate the net proved reserves attributable to the Royalty Interests. Estimates of future net revenues from proved
reserves have been prepared using average 12-month oil and gas prices, determined as an unweighted arithmetic average of the first-day-of-the-month benchmark price for each month within the 12-month period  30




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##### Table of Contents

preceding the end of the most recent fiscal year, unless prices are defined by contractual arrangements. The standardized measure of discounted future net cash flows is achieved by using a
discount rate of 10% a year to reflect the timing of future cash flows relating to proved oil and gas reserves. The reserves actually recovered and the timing of production may be substantially different from the reserve estimates and related costs.
Numerous uncertainties are inherent in estimating volumes and the value of proved reserves and in projecting future production rates and the timing of development of non-producing reserves. Such reserve
estimates are subject to change as market conditions change. Detailed information concerning the number of wells on royalty properties is not
generally available to the owner of royalty interests. Consequently, the Registrant does not have information that would be disclosed by a company with oil and gas operations, such as an accurate account of the number of wells located on its royalty
properties, the number of exploratory or development wells drilled on its royalty properties during the periods presented by this report, or the number of wells in process or other present activities on its royalty properties, and the Registrant
cannot readily obtain such information. 4.    Contingencies Contingencies related to the Underlying Properties that are unfavorably resolved would generally be reflected by the Trust as reductions to future
royalty income payments to the Trust with corresponding reductions to cash distributions to Unit holders. New Accounting Pronouncements There are no new pronouncements that are expected to have a significant impact on the Trusts financial statements.  Item 7A.
Quantitative and Qualitative Disclosures about Market Risk The Trust is a passive entity and other than the Trusts ability to periodically borrow money as necessary to pay expenses, liabilities and
obligations of the Trust that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in borrowing transactions. The amount of any such borrowings is unlikely to be material to the Trust. The Trust periodically holds
short-term investments acquired with funds held by the Trust pending distribution to Unit holders and funds held in reserve for the payment of Trust expenses and liabilities. Because of the short-term nature of these borrowings and investments and
certain limitations upon the types of such investments which may be held by the Trust, the Trustee believes that the Trust is not subject to any material interest rate risk. The Trust does not engage in transactions in foreign currencies which could
expose the Trust or Unit holders to any foreign currency related market risk. The Trust invests in no derivative financial instruments and has no foreign operations or long-term debt instruments.  31




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##### Table of Contents

Item 8.
Financial Statements and Supplementary Data  PageReport of Independent Registered Public Accounting Firm (PCAOB ID Number
410)


33Statements of Assets, Liabilities and Trust Corpus


34Statements of Distributable Income


34Statements of Changes in Trust Corpus


35Notes to Financial Statements


36 All financial statement schedules are omitted as they are inapplicable or the required information has been included in
the consolidated financial statements or notes thereto.  32




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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Unit Holders of Permian Basin Royalty Trust and Argent Trust Company, Trustee Opinion on the Financial Statements We have audited the
accompanying statements of assets, liabilities and trust corpus ofPermian Basin Royalty Trust (the Trust) as of December 31, 2022 and 2021, and the related statements of distributable income and changes in trust corpus for each of the three
years in the period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the assets, liabilities,
and trust corpus of the Trust as of December 31, 2022 and 2021, and the distributable income and changes in trust corpus for each of the three years in the period ended December 31, 2022, in conformity with the modified cash basis of
accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the Trusts internal control over financial reporting as of December 31, 2022, based on criteria
established in 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 1, 2023 expressed an unqualified opinion thereon. As described in Note 2 to the financial statements, these financial statements were prepared on a modified cash basis of accounting, which is a
comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Trustee. Our responsibility is to express an opinion on these financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by the Trustee, as well as evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be
communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are
no critical audit matters. /s/ WEAVER AND TIDWELL, L.L.P. We have
served as the Trusts auditor since 2016. Dallas, Texas March 1, 2023  33




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##### Table of Contents

PERMIAN BASIN ROYALTY TRUST FINANCIAL STATEMENTS STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS  December 31,ASSETS

2022


2021Cash and Short-term Investments

$
2,855,444


$
2,248,527Net Overriding Royalty Interests in Producing Oil and Gas Properties  Net (Notes 2 and 3)


279,433



352,688Total

$
3,134,877


$
2,601,215LIABILITIES AND TRUST CORPUSDistribution Payable to Unit Holders

$
1,755,444


$
1,148,527Commitments and Reserve for Contingencies (Note 8)


1,100,000



1,100,000Total Liabilities

$
2,855,444


$
2,248,527Trust Corpus  46,608,796 Units of Beneficial Interest Authorized and Outstanding


279,433



352,688Total

$
3,134,877


$
2,601,215 STATEMENTS OF DISTRIBUTABLE INCOME  For the years ended December 31,2022


2021


2020Royalty Income (Notes 2 and 3)

$
54,417,857


$
11,805,514


$
12,040,318Interest Income


48,371



5,112



9,603Total Income


54,466,228



11,810,626



12,049,921Reserve for Expenses










50,000General and Administrative Expenditures


922,404



1,088,851



1,041,303Total Expenditures


922,404



1,088,851



1,091,303Distributable Income

$
53,543,824


$
10,721,775


$
10,958,618Distributable Income per Unit (46,608,796 Units)

