8-K: Cross Timbers Royalty Trust Declares Lower Monthly Distribution Amid Declining Oil and Gas Volumes and Prices

Cross Timbers Royalty Trust announced a cash distribution of $0.035849 per unit for June 2025, a decrease driven by lower underlying oil and gas sales volumes and average commodity prices compared to the prior month.

Summary

• Cross Timbers Royalty Trust declared a cash distribution of $0.035849 per unit for June 2025.
• The distribution is payable on July 15, 2025, to unitholders of record on June 30, 2025.
• Underlying oil sales volumes for the current distribution period were 11,000 Bbls, down from 13,000 Bbls in the prior month.
• Underlying gas sales volumes for the current distribution period were 66,000 Mcf, down from 72,000 Mcf in the prior month.
• Average oil prices for the current distribution period were $62.83 per Bbl, a decrease from $67.18 per Bbl in the prior month.
• Average gas prices for the current distribution period were $4.89 per Mcf, a decrease from $5.80 per Mcf in the prior month.
• Excess costs on Texas Working Interest net profits interests increased by $91,000, bringing the cumulative total to $4,786,000, including $1,281,000 in accrued interest.
• Excess costs on Oklahoma Working Interest net profits interests increased by $72,000, bringing the cumulative total to $72,000.
• Despite the increase, these excess costs did not reduce net proceeds from the remaining conveyances for the current distribution period.

Sentiment

Score: 3

Explanation: The sentiment is negative due to a lower cash distribution per unit, significant declines in underlying oil and gas sales volumes, and decreases in average commodity prices compared to the prior month. Additionally, excess costs increased, although they did not impact current net proceeds.

Positives

• A cash distribution of $0.035849 per unit was declared, providing income to unitholders.
• The increase in excess costs for both Texas and Oklahoma Working Interests did not reduce net proceeds from the remaining conveyances for the current distribution period.

Negatives

• The declared cash distribution of $0.035849 per unit is lower than the implied distribution from the prior month's higher volumes and prices.
• Underlying oil sales volumes decreased by 2,000 Bbls (15.4%) to 11,000 Bbls from 13,000 Bbls in the prior month.
• Underlying gas sales volumes decreased by 6,000 Mcf (8.3%) to 66,000 Mcf from 72,000 Mcf in the prior month.
• Average oil prices decreased by $4.35 per Bbl (6.5%) to $62.83 per Bbl from $67.18 per Bbl in the prior month.
• Average gas prices decreased by $0.91 per Mcf (15.7%) to $4.89 per Mcf from $5.80 per Mcf in the prior month.
• Excess costs on Texas Working Interest net profits interests increased by $91,000.
• Excess costs on Oklahoma Working Interest net profits interests increased by $72,000.

Risks

• Fluctuations in underlying oil and gas sales volumes can directly impact future distributions.
• Volatility in average oil and gas prices can significantly affect the Trust's net proceeds and distributions.
• Accumulation of excess costs on net profits interests, particularly the $4,786,000 on Texas Working Interest, poses a risk as future increases could potentially reduce net proceeds from conveyances.

Future Outlook

The document does not provide explicit forward-looking statements or guidance beyond the declaration of the current month's distribution.

Management Comments

• Argent Trust Company, as Trustee of the Cross Timbers Royalty Trust, declared a cash distribution to the holders of its units of beneficial interest of $0.035849 per unit.
• XTO Energy has advised the Trustee that excess costs increased by $91,000 on properties underlying the Texas Working Interest net profits interests, and by $72,000 on properties underlying the Oklahoma Working Interest net profits interests.

Industry Context

Royalty trusts like Cross Timbers Royalty Trust are structured to pass through income from underlying oil and gas assets directly to unitholders. Their distributions are highly sensitive to fluctuations in commodity prices and production volumes. The reported declines in both volumes and prices reflect broader market dynamics in the energy sector, which can be influenced by global supply-demand balances, geopolitical events, and economic conditions. The increase in excess costs is a specific operational factor that can impact net proceeds for such trusts.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess the performance against global benchmarks or industry standards.

Related Party Transactions

• XTO Energy, a subsidiary of Exxon Mobil Corporation, advises the Trustee regarding excess costs and underlying properties. Exxon Mobil Corporation also signed the 8-K filing, indicating a close operational relationship.

Stakeholder Impact

• Shareholders (unitholders) will receive a lower cash distribution per unit compared to the prior period, impacting their income from the Trust.
• The Trust's financial performance, as indicated by declining volumes and prices, may influence investor sentiment and trading activity for CRT units.

Next Steps

• The declared cash distribution of $0.035849 per unit will be paid on July 15, 2025, to unitholders of record on June 30, 2025.

Key Dates

Recommendation

Keywords

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