PRT Stock Outpacing the S&P 500
Today, I’m going to focus on PermRock Royalty Trust (NYSE:PRT).
Why?
Well, there’s more to the bullish moves in the energy market than crude oil.
In February, natural gas futures hit $100.00 per barrel of oil equivalent (BOE) for the first time in two years. The big increase comes amid cold weather and depleted inventories. (Source: “Europe’s Oil Demand Could Rise As Natural Gas Soars to $100 A Barrel Equivalent,” OilPrice, February 10, 2025.)
With natural gas at a two-year high, this means that burning oil for industrial uses is more economical. As a result, high natural gas prices are a bullish tailwind for oil.
It doesn’t hurt that President Donald Trump is all in on the energy industry, and ramping up the oil and gas sector, too. And Trump’s pro-oil agenda should help the domestic energy industry over the long run.
These favorable conditions are an encouraging trend for an energy play like PermRock Royalty Trust.
PermRock Royalty Trust owns a perpetual interest in oil-and-natural-gas-producing properties located in the Permian Basin in Texas. It received an 80% net profit interest from the sale of production from certain properties owned by Boaz Energy, rather than a specific portion of production. (Source: “Form 10K,” U.S. Securities and Exchange Commission, November 13, 2024.)
PermRock’s underlying properties consist of four operating areas in the Permian Basin in Texas, totaling approximately 31,354 gross (22,394 net) acres.
There are some big changes coming to PermRock…all of them good.
In January, Boaz Energy, the owner and operator of the oil-and-gas properties underlying the trust, announced that it had entered into an agreement to sell its interests to T2S Permian Acquisition II LLC. (Source: “PermRock Royalty Trust Announces Boaz Energy’s Pending Sale to T2S Permian Acquisition II LLC,” PermRock Royalty Trust, January 13, 2025.)
The transaction is expected to close in March. PermRock expects that the operations under T2S will benefit from increased investment and a strategic operational framework, which should enhance operational efficiency and longer-term financial returns.
Monthly Payout of $0.04/Unit
Because PermRock declares a monthly dividend, it announces its financial results on a monthly basis, too. In January, the company reported oil cash receipts of $1.52 million, a decrease of $230,000 from the prior month.
During the month, the trust sold 22,491 barrels of oil, compared to 24,938 in the prior month. The average price per barrel was $67.80, down from $70.24 per barrel in December 2024.
PermRock’s natural gas receipts totaled $0.07 million, unchanged from the prior month. During the month, natural gas averaged $2.53 per thousand cubic feet (Mcf) as compared to $2.37 per Mcf in the prior month.
This resulted in a cash distribution of $489,995.26, or $0.040276 per unit. This works out to $0.48 on an annual basis for a forward yield of 12.34%. (Source: “Cash Distributions,” PermRock Royalty Trust, last accessed February 11, 2025.)
PermRock paid out its first monthly dividend in May 2018. As expected, the monthly payout fluctuates based on the price of oil and gas and sales volumes.
The red line in the chart below represents the dividend payout and the blue line is the price of West Texas Intermediate.
Some months are more prosperous than others. During the 2020 health crisis, PermRock suspended its payout for five months.
Chart courtesy of StockCharts.com
PRT Stock Rallies Higher on News of Acquisition
PermRock Royalty Trust stock did not exactly perform well in 2024, but that sentiment turned around in 2025. The big jump in PRT units can be attributed to news of Boaz Energy’s pending sale to T2S in January, with PRT stock trading at its highest level in over a year.
As of February 11, PRT is up:
- 11% over the last month
- 13% over the last three months
- 21% year to date
- 10.7% year over year
The Lowdown on PermRock Royalty Trust
PermRock Royalty Trust is an oil and gas exploration and production company with a big footprint in Permian Basin. Thanks to historically strong demand for oil and gas, it has been able to provide its shareholders with an ultra-high-yield monthly dividend.
Insiders have a big stake in PermRock Royalty Trust stock, holding 40.2% of all outstanding shares. I’d like to think that having this much skin in the game would motivate management to see the trust perform well. (Source: “PermRock Royalty Trust (PRT),” Yahoo! Finance, last accessed February 11, 2025.)
Institutional ownership is not exactly robust, at just 1.7%, but the biggest holders include some of Wall Street’s most recognizable names, including BlackRock Inc, Royal Bank of Canada, and Morgan Stanley.