$
1.15


$
.23


$
.24Distributions per Unit

$
1.15


$
.23


$
.24 The accompanying notes to financial statements are an integral part of these statements.  34




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##### Table of Contents

STATEMENTS OF CHANGES IN TRUST CORPUS  For the years ended December 31,2022


2021


2020Trust Corpus, Beginning of Year

$
352,688


$
382,876


$
424,507Amortization of Net Overriding Royalty Interests (Notes 2 and 3)


(73,255
)


(30,188
)


(41,631
)Distributable Income


53,543,824



10,721,775



10,958,618Distributions Declared


(53,543,824
)


(10,721,775
)


(10,958,618
)Trust Corpus, End of Year

$
279,433


$
352,688


$
382,876 The accompanying notes to financial statements are an integral part of these statements.  35




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##### Table of Contents

NOTES TO FINANCIAL STATEMENTS  1.
Trust Organization and Provisions The Permian Basin Royalty Trust (Trust) was established as of November 1, 1980. Simmons Bank (Trustee) is Trustee for the
Trust. The net overriding royalties conveyed to the Trust include (1) a 75% net overriding royalty in Southland Royalty Companys fee mineral interest in the Waddell Ranch in Crane County, Texas (the Waddell Ranch properties)
and (2) a 95% net overriding royalty carved out of Southland Royalty Companys major producing royalty properties in Texas (the Texas Royalty properties). The net overriding royalty for the Texas Royalty properties is subject
to the provisions of the lease agreements under which such royalties were created. The net overriding royalties above are collectively referred to as the Royalties. On November 3, 1980, Units of Beneficial Interest (Units) in the Trust were distributed to the Trustee for the benefit of Southland
Royalty Companys shareholders of record as of November 3, 1980, who received one Unit in the Trust for each share of Southland Royalty Company common stock held. The Units are traded on the New York Stock Exchange. Burlington Resources Oil & Gas Company LP (BROG), a subsidiary of ConocoPhillips, was the interest owner for the Waddell Ranch
properties through November 1, 2019 and Riverhill Energy Corporation (Riverhill Energy), formerly a wholly owned subsidiary of Riverhill Capital Corporation (Riverhill Capital) and formerly an affiliate of Coastal
Management Corporation (CMC), is the interest owner for the Texas Royalty properties. BROG currently conducts all field, technical and accounting operations on behalf of BROG with regard to the Waddell Ranch properties. Riverhill Energy
currently conducts the accounting operations for the Texas Royalty properties. In February 1997, BROG sold its interest in the Texas Royalty
properties to Riverhill Energy. The Trustee was advised that in the first quarter of 1998, Schlumberger Technology Corporation (STC)
acquired all of the shares of stock of Riverhill Capital. Prior to such acquisition by STC, CMC and Riverhill Energy were wholly owned subsidiaries of Riverhill Capital. The Trustee was further advised that in connection with STCs acquisition
of Riverhill Capital, the shareholders of Riverhill Capital acquired ownership of all of the shares of stock of Riverhill Energy. Thus, the ownership in the Texas Royalty properties referenced above remained in Riverhill Energy, the stock ownership
of which was acquired by the former shareholders of Riverhill Capital. BROG notified the Trust, that on November 1, 2019, the Waddell Ranch
properties (as defined herein on page 10) that are subject to the Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) dated November 1, 1980 (the Waddell Ranch
Conveyance), were sold to Blackbeard Operating, LLC (Blackbeard) of Fort Worth, Texas. Blackbeard became the operator effective as of April 1, 2020. On January 9, 2014, Bank of America N.A. (as successor to The First National Bank of Fort Worth) gave notice to Unit holders that it would be
resigning as trustee of the Trust subject to certain conditions that included the appointment of Southwest Bank as successor trustee. At a Special Meeting of Trust Unit holders, the Unit holders approved the appointment of Southwest Bank as
successor trustee of the Trust once the resignation of Bank of America N.A. took effect and also approved certain amendments to the Trust Indenture. The effective date of Bank of America N.A.s resignation and the effective date of Southwest
Banks appointment as successor trustee was August 29, 2014. Effective October 19, 2017, Simmons First National Corporation (SFNC) completed its acquisition of First Texas BHC, Inc., the parent company of Southwest Bank.
SFNC is the parent company of Simmons Bank. SFNC merged Southwest Bank with Simmons Bank effective February 20, 2018. On November 4,
2021, Simmons Bank announced that it had entered into an agreement with Argent Trust Company, a Tennessee chartered trust company (Argent), pursuant to which Simmons Bank would be resigning as trustee of the Trust and would nominate
Argent as successor trustee of the Trust. The effective date of Simmons Banks resignation and Argents appointment as successor trustee was December 30, 2022. The defined term Trustee as used herein shall refer to Bank of
America N.A. for periods prior to August 29, 2014, shall refer to Southwest Bank for periods from August 29, 2014 through  36




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##### Table of Contents

February 19, 2018, shall refer to Simmons Bank for periods from February 20, 2018 through December 29, 2022, and shall refer to Argent for periods on and after December 30,
2022. The terms of the Trust Indenture provide, among other things, that:  

the Trust shall not engage in any business or commercial activity of any kind or acquire any assets other than those
initially conveyed to the Trust;  

the Trustee may not sell all or any part of the Royalties unless approved by holders of 75% of all Units outstanding in
which case the sale must be for cash and the proceeds promptly distributed;  

the Trustee may establish a cash reserve for the payment of any liability which is contingent or uncertain in amount;  

the Trustee is authorized to borrow funds to pay liabilities of the Trust; and  

the Trustee will make monthly cash distributions to Unit holders (see Note 3).  2.
Accounting Policies The financial statements of the Trust are prepared on the following basis:  

Royalty income recorded for a month is the amount computed and paid to the Trustee on behalf of the Trust by the interest
owners. Royalty income consists of the amounts received by the owners of the interest burdened by the Royalties from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges and other
costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties.  

