8-K: Cross Timbers Royalty Trust Declares Lower July Cash Distribution Amid Decreased Sales and Prices

Cross Timbers Royalty Trust announced a cash distribution of $0.030376 per unit for July, payable on August 14, 2025, to unitholders of record on July 31, 2025, reflecting a decline in underlying oil and gas sales volumes and average prices.

Summary

• A cash distribution of $0.030376 per unit was declared for July.
• The distribution is payable on August 14, 2025, to unitholders of record on July 31, 2025.
• Underlying oil sales for the current month were 9,000 barrels at an average price of $60.88 per barrel.
• Underlying gas sales for the current month were 47,000 Mcf at an average price of $4.84 per Mcf.
• Compared to the prior month, oil sales decreased from 11,000 barrels and gas sales decreased from 66,000 Mcf.
• Average oil prices decreased from $62.83 per barrel and average gas prices decreased from $4.89 per Mcf compared to the prior month.
• Excess costs on properties underlying the Texas Working Interest net profits interests increased by $9,000.
• Cumulative excess costs remaining on the Texas Working Interest net profits interests total $4,824,000, including $1,311,000 in accrued interest.
• Excess costs of $39,000 were recovered on properties underlying the Oklahoma Working Interest net profits interests.
• After the partial recovery, no remaining proceeds from the Oklahoma Working Interest properties were included in this month's distribution.
• Cumulative excess costs remaining on the Oklahoma Working Interest net profits interests total $33,000, including $443 in accrued interest.

Sentiment

Score: 3

Explanation: The significant decline in underlying oil and gas sales volumes and average prices, coupled with an increase in excess costs for one key interest, resulted in a lower cash distribution. While there was some excess cost recovery, the overall trend for the underlying assets appears negative for this period.

Positives

• A cash distribution of $0.030376 per unit was declared for unitholders.
• Excess costs of $39,000 were recovered on properties underlying the Oklahoma Working Interest net profits interests.

Negatives

• The cash distribution of $0.030376 per unit is lower than implied by prior month's underlying sales and prices.
• Underlying oil sales decreased by 2,000 barrels (from 11,000 Bbls to 9,000 Bbls) compared to the prior month.
• Underlying gas sales decreased by 19,000 Mcf (from 66,000 Mcf to 47,000 Mcf) compared to the prior month.
• Average oil price decreased by $1.95 per barrel (from $62.83/Bbl to $60.88/Bbl) compared to the prior month.
• Average gas price decreased by $0.05 per Mcf (from $4.89/Mcf to $4.84/Mcf) compared to the prior month.
• Excess costs on Texas Working Interest properties increased by $9,000.
• Despite partial recovery, there were no remaining proceeds from the Oklahoma Working Interest properties to be included in this month's distribution.

Risks

• Sales volumes may fluctuate from month to month based on the timing of cash receipts.
• Significant cumulative excess costs of $4,824,000 (including $1,311,000 accrued interest) remain on the Texas Working Interest net profits interests, which can reduce future net proceeds.
• Cumulative excess costs of $33,000 (including $443 accrued interest) remain on the Oklahoma Working Interest net profits interests, potentially impacting future distributions from these properties.

Future Outlook

Sales volumes are recorded in the month the Trust receives the related net profits income, and because of this, sales volumes may fluctuate from month to month based on the timing of cash receipts.

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 $0.030376 per unit."
• "XTO Energy has advised the Trustee that excess costs increased by $9,000 on properties underlying the Texas Working Interest net profits interests."
• "XTO Energy has advised the Trustee that $39,000 of excess costs were recovered on properties underlying the Oklahoma Working Interest net profits interests."

Industry Context

Cross Timbers Royalty Trust operates as a pass-through entity, distributing net profits from underlying oil and gas properties. Its performance is directly influenced by commodity prices and production volumes, as well as the management of excess costs by the operator, XTO Energy. The reported decrease in both oil and gas sales volumes and average prices for the current period reflects a challenging commodity market environment, which is a common factor affecting royalty trusts.

Stakeholder Impact

• Shareholders (unitholders) will receive a lower cash distribution of $0.030376 per unit.
• XTO Energy, as the operator, continues to manage the underlying properties and report financial details to the Trust.

Next Steps

• Future monthly distributions will be declared based on underlying sales and net profits from the Trust's properties.

Key Dates

Recommendation

Keywords

Cross Timbers Royalty Trust, CRT, cash distribution, oil and gas, royalty trust, net profits interest, excess costs, unitholders, NYSE