Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors

You're looking at Cross Timbers Royalty Trust (CRT) because that monthly distribution looks tempting, but honestly, you need to look past the yield and straight into the production decline-the core of the trust's health. The Q3 2025 results were a clear warning sign, with net profits income plummeting a staggering 55% to just $761,552, and distributable income hitting only $0.075553 per unit. Here's the quick math: that drop was driven by a 20% decline in oil volumes and a 47% slide in gas volumes, plus lower realized oil prices averaging $62.21 per Bbl. Still, the Trust declared a November distribution of $0.036930 per unit, bringing the 2025 year-to-date total to $0.596840 per unit. The real risk is the underlying cumulative excess costs on the Texas working interest conveyance, which still totaled $5.1 million as of September 30, 2025, a liability that sits on the books and can eat into future payouts. This isn't a growth story; it's a liquidation vehicle, so you have to map the commodity price cycle against that natural production decline to defintely understand your total return profile.

Revenue Analysis

The direct takeaway for Cross Timbers Royalty Trust (CRT) is clear: revenue, which for the Trust is essentially Net Profits Income, is under significant pressure. For the nine months ending September 30, 2025, the Trust reported revenue of approximately $4.15 million, a sharp decline from the prior year.

You need to understand that Cross Timbers Royalty Trust is a pure pass-through vehicle, not an operating company. Its revenue comes entirely from net profits interests in underlying oil and gas properties across Texas, Oklahoma, and New Mexico. This means its financial health is a direct function of commodity prices and production volumes, with no operational levers to pull. Mission Statement, Vision, & Core Values of Cross Timbers Royalty Trust (CRT).

The Trust's revenue structure is split into two main components, and this distinction is defintely critical for investors:

• 90% Net Profits Interests: These are royalty and overriding royalty interests, primarily from long-lived gas properties in the San Juan Basin of New Mexico. These interests are not subject to production or development costs, so revenue only varies with sales volumes and prices.
• 75% Net Profits Interests: These come from underlying working interests in predominantly oil-producing properties in Texas and Oklahoma. This is the riskier segment, as net profits are reduced by production expense and development costs.

The near-term risk is already here. The Trust's trailing twelve months (TTM) revenue as of September 30, 2025, stood at $5.62 million, reflecting a year-over-year revenue growth rate of -27.09%. Here's the quick math on the recent quarterly drop:

The revenue decline in Q3 2025 was dramatic, with net profits income falling 55% to $761,552. This wasn't just a price issue; it was a volume problem too. The underlying properties saw a 20% oil volume decline and a 47% gas volume decline. Plus, the realized oil price fell 20% to an average of $62.21 per barrel. That's a triple-whammy of bad news.

Historically, oil has been the dominant contributor, making up 72% of total revenues in 2024, with gas at 28%. Any significant change in oil prices or production hits the top line hard. The other major change is the cumulative excess costs on the Texas working interest properties (the 75% segment). As of September 30, 2025, these costs totaled $5.1 million, which must be recovered before that segment contributes any net profits income to the Trust. This effectively mutes a portion of your potential revenue until that hole is filled.

Profitability Metrics

You're looking at Cross Timbers Royalty Trust (CRT) because you want a clear picture of its cash-flow engine, and honestly, the profitability of a royalty trust is a different beast than a typical operating company. The key takeaway for 2025 is that while the trust's structure inherently yields high margins, the recent drop in commodity prices and production volume is eroding those figures, making the distribution highly volatile.

For the second quarter of 2025 (Q2 2025), Cross Timbers Royalty Trust reported $3.59 million in total revenue, which led to a Gross Profit of $1.50 million and Net Income of $0.89 million. Here's the quick math on what that means for your returns:

A royalty trust is a pass-through vehicle, not an operating business, so its 'profit' is primarily its net profits income (NPI) from the underlying oil and gas properties, less administrative expenses. This structure is why the trailing twelve-month (TTM) Net Profit Margin for Cross Timbers Royalty Trust sits at a high 79.1%. That's a huge number, but it's still lower than the 87.9% margin reported last year, a clear sign of the headwinds the trust is facing.

