Executive Summary

Q3 2024 distributable income was $1.52M ($0.253542 per unit), down 38% YoY but up sequentially from Q2’s $0.224293 per unit as oil price realizations improved and Oklahoma working‑interest excess costs were recovered .
Net profits income fell 37% YoY to $1.70M on lower oil volumes (-23%), higher production expense (+34%), and weaker gas prices (-14%), partially offset by higher oil prices (+4%) and stronger gas volumes (+17%) .
Excess costs on Texas working‑interest (WI) properties increased; total remaining to be recovered (underlying) ended Q3 at $3.85M (vs $3.73M at 6/30), while Oklahoma WI excess costs were fully recovered during Q3 (underlying) .
No formal guidance is provided. Distribution declarations in August ($0.055175), September ($0.102230), and October ($0.064592) reflect monthly variability; September included a $24,128 net deduction for the Chieftain settlement .

What Went Well and What Went Wrong

What Went Well
- Sequential improvement: per‑unit distributable income rose to $0.253542 from $0.224293 in Q2 2024, aided by higher realized oil prices and Oklahoma WI excess cost recovery .
- Gas volumes YoY up 17% on timing dynamics; oil prices up 4% YoY to $77.54/Bbl in Q3 .
- Oklahoma WI excess costs and accrued interest were recovered in Q3, removing a drag on near‑term net proceeds from that conveyance (underlying) .
- Quote (Trustee’s MD&A): “This 37 percent decrease in net profits income is primarily the result of decreased oil production ($0.7 million), increased production expenses ($0.4 million), [and] lower gas prices ($0.2 million), partially offset by increased gas production ($0.2 million), and higher oil prices ($0.1 million)” .
What Went Wrong
- YoY deterioration: net profits income down 37% and distributable per unit down to $0.253542 from $0.408532 on lower oil volumes and higher production costs .
- Production expense jumped 34% YoY on higher processing, labor, field, and R&M costs (timing of receipts cited); gas price realizations fell 14% YoY .
- Texas WI excess costs increased during Q3; total remaining to be recovered (underlying) rose to $3.85M at 9/30 from $3.73M at 6/30, sustaining a headwind to the WI component of payments .

Financial Results

Trust distributable metrics

Metric	Q1 2024	Q2 2024	Q3 2024
Net profits income ($)	$1,837,741	$1,564,871	$1,697,724
Total income ($)	$1,854,714	$1,580,044	$1,712,188
Administration expense ($)	$361,500	$234,286	$190,936
Distributable income ($)	$1,493,214	$1,345,758	$1,521,252
Distributable income per unit ($)	$0.248869	$0.224293	$0.253542

Underlying revenues and costs (three months)

Metric	Q1 2024	Q2 2024	Q3 2024
Oil sales ($)	$3,212,363	$3,361,489	$3,160,814
Gas sales ($)	$1,159,078	$1,353,167	$1,427,583
Total revenues ($)	$4,371,441	$4,714,656	$4,588,397
Taxes, transportation & other ($)	$537,506	$471,097	$567,122
Production expense ($)	$1,565,161	$1,689,436	$2,092,642
Development costs ($)	$1,113,069	$364,014	$25,693
Excess costs (recovery) ($)	$(940,783)	$451,363	$(36,275)

Underlying prices and volumes (three months)

KPI	Q1 2024	Q2 2024	Q3 2024
Avg oil price ($/Bbl)	$75.30	$77.24	$77.54
Avg gas price ($/Mcf)	$4.57	$4.04	$3.65
Oil volumes (Underlying Bbls)	42,662	43,522	40,764
Gas volumes (Underlying Mcf)	253,799	335,263	391,443

YoY comparison (Q3 2024 vs Q3 2023)

Metric	Q3 2023	Q3 2024
Net profits income ($)	$2,676,180	$1,697,724
Distributable income per unit ($)	$0.408532	$0.253542
Oil sales ($)	$3,956,370	$3,160,814
Gas sales ($)	$1,415,946	$1,427,583
Total revenues ($)	$5,372,316	$4,588,397
Taxes, transportation & other ($)	$592,812	$567,122
Production expense ($)	$1,565,373	$2,092,642
Development costs ($)	$52,950	$25,693
Avg oil price ($/Bbl)	$74.62	$77.54
Avg gas price ($/Mcf)	$4.23	$3.65
Oil volumes (Underlying Bbls)	53,022	40,764
Gas volumes (Underlying Mcf)	334,675	391,443