Trust expenses, consisting principally of routine general and administrative costs, recorded are based on liabilities paid
and cash reserves established out of cash received or borrowed funds for liabilities and contingencies.  

Distributions to Unit holders are recorded when declared by the Trustee.  

Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust. If
monthly costs exceed revenues for any conveyance (excess costs), such excess costs cannot reduce royalty income from other conveyances, but is carried forward with accrued interest to be recovered from future net proceeds of that
conveyance. The financial statements of the Trust differ from financial statements prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP) because revenues are not accrued in the month of production expenses are recorded when paid and certain cash reserves may be established for contingencies which would
not be accrued in financial statements prepared in accordance with GAAP. Amortization of the Royalties calculated on a unit-of-production basis is charged directly to
trust corpus. This comprehensive basis of accounting other than GAAP corresponds to the accounting permitted for royalty trusts by the U.S. Securities and Exchange Commission as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements
of Royalty Trusts. Use of Estimates The preparation of financial statements in conformity with the basis of accounting described above requires management to make estimates and assumptions
that affect reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting periods. Actual results may differ from such estimates. Impairment The Trustee
routinely reviews its royalty interests in oil and gas properties for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment event occurs and it is determined that the
carrying value of the Trusts royalty interests may not be recoverable, an impairment will be recognized  37




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##### Table of Contents

as measured by the amount by which the carrying amount of the royalty interests exceeds the fair value of these assets, which would likely be measured by discounting projected cash flows. There
was no impairment of the assets as of December 31, 2022. Contingencies Contingencies related to the Underlying Properties that are unfavorably resolved would generally be reflected by the Trust as reductions to future
royalty income payments to the Trust with corresponding reductions to cash distributions to Unit holders. Distributable Income Per
Unit Basic distributable income per Unit is computed by dividing distributable income by the weighted average of Units outstanding.
Distributable income per Unit assuming dilution is computed by dividing distributable income by the weighted average number of Units and equivalent Units outstanding. The Trust had no equivalent Units outstanding for any period presented. Therefore,
basic distributable income per Unit and distributable income per Unit assuming dilution are the same. New Accounting Pronouncements There are no new pronouncements that are expected to have a significant impact on the Trusts financial statements.  3.
Net Overriding Royalty Interests and Distribution to Unit Holders The amounts to be distributed to Unit holders (Monthly Distribution Amounts) are determined on a monthly basis. The Monthly Distribution
Amount is an amount equal to the sum of cash received by the Trustee during a calendar month attributable to the Royalties, any reduction in cash reserves and any other cash receipts of the Trust, including interest, reduced by the sum of
liabilities paid and any increase in cash reserves. If the Monthly Distribution Amount for any monthly period is a negative number, then the distribution will be zero for such month. To the extent the distribution amount is a negative number, that
amount will be carried forward and deducted from future monthly distributions until the cumulative distribution calculation becomes a positive number, at which time a distribution will be made. Unit holders of record will be entitled to receive the
calculated Monthly Distribution Amount for each month on or before 10 business days after the monthly record date, which is generally the last business day of each calendar month. The cash received by the Trustee consists of the amounts received by owners of the interest burdened by the Royalties from the sale of production less
the sum of applicable taxes, accrued production costs, development and drilling costs, operating charges and other costs and deductions, multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty
properties. The initial carrying value of the Royalties ($10,975,216) represented Southland Royalty Companys historical net book value at the
date of the transfer to the Trust. Accumulated amortization as of December 31, 2022 and 2021 was $10,695,783 and $10,622,528, respectively.  4.
Federal Income Taxes For federal income tax purposes, the Trust constitutes a fixed investment trust that is taxed as a grantor trust. A grantor trust is not subject to tax
at the trust level. The Unit holders are considered to own the Trusts income and principal as though no trust were in existence. The income of the Trust is deemed to have been received or accrued by each Unit holder at the time such income is
received or accrued by the Trust and not when distributed by the Trust. The Trust has on file technical advice memoranda confirming the tax treatment described above. Some Trust Units are held by middlemen, as such term is broadly defined in U.S. Treasury Regulations (and includes custodians, nominees, certain joint
owners, and brokers holding an interest for a customer in street name, collectively  38




