Cross Timbers Royalty Trust

Cross Timbers Royalty Trust

Cross Timbers Royalty Trust was formed in 1991 by predecessors of XTO Energy, with Simmons Bank appointed as trustee to administer the trust's passive royalty interests. The trust holds 75% net profits interests in properties concentrated in the San Juan Basin, Hugoton Field, and Permian Basin — mature oil and gas regions producing primarily natural gas. Simmons Bank has no investment staff dedicated to the trust and does not deploy fresh capital; its function is limited to collecting royalty payments, paying administrative expenses, and distributing the remaining cash to unitholders. The trust's underlying properties are operated by third parties, chiefly XTO Energy, a subsidiary of ExxonMobil. Production is almost entirely conventional natural gas, with a small oil and NGL component. Because the trust cannot fund new drilling, annual production has followed a long-term decline curve punctuated by occasional well-workover activity and commodity-price swings. Geographically, proved reserves are split among the San Juan Basin in New Mexico and Colorado, the Permian Basin in West Texas, and the Mid-Continent area of Oklahoma. Total asset value is capped by reserves remaining under the net profits interests. In recent years, the trust's market capitalization has oscillated between roughly $5 million and $25 million, depending on natural gas prices. April 2024: The trust announced a monthly cash distribution of $0.051940 per unit, driven by elevated natural gas prices during the production month of February 2024. The trust's administrative footprint is minimal; the trustee operates from Dallas, Texas, and no additional physical offices exist. Structurally, Cross Timbers operates more like a depleting bond than a going concern. The trustee cannot reinvest earnings, hedge future production, or finance acquisitions. When underlying reserves are economically exhausted, the trust terminates. This self-liquidating architecture distinguishes it from every other energy-security structure available to public investors, making its valuation entirely dependent on the strip price of natural gas minus a fixed administrative burden.