8-K: Cross Timbers Royalty Trust Declares $0.05 Distribution

Cross Timbers Royalty Trust announced a $0.050060 per unit cash distribution and the completion of its $1.5 million reserve fund increase.

Summary

• Declared a cash distribution of $0.050060 per unit, payable on March 13, 2026, to unitholders of record on February 27, 2026.
• Oil sales volumes for the current month were 9,000 Bbls at an average price of $55.35 per Bbl.
• Gas sales volumes for the current month were 73,000 Mcf at an average price of $4.36 per Mcf.
• Oil sales volumes decreased from 10,000 Bbls in the prior month, while gas sales volumes remained stable at 73,000 Mcf.
• Average oil price decreased from $57.62 per Bbl in the prior month, while average gas price increased from $4.13 per Mcf.
• Excess costs on Texas Working Interest properties increased by $80,000, with cumulative remaining costs totaling $5,637,000, including accrued interest of $1,532,000.
• Excess costs on Oklahoma Working Interest properties increased by $262,000, with cumulative remaining costs totaling $931,000, including accrued interest of $4,000.
• The Trustee completed its increase to the reserve funds, reaching a balance of $1,500,000, and has discontinued the $50,000 monthly withholding.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative update due to declining oil metrics and increasing excess costs, partially offset by the completion of the reserve fund increase and stable gas volumes/improved gas prices.

Positives

• A cash distribution of $0.050060 per unit has been declared.
• The Trustee has successfully increased the reserve fund to $1,500,000, enhancing financial stability.
• The $50,000 monthly withholding from distributions to fund the reserve has been discontinued, potentially allowing for higher future distributions.
• Average gas prices increased from $4.13/Mcf in the prior month to $4.36/Mcf in the current month.
• Excess costs on both Texas and Oklahoma Working Interest properties did not reduce net proceeds from remaining conveyances.

Negatives

• Oil sales volumes decreased from 10,000 Bbls in the prior month to 9,000 Bbls in the current month.
• Average oil price decreased from $57.62 per Bbl in the prior month to $55.35 per Bbl in the current month.
• Excess costs on Texas Working Interest properties increased by $80,000.
• Excess costs on Oklahoma Working Interest properties increased by $262,000.

Risks

• Underlying cumulative excess costs on Texas Working Interest net profits interests total $5,637,000, including accrued interest of $1,532,000, which must be recovered before net profits are realized.
• Underlying cumulative excess costs on Oklahoma Working Interest net profits interests total $931,000, including accrued interest of $4,000, which must be recovered before net profits are realized.
• Fluctuations in sales volumes and commodity prices (oil and gas) directly impact distribution amounts, introducing revenue variability.

Future Outlook

NA

Management Comments

• Argent Trust Company, as Trustee of the Cross Timbers Royalty Trust, today declared a cash distribution to the holders of its units of beneficial interest of $0.050060 per unit.
• XTO Energy has advised the Trustee that excess costs increased by $80,000 on properties underlying the Texas Working Interest net profits interests.
• XTO Energy has advised the Trustee that excess costs increased by $262,000 on properties underlying the Oklahoma Working Interest net profits interests.
• In accordance with Section 3.08 of the Cross Timbers Royalty Trust Indenture, the Trustee withheld $50,000 from the monthly distribution over the past ten months to increase the reserve account balance.
• The reserve has now reached $1,500,000, and the Trustee has discontinued the $50,000 withholding.

Industry Context

StockSavvy.ai notes that the slight decline in oil sales volumes and average oil prices for Cross Timbers Royalty Trust reflects broader volatility in the crude oil market, while the increase in natural gas prices aligns with recent trends driven by demand and supply dynamics. The continued increase in excess costs, despite not impacting current net proceeds, highlights the ongoing operational challenges and cost management pressures faced by operators in the energy sector, particularly for mature assets.

Stakeholder Impact

• Shareholders (Unitholders): Will receive a cash distribution of $0.050060 per unit. The discontinuation of the $50,000 monthly withholding for reserves could lead to higher future distributions if other factors remain constant, but current distribution is impacted by lower oil metrics and higher excess costs.
• Trustee (Argent Trust Company): Continues its role in managing the Trust and distributions, having successfully completed the reserve fund increase.
• Operators (XTO Energy): Continues to manage the underlying properties, reporting increased excess costs which impact the Trust's net profits.

Next Steps

• Payment of the cash distribution on March 13, 2026, to unitholders of record on February 27, 2026.
• Future monthly distribution declarations will continue to be based on underlying sales and costs.

Key Dates

Recommendation

The Trust's distribution is impacted by declining oil volumes and prices, alongside increasing excess costs, which are negative factors. However, the completion of the reserve fund increase and stable gas volumes with improved gas prices provide some stability. Given the mixed signals and the nature of a royalty trust, a 'hold' recommendation is appropriate as investors monitor future commodity price trends and operational costs.

Keywords

Royalty Trust, Oil and Gas, Cash Distribution, CRT, Cross Timbers, Energy, Dividends, Commodity Prices, Net Profits Interest, SEC Filing