Cross Timbers Royalty Trust (CRT)

History and Background

Cross Timbers Royalty Trust was formed in 1991 by XTO Energy Inc. It's a grantor trust that owns net overriding royalty interests in oil and gas producing properties.

Core Business Areas

• Oil and Gas Royalty Interests: The Trust's primary business is owning and administering net overriding royalty interests in various oil and gas properties. Revenue is derived from the production and sale of oil and gas from these properties.

Leadership and Structure

The Trust operates with a trustee, currently Argent Trust Company. It's a passive entity, meaning it doesn't actively manage the underlying oil and gas properties. XTO Energy (now a subsidiary of ExxonMobil) is responsible for the operation of most of the underlying properties.

Key Offerings

• Net Overriding Royalty Interests: The Trust holds net overriding royalty interests (ORRI) in producing oil and gas properties. These ORRIs entitle the trust to a percentage of the revenue generated from the sale of oil and gas produced from the underlying properties after certain expenses. Market share is relative to the percentage of royalties received. Competitors are other royalty trusts such as Texas Pacific Land Corporation (TPL) and Permian Basin Royalty Trust (PBT).

Industry Overview

The oil and gas royalty trust industry is directly tied to the performance of the underlying oil and gas properties and prevailing commodity prices. The industry is subject to fluctuations based on supply, demand, geopolitical events, and regulatory changes.

Positioning

Cross Timbers Royalty Trust is a smaller player in the royalty trust market. Its competitive advantage lies in its established royalty interests in proven oil and gas reserves. This provides a relatively stable income stream, although susceptible to commodity price volatility.

Total Addressable Market (TAM)

The total addressable market for royalty trusts is dependent on the overall value of oil and gas production in the US. It is difficult to quantify the TAM but Cross Timbers royalty trust has a small percentage.

Key Competitors

• TPL
• PBT

Competitive Landscape

Cross Timbers is smaller than other trusts. They are all subject to same commodity price risk.

Historical Growth: Historical growth is limited due to the nature of royalty trusts. Growth is primarily driven by acquisitions of new royalty interests or increased production on existing properties.

Future Projections: Future projections are uncertain and dependent on oil and gas prices, production volumes, and potential acquisitions. Analyst estimates vary widely.

Recent Initiatives: The trust has limited strategic initiatives as it is passive.

Cross Timbers Royalty Trust is a passive investment vehicle that provides exposure to oil and gas royalty income. Its performance is heavily reliant on volatile commodity prices. While offering potential for high dividend yields, investors must be aware of the inherent risks associated with depleting assets and fluctuations in the energy market. Recent higher oil prices have helped revenues and distributions but long term sustainability is uncertain. This has resulted in increased cash flows and attractive short-term returns, but future performance hinges on maintaining favorable market conditions and managing the inevitable decline of reserves.

Data Sources:

• Company SEC filings
• Analyst reports
• Industry publications

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. The value of royalty trust units can fluctuate significantly based on market conditions and commodity prices.