Cross Timbers Royalty Trust (CRT): History, Ownership, Mission, How It Works & Makes Money

Ever wondered how Cross Timbers Royalty Trust consistently delivers value from established energy assets, distributing $0.088451 per unit to holders in its December 2024 declaration alone? This unique entity, holding net profits interests primarily in Texas, Oklahoma, and New Mexico, operates distinctly from typical exploration and production companies by focusing solely on distributing available cash flows derived from its underlying properties. With a market capitalization hovering around $175 million as of late 2024, understanding its structure and income generation is crucial for investors seeking direct exposure to energy royalties; are you ready to explore how this decades-old trust functions and sustains its distributions?

Cross Timbers Royalty Trust (CRT) History

Cross Timbers Royalty Trust (CRT)'s Founding Timeline

Understanding the roots of Cross Timbers Royalty Trust provides crucial context for its operations today.

Year established

Cross Timbers Royalty Trust was established on February 12, 1991.

Original location

The Trust was formed under the laws of Texas. The underlying properties, from which the Trust derives income, are primarily located in established oil and gas producing regions within Texas, Oklahoma, and New Mexico.

Founding team members

The Trust wasn't founded by individuals in the traditional startup sense. It was created by XTO Energy Inc. (which itself was previously known as Cross Timbers Oil Company) through the conveyance of net profits interests.

Initial capital/funding

Instead of typical startup funding, the Trust was endowed with specific assets. XTO Energy conveyed 90% net profits interests in certain producing royalty and overriding royalty interest properties located in Texas, Oklahoma, and New Mexico, and 75% net profits interests from working interest properties primarily in Oklahoma and Texas.

Cross Timbers Royalty Trust (CRT)'s Evolution Milestones

The journey since 1991 has seen several key developments shape the Trust.

Cross Timbers Royalty Trust (CRT)'s Transformative Moments

Certain moments stand out in defining CRT's path.

Initial Asset Conveyance Structure

The foundational decision by XTO Energy to structure CRT with net profits interests in long-life, established (but naturally declining) fields fundamentally defined its purpose and investment profile: providing distributions from existing production rather than growth through new exploration.

Dependence on External Operators

The reliance on external operators, initially XTO Energy and later ExxonMobil following the acquisition, means CRT has no operational control. Its fortunes are tied to the operator's efficiency, development decisions (or lack thereof on mature properties), and reporting accuracy.

Market Perception and Yield Focus

Over time, CRT became known primarily as a yield-focused investment. Its attractiveness fluctuates heavily with energy prices and distribution levels, influencing its unit price. Understanding its financial mechanisms is key; you can explore more here: Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors. The declining nature of the underlying assets remains a central theme affecting its valuation and future prospects into 2024 and beyond.

Cross Timbers Royalty Trust (CRT) Ownership Structure

Cross Timbers Royalty Trust operates as a statutory trust, meaning its structure and governance differ significantly from a traditional corporation. Ownership is represented by units traded publicly, reflecting a direct interest in the underlying royalty assets.

Cross Timbers Royalty Trust's Current Status

As of late 2024, Cross Timbers Royalty Trust is a publicly traded entity. Its units are listed and actively traded on the New York Stock Exchange under the ticker symbol CRT. This public status ensures liquidity for unitholders and mandates regulatory compliance and financial disclosures, offering transparency into its operations. You can delve deeper into its financial condition here: Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors.

Cross Timbers Royalty Trust's Ownership Breakdown

The ownership of CRT units is dispersed among various types of holders. Based on available data from 2024 filings, the distribution reflects significant public participation alongside institutional investment.

Cross Timbers Royalty Trust's Leadership

Unlike corporations with a board of directors and executive officers, a royalty trust is administered by a trustee. For Cross Timbers Royalty Trust, the Trustee responsible for managing the trust's affairs, collecting revenues from the underlying properties, and distributing net proceeds to unitholders is Simmons Bank. Simmons Bank acts in a fiduciary capacity, overseeing administrative functions according to the terms outlined in the Trust Indenture.

• The Trustee's role involves ensuring distributions are made correctly and timely.
• They handle administrative tasks such as accounting, reporting, and compliance.
• Decision-making is generally limited to the execution of the trust agreement, not active operational management of the underlying properties, which remains with the working interest owners like XTO Energy Inc.

