CROSS TIMBERS ROYALTY TRUST TRUSTEE'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K) – Marketscreener.com

Calculation of Net Profits Income
Taxes, transportation and other 2,909,480 1,522,567
(a) Because of the interval between time of production and receipt of net profits
income by the Trust, oil and gas sales for the year ended December 31
generally relate to oil production from November through October and gas
production from October through September, while oil and gas sales for the
quarter ended December 31 generally relate to oil production from August
through October and gas production from July through September.
(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 includes an overhead charge which is deducted and retained
by the operator. XTO Energy deducts an overhead charge as reimbursement for
costs associated with monitoring these interests. See Note 5 to Financial
Statements under Item 8. Financial Statements and Supplementary Data.
(d) See Note 7 to Financial Statements under Item 8. Financial Statements and
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Results of Operations
Years Ended December 31, 2022 and 2021
Volumes
Gas. Underlying gas sales volumes increased 47 percent from 2021 to 2022 primarily because of timing of cash receipts, partially offset by natural production decline.
The estimated rate of natural production decline on the underlying oil and gas properties is approximately 6 to 8 percent a year.
Prices
Costs
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Other Proceeds
The calculation of net profits income for the year ended December 31, 2021 included an expense adjustment from XTO Energy of $33,956 ($30,560 net to the Trust).
Administration expense was $203,624 and Trust interest income was $9,727, resulting in fourth quarter 2022 distributable income of $2,763,048, or $0.460508 per unit. Distributable income for fourth quarter 2021 was $1,662,792, or $0.277132 per unit.
Distributions to unitholders for the quarter ended December 31, 2022 were:
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Prices
Costs
Liquidity and Capital Resources
Greenhouse Gas Emissions and Climate Change Regulations
Off-Balance Sheet Arrangements
Related Party Transactions
The underlying properties from which the net profits interests were carved are currently owned by XTO Energy or other affiliated companies of ExxonMobil.
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Other than these properties, XTO Energy and ExxonMobil do not operate or control any of the underlying properties or related working interests.
The calculation of net profits income for the year ended December 31, 2021 included an expense adjustment from XTO Energy of $33,956 ($30,560 net to the Trust).
On June 25, 2010, XTO Energy became a wholly-owned subsidiary of Exxon Mobil Corporation.
The financial statements of the Trust are significantly affected by its basis of accounting and estimates related to its oil and gas properties and proved reserves, as summarized below.
Basis of Accounting
Impairment of Net Profits Interests
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Net profits interests in oil and gas properties
Oil and Gas Reserves
Forward-Looking Statements
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