Trends and Industry Comparison

The trend is a downward slide, driven by market forces and the natural decline of the underlying assets. The net profits income for the third quarter of 2025 (Q3 2025) was $761,552, which is a sharp 55% drop compared to the same quarter in 2024. This decline is a direct result of both a 20% fall in realized oil prices to $62.21 per barrel and a significant decrease in oil and gas production volumes. The nine-month Net Income for 2025 was $3.13 million, down from the prior year. You need to pay attention to this trend; it directly impacts your distribution checks.

In comparison to its peers, Cross Timbers Royalty Trust's TTM Net Margin of 79.1% is actually quite strong when stacked against the Oil and Gas Royalty Trust industry average Net Margin of 65.92%. The trust is defintely efficient at converting its royalty revenue into net income, but that efficiency can't fully offset a major drop in the top-line revenue.

• Watch the NPI: Net Profits Income is the real driver of your cash flow.
• The high margin is a structural advantage, but it's shrinking.

Operational Efficiency and Cost Management

Since Cross Timbers Royalty Trust doesn't run the wells, its operational efficiency is largely about minimizing its own administrative costs and managing the costs associated with the 75% net profits working interests. The trust's Q3 2025 results show that the massive drop in net profits income was partially offset by a decrease in production expenses by about $0.3 million, which is good cost management by the operator, XTO Energy.

What this estimate hides, however, is the long-term drag from the Texas working interest properties. The cumulative excess costs on these properties, which must be recovered from future net proceeds before the trust sees a dime, totaled $5.1 million as of September 30, 2025 ($3.8 million net to the Trust). This is a significant headwind that will continue to suppress distributable income until those costs are fully recovered. You can read more on the risks in Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors.

Next Step: Review the Q4 2025 distribution announcement immediately upon release to gauge the full year's profitability impact from the continued low oil price environment.

Debt vs. Equity Structure

The core takeaway on Cross Timbers Royalty Trust (CRT) financing is simple: the Trust operates with virtually no debt, making its capital structure exceptionally conservative. This is a crucial point for investors to understand, as it fundamentally changes how you assess its financial risk compared to a typical energy company.

As of the most recent data, Cross Timbers Royalty Trust reports $0.00 in total debt, encompassing both long-term and short-term debt. This debt-free status is a defining characteristic of its structure. The Trust, as a pass-through entity, is not an operating company that takes on debt to fund exploration or capital expenditures. Its assets are static, and its primary function is to distribute net profits to unitholders.

This zero-debt position leads directly to a Debt-to-Equity (D/E) ratio of 0%. Here's the quick math: since total debt is zero, the ratio is zero, regardless of the equity value. The total shareholder equity, which represents the unitholders' stake, stood at approximately $2.3 million as of the latest reporting.

This 0% D/E ratio is not just low; it perfectly aligns with the industry standard for U.S. Oil and Gas Royalty Trusts, which also averages 0.00.

• CRT D/E Ratio (2025): 0.00
• Royalty Trust Industry Average D/E Ratio (2025): 0.00
• Broader E&P Industry Average D/E Ratio (2025): 0.48

Compare this to the broader Oil & Gas Exploration & Production (E&P) sector, which carries an average D/E ratio of around 0.48 as of November 2025. The difference shows that while a typical E&P firm uses nearly 50 cents of debt for every dollar of equity to finance its operations, Cross Timbers Royalty Trust is 100% equity-funded.

Because the Trust has no debt, there is no recent activity to report on debt issuances, credit ratings, or refinancing. The financing balance is entirely skewed toward equity, which is the only funding source for its operations and reserve requirements. The Trustee maintains an expense reserve, currently funded at $1,300,000 from distributable income, to cover its obligations, which acts as a buffer instead of a credit facility. This structure minimizes financial risk but also limits growth, as no new properties can be added to the Trust.

