CROSS TIMBERS ROYALTY TRUST

Previous wording

For the nine months ended September 30, 2024, net profits income was $5,100,336 compared to $9,751,943 for the same 2023 period. This 48 percent decrease in net profits income is primarily the result of lower gas prices ($3.0 million), decreased gas production ($1.5 million), decreased oil production ($0.8 million), increased development costs ($0.6 million), and increased production expenses ($0.3 million), partially offset by decreased taxes, transportation and other costs ($0.9 million), and net excess costs activity ($0.6 million). See “Net Profits Income” below.

Current wording

For the quarter ended March 31, 2025, net profits income was $2,053,394 compared to $1,837,741 for first quarter 2024. This 12 percent increase in net profits income is primarily the result of decreased development costs ($0.7 million), increased oil and gas production ($0.3 million), and decreased taxes, transportation and other costs ($0.1 million), partially offset by net excess costs activity ($0.6 million), and lower oil and gas prices ($0.3 million). See “Net Profits Income” below.

Previous wording

After considering interest income of $14,464 and administration expense of $190,936, distributable income for the quarter ended September 30, 2024, was $1,521,252, or $0.253542 per unit of beneficial interest. Administration expense for the quarter decreased $50,648 from the prior year quarter, primarily related to the timing of receipt and payment of Trust expenses and terms of professional services. Changes in interest income are attributable to fluctuations in net profits income, expense reserve, and interest rates. For third quarter 2023, distributable income was $2,451,192, or $0.408532 per unit.

Current wording

After considering interest income of $12,006 and administration expense of $281,462, distributable income for the quarter ended March 31, 2025, was $1,783,938, or $0.297323 per unit of beneficial interest. Administration expense for the quarter decreased $80,038 from the prior year quarter, primarily related to the timing of receipt and payment of Trust expenses and terms of professional services. Changes in interest income are attributable to fluctuations in net profits income, expense reserve, and interest rates. For first quarter 2024, distributable income was $1,493,214, or $0.248869 per unit.

Previous wording

Because of the interval between time of production and receipt of royalty income by the Trust, (1) oil and gas sales for the quarter ended September 30 generally represent oil production for the period May through July and gas production for the period April through June and (2) oil and gas sales for the nine-months ended September 30 generally represent oil production for the period November through July and gas production for the period October through June.

Current wording

Because of the interval between time of production and receipt of royalty income by the Trust, oil and gas sales for the quarter ended March 31 generally represent oil production for the period November through January and gas production for the period October through December.

Previous wording

The following are explanations of significant variances on the underlying properties from third quarter 2023 to third quarter 2024 and from the first nine months of 2023 to the comparable period in 2024:

Current wording

The following are explanations of significant variances on the underlying properties from first quarter 2024 to first quarter 2025:

Previous wording

Gas sales volumes increased 17 percent for the third quarter primarily because of timing of cash receipts, partially offset by natural production decline. Gas sales volumes decreased 30 percent for the nine-month period primarily due to absence of receipts for the New Mexico royalty interest net profits interests related to March 2018 to December 2020 production, timing of cash receipts, and natural production decline, partially offset by out of period revenues attributable to non-operated properties in the Oklahoma royalty interest net profits interests.

Current wording

Gas sales volumes increased 19 percent from first quarter 2024 to first quarter 2025 primarily because of timing of cash receipts, partially offset by natural production decline.

Previous wording

The estimated rate of natural production decline on the underlying oil and gas properties is approximately six to eight percent a year.

Current wording

The estimated rate of natural production decline on the underlying oil and gas properties is approximately 6 to 8 percent a year.

Previous wording

Development costs related to properties underlying the 75% net profits interests decreased 51 percent for the third quarter due to decreased recompletion activity in the Hewitt Unit. Development costs increased 103 percent for the nine-month period primarily because of the timing of the receipt of costs for drilling activity that occurred in the second half of 2023 for the Hewitt Unit.

Current wording

Development costs related to properties underlying the 75% net profits interests decreased 88 percent for first quarter 2025 primarily because of the absence of costs for drilling activity that occurred in the second half of 2023 for the Hewitt Unit.

Previous wording

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 any other conveyance. Underlying cumulative excess costs for the Texas working interest conveyance remaining as of September 30, 2024, totaled $3.8 million ($2.9 million net to the Trust), including accrued interest of $1.0 million ($0.8 million net to the Trust). For further information on excess costs, see Note 4 to Condensed Financial Statements.

Current wording

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 any other conveyance. Underlying cumulative excess costs for the Texas working interest conveyance remaining as of March 31, 2025, totaled $4.4 million ($3.3 million net to the Trust), including accrued interest of $1.2 million ($0.9 million net to the Trust). For further information on excess costs, see Note 4 to Condensed Financial Statements.

Previous wording

Certain information included in this Quarterly Report and other materials filed, or to be filed, by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by XTO Energy or the Trustee) contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to the Trust, operations of the underlying properties and the oil and gas industry. Such forward-looking statements are based on XTO Energy’s and the Trustee’s current plans, expectations, assumptions, projections and estimates and are identified by words such as “may,” “expects,” “intends,” “plans,” “believes,” “estimates,” “should,” “could,” “would,” and similar words that convey the uncertainty of future events. Such forward-looking statements may concern, among other things, development activities, future development plans by area, increased density drilling, reserve-to-production ratios, future production, future net cash flows, maintenance projects, development, production, regulatory and other costs, oil and gas prices and expectations for future demand, the impact of inflation and economic downturns on economic activity, government policy and its impact on oil and gas prices and future demand, the development and competitiveness of alternative energy sources, pricing differentials, proved reserves, production levels, expense reserve budgets, availability of financing, arbitration, litigation, liquidity, financing, political and regulatory matters, such as tax and environmental policy, climate policy, trade barriers, sanctions, competition, war and other political or security disturbances. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, including those detailed in Part I, Item 1A of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated by this reference as though fully set forth herein. Therefore, actual financial and operational results may differ materially from expectations, estimates or assumptions expressed in, implied in, or forecasted in such forward-looking statements. XTO Energy and the Trustee assume no duty to update these statements as of any future date.

Current wording

Certain information included in this Quarterly Report and other materials filed, or to be filed, by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by XTO Energy or the Trustee) contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to the Trust, operations of the underlying properties and the oil and gas industry. Such forward-looking statements are based on XTO Energy’s and the Trustee’s current plans, expectations, assumptions, projections and estimates and are identified by words such as “may,” “expects,” “intends,” “plans,” “believes,” “estimates,” “should,” “could,” “would,” and similar words that convey the uncertainty of future events. Such forward-looking statements may concern, among other things, development activities, future development plans by area, increased density drilling, reserve-to-production ratios, future production, future net cash flows, maintenance projects, development, production, regulatory and other costs, oil and gas prices and expectations for future demand, the impact of inflation and economic downturns on economic activity, government policy and its impact on oil and gas prices and future demand, the development and competitiveness of alternative energy sources, pricing differentials, proved reserves, production levels, expense reserve budgets, availability of financing, arbitration, litigation, liquidity, financing, political and regulatory matters, such as tax and environmental policy, climate policy, trade barriers, tariffs, sanctions, competition, war and other political or security disturbances. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, including those detailed in Part I, Item 1A of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2024, which is incorporated by this reference as though fully set forth herein. Therefore, actual financial and operational results may differ materially from expectations, estimates or assumptions expressed in, implied in, or forecasted in such forward-looking statements. XTO Energy and the Trustee assume no duty to update these statements as of any future date.