Cross Timbers Royalty Trust (CRT) Mission and Values

Cross Timbers Royalty Trust operates with a singular focus defined by its trust structure: managing underlying royalty interests and distributing the resulting income to its unitholders. This structure dictates its operational priorities and long-term objectives, centering on efficient administration of assets rather than traditional corporate expansion or product development.

Cross Timbers Royalty Trust's Core Purpose

Unlike conventional corporations, royalty trusts like CRT typically do not publish formal mission or vision statements centered on broad social or market goals. Their existence and operations are strictly governed by the terms outlined in the original trust agreement.

Official mission statement

CRT does not have an official, publicly stated mission statement in the traditional corporate sense. Its primary legal and operational mandate, derived from the trust indenture established in 1991, is to collect and distribute net proceeds from its royalty interests to unitholders. This focus on distribution shapes its entire operational framework.

Vision statement

A formal vision statement outlining future aspirations is not provided by CRT. The trust's long-term direction is inherently tied to the production life and market prices associated with its underlying oil and gas properties.

Company slogan

Cross Timbers Royalty Trust does not utilize a company slogan. Its identity and communication focus on its function as a distribution vehicle for royalty income. The trust's performance and value proposition are communicated through its distribution history and the financial health of its underlying assets. Understanding these financial dynamics is key for stakeholders; you can explore more details here: Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors.

Operational Focus

The core values are implicitly demonstrated through its operational execution:

• Fiduciary Responsibility: Acting in the best interest of unitholders by ensuring proper collection and timely distribution of entitled income.
• Transparency: Providing regular financial reporting and updates on production and reserves as required by regulations.
• Efficiency: Managing administrative functions cost-effectively to maximize distributable income. For the fiscal year ending December 31, 2023, general and administrative expenses were reported at approximately $1.6 million.

The trust's 'culture' is thus defined by compliance, accurate accounting, and distribution maximization within the confines of the trust agreement.

Cross Timbers Royalty Trust (CRT) How It Works

Cross Timbers Royalty Trust functions primarily as a pass-through entity, holding net profits interests in producing and nonproducing oil and gas properties primarily in Texas, Oklahoma, and New Mexico. The Trust collects income generated from these interests, managed by XTO Energy Inc., and distributes it to its unitholders after deducting trust expenses.

Cross Timbers Royalty Trust's Product/Service Portfolio

Cross Timbers Royalty Trust's Operational Framework

The core operational process for CRT is straightforward due to its structure as a trust. XTO Energy Inc., as the operator of the underlying properties, manages exploration, development, and production activities. They calculate the net proceeds attributable to the Trust's interests based on revenues less production costs and capital expenditures.

These calculated net proceeds are then conveyed to Simmons Bank, the Trustee for CRT. The Trustee is responsible for:

• Collecting the net proceeds income from XTO Energy.
• Paying the administrative expenses of the Trust, which were typically minimal, often less than $1 million annually based on recent years like 2023-2024.
• Distributing the remaining available cash to the unitholders, usually on a monthly basis. For the fiscal year 2024, distributions fluctuated based on energy prices and production volumes reported by the operator.

CRT itself does not engage in any operational activities related to the oil and gas properties. Its existence is centered on holding these interests and distributing the resulting income, aligning with its stated objectives detailed in the Mission Statement, Vision, & Core Values of Cross Timbers Royalty Trust (CRT). The underlying properties consist primarily of established, long-life assets.

Cross Timbers Royalty Trust's Strategic Advantages

CRT possesses several inherent advantages stemming from its structure and asset base:

• Pass-Through Taxation: As a statutory trust, CRT generally avoids corporate income tax, allowing income to pass directly to unitholders, though unitholders are taxed on their distributions.
• No Operational Burden: The Trust has no employees and incurs minimal overhead, as all operational aspects are handled by the property operator (XTO Energy). This leads to very low administrative costs relative to revenue.
• Direct Commodity Exposure: Unitholders gain direct exposure to oil and natural gas price movements, which heavily influence the net proceeds and subsequent distributions. In 2024, natural gas accounted for a significant portion of the underlying production volumes, making gas prices a key driver of trust income.
• Established Asset Base: The royalty interests are tied to mature, producing fields, providing a relatively predictable (though declining over the very long term) production base compared to exploration-focused entities.

