10-Q 1 crt_10-q_2606.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

CROSS TIMBERS ROYALTY TRUST

(Exact name of registrant as specified in its charter)


Texas	1-10982	75-6415930
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

      c/o The Corporate Trustee:

     

      Argent Trust Company

     

Oak Lawn Ave, Suite 1720

     

      Dallas, Texas 75219-4518

     

      (Address of principal executive offices) (Zip Code)

     

      (Registrant’s telephone number, including area code) (855) 588-7839

     

      (Former name, former address and former fiscal year, if change since last report)

     

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units of Beneficial Interest	CRT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

Indicate the number of units of beneficial interest outstanding, as of the latest practicable date:

Outstanding as of August 13, 2026

6,000,000


Glossary of Terms		3
PART I ‑ FINANCIAL INFORMATION		4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Statements of Assets, Liabilities and Trust Corpus at June 30, 2026 and December 31, 2025	5
	Condensed Statements of Distributable Income for the Three and Six Months Ended June 30, 2026 and 2025	6
	Condensed Statements of Changes in Trust Corpus for the Three and Six Months Ended June 30, 2026 and 2025	7
	Notes to Condensed Financial Statements	8
Item 2.	Trustee’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II - OTHER INFORMATION		16
Item 1A.	Risk Factors	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
Signatures		17


Bbl		Barrel (of oil)

Mcf		Thousand cubic feet (of natural gas)

MMBtu		One million British Thermal Units, a common energy measurement

net proceeds		Gross proceeds received by XTO Energy from sale of production from the underlying properties, less applicable costs, as defined in the net profits interest conveyances.

net profits income		Net proceeds multiplied by the applicable net profits percentage of 75% or 90%, which is paid to the Trust by XTO Energy. “Net profits income” is referred to as “royalty income” for income tax purposes.

net profits interest		An interest in an oil and gas property measured by net profits from the sale of production, rather than a specific portion of production. The following defined net profits interests were conveyed to the Trust from the underlying properties:

		90% net profits interests- interests that entitle the Trust to receive 90% of the net proceeds from the underlying properties that are substantially all royalty or overriding royalty interests in Texas, Oklahoma and New Mexico.

		75% net profits interests- interests that entitle the Trust to receive 75% of the net proceeds from the underlying properties that are working interests in Texas and Oklahoma.

royalty interest (and overriding royalty interest)		A non-operating interest in an oil and gas property that provides the owner a specified share of production without any production expense or development costs.

underlying properties		XTO Energy’s interest in certain oil and gas properties from which the net profits interests were conveyed. The underlying properties include royalty and overriding royalty interests in producing and nonproducing properties in Texas, Oklahoma and New Mexico, and working interests in producing properties located in Texas and Oklahoma.

working interest		An operating interest in an oil and gas property that provides the owner a specified share of production that is subject to all production expense and development costs.


	June 30, 2026		December 31, 2025
ASSETS

Cash and short-term investments	$	1,760,319	$	2,133,676

Interest to be received		4,797		4,554

Net profits interests in oil and gas properties - net (Note 1)		2,092,236		2,158,420

	$	3,857,352	$	4,296,650

LIABILITIES AND TRUST CORPUS

Distribution payable to unitholders	$	265,116	$	688,230

Expense reserve (a)		1,500,000		1,450,000

Trust corpus (6,000,000 units of beneficial interest authorized and outstanding)		2,092,236		2,158,420

	$	3,857,352	$	4,296,650


	Three Months Ended June 30				Six Months Ended June 30
	2026		2025		2026		2025
Net profits income	$	1,088,155	$	1,293,766	$	1,862,336	$	3,347,160

Interest income		13,591		11,982		27,257		23,988

Total income		1,101,746		1,305,748		1,889,593		3,371,148

Administration expense		240,566		263,200		475,007		544,662

Expense reserve		—		150,000		50,000		150,000

Distributable income	$	861,180	$	892,548	$	1,364,586	$	2,676,486

Distributable income per unit (6,000,000 units)	$	0.143530	$	0.148758	$	0.227431	$	0.446081


-	Net profits income recorded for a month is the amount computed and paid by XTO Energy Inc. (“XTO Energy”), the owner of the underlying properties, to Argent Trust Company, as trustee (the “Trustee”) for the Trust. XTO Energy is a wholly owned subsidiary of Exxon Mobil Corporation. Net profits income consists of net proceeds received by XTO Energy from the underlying properties in the prior month, multiplied by a net profits percentage of 90% for the 90% net profits interests, and 75% for the 75% net profits interests.

-	Costs deducted in the calculation of net proceeds for the 90% net profits interests generally include applicable taxes, transportation, marketing and legal costs. In addition to those costs, the 75% net profits interests include deductions for production expense, development costs, operating charges and other costs.