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##### Table of Contents

referred to herein as middlemen). Therefore, the Trustee considers the Trust to be a non-mortgage widely held fixed investment trust
(WHFIT) for U.S. federal income tax purposes. Argent Trust Company, EIN: 62-1437218, 2911 Turtle Creek Boulevard, Suite 850, Dallas, Texas 75219, telephone number (855) 588-7839, email address trustee@pbt-permian.com, is the representative of the Trust that will provide tax information in accordance with applicable U.S. Treasury Regulations
governing the information reporting requirements of the Trust as a WHFIT. Tax information is also posted by the Trustee at www.pbt-permian.com. Notwithstanding the foregoing, the middlemen holding Trust Units
on behalf of Unit holders, and not the Trustee of the Trust, are solely responsible for complying with the information reporting requirements under the U.S. Treasury Regulations with respect to such Trust Units, including the issuance of IRS Forms
1099 and certain written tax statements. Unit holders whose Trust Units are held by middlemen should consult with such middlemen regarding the information that will be reported to them by the middlemen with respect to the Trust Units. Because the Trust is a grantor trust for federal tax purposes, each Unit holder is taxed directly on his proportionate share of income, deductions and
credits of the Trust consistent with each such Unit holders taxable year and method of accounting and without regard to the taxable year or method of accounting employed by the Trust. The income of the Trust consists primarily of a specified
share of the proceeds from the sale of oil and gas produced from the Underlying Properties. During 2022, the Trust also earned interest income on funds held for distribution and the cash reserve maintained for the payment of contingent and future
obligations of the Trust. The Trust generally allocates its items of income, gain, loss and deduction between transferors and transferees of the
Units each month based upon the ownership of the Units on the monthly record date, instead of on the basis of the date a particular Unit is transferred. It is possible that the IRS could disagree with this allocation method and could assert that
income and deductions of the Trust should be determined and allocated on a daily or prorated basis, which could require adjustments to the tax returns of the Unit holders affected by the issue and result in an increase in the administrative expense
of the Trust in subsequent periods. The deductions of the Trust consist of severance taxes and administration expenses. In addition, each Unit
holder is entitled to depletion deductions because the Royalties constitute economic interests in oil and gas properties for federal income tax purposes. Each Unit holder is entitled to amortize the cost of the Units through cost
depletion over the life of the Royalties or, if greater, through percentage depletion equal to 15 percent of gross income attributable to the Royalties, limited to 100% of the net income from such Royalties. Unlike cost depletion, percentage
depletion is not limited to a Unit holders depletable tax basis in the Units. Rather, a Unit holder is entitled to a percentage depletion deduction as long as the applicable Underlying Properties generate gross income. Percentage depletion is
allowed on proven properties acquired after October 11, 1990. For Units acquired after such date, Unit holders should compute both percentage depletion and cost depletion from each property and claim the larger amount as a deduction on their
income tax returns. Unit holders must maintain records of their adjusted basis in their Trust Units (generally the Unit holders cost less
prior depletion deductions), make adjustments for depletion deductions to such basis, and use the adjusted basis for the computation of gain or loss on the disposition of the Trust Units. If a taxpayer disposes of any Section 1254 property (certain oil, gas, geothermal or other mineral property), and if the adjusted basis
of such property includes adjustments for deductions for depletion under Section 611 of the Internal Revenue Code (the Code), the taxpayer generally must recapture the amount deducted for depletion as ordinary income (to the extent
of gain realized on such disposition). This depletion recapture rule applies to any disposition of property that was placed in service by the taxpayer after December 31, 1986. Detailed rules set forth in Sections
1.1254-1 through 1.1254-6 of the U.S. Treasury Regulations govern dispositions of property after March 13, 1995. The Internal Revenue Service likely will take the
position that a Unit holder who purchases a Unit subsequent to December 31, 1986 must recapture depletion upon the disposition of that Unit. Individuals may incur expenses in connection with the acquisition or ownership of Trust Units. For tax years beginning before January 1, 2018 and
after December 31, 2025, these expenses may be deductible as miscellaneous itemized deductions only to the extent that such expenses exceed 2 percent of the individuals adjusted gross income. As a result of the TCJA, for
tax years beginning after December 31, 2017 and before January 1, 2026, miscellaneous itemized deductions are not allowed.  39