Excess costs trajectory (Underlying – total remaining to be recovered)

Quarter-End	Total ($)
Mar 31, 2024	$4,099,588
Jun 30, 2024	$3,731,932
Sep 30, 2024	$3,847,432

Selected Q3 distribution declarations (for context)

Month	Per-unit Distribution	Notes
August 2024	$0.055175	TX WI excess costs partially recovered; no remaining WI proceeds that month
September 2024	$0.102230	Includes $24,128 (net) deduction related to Chieftain settlement
October 2024	$0.064592	TX WI excess costs increased $125,000; cumulative underlying TX WI excess costs $4.0M, incl. $1.061M interest

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
N/A	N/A	N/A	N/A	The Trust does not issue formal financial guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2024)	Current Period (Q3 2024)	Trend
Commodity prices	Q1: Oil $75.30/Bbl, gas $4.57/Mcf; Q2: Oil $77.24/Bbl, gas $4.04/Mcf	Oil $77.54/Bbl up YoY; gas $3.65/Mcf down YoY	Oil steady-high; gas softer
Natural production decline	Decline cited; expected ~6–8% annually	Continued 6–8% decline; timing effects on volumes	Unchanged structural headwind
Excess costs (WI)	Q1 total underlying to be recovered $4.10M; Q2 $3.73M (OK WI recovery)	Q3 $3.85M; OK WI recovered; TX WI increased	TX WI drag persists; OK WI improved
Development at Hewitt Unit (OK WI)	Elevated in Q1 (+87% YoY); remained high in Q2 (+290% YoY) on timing	Q3 down sharply ($25,693) on decreased recompletion activity	Capex pressure eased
Chieftain settlement	Allocation anticipated; arbitration settled June 18, 2024	$24,128 (net) deducted in Sept distribution; matter completed for CRT	One-time headwind resolved
Operating costs	Q1: lower processing; Q2: lower power/fuel; Q3: higher processing, labor, field, R&M	Mix shift; higher in Q3	Cost inflation/timing pressures

Note: No earnings call transcript was filed; themes are drawn from quarterly MD&A disclosures .

Management Commentary

Trustee’s MD&A on YoY change: “This 37 percent decrease in net profits income is primarily the result of decreased oil production ($0.7 million), increased production expenses ($0.4 million), lower gas prices ($0.2 million), partially offset by increased gas production ($0.2 million), and higher oil prices ($0.1 million)” .
Operating cost dynamics: “Production expense increased 34 percent for the third quarter primarily because of higher processing costs driven by timing of receipts, increased labor, field, repairs and maintenance, and miscellaneous non‑operated costs” .
Excess costs status: “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)” .

Q&A Highlights

N/A – no earnings call transcript was filed in the period; key insights are from MD&A and monthly distribution 8‑K press releases .

Estimates Context

We attempted to retrieve S&P Global consensus (EPS and revenue) for Q3 2024; estimates could not be retrieved due to access limits in this session. As a result, we cannot provide a comparison to Wall Street consensus for this quarter. If needed, we can refresh and pull consensus on a subsequent request.

Key Takeaways for Investors

Sequential per‑unit distributable income improved in Q3 despite YoY pressure, aided by better oil realizations and OK WI excess cost recovery; however, elevated production expenses limited upside .
Texas WI excess costs remain the principal structural headwind; watch for recovery pace as it directly impacts monthly distributions (cumulative underlying to be recovered $3.85M at 9/30) .
Gas price softness persisted while oil realizations held firm; CRT’s cash flows remain highly sensitive to commodity prices and timing effects embedded in the modified cash‑basis accounting .
Development spending eased in Q3 following earlier Hewitt Unit activity, reducing near‑term capex burden on WI net proceeds .
One‑time Chieftain settlement deduction hit the September distribution but is now completed for CRT, removing an overhang on future payments .
Trading implications: near‑term distributions likely track oil prices and the cadence of Texas WI excess‑cost recovery; upside catalysts include sustained oil strength and faster WI cost recovery; downside risks include cost inflation and weaker gas pricing .

CROSS TIMBERS ROYALTY TRUST (CRT)·Q3 2024 Earnings Summary