Cross Timbers Royalty Trust (CRT): Business Model Canvas

In the dynamic world of energy investments, Cross Timbers Royalty Trust (CRT) stands out with its unique approach to generