Cross Timbers Royalty Trust (CRT)

History and Background

Cross Timbers Royalty Trust was formed in 1991 by XTO Energy Inc. to own net profits interests in XTO's working interests in oil and gas properties. The trust distributes to its unit holders the proceeds it receives from these net profits interests, less administrative expenses.

Core Business Areas

• Net Profits Interests: The Trust's primary business involves owning and administering net profits interests (NPIs) in certain oil and gas properties. These NPIs entitle the Trust to a percentage of the net profits generated from the underlying properties after deducting operating costs, development expenses, and other applicable charges.

Leadership and Structure

The Trust operates as a passive entity. There is no management team or employees. South Dakota Trust Company LLC serves as the trustee.

Key Offerings

• Net Profits from Oil and Gas: Cross Timbers Royalty Trust generates revenue solely from its net profits interests in oil and gas properties. Its income directly correlates to the production volumes, prices, and operating expenses of those properties. Since Cross Timbers is a royalty trust, it does not have market share in the conventional sense, its returns are derived from the revenue streams from its properties. XTO Energy, now owned by ExxonMobil, is the main operator of properties underlying the royalties. Competitors are other royalty trusts such as Sabine Royalty Trust (SBR) and Texas Pacific Land Corporation (TPL).

Industry Overview

The oil and gas industry is characterized by fluctuating commodity prices, technological advancements in extraction, and increasing regulatory scrutiny. Royalty trusts benefit from high oil and gas prices but face challenges related to declining production from mature fields.

Positioning

Cross Timbers Royalty Trust is a passive income vehicle that provides unit holders with exposure to oil and gas production without direct operational involvement. Its position is dependent on the performance of the underlying assets managed by XTO Energy.

Total Addressable Market (TAM)

The total addressable market for royalty trusts is difficult to quantify directly, as the trusts are tied to specific oil and gas reserves. The market value is linked to the present value of all future discounted cash flow from the underlying resource, thus dependent on oil and gas prices as well as costs to extract the underlying assets. Cross Timbers is positioned based on its existing assets.

Key Competitors

• Sabine Royalty Trust (SBR)
• Texas Pacific Land Corporation (TPL)

Competitive Landscape

Cross Timbers Royalty Trust competes with other royalty trusts and mineral rights companies for investor capital. Its advantage lies in its established properties, while its disadvantages include its dependence on XTO Energy and its lack of control over operations.

Historical Growth: Limited historical growth potential as the trust primarily distributes proceeds from existing properties.

Future Projections: Future growth is uncertain and dependent on commodity prices and production from existing reserves. Projections are difficult due to the volatility of the oil and gas market.

Recent Initiatives: The trust does not undertake strategic initiatives. Its performance depends on the actions of XTO Energy.

Cross Timbers Royalty Trust is a passive investment vehicle that offers exposure to oil and gas production. Its performance is heavily reliant on commodity prices and the production of underlying properties managed by XTO Energy. Declining production from mature fields and volatile commodity prices pose significant challenges. The trust offers variable dividend payouts which are attractive in strong markets but are exposed to market fluctuations.

Data Sources:

• SEC Filings
• Company Website
• Industry Reports

Disclaimers:

The information provided is for informational purposes only and should not be considered financial advice. Investment decisions should be based on individual circumstances and after consulting with a qualified financial advisor.