Sale of underlying properties
PermRock Royalty Trust (NYSE: PRT) announced the closing of a significant transaction where Boaz Energy II and its affiliate Boaz Energy II Royalty (the Grantors) sold their interests in the underlying oil and gas properties of the Trust to T2S Permian Acquisition II. The sale, initiated by a Purchase and Sale Agreement on January 10, 2025, comprises the transfer of all Grantors’ rights and interests in the subject properties, which remain subject to the net profits interest and the original Conveyance agreement dated May 4, 2018.
Transition of operations
Boaz Energy will facilitate the transition of operations to new owner T2S Permian Acquisition II. Argent Trust Company, as trustee of the Trust, will proceed with customary administration of the Trust. This is for maintaining continuity of the Trust operations and minimizing stakeholder disruption.
Ownership change and trust units
Boaz Energy sold 4,884,861 Trust units to T2S Permian-owned Ustx LLC. The sudden change in ownership may lead to operating uncertainty but the seamless transition under the expected administration by Argent Trust Company will work towards mitigating the risks.
Analysis
The culmination of the deal is a strategic shift for PermRock Royalty Trust, in the sense that it has sold underlying properties and Trust units to T2S Permian. Stability of management and operations, backed by the direction of Boaz Energy, is crucial to maintaining stakeholder trust. Even though the big change in ownership introduces potential operational risk, the structured approach to the transition aims to make the process seamless. The transaction ought to be capable of providing financial stability and potentially enhancing the long-term value of the Trust.