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##### Table of Contents

The classification of the Trusts income for purposes of the passive loss rules may be important
to a Unit holder. Interest and royalty income attributable to ownership of Trust Units and any gain on the sale thereof are generally considered portfolio income and not income from a passive activity, to the extent a Unit holder
acquires and holds Trust Units as an investment and not in the ordinary course of a trade or business. Therefore, in general, interest and royalty income attributable to ownership of Trust Units may not be offset by losses from any passive
activities. Unit holders should consult their tax advisor for further information. Unit holders of record will continue to receive an
individualized tax information letter for each of the quarters ending March 31, June 30 and September 30, 2022, and for the year ending December 31, 2022. Unit holders owning Units in the name of a nominee may obtain monthly tax
information from the Trustee upon request. See discussion above regarding certain reporting requirements imposed upon middlemen under U.S. Treasury Regulations because the Trust is considered a WHIFT for federal income tax purposes. Under the TCJA, for tax years beginning after December 31, 2017 and before January 1, 2026, the highest marginal U.S. federal income tax rate
applicable to ordinary income of individuals is 37%, and the highest marginal U.S. federal income tax rate applicable to long-term capital gains (generally, gains from the sale or exchange of certain investment assets held for more than one year)
and qualified dividends of individuals is 20%. Under the TCJA, for such tax years, personal exemptions and miscellaneous itemized deductions are not allowed. For such tax years, the U.S. federal income tax rate applicable to corporations is 21%, and
such rate applies to both ordinary income and capital gains. Section 1411 of the Code imposes a 3.8% Medicare tax on certain investment income
earned by individuals, estates, and trusts. For these purposes, investment income generally will include a Unit holders allocable share of the Trusts interest and royalty income plus the gain recognized from a sale of Trust Units. In the
case of an individual, the tax is imposed on the lesser of (i) the individuals net investment income from all investments, or (ii) the amount by which the individuals modified adjusted gross income exceeds specified threshold
levels depending on such individuals federal income tax filing status. In the case of an estate or trust, the tax is imposed on the lesser of (i) undistributed net investment income, or (ii) the excess adjusted gross income over the
dollar amount at which the highest income tax bracket applicable to an estate or trust begins. Pursuant to the Foreign Account Tax Compliance Act
(commonly referred to as FATCA), distributions from the Trust to foreign financial institutions and certain other non-financial foreign entities may be subject to U.S.
withholding taxes. Specifically, certain withholdable payments (including certain royalties, interest and other gains or income from U.S. sources) made to a foreign financial institution or
non-financial foreign entity will generally be subject to the withholding tax unless the foreign financial institution or non-financial foreign entity complies with
certain information reporting, withholding, identification, certification and related requirements imposed by FATCA. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing
FATCA may be subject to different rules. The Treasury Department issued guidance providing that the FATCA withholding rules described above
generally apply to qualifying payments made after June 30, 2014. Foreign Unit holders are encouraged to consult their own tax advisor regarding the possible implications of these withholding provisions on their investment in Trust Units. The foregoing summary is not exhaustive and does not purport to be complete. Many other provisions of the federal income tax laws may affect individual
Unit holders. The federal income tax consequences to a Unit holder of the acquisition, ownership or disposition of Units will depend in part on the Unit holders tax circumstances. Unit holders should consult their tax advisor regarding all
Trust tax compliance matters.  5.
Proved Oil and Gas Reserves (Unaudited) Reserve Quantities Information
regarding estimates of the proved oil and gas reserves attributable to the Trust are based on reports prepared by Cawley, Gillespie & Associates, Inc., independent petroleum engineering consultants. Estimates were prepared  40




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##### Table of Contents

in accordance with the guidelines established by the FASB and the Securities and Exchange Commission. Certain information required by this guidance is not presented because that information is
not applicable to the Trust due to its passive nature. Oil and gas reserve quantities (all located in the United States) are estimates based on
information available at the time of their preparation. Such estimates are subject to change as additional information becomes available. Reserves actually recovered, and the timing of the production of those reserves, may differ substantially from
original estimates. The following schedule presents changes in the Trusts total proved reserves (in thousands):  TotalOil(Bbls)


Gas(Mcf)January 1, 2020


4,029



5,386Extensions, discoveries, and other additions


615



1,327Revisions of previous estimates


242



1,122Production


(436
)


(1,437
)December 31, 2020


4,450



6,398Extensions, discoveries, and other additions


1,309



2,123Revisions of previous estimates


1,831



6,620Production


(967
)


(3,877
)December 31, 2021


6,623



11,264Extensions, discoveries, and other additions


3,714



5,206Revisions of previous estimates


2,976



18,728Production


(1,760
)


(9,461
)December 31, 2022


11,553



25,737 Estimated quantities of proved developed reserves of oil and gas as of the dates indicated were as follows
(in thousands):  Proved Developed Reserves:

Oil(Barrels)


Gas(Mcf)January 1, 2020


4,029



5,386December 31, 2020


4,450



6,398December 31, 2021


6,623



11,264December 31, 2022


8,022



21,216 Disclosure of a Standardized Measure of Discounted Future Net Cash Flows The following is a summary of a standardized measure (in thousands) of discounted future net cash flows related to the total proved oil and gas reserve
quantities attributable to the Trust. Information presented is based upon valuation of proved reserves by using discounted cash flows based upon average oil and gas prices ($93.67 per bbl and $6.36 per Mcf, respectively) during the 12-month period prior to the fiscal year-end, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future
conditions and severance and ad valorem taxes, if any, and economic conditions, discounted at the required rate of 10 percent. As the Trust is not subject to taxation at the trust level, no provision for income taxes has been made in the
following disclosure. Trust prices may differ from posted NYMEX prices due to differences in product quality and property location. The impact of changes in current prices on reserves could vary  41




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##### Table of Contents

significantly from year to year. Accordingly, the information presented below should not be viewed as an estimate of the fair market value of the Trusts oil and gas properties nor should it
be viewed as indicative of any trends.  December 31,

2022


2021


2020Future net cash inflows

$
1,205,227


$
465,149


$
170,446Discount of future net cash flows @ 10%


(518,760
)


(205,293
)


(90,355
)Standardized measure of discounted future net cash inflows

$
686,467


$
259,856


$
80,091 The change in the standardized measure of discounted future net cash flows for the years ended December 31, 2022,
2021 and 2020 is as follows (in thousands):  Total2022


