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    CROSS TIMBERS ROYALTY TRUST FIRST QUARTER REPORT 2017 TO UNITHOLDERS Distributions to unitholders for the quarter ended March 31, For the quarter ended March 31, 2017, net profits income 2017 were: was $1,624,671 compared to $2,706,106 for first quarter 2016. This 40% decrease in net profits income is primarily the RECORD DATE PAYMENT DATE PER UNIT result of decreased oil and gas production ($1.2 million), and January 31, 2017 February 14, 2017 $ 0.079287 net excess cost activity on the Texas and Oklahoma working February 28, 2017 March 14, 2017 0.061822 interest properties ($0.6 million), partially offset by increased March 31, 2017 April 13, 2017 0.089461 oil prices ($0.4 million), lower production expense $ 0.230570 ($0.2 million) and decreased taxes, transportation, and other ($0.1 million). See “Net Profits Income” on the following page. Individualized tax information is provided annually to unitholders of record. Unitholders owning units in nominee After considering interest income of $987 and administration name may obtain monthly tax information from the trustee expense of $242,238, distributable income for the quarter upon request or from the Trust’s website at ended March 31, 2017 was $1,383,420, or $0.230570 per www.crt-crosstimbers.com. unit of beneficial interest. Administration expense for the quarter increased $17,056 from the prior year quarter. For This letter, and all communications to unitholders, includes first quarter 2016, distributable income was $2,180,982, or information provided to the trustee by XTO Energy Inc. $0.363497 per unit. Cross Timbers Royalty Trust By: Southwest Bank, Trustee By: Nancy G. Willis Vice President CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (Unaudited) THREE MONTHS ENDED MARCH 31 2017 2016 Net Profits Income......................................................................... $ 1,624,671 $ 2,706,106 Interest Income .......................................................................................... 987 58 Total Income .................................................................................. 1,625,658 2,706,164 Administration Expense ............................................................................ 242,238 225,182 Cash Reserves Withheld for Trust Expenses ........................................... – 300,000 Distributable Income .................................................................... $ 1,383,420 $ 2,180,982 Distributable Income Per Unit (6,000,000 units) .......................... $ 0.230570 $ 0.363497 These condensed statements of distributable income should be read in conjunction with the financial statements and notes thereto included in the Trust’s 2016 annual report. For further information, see the Trust’s quarterly report on Form 10-Q for the quarter ended March 31, 2017. Statements in this report to unitholders relating to future plans, predictions, events or conditions are forward-looking statements. All statements other than statements of historical fact included in this report to unitholders including, without limitation, statements regarding the net profits interests, underlying properties, development activities, development, production and other costs and expenses, oil and gas prices and differentials to NYMEX prices, distributions to unitholders, and industry and market conditions, are forward-looking statements that are subject to risks and uncertainties which are detailed in Part I, Item 1A of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by this reference as though fully set forth herein. XTO Energy and the trustee assume no duty to update these statements as of any future date.


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    CROSS TIMBERS ROYALTY TRUST FIRST QUARTER REPORT 2017 Net Profits Income recovery, repairs and maintenance, power and fuel, and chemical Net profits income is recorded when received by the Trust, which costs. is the month following receipt by XTO Energy and generally two months after oil production and three months after gas Development Costs. Development costs decreased 22% for the production. Net profits income is generally affected by three first quarter primarily because of decreased activity and costs major factors: related to Oklahoma oil properties underlying the 75% net profits interests. ■ oil and gas sales volumes, ■ oil and gas sales prices, and ■ costs deducted in the calculation of net profits income. Excess Costs The following summarizes excess costs activity and cumulative Because properties underlying the 90% net profits interests are balances by conveyance: primarily royalty and overriding royalty interests, the calculation Underlying of net profits income from these interests includes deductions TX WI OK WI Total for production and property taxes, legal costs, and marketing and Cumulative excess costs remaining at 12/31/16 ... $1,747,819 $ 655,835 $2,403,654 transportation charges. In addition to these costs, the calculation Excess costs (recovery) for the quarter ended 3/31/17 . 45,131 (317,927) (272,796) of net profits income from the 75% net profits interests includes Cumulative excess costs remaining at 3/31/17 ..... $1,792,950 $ 337,908 $2,130,858 deductions for production expense and development costs since NPI the related underlying properties are working interests. TX WI OK WI Total Cumulative excess costs remaining at 12/31/16 ... $1,310,865 $ 491,876 $1,802,741 The following are explanations of significant variances on Excess costs (recovery) for the quarter ended 3/31/17 . 33,848 (238,445) (204,597) the underlying properties from first quarter 2016 to first Cumulative excess costs remaining at 3/31/17 ..... $1,344,713 $ 253,431 $1,598,144 quarter 2017: Continued lower oil prices in relation to operating expenses Sales Volumes and increased development costs resulted in net excess costs Oil. Oil sales volumes decreased 9% from first quarter 2016 to on properties underlying the Texas working interests for the first quarter 2017 primarily due to natural production decline quarter ended March 31, 2017. and the timing of cash receipts. Improved oil prices resulted in the partial recovery of excess Gas. Gas sales volumes decreased 41% from first quarter 2016 costs on properties underlying the Oklahoma working interests to first quarter 2017 primarily due to the timing of cash receipts for the quarter ended March 31, 2017. in first quarter 2016 related to purchaser payments covering Underlying cumulative excess costs for the Texas and Oklahoma production back to 2013 and natural production decline. working interest conveyances remaining as of The estimated rate of natural production decline on the underlying March 31, 2017 totaled $2,130,858 (NPI $1,598,144). oil and gas properties is approximately 6% to 8% a year. Sales Prices Contingencies Oil. The first quarter 2017 average oil price was $45.22 per Bbl, a Several states have enacted legislation requiring state income 25% increase from the first quarter 2016 average price of $36.16 tax withholding from nonresident recipients of oil and gas per Bbl. The first quarter 2017 oil price is primarily related to proceeds. After consultation with its tax counsel, the trustee production from November 2016 through January 2017, when believes that it is not required to withhold on payments made to the average NYMEX price was $50.19 per Bbl. the unitholders. However, regulations are subject to change by Gas. The first quarter 2017 average gas price was $3.99 per Mcf, the various states, which could change this conclusion. Should a 4% decrease from the first quarter 2016 average price of $4.15 amounts be withheld on payments made to the Trust or the per Mcf. Excluding the impact of the prior period production unitholders, distributions to the unitholders would be reduced by payments received in first quarter 2016 the adjusted gas price the required amount, subject to the filing of a claim for refund by was $2.97 per Mcf. The first quarter 2017 gas price is primarily the Trust or unitholders for such amount. related to production from October through December 2016, when the average NYMEX price was $2.98 per MMBtu. Costs Taxes, Transportation and Other. Taxes, transportation and other decreased 23% for the first quarter primarily because of decreased gas production taxes and other deductions related to lower gas revenues. Production Expense. Production expense decreased 22% for the first quarter primarily because of decreased secondary


