Texas Royalty properties are located in 33 Texas counties.
Waddell Ranch properties are located in Crane county.
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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 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, 2021, the Waddell Ranch properties contained 775 gross (268 net) productive oil wells, 107 gross 38 net) productive gas wells, and 152 gross (50 net) injection 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, 2021.
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. BROG 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 BROG. 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.
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.
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. There were 3 gross (0 net) drill wells completed on the Waddell Ranch properties during 2019. At December 31, 2019, there were 0 drill wells and 0 workover in progress on the Waddell Ranch properties.
Blackbeard has advised the Trustee that the total amount of capital expenditures for 2021 with regard to the Waddell Ranch properties totaled $154 million (gross). Capital expenditures include the cost of remedial and maintenance activities. The amount spent on remedial and maintenance activities is approximately $5 million of the amount expended by Blackbeard in 2021.
Blackbeard has advised the Trustee that the capital expenditures budget for 2022 totals approximately $245 million (gross) ($92 million net to the Trust), of which approximately $19 million (gross) is attributable to facilities. Accordingly, there is a 59% increase in capital expenditures expected for 2022 as compared with the 2021 capital expenditures. There are expected to be 125 (gross) new drill wells and 120 (gross) recompletions in 2022 as compared to 79 (gross) new drill wells and 110 (gross) recompletion in 2021.