-	Net profits income is computed separately for each of the five conveyances under which the net profits interests were conveyed to the Trust. If monthly costs exceed revenues for any conveyance, such excess costs must be recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from the other conveyances.

-	Interest income and distribution payable to unitholders include interest earned on the previous month’s investment.

-	Trust expenses are recorded based on liabilities paid and cash reserves established by the Trustee for liabilities and contingencies.

-	Distributions to unitholders are recorded when declared by the Trustee.


	Underlying
	TX WI		OK WI			Total
Cumulative excess costs remaining at 12/31/25	$	3,990,865	$	—		$	3,990,865
Net excess costs (recovery) for the quarter ended 3/31/26		210,012		888,779			1,098,791
Net excess costs (recovery) for the quarter ended 6/30/26		90,021		(71,300	)		18,721
Cumulative excess costs remaining at 6/30/26		4,290,898		817,479			5,108,377
Accrued interest at 6/30/26		1,660,092		25,011			1,685,103
Total remaining to be recovered at 6/30/26	$	5,950,990	$	842,490		$	6,793,480

	NPI
	TX WI		OK WI			Total
Cumulative excess costs remaining at 12/31/25	$	2,993,150	$	—		$	2,993,150
Net excess costs (recovery) for the quarter ended 3/31/26		157,509		666,585			824,094
Net excess costs (recovery) for the quarter ended 6/30/26		67,516		(53,476	)		14,040
Cumulative excess costs remaining at 6/30/26		3,218,175		613,109			3,831,284
Accrued interest at 6/30/26		1,245,068		18,758			1,263,826
Total remaining to be recovered at 6/30/26	$	4,463,243	$	631,867		$	5,095,110


Record Date	Payment Date	Distribution per Unit
April 30, 2026	May 14, 2026	$	0.069720
May 29, 2026	June 12, 2026		0.029624
June 30, 2026	July 15, 2026		0.044186
		$	0.143530


	Three Months Ended						Six Months Ended
	June 30 (a)				Increase		June 30 (a)			Increase
	2026		2025		(Decrease)	2026		2025		(Decrease)
Sales Volumes
Oil (Bbls) (b)
Underlying properties		36,535		35,811	2%		64,654		80,181	(19%)
Average per day		411		402	2%		357		443	(19%)
Net profits interests		8,485		8,518	(0%)		12,767		25,901	(51%)

Gas (Mcf) (b)
Underlying properties		195,389		216,440	(10%)		380,528		517,283	(26%)
Average per day		2,171		2,405	(10%)		2,091		2,842	(26%)
Net profits interests		143,405		161,878	(11%)		287,866		409,404	(30%)

Average Sales Prices
Oil (per Bbl)	$	71.54	$	66.79	7%	$	65.07	$	68.84	(5%)
Gas (per Mcf)	$	4.79	$	5.54	(14%)	$	4.53	$	4.71	(4%)

Revenues
Oil sales	$	2,613,722	$	2,391,955	9%	$	4,206,787	$	5,519,342	(24%)
Gas sales		936,390		1,199,821	(22%)		1,723,960		2,435,157	(29%)
Total Revenues		3,550,112		3,591,776	(1%)		5,930,747		7,954,499	(25%)

Costs
Taxes, transportation and other		379,083		396,510	(4%)		648,077		818,572	(21%)
Production expense (c)		1,980,689		2,088,471	(5%)		4,332,851		3,637,591	19%
Development costs		—		23,171	(100%)		(1,931)		154,413	(101%)
Excess costs (d)		(18,721)		(369,070)	(95%)		(1,117,512)		(435,725)	156%
Total Costs		2,341,051		2,139,082	9%		3,861,485		4,174,851	(8%)

Net Proceeds	$	1,209,061	$	1,452,694	(17%)	$	2,069,262	$	3,779,648	(45%)

Net Profits Income	$	1,088,155	$	1,293,766	(16%)	$	1,862,336	$	3,347,160	(44%)


(31)		Rule 13a-14(a)/15d-14(a) Certification

(32)		Section 1350 Certification

(99)		Items 1A and 7 to the Annual Report on Form 10-K for Cross Timbers Royalty Trust filed with the Securities and Exchange Commission on March 27, 2026 (incorporated herein by reference)


	CROSS TIMBERS ROYALTY TRUST
	By ARGENT TRUST COMPANY, TRUSTEE



	By	/s/ NANCY WILLIS
		Nancy Willis
		Director of Royalty Trust Services


	EXXON MOBIL CORPORATION



Date: August 13, 2026	By	/s/ DANIEL BATES
		Daniel Bates
		Unconventional Finance General Manager

GLOSSARY OF TERMS

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

Item 2. Trustee’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

PART II - OTHER INFORMATION

Item 1A. Risk Factors

Item 6. Exhibits