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    CROSS TIMBERS ROYALTY TRUST FIRST QUARTER REPORT 2017 GLOSSARY Bbl Barrel (of oil) Mcf Thousand cubic feet (of natural gas) MMBtu One million British Thermal Units, a common energy measurement CALCULATION OF NET PROFITS INCOME The following is a summary of the calculation of the net profits income received by the Trust: THREE MONTHS ENDED MARCH 31 [A] INCREASE 2017 2016 (DECREASE) Sales Volumes Oil (Bbl) [B] Underlying Properties........................................... 53,363 58,866 (9%) Average Per Day .................................................... 580 640 (9%) Net Profits Interests .............................................. 13,102 16,215 (19%) Gas (Mcf) [B] Underlying Properties........................................... 420,434 711,787 (41%) Average Per Day .................................................... 4,570 7,737 (41%) Net Profits Interests .............................................. 369,910 635,806 (42%) Average Sales Prices Oil (per Bbl).................................................................. $ 45.22 $ 36.16 25% Gas (per Mcf)................................................................ $ 3.99 $ 4.15 (4%) Revenues Oil sales ........................................................................ $ 2,413,076 $ 2,128,439 13% Gas sales ....................................................................... 1,676,280 2,956,199 (43%) Total Revenues ...................................................... 4,089,356 5,084,638 (20%) Costs Taxes, transportation and other .................................. 639,648 828,062 (23%) Production expense [C] .............................................. 1,072,142 1,371,919 (22%) Development costs ....................................................... 299,580 386,234 (22%) Excess costs .................................................................. 272,796 (508,361) N/A Total Costs ...................................................... 2,284,166 2,077,854 10% Net Proceeds............................................................... $ 1,805,190 $ 3,006,784 (40%) Net Profits Income...................................................... $ 1,624,671 $ 2,706,106 (40%) [A] 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. [B] Oil and gas sales volumes are allocated to the net profits interests by dividing Trust net cash inflows by average sales prices. As oil and gas prices change, the Trust’s allocated production volumes are impacted as the quantity of production necessary to cover expenses changes inversely with price. As such, the underlying property production volume changes may not correlate with the Trust’s allocated production volumes in any given period. Therefore, comparative discussion of oil and gas sales volumes is based on the underlying properties. [C] Production expense is primarily from seven working interest properties in the 75% net profits interest. Six of these properties are not operated by XTO Energy or ExxonMobil. Production expense includes an overhead charge which is deducted and retained by the operator. As of March 31, 2017, this charge was $37,200 per month (including a monthly overhead charge of $5,314 which XTO Energy deducts as operator of the Hewitt Unit) and is subject to adjustment each May based on an oil and gas industry index.


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    CROSS TIMBERS ROYALTY TRUST FIRST QUARTER REPORT 2017 TAX INFORMATION PER UNIT MONTHLY DISTRIBUTIONS PAID ON: ($/UNIT EXCEPT COST DEPLETION FACTORS) February 14, 2017 March 14, 2017 April 13, 2017 Total Gross Income.................................................................................. $ 0.116067 $ 0.107238 $ 0.114337 $ 0.337642 Less Severance Taxes .................................................................... (0.024389) (0.021452) (0.021022) (0.066863) Interest Income .............................................................................. 0.000052 0.000058 0.000054 0.000164 Less Administration Expenses...................................................... (0.012443) (0.024022) (0.003908) (0.040373) Reconciling Items .......................................................................... 0.000000 0.000000 0.000000 0.000000 Net Cash Distribution ............................................................... $ 0.079287 $ 0.061822 $ 0.089461 $ 0.230570 Cost Depletion Factors: Texas - 90% ............................................................................ 0.009511 0.009454 0.007543 0.026508 Oklahoma - 90% ..................................................................... 0.018988 0.012754 0.014003 0.045745 New Mexico - 90% ................................................................. 0.008252 0.008073 0.006140 0.022465 Texas - 75% ............................................................................ 0.000000 0.000000 0.000000 0.000000 Oklahoma - 75% ..................................................................... 0.000000 0.000000 0.000000 0.000000 CROSS TIMBERS ROYALTY TRUST P.O. Box 962020, Fort Worth, Texas 76162-2020 • (855) 588-7839 Southwest Bank, Trustee • www.crt-crosstimbers.com FIRST QUARTER REPORT 2017 CROSS TIMBERS ROYALTY TRUST


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