8-K: Cross Timbers Royalty Trust Announces October Cash Distribution of $0.064592 Per Unit

Cross Timbers Royalty Trust declared a cash distribution of $0.064592 per unit for October, payable on November 15, 2024, to unitholders of record on October 31, 2024.

Summary

• Cross Timbers Royalty Trust has announced a cash distribution of $0.064592 per unit.
• The distribution is payable on November 15, 2024, to unitholders of record on October 31, 2024.
• The current month's distribution is based on sales of 12,000 barrels of oil at an average price of $76.77 per barrel and 82,000 Mcf of gas at an average price of $4.46 per Mcf.
• The prior month's distribution was based on sales of 16,000 barrels of oil at an average price of $77.46 per barrel and 138,000 Mcf of gas at an average price of $3.29 per Mcf.
• A $24,128 deduction was included in the September distribution as a production cost related to a litigation settlement.
• Excess costs on Texas Working Interest net profits interests increased by $125,000, bringing the cumulative total to $4,000,000, including $1,061,000 in accrued interest.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to decreased sales volumes and increased costs, although the distribution is still being made. The litigation settlement deduction and rising excess costs are also concerning.

Positives

• The Trust is continuing to make monthly cash distributions to unitholders.
• Gas prices increased significantly from $3.29 to $4.46 per Mcf compared to the prior month.

Negatives

• Oil sales volumes decreased from 16,000 barrels to 12,000 barrels compared to the prior month.
• Gas sales volumes decreased from 138,000 Mcf to 82,000 Mcf compared to the prior month.
• A $24,128 deduction was included in the September distribution as a production cost.
• Excess costs on Texas Working Interest net profits interests increased by $125,000.

Risks

• Sales volumes can fluctuate from month to month based on the timing of cash receipts.
• The Trust is subject to litigation risks, as evidenced by the settlement deduction.
• Excess costs on the Texas Working Interest net profits interests continue to accumulate, reaching $4,000,000.

Future Outlook

The document does not provide specific forward-looking statements or guidance beyond the current distribution announcement.

Management Comments

• Argent Trust Company, as Trustee of the Cross Timbers Royalty Trust, declared the cash distribution.
• XTO Energy advised the Trustee about the allocation of settlement funds and excess costs.

Industry Context

This announcement is typical for royalty trusts, which distribute cash based on underlying oil and gas sales. The fluctuations in sales volumes and prices reflect the volatility of the energy market. The litigation settlement and excess cost issues are specific to this trust but highlight the complexities of managing royalty interests.

Comparison to Industry Standards

• The distribution yield for Cross Timbers Royalty Trust will vary based on the unit price, but the distribution of $0.064592 per unit is in line with the typical monthly distributions of similar royalty trusts.
• Other royalty trusts such as the Permian Basin Royalty Trust (PBT) and the San Juan Basin Royalty Trust (SJT) also experience fluctuations in monthly distributions based on commodity prices and production volumes.
• The litigation settlement and excess cost issues are not uncommon in the royalty trust sector, as these trusts often have complex relationships with the operators of the underlying properties.

Legal Proceedings

• A royalty class action lawsuit against XTO Energy Inc. was settled, resulting in a $24,128 deduction for the Trust.

Stakeholder Impact

• Unitholders will receive a cash distribution of $0.064592 per unit.
• The decrease in sales volumes and increase in costs may negatively impact future distributions.

Next Steps

• The next cash distribution will be announced in the following month.
• The Trust will continue to monitor sales volumes, commodity prices, and operating costs.

Key Dates

Keywords

Cash Distribution, Royalty Trust, Oil and Gas, Unit Holders, Production Costs, Litigation Settlement, Excess Costs