For a deeper dive into the Trust's overall financial picture, including its revenue trends and distributable cash flow, check out our full report: Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Cross Timbers Royalty Trust (CRT) has the immediate cash to cover its obligations, and the short answer is yes, but with razor-thin margins that are typical for a royalty trust. The trust's structure as a pass-through entity with no debt means its liquidity picture is simple, yet vulnerable to commodity price swings.

For the most recent quarter (MRQ) in 2025, the trust's liquidity ratios were perfectly balanced. Its Current Ratio and Quick Ratio both stood at 1.00 [cite: 11, 12 in first step], meaning its current assets exactly matched its current liabilities. This is a very tight position, but not defintely a red flag for a trust whose primary function is to distribute cash, not hold it for growth or large capital expenditures.

Current and Quick Ratios: A Tight Balance

The Current Ratio (Current Assets / Current Liabilities) and Quick Ratio (Cash + Receivables / Current Liabilities) are key to assessing short-term health. Since Cross Timbers Royalty Trust has virtually no inventory or accounts receivable, the two ratios are identical. Here's the quick math for the most recent quarter:

The working capital trend is essentially flat at $0.0 million (Current Assets minus Current Liabilities), which is by design. The trust is a zero-sum game in the short term, passing through nearly all net profits to unitholders. This is a crucial point: its solvency is not built on retained earnings or a large cash hoard, but on the continual flow of royalty income.

Cash Flow Dynamics and Near-Term Risks

The cash flow statement overview for Cross Timbers Royalty Trust is dominated by operating activities, as the trust has no operations and its assets are static [cite: 3 in first step]. Investing cash flow is negligible, and financing cash flow is almost entirely the distribution of net profits to unitholders.

• Operating Cash Flow: For the nine months ended September 30, 2025, total revenue (net profits income) was approximately $4.15 million. This is the lifeblood of the trust.
• Financing Cash Flow: The distributable income for the same nine-month period was around $3.13 million, which is the cash paid out to investors.

The major near-term risk is the volatility in that operating cash flow. In the third quarter of 2025 alone, the net profits income plunged to $761,552, representing a steep 55% decrease compared to the same quarter in 2024. This sharp drop, driven by lower oil and gas volumes and weaker realized prices, directly impacts the monthly distributions you receive.

Liquidity Strengths and Concerns

The primary liquidity strength is the expense reserve, which acts as a buffer against temporary shortfalls. This reserve is currently funded at $1,300,000. This cash is specifically held by the Trustee to cover administrative obligations if the monthly net profits income is insufficient. It's a smart, necessary safeguard. Plus, the trust carries no long-term debt.

However, a significant liquidity concern is the underlying cumulative excess costs on the Texas working interest conveyance, which totaled $5.1 million ($3.8 million net to the Trust) as of September 30, 2025 [cite: 7 in first step]. Until this is fully recovered from future profits on those properties, it will continue to be a drag on distributable cash flow. This is a structural risk you must factor in. For more on the trust's mandate, check out the Mission Statement, Vision, & Core Values of Cross Timbers Royalty Trust (CRT).

Valuation Analysis

You're looking at Cross Timbers Royalty Trust (CRT) and asking the core question: is this royalty trust a value play or a value trap? The data from late 2025 suggests a complex picture, where traditional valuation metrics signal a high price, but a discounted cash flow (DCF) view suggests a deep discount. It's defintely not a simple buy-or-sell call.

The key takeaway is that Cross Timbers Royalty Trust appears expensive on a book value basis, but its high dividend yield and low Price-to-Earnings (P/E) ratio make it look cheap compared to the broader market. The stock price has been under pressure, which is a near-term risk you need to weigh.