2021


2020January 1

$
259,857


$
80,091


$
102,755Extensions, discoveries, and other additions


201,239



51,245



10,240Accretion of discount


25,986



8,009



10,276Revisions of previous estimates and other


253,804



132,317



(31,140
)Royalty income


(54,418
)


(11,806
)


(12,040
)December 31

$
686,467


$
259,856


$
80,091 Subsequent to December 31, 2022, the price of both oil and gas continued to fluctuate, giving rise to a correlating
adjustment of the respective standardized measure of discounted future net cash flows. As of February 24, 2023, NYMEX posted oil prices were approximately $76.45 per barrel, which compared to the posted price of $93.67 per barrel, used to
calculate the worth of future net revenue of the Trusts proved developed reserves, would result in a smaller standardized measure of discounted future net cash flows for oil. As of February 22, 2023, NYMEX posted gas prices were
$2.07 per million British thermal units. The use of such price, as compared to the posted price of $6.36 per million British thermal units, used to calculate the future net revenue of the Trusts proved developed reserves would result in a
smaller standardized measure of discounted future net cash flows for gas.  6.
Quarterly Schedule of Distributable Income (Unaudited) The following is a summary of the unaudited quarterly schedule of distributable income for the two years ended December 31, 2022 (in thousands,
except per Unit amounts):  2022

RoyaltyIncome


DistributableIncome


DistributableIncome andDistributionPer UnitFirst Quarter

$
4,078,645


$
3,734,694


$
.080128Second Quarter


7,630,221



7,358,308



.15787Third Quarter


27,323,759



27,198,499



.583549Fourth Quarter


15,385,232



15,252,323



.33Total

$
54,417,857


$
53,543,824


$
1.15  42




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##### Table of Contents

2021

RoyaltyIncome


DistributableIncome


DistributableIncome andDistributionPer UnitFirst Quarter

$
2,124,157


$
1,839,730


$
.039472Second Quarter


2,941,146



2,658,115



.057030Third Quarter


3,344,086



2,984,263



.064028Fourth Quarter


3,396,125



3,239,667



.069509Total

$
11,805,514


$
10,721,775


$
.230042  7.
State Tax Considerations All revenues from the Trust are from sources within Texas, which does not impose an individual income tax. Texas imposes a franchise tax at a rate of
0.75% on gross revenues less certain deductions, as specifically set forth in the Texas franchise tax statutes. Entities subject to tax generally include trusts and most other types of entities that provide limited liability protection, unless
otherwise exempt. Trusts that receive at least 90% of their federal gross income from certain passive sources, including royalties from mineral properties and other non-operated mineral interest income, and do
not receive more than 10% of their income from operating an active trade or business, generally are exempt from the Texas franchise tax as passive entities. The Trust has been and expects to continue to be exempt from Texas franchise tax
as a passive entity. Because the Trust should be exempt from Texas franchise tax at the Trust level as a passive entity, each Unit holder that is a taxable entity under the Texas franchise tax generally will be required to include its portion of
Trust revenues in its own Texas franchise tax computation. This revenue is sourced to Texas under provisions of the Texas Administrative Code providing that such income is sourced according to the principal place of business of the Trust, which is
Texas. Unit holders should consult their tax advisor regarding the possible state tax implications of owning Trust Units.  8.
Commitments and Contingencies Contingencies related to the Underlying Properties that are unfavorably resolved would generally be reflected by the Trust as reductions to future
royalty income payments to the Trust with corresponding reductions to cash distributions to Unit holders.  9.
Subsequent Events Subsequent to December 31, 2022, the Trust declared the following distributions:  Monthly Record Date

Payment Date


Distributionper UnitJanuary 31, 2023


February 14, 2023


$
.036797February 28, 2023


March 14, 2023


$
.041356 * * * * *  43




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##### Table of Contents

Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.  Item 9A.
Controls and Procedures. Disclosure Controls and Procedures As of the end of the
period covered by this report, the Trustee carried out an evaluation of the effectiveness of the design and operation of the Trusts disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934, as amended. Based on such evaluation, the Trustee concluded that the Trusts disclosure controls and procedures are effective in ensuring that
information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Trustee to allow timely decisions regarding required disclosure. In its evaluation of disclosure controls and procedures, the Trustee has relied, to the extent considered reasonable, on information provided by
Blackbeard Operating, LLC, the owner of the Waddell Ranch properties, and Riverhill Energy Corporation, the owner of the Texas Royalty properties. Changes in
Internal Control over Financial Reporting There has not been any change in the Trusts internal control over financial reporting during the twelve months
ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Trusts internal control over financial reporting. Trustees Report on Internal Control Over Financial Reporting The Trustee is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Securities and Exchange Act of 1934, as amended. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial
reporting for external purposes in accordance with the modified cash basis of accounting. The Trustee conducted an evaluation of the effectiveness of the Trusts internal control over financial reporting based on the criteria established in
Internal Control-Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the Trustees evaluation under the framework in Internal Control-Integrated Framework 2013, the Trustee
concluded that the Trusts internal control over financial reporting are effective as of December 31, 2022. The independent registered
public accounting firm of Weaver and Tidwell, L.L.P., as auditors of the statements of assets, liabilities and trust corpus, and the related statements of distributable income and changes in trust corpus for the year ended December 31, 2022,
has issued an attestation report on the Trusts internal control over financial reporting as of December 31, 2022, which is included herein.  44




