Cross Timbers Royalty Trust Reports Decline in Financial Performance for Q2 and First Half of 2026

Cross Timbers Royalty Trust reported a decline in financial performance for the second quarter and first half of 2026, as detailed in its latest 10-Q filing. For the quarter ended June 30, 2026, net profits income was $1,088,155, a decrease of 16% from $1,293,766 in the same period of 2025. The Trust's total income for the quarter was $1,101,746, down from $1,305,748 year-over-year. For the six months ending June 30, 2026, net profits income fell 44% to $1,862,336 compared to $3,347,160 in the prior year, reflecting a significant drop in oil and gas production and lower sales prices.

The decrease in net profits income was attributed to several factors, including a reduction in oil and gas production, increased overhead costs, and lower oil and gas prices. Specifically, oil sales volumes decreased by 19% for the six-month period, while gas sales volumes dropped by 26%. The average oil price increased by 7% to $71.54 per barrel in the second quarter, but the average gas price fell by 14% to $4.79 per thousand cubic feet. The Trust's administration expenses also decreased, amounting to $240,566 for the quarter, down from $263,200 in the previous year.

Operationally, the Trust's net profits interests in oil and gas properties were valued at $2,092,236 as of June 30, 2026, a decline from $2,158,420 at the end of 2025. The Trust's cash and short-term investments decreased to $1,760,319 from $2,133,676 over the same period. The distribution payable to unitholders was $265,116, significantly lower than the $688,230 reported at the end of 2025. The Trust's corpus at the end of the second quarter was $2,092,236, consistent with the previous quarter's figure.

Looking ahead, the Trust's management noted that while the oil and gas markets are subject to volatility, they do not anticipate impairment of the net profits interests at this time. The Trustee emphasized that the Trust's financial statements are prepared on a modified cash basis, which may differ from U.S. GAAP, and that they will continue to monitor market conditions closely. The Trust's future performance will depend on various factors, including commodity prices, production levels, and operational costs, as well as the ongoing management of excess costs associated with the underlying properties.