Cross Timbers Royalty Trust (CRT) How It Makes Money

Cross Timbers Royalty Trust primarily generates income by collecting royalties from the net profits derived from producing oil and gas properties located in Texas, Oklahoma, and New Mexico. Essentially, it acts as a pass-through entity, distributing the vast majority of the royalty income received, less administrative expenses, directly to its unitholders.

Cross Timbers Royalty Trust's Revenue Breakdown

Cross Timbers Royalty Trust's Business Economics

The economic engine of CRT is directly tied to the energy markets and the physical production from its underlying properties. Revenue hinges almost entirely on two key factors: the prevailing market prices for crude oil and natural gas, and the volume of these commodities extracted and sold from the properties in which it holds net profit interests.

• Commodity Price Sensitivity: Higher oil and gas prices directly translate to higher royalty income, while lower prices reduce it significantly. The significant drop in natural gas prices through parts of 2023 and 2024 directly impacted distributions.
• Production Volumes: The trust holds interests in mature assets. Production naturally declines over time unless new discoveries or enhanced recovery techniques are applied by the operators (which the trust does not control). This underlying production decline is a critical factor impacting long-term revenue potential.
• Operating Expenses: Operators deduct production costs, development expenses, and taxes before calculating the net profits from which CRT derives its royalty. These costs can fluctuate, impacting the final amount available for distribution.
• Pass-Through Structure: CRT itself has minimal operating expenses, mainly administrative. Its structure is designed to pass nearly all net royalty income to unitholders monthly.

Cross Timbers Royalty Trust's Financial Performance

Evaluating CRT's financial health involves looking at distributable income per unit and the trends in underlying production and commodity prices. As of late 2024, financial performance reflected the continued pressure from lower natural gas prices compared to prior highs, alongside the expected gradual decline in production from its mature asset base. Distributable income per unit saw noticeable decreases compared to the peak levels experienced when energy prices were significantly higher. For instance, monthly distributions in 2024 were often below $0.10 per unit, a stark contrast to periods when they exceeded $0.20 or even $0.30 per unit during commodity price surges.

The trust's value proposition is inherently linked to these distributions, making commodity price volatility a primary risk factor. Understanding the interplay between market prices and depleting reserves is crucial. You can explore more detailed financial health metrics here: Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors. Monitoring average realized prices for oil and gas alongside reported production volumes provides the clearest insight into near-term distribution potential and overall financial performance trends.

Cross Timbers Royalty Trust (CRT) Market Position & Future Outlook

Cross Timbers Royalty Trust maintains its position as an established, mature royalty trust, with its future outlook heavily tied to energy commodity prices and the production levels managed by XTO Energy on its underlying properties as we look into 2025. Its performance hinges directly on factors largely outside its control, primarily the prevailing market rates for oil and natural gas and the natural decline curves of its reserves.

Competitive Landscape

Competition for CRT exists mainly in the form of alternative yield-focused investments, particularly other energy royalty trusts vying for investor capital. Relative standing often depends on the quality and longevity of underlying assets and distribution consistency.

Opportunities & Challenges

The trust faces a dynamic environment influenced by global energy markets and operational realities.

Industry Position

CRT occupies a specific niche within the energy sector as a non-operating royalty trust. Its value proposition is straightforward: providing unitholders direct exposure to royalty income from established oil and gas producing properties primarily in Texas, Oklahoma, and New Mexico. Unlike integrated energy companies, CRT does not engage in exploration or operational decision-making; its role is passive receipt and distribution of net profits interests.

• Reliant on XTO Energy (an ExxonMobil subsidiary) for operational management and production results.
• Distributions are variable, directly reflecting realised commodity prices and production volumes minus expenses, typically paid monthly. Based on 2024 distributions, the yield fluctuated significantly, reflecting market conditions.
• Considered a mature trust, meaning its underlying assets have been producing for a considerable period, implying predictable, albeit declining, production profiles.

Understanding who invests in such trusts requires a closer look. Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why? Its position is defined by this pass-through structure, appealing to income-seeking investors willing to accept commodity price risk and reserve depletion risk. Compared to larger, more diversified trusts like SBR, CRT offers a more concentrated asset base.