Cross Timbers Royalty Trust: A Simple Breakdown

I’m writing this guide to help you understand how Cross Timbers Royalty Trust (CRT) performed this year. Instead of digging through dense legal filings, we’ll look at what actually matters to you as an investor.

1. What does this company do?

Think of the Trust as a "middleman" that collects a share of profits from oil and gas wells.

The Trust doesn't own the wells. Instead, it owns the right to a percentage of the profits from specific properties in Texas, Oklahoma, and New Mexico. These are operated by XTO Energy (a subsidiary of ExxonMobil) and other partners. Because the Trust is a "pass-through" entity, it has no employees or offices. It simply collects money and passes it to you as monthly payments. In 2024, the Trust paid out about $11.5 million to unit holders from its royalty and working interest properties.

2. How the money works

The Trust’s income is based on "net profits."

• The Profit Split: For most properties, the Trust gets 90% of the profit. For others, it gets 75%.
• The "Catch": If the costs to run a well—like maintenance or repairs—are higher than the money made from selling oil and gas, the Trust gets nothing. Those extra costs carry over and are subtracted from future checks.
• The Current Reality: The Texas working interest properties are currently "underwater." They owe about $5.5 million in unpaid costs. Until those wells become profitable enough to pay off that debt, you won't receive money from those specific properties. Last year, these costs significantly lowered your total payments because the operator prioritized maintenance on aging equipment.

3. Key things to keep in mind

• You are a "Silent Partner": You have no say in how the wells are run. Operators like XTO Energy decide everything, including when to shut down a well or invest in repairs.
• It’s a Depleting Asset: These wells won't produce forever. The average life of these reserves is about nine years, with production dropping 8-10% each year. Part of your payment is essentially a return of your original investment, not just profit.
• The "Lag" Effect: Your check today is based on oil produced two months ago and gas produced three months ago. If oil prices crash today, you won't feel the full impact on your bank account for three months.
• Cybersecurity: The Trust relies on the security of its operators. While the Trust has no digital infrastructure to hack, a breach at XTO Energy could delay your payments.

4. Risks to watch

• Price Swings: Your income depends on commodity prices. In 2024, oil averaged $74.50 per barrel and gas averaged $2.10 per unit. A 10% drop in oil prices often causes a larger drop in your profit because the costs to run older wells remain high.
• Operational Hazards: You have no control over the operators. If they face mechanical failures or environmental cleanup requirements, your check shrinks. New regulations in Texas or Oklahoma could also lead to sudden costs that wipe out your monthly payments.
• The "Debt" Burden: You are effectively paying for the maintenance of these wells. If they don't produce enough to cover their own costs, you don't get paid. The $5.5 million debt must be cleared by future production before you see cash from those assets.
• Development Costs: Spending on new projects dropped 89% in 2025 because there was little new drilling. While this saves money now, it means there is less new production to replace the old, drying-up wells. The Trust is now "harvesting" existing reserves rather than growing.

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Final Thought for Investors: Investing in CRT is a bet on the long-term price of oil and gas and the efficiency of the operators. Because the Trust is currently paying off significant debt on its Texas properties and relies on aging wells, your income will likely be volatile. Before buying, consider whether you are looking for a steady, predictable income stream—which this Trust may not provide—or if you are comfortable with a "harvesting" strategy where payouts fluctuate based on the costs of keeping older wells running.