Cross Timbers Royalty Trust(CRT) - 2022 Q3 - Quarterly Report

Financial Performance - As of September 30, 2022, the Trust's total assets amounted to $5,228,221, an increase from $5,089,130 at December 31, 2021, representing a growth of approximately 2.74%[11] - The distributable income for the three months ended September 30, 2022, was $3,736,260, compared to $2,301,702 for the same period in 2021, reflecting a year-over-year increase of approximately 62.4%[13] - The net profits income for the nine months ended September 30, 2022, was $9,536,782, up from $5,602,598 in the same period of 2021, indicating a growth of approximately 70.5%[13] - The total income for the three months ended September 30, 2022, was $3,822,288, compared to $2,455,524 for the same period in 2021, indicating an increase of approximately 55.6%[13] - For the quarter ended September 30, 2022, net profits income was $3,817,493, a 55% increase from $2,455,493 in Q3 2021, primarily due to increased oil and gas prices[48] - For the nine months ended September 30, 2022, net profits income was $9,536,782, a 70% increase from $5,602,598 in the same period of 2021, driven by increased oil and gas production and prices[51] - Distributable income for the nine months ended September 30, 2022, was $8,980,188, or $1.496698 per unit, an increase from $5,010,510, or $0.835085 per unit in the same period of 2021[52] Assets and Investments - The Trust's cash and short-term investments increased to $2,200,234 as of September 30, 2022, compared to $1,822,750 at the end of 2021, marking an increase of about 20.7%[11] - The distribution payable to unitholders as of September 30, 2022, was $1,202,406, significantly higher than $822,774 at December 31, 2021, which is an increase of approximately 46%[11] - The Trust's corpus at the end of the period was $3,025,815, down from $3,266,356 at the end of 2021, reflecting a decrease of about 7.35%[11] - The Trust's net profits interests in oil and gas properties decreased to $3,025,815 as of September 30, 2022, from $3,266,356 at December 31, 2021, a decline of about 7.35%[11] Revenue and Sales - Oil sales volumes decreased by 12% in Q3 2022 but increased by 53% for the nine-month period compared to the same period in 2021[61] - Average oil price for Q3 2022 increased by 63% to $101.80 per Bbl, while the nine-month average rose by 36% to $75.11 per Bbl[64] - Total revenues for Q3 2022 were $7,071,571, a 52% increase from $4,653,596 in Q3 2021, and for the nine-month period, revenues reached $23,166,957, up 96% from $11,805,843[56] - Gas sales volumes increased by 1% in Q3 2022 and by 12% for the nine-month period compared to the same period in 2021[62] Expenses and Costs - Production expenses increased by 36% for Q3 2022 and 23% for the nine-month period, primarily due to higher gas processing and maintenance costs[67] - Taxes, transportation, and other costs rose by 33% in Q3 2022 and 39% for the nine-month period, mainly due to production taxes on higher revenues[66] - Administration expenses for the quarter decreased by $67,794 from the prior year quarter, primarily due to timing of expenses[49] - Development costs related to properties underlying the 75% net profits interests increased by $1.3 million for the nine-month period, driven by increased drilling activity in the Hewitt Unit[68] Trust Operations and Taxation - The Trust has not been taxed at the trust level in New Mexico or Oklahoma due to its distribution of all net income to unitholders[29] - The Trust expects to continue being exempt from Texas franchise tax as a passive entity[31] - The Trust may be required to bear a portion of the settlement costs arising from the Chieftain royalty class action settlement, which could affect net profits income[32] - The Trust's expense reserve remains unchanged at $1,000,000, which allows the Trustee to meet obligations if unable to pay them from net profits income[11] - Cumulative excess costs remaining as of September 30, 2022, totaled $2.0 million, including accrued interest of $0.6 million[43] Production and Decline Rates - The estimated rate of natural production decline on the underlying oil and gas properties is approximately 6% to 8% per year[63]