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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Unit Holders of Permian Basin Royalty Trust and Argent Trust Company, Trustee Opinion on Internal Control Over Financial Reporting We have
audited Permian Basin Royalty Trust (the Trust)s internal control over financial reporting as of December 31, 2022 based on criteria established in 2013 Internal Control  Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). In our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the statements of
assets, liabilities, and trust corpus of Permian Basin Royalty Trust as of December 31, 2022 and 2021 and the related statements of distributable income and changes in trust corpus for each of the three years in the period ended
December 31, 2022, and our report dated March 1, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Trustee is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Trustees Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Trusts internal control over financial reporting based on our
audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Permian Basin Royalty Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting An entitys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with the modified cash basis of accounting described in Note 2 to the financial statements. An entitys internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with the modified cash basis of accounting described in Note 2 to the financial statements, and that receipts and expenditures of the entity are being
made only in accordance with authorizations of the Trustee and directors of the entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entitys assets
that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. /s/ Weaver and Tidwell, L.L.P. Dallas, Texas March 1, 2023  45




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##### Table of Contents

Item 9B.
Other Information. None.  Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspection. None.  46




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##### Table of Contents

PART III  Item 10.
Directors and Executive Officers of the Registrant DIRECTORS AND OFFICERS The Trust has no
directors or executive officers. The Trustee is a corporate trustee which may be removed, with or without cause, at a meeting of the Unit holders, by the affirmative vote of the holders of a majority of all the Units then outstanding. AUDIT COMMITTEE AND NOMINATING COMMITTEE Because the Trust has no directors, it does not have an audit committee, an audit committee financial expert or a nominating committee. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Trusts directors, officers or beneficial owners of more than
ten percent of a registered class of the Trusts equity securities to file reports of ownership and changes in ownership with the SEC and to furnish the Trust with copies of all such reports. The Trust has no directors or officers and based solely on its review of the reports received by it, the Trust believes that during the fiscal year of
2022, no person who was a beneficial owner of more than ten percent the Trusts Units failed to file on a timely basis any report required by Section 16(a). STANDARDS OF CONDUCT Because the Trust has
no employees, it does not have a code of ethics. Employees of the Trustee, Argent Trust Company, must comply with the companys code of ethics which may be found at www.argentfinancial.com.  Item 11.
Executive Compensation During the years ended December 31, 2022, 2021 and 2020, Simmons Bank, as Trustee for such periods received total remuneration as follows:  Name of Individual or Numberof Persons in Group

CashCompensation


YearSimmons Bank, Trustee

$
130,209
(1)


2022Simmons Bank, Trustee

$
108,653
(1)


2021Simmons Bank, Trustee

$
104,613
(1)


2020  (1)
Under the Trust Indenture, the Trustee is entitled to an administrative fee for its administrative services, preparation
of quarterly and annual statements with attention to tax and legal matters of: (i) 1/20 of 1% of the first $100 million and (ii) Trustees standard hourly rate in excess of 300 hours annually. The administrative fee is subject to
reduction by a credit for funds provision.  47




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##### Table of Contents

COMPENSATION COMMITTEE Because the Trust has no directors, it does not have a compensation committee or maintain any equity compensation plans, and the Trust has not engaged
any consultants to provide advice or recommendations on the amount or form of compensation. The Trust does not have a principal executive officer or employees and therefore, the pay ratio disclosure is not applicable.  Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (a) Security Ownership of Certain Beneficial Owners.    Based solely on a review of statements
filed with the SEC pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the following table sets forth all persons who are known to the Trustee to own beneficially more than 5% of the outstanding Units of the
Trust as of December 31, 2022:  Name

Number of UnitsOwned(1)


Percent(2)Loyd Powell(3)


3,372,195



7.235
%Gideon Powell(3)


1,287,004



2.76
%SoftVest, LP(4)


4,148,095



8.9
%  (1)
Unless otherwise indicated, all Units are held directly with sole voting and investment power. (2)
Based on 46,608,796 Units outstanding as of December 31, 2022. (3)
Based on Schedule 13G/A filed February 11, 2021, reporting ownership as of December 31, 2020, jointly and as a
group by Loyd Powell and Gideon Powell. The address for each of Loyd Powell and Gideon Powell is P.O. Box 12208; Suite 1610, Dallas, Texas 75225. (4)
Based on Schedule 13G/A filed February 13, 2023 reporting ownership as of December 31, 2022, jointly and as a
group by SoftVest Advisors, LLC, SoftVest, LP, and SoftVest GP I, LLC. The address for each of SoftVest Advisors, LLC, SoftVest, LP, and SoftVest GI I, LLC is 400 Pine Street, Suite 1010, Abilene, TX, 79601. (b) Security Ownership of Management.    The Trustee does not beneficially own any securities of the Trust. (c) Change In Control.    The Trustee knows of no arrangements which may subsequently result in a change in control of the
Trust. (d) Securities Authorized for Issuance under Equity Compensation Plans.The Trust has no equity compensation
plans.  Item 13.
Certain Relationships and Related Transactions, and Director Independence The Trust has no directors or executive officers. See Item 11 for the remuneration received by the Trustee during the years
ended December 31, 2022, 2021 and 2020.  Item 14.
Principal Accounting Fees and Services Fees for services performed by Weaver and Tidwell, L.L.P. for the years ended December 31, 2022 and 2021 are:  Weaver and Tidwell, L.L.P.

2022


2021Audit fees

$
73,800


$
84,720Audit-related fees






Tax fees






All other fees






Total

$
73,800


$
84,720 As referenced in Item 10 above, the Trust has no audit committee, and as a result, has no audit committee pre-approval policy with respect to fees paid to Weaver and Tidwell, L.L.P.  48




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##### Table of Contents

PART IV  Item 15.
Exhibits, Financial Statement Schedules The following documents are filed as a part of this Report: 1.Financial Statements Included in Part II
of this Report:  Report of Independent Registered Public Accounting Firm


33Statements of Assets, Liabilities and Trust Corpus at December 31, 2022 and
2021


34Statements of Distributable Income for Each of the Three Years in the Period Ended December 31,
 2022


34Statements of Changes in Trust Corpus for Each of the Three Years in the Period Ended December 31,
 2022


35Notes to Financial Statements


36 2.Financial Statement Schedules Financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is given
in the financial statements or notes thereto. 3.Exhibits  Exhibit
Number



Exhibit(4)(a)



Permian Basin Amended and Restated Royalty Trust Indenture dated June 
20, 2014, between Southland Royalty Company (now Burlington Resources Oil 
& Gas Company LP) and The First National Bank of Fort Worth (now Simmons Bank), as Trustee, heretofore filed as Exhibit 4.1 to the Trusts Quarterly Report on Form 10-Q to the Securities and Exchange Commission
 for the quarterly period ended June 30, 2014, is incorporated herein by reference.*(b)



Amendment No. 1 to the Amended and Restated Royalty Trust Indenture of Permian Basin Royalty Trust, dated May 
4, 2022, heretofore filed as Exhibit 4.1 to the Trusts Current Report on Form 8-K to the Securities and Exchange Commission filed on May 6, 2022 is incorporated herein by reference.*(c)



Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) to The First National Bank of Fort Worth (now Simmons Bank), as Trustee, dated
November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trusts Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended
December 31, 1980, is incorporated herein by reference.* (P)(d)



Net Overriding Royalty Conveyance (Permian Basin Royalty Trust  Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil & Gas Company LP) to The First National Bank of Fort Worth (now Simmons
Bank), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(c) to the Trusts Annual Report on Form 10-K to the Securities and Exchange Commission for the
fiscal year ended December 31, 1980, is incorporated herein by reference.* (P)(10)(a)



Underwriting Agreement dated December 
15, 2005 among the Permian Basin Royalty Trust, Burlington Resources, Inc., Burlington Resources Oil 
& Gas L.P. and Lehman Brothers Inc. and Wachovia Capital Markets, LLC as representatives of the several underwriters, heretofore filed as Exhibit 10.1 to the Trusts current report on Form 8-K to the Securities
 and Exchange Commission filed on December 19, 2005, is incorporated herein by reference.*(b)



Underwriting Agreement dated August 
2, 2005 among the Permian Basin Royalty Trust, Burlington Resources, Inc., Burlington Resources Oil & Gas L.P. and Goldman Sachs 
& Co. and Lehman Brothers Inc. as representatives of the several underwriters, heretofore filed as Exhibit 10.1 to the Trusts current report on Form 8-K to the Securities and Exchange Commission filed on
August 8, 2005, is incorporated herein by reference.*  49




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##### Table of Contents

Exhibit
Number



Exhibit(c)



Underwriting Agreement dated August 
17, 2006, among Permian Basin Royalty Trust, ConocoPhillips, Burlington Resources Oil 
& Gas Company LP and Lehman Brothers Inc. and Wachovia Capital Markets, LLC as representatives of the several underwriters heretofore filed as Exhibit 10.1 to the Trusts current report on Form 8-K to the
 Securities and Exchange Commission filed on August 22, 2006, is incorporated herein by reference.*(d)



Registration Rights Agreement dated as of July 
21, 2004 by and between Burlington Resources, Inc. and Bank of America, N.A., as trustee of Permian Basin Royalty Trust, heretofore filed as Exhibit 
10.1 to the Trusts Quarterly Report on Form10-Q to the Securities and Exchange Commission for the quarterly period ended June 30, 2004 is incorporated herein by reference.*(23.1)



Consent of Cawley, Gillespie & Associates, Inc., reservoir engineer.**(31.1)



Certification required by Rule 13a-14(a)/15d-14(a).**(32.1)



Certification required by Rule 13a-14(b)/15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002.**(99.1)



Report of Cawley, Gillespie & Associates, Inc., reservoir engineer.**  *
A copy of this Exhibit is available to any Unit holder, at the actual cost of reproduction, upon written request to the
Trustee, Argent Trust Company, 2911 Turtle Creek Boulevard, Suite 850, Dallas, Texas 75219.  **
Filed herewith.  (P)
Paper exhibits.  50




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SIGNATURE PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.  ARGENT TRUST COMPANY, TRUSTEE FOR THE
PERMIAN BASIN ROYALTY TRUSTBy:

/s/     Ron E. HooperRon E. Hooper SVP
Royalty Trust Services
 Date: March 1, 2023 (The
Trust has no directors or executive officers.)  51