8-K: Cross Timbers Royalty Trust Announces September Cash Distribution of $0.102230 Per Unit

Cross Timbers Royalty Trust declared a September cash distribution of $0.102230 per unit, payable on October 15, 2024, to unitholders of record on September 30, 2024.

Summary

• Cross Timbers Royalty Trust has announced a cash distribution of $0.102230 per unit for September.
• The distribution is payable on October 15, 2024, to unitholders of record on September 30, 2024.
• The current month's distribution is based on 16,000 barrels of oil sold at an average price of $77.46 per barrel and 138,000 Mcf of gas sold at an average price of $3.29 per Mcf.
• The prior month's distribution was based on 13,000 barrels of oil sold at an average price of $76.84 per barrel and 67,000 Mcf of gas sold at an average price of $3.33 per Mcf.
• The September distribution includes a $24,128 deduction related to a settlement with XTO Energy Inc.
• Excess costs on the Texas Working Interest net profits interests increased by $124,000, with cumulative excess costs now totaling $3,847,000, including accrued interest of $1,034,000.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the settlement deduction and increase in excess costs, which offset the positive of the cash distribution. The distribution is expected, but the negative factors temper the overall sentiment.

Positives

• The Trust is making a cash distribution to unitholders.
• Oil sales volumes and prices increased compared to the prior month.

Negatives

• The September distribution includes a $24,128 deduction related to a settlement with XTO Energy Inc.
• Excess costs on the Texas Working Interest net profits interests increased by $124,000.
• Cumulative excess costs on the Texas Working Interest net profits interests total $3,847,000, including accrued interest of $1,034,000.

Risks

• Sales volumes may fluctuate from month to month based on the timing of cash receipts.
• The Trust is subject to ongoing litigation and settlement risks.
• Excess costs on the Texas Working Interest net profits interests continue to accumulate.

Future Outlook

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

Management Comments

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

Industry Context

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

Comparison to Industry Standards

• The distribution of $0.102230 per unit is within the range of typical distributions for royalty trusts, but the specific amount varies based on production and commodity prices.
• The settlement deduction is a unique event and not a standard occurrence for royalty trusts.
• The increase in excess costs is a negative factor that could impact future distributions, and is a common issue for trusts with working interest properties.

Legal Proceedings

• The document references a settlement of a royalty class action lawsuit against XTO Energy Inc.
• The Trustee objected to similar claims relating to the Chieftain settlement with respect to another trust for which it serves as trustee (the Hugoton Royalty Trust) in an arbitration styled Simmons Bank (successor to Southwest Bank and Bank of America, N.A.) vs. XTO Energy Inc. through the American Arbitration Association.

Stakeholder Impact

• Unitholders will receive a cash distribution of $0.102230 per unit.
• The settlement deduction and excess costs may negatively impact future distributions to unitholders.

Next Steps

• The next distribution will be announced in the following month.
• The Trust will continue to monitor and manage the excess costs on the Texas Working Interest net profits interests.

Key Dates

Keywords

cash distribution, royalty trust, oil and gas, XTO Energy, settlement, excess costs, unit holders, production costs