Here's the quick math on the core valuation ratios as of November 2025:

• Price-to-Earnings (P/E): The trailing P/E ratio sits around 12.09, which is significantly lower than the broader market P/E ratio of about 38.44. This suggests the stock is trading at a less expensive multiple relative to its earnings.
• Price-to-Book (P/B): This ratio is extremely high, ranging from 21.74 to 24.93. For a royalty trust, this metric is often inflated because the book value doesn't fully capture the value of the underlying, depleting oil and gas reserves.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple is reported at 9.37, which is a more favorable valuation profile compared to some industry peers.

The divergence in these numbers is critical. A high P/B ratio is typical for a royalty trust, but a P/E near 10-12 suggests a reasonable price for the earnings it generates. You have to look past the book value here.

Stock Trend and Analyst Consensus

The stock price trend over the last year shows clear weakness. Cross Timbers Royalty Trust's stock price, hovering around $8.89 to $8.95 in November 2025, has declined by approximately 11.37% over the past year. This contrasts sharply with the S&P 500's return during the same period, which was up by 13.19%. The stock is definitely lagging the market.

When you look at the analyst community, the consensus rating is a decisive Sell. This rating is based on limited coverage-only one research report in the last 90 days. However, some models paint a different picture, suggesting the stock is undervalued by as much as 82.50%, with an intrinsic value of $14.11 based on a Discounted Cash Flow (DCF) model. This is a massive disagreement, and it's why you need to do your own work.

Here's a quick summary of the conflicting views:

The Dividend Story

As a royalty trust, Cross Timbers Royalty Trust is legally structured to pass through most of its income to unit holders, so the dividend is the primary reason to own it. The trailing twelve months (TTM) dividend payout as of November 17, 2025, was $0.90 per share. This translates to a strong TTM dividend yield of 10.15%.

What this estimate hides is the volatility. Royalty trust payouts are not fixed; they fluctuate monthly based on commodity prices and production volumes. The dividend yield has been volatile, with some sources citing a lower current yield of 8.33% or 4.95%, but the TTM payout of $0.90 gives you a concrete historical figure. A high yield like this often signals risk, mainly the risk of a declining distribution due to depleting assets or lower oil and gas prices. If you want to dive deeper into who is holding this volatile asset, you should read Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at Cross Timbers Royalty Trust (CRT) for income, and honestly, the recent 10.2% annualized yield based on the November 2025 dividend increase is tempting. But, as a seasoned analyst, I have to tell you the trust's structure means its risks are highly concentrated and largely unmitigable by management. It's a pure pass-through vehicle, so you're directly exposed to two major, non-negotiable headwinds: commodity prices and production decline. You need to see this as a depleting asset with no ability to replace reserves.

The most immediate and unpredictable risk is the price of oil and natural gas. The trust's distributable income dropped significantly in the third quarter of 2025, primarily because of a downturn in commodity prices and production volumes. Net profits income fell 55% year-over-year in Q3 2025. That's a huge compression in payout. For example, the average realized oil price fell 20% to $62.21 per Bbl in Q3 2025, and gas averaged $3.65 per Mcf. A single-digit percentage change in these prices can swing your monthly distribution wildly.

Beyond market volatility, the core operational risk is the natural decline of the underlying properties. The trust's assets are static-they can't add new wells or properties. Here's the quick math: the estimated natural production decline rate is a significant 6% to 8% per year. This is a structural headwind that no amount of market optimism can overcome long-term. In Q3 2025 alone, underlying oil sales volumes decreased 20% and gas volumes decreased 47% compared to the prior year's quarter. That's a serious acceleration of decline.

The Texas Working Interest conveyance presents a specific financial risk you must track: cumulative excess costs. The operator, XTO Energy, must recover these costs before the trust sees higher net profits from those properties. As of November 17, 2025, the underlying cumulative excess costs remaining on the Texas Working Interest totaled $5.32 million, including accrued interest of $1.437 million. This excess cost overhang acts like a lien on future cash flow from that portion of the assets.

Mitigation strategies for a passive trust like Cross Timbers Royalty Trust (CRT) are limited, but they do exist. The Trustee, Argent Trust Company, maintains an expense reserve to cover administrative costs and obligations, which is currently funded at $1,300,000. Also, the trust's dual structure offers some internal stability. The 90% net profits interests from gas properties are not subject to production or development costs, which means they provide a more defintely stable revenue base compared to the 75% oil-producing properties.

You can find more detailed information on the trust's long-term objectives and structure here: Mission Statement, Vision, & Core Values of Cross Timbers Royalty Trust (CRT).

Key Risk Exposures (FY 2025 Data):

• Oil Price Volatility: Average Q3 2025 price was $62.21/Bbl, down 20% year-over-year.
• Production Decline: Estimated natural decline rate is 6%-8% annually.
• Excess Cost Overhang: Cumulative Texas Working Interest excess costs total $5.32 million as of November 2025.

Here's a snapshot of the Q3 2025 financial impact:

Your next step: Model a worst-case scenario where the average oil price drops another 10% and the production decline hits the high end of the 8% estimate for the next four quarters to stress-test the distribution yield.

Growth Opportunities

You're looking at Cross Timbers Royalty Trust (CRT) and wondering where the growth comes from, especially with a structure that feels like a ticking clock. The direct takeaway is this: Cross Timbers Royalty Trust (CRT) has virtually no organic growth-it's a passive vehicle-so its future prospects are entirely dependent on two external factors: commodity prices and the operator's (XTO Energy Inc.'s) success in managing the natural decline rate of the underlying assets.

The trust is a finite-life entity, set to terminate by December 31, 2032, or when the reserves run out. The trust itself cannot add new properties, drill new wells, or execute acquisitions. This means the traditional growth drivers of a standard energy company-product innovations, market expansions, or acquisitions-simply don't apply here. It's a pure-play income stream on existing assets.

Future Revenue and Earnings Estimates

The 2025 fiscal year data clearly shows the pressure from volatile energy markets. For the nine months ended September 30, 2025, the trust reported revenue of $4.15 million, a notable drop from the $5.15 million reported in the prior year period. Net income followed a similar trend, coming in at $3.13 million for the same nine-month period.

Here's the quick math on the investor payout: The estimated distributable cash flow per unit (DCFU), which is the most critical number for a royalty trust investor, is projected to be around $0.82 for the full year 2025. That's a dip from the $0.95 DCFU in 2024. Still, analysts project a modest 2.0% average annual growth of distributable cash flow over the next five years, which is a hopeful sign if commodity prices stabilize.

The Real Growth Drivers: Price and Production

Since Cross Timbers Royalty Trust (CRT) is a pass-through entity, its financial health hinges on the oil and gas market. The trust's underlying assets have a natural production decline rate estimated at 6%-8% per year. This is the headwind you're defintely fighting.

The only way to overcome that decline is through a sharp rise in the price of oil and natural gas, or through effective development by the operator, XTO Energy Inc. The first quarter of 2025 actually saw oil and gas volumes rise by 4% and 19% respectively, but lower realized prices offset those production gains. This highlights the volatility.

• Commodity Price Volatility: The largest driver of future distributions.
• Operator Efficiency: XTO Energy Inc.'s ability to mitigate the natural decline of the underlying properties.
• Cost Management: Controlling the excess costs associated with the 75% net profits interests in the oil-producing properties.

Competitive Advantages and Strategic Positioning

Cross Timbers Royalty Trust (CRT)'s competitive advantage isn't in operations; it's in its structure. It offers investors a high-payout vehicle-an annualized yield of 8.6% as of mid-2025-without the capital expenditure and operational risks of a traditional exploration and production company.

The trust's high profitability metrics-a net margin of 84.24% and a Return on Equity (ROE) of 231.09%-show how efficiently it converts royalty income into net income, simply because it has almost no operating expenses. The 90% net profits interests, largely from long-lived gas properties in the San Juan Basin, are insulated from production costs, providing a crucial, more stable revenue base. This stability is the key to its positioning against other, more operationally-exposed energy investments.

If you want to dive deeper into the ownership structure, check out Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who's Buying and Why?