8-K: Cross Timbers Royalty Trust Declares May Distribution

Cross Timbers Royalty Trust announced a May cash distribution of $0.029624 per unit, payable June 12, 2026, with lower underlying sales volumes and recovered excess costs impacting the distribution.

Summary

• Cross Timbers Royalty Trust declared a monthly cash distribution of $0.029624 per unit.
• The distribution is payable on June 12, 2026, to unitholders of record on May 29, 2026.
• Underlying oil sales volumes decreased to 10,000 Bbls from 17,000 Bbls in the prior month.
• Underlying gas sales volumes decreased to 47,000 Mcf from 121,000 Mcf in the prior month.
• The average oil price increased to $77.14 per Bbl from $58.93 per Bbl.
• The average gas price increased to $4.98 per Mcf from $4.83 per Mcf.
• Excess costs were recovered on Texas and Oklahoma Working Interest net profits interests, reducing proceeds available for distribution.
• Cumulative excess costs remaining on Texas Working Interest net profits interests total $5,893,000, including $1,626,000 in accrued interest.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to significantly lower sales volumes and the impact of excess cost recoveries, which outweigh the positive commodity price movements for the current distribution.

Positives

• The average oil price increased significantly to $77.14 per Bbl from $58.93 per Bbl.
• The average gas price saw a slight increase to $4.98 per Mcf from $4.83 per Mcf.

Negatives

• Underlying oil sales volumes decreased by 41% to 10,000 Bbls from 17,000 Bbls.
• Underlying gas sales volumes decreased by 61% to 47,000 Mcf from 121,000 Mcf.
• Despite price increases, the substantial drop in sales volumes led to a lower distribution.
• Recovered excess costs on Texas and Oklahoma Working Interest properties reduced proceeds available for distribution.
• Cumulative excess costs on Texas Working Interest net profits interests remain substantial at $5,893,000, including significant accrued interest.

Risks

• Fluctuations in sales volumes from month to month based on the timing of cash receipts can impact distributions.
• The existence of significant cumulative excess costs on working interest net profits interests could continue to reduce future distributions.
• Volatility in oil and gas prices can impact revenue and profitability.

Future Outlook

The distribution amount is subject to fluctuations based on underlying sales volumes, commodity prices, and the recovery of excess costs. The significant cumulative excess costs on certain properties may continue to impact future distributions.

Management Comments

• Argent Trust Company, as Trustee of the Cross Timbers Royalty Trust (the Trust) (NYSE: CRT), today declared a cash distribution to the holders of its units of beneficial interest of $0.029624 per unit, payable on June 12, 2026, to unitholders of record on May 29, 2026.
• Sales volumes are recorded in the month the Trust receives the related net profits income. Because of this, sales volumes may fluctuate from month to month based on the timing of cash receipts.
• XTO Energy has advised the Trustee that $3,000 of excess costs were recovered on properties underlying the Texas Working Interest net profits interests. However, after the partial recovery, there were no remaining proceeds from the properties underlying the Texas Working Interest net profits interests to be included in this months distribution.
• XTO Energy has advised the Trustee that $52,000 of excess costs were recovered on properties underlying the Oklahoma Working Interest net profits interests. However, after the partial recovery, there were no remaining proceeds from the properties underlying the Oklahoma Working Interest net profits interests to be included in this months distribution.

Industry Context

StockSavvy.ai notes that this distribution announcement reflects typical operational dynamics for royalty trusts, where monthly distributions are highly sensitive to commodity price fluctuations and production volumes. The recovery of excess costs is a common factor that can temporarily reduce distributable income.

Comparison to Industry Standards

• The distribution of $0.029624 per unit is a specific outcome for Cross Timbers Royalty Trust and cannot be directly compared to industry-wide standards without more context on the trust's underlying assets and operational costs.
• The significant decrease in sales volumes (oil by 41%, gas by 61%) is a key factor impacting this distribution, which is a common challenge for many oil and gas producers facing market or operational headwinds.
• The recovery of excess costs, while reducing this month's distribution, is a mechanism to eventually recoup past operational expenses, a practice common in net profits interest structures.

Stakeholder Impact

• Shareholders will receive a lower cash distribution for May compared to the prior month, impacting their immediate income.
• The ongoing cumulative excess costs may impact the long-term value and distributable income for unitholders.

Next Steps

• Unitholders of record on May 29, 2026, will receive the distribution on June 12, 2026.
• Monitor future distributions for trends in sales volumes, commodity prices, and excess cost recovery.

Key Dates

Recommendation

The filing indicates a weaker distribution due to decreased volumes, despite higher prices. While the price increase is positive, the volume drop and ongoing excess costs suggest caution. A 'hold' recommendation is appropriate pending signs of volume recovery or resolution of excess costs.

Keywords

Cross Timbers Royalty Trust, CRT, Cash Distribution, Royalty Trust, Oil and Gas, Net Profits Interest, Excess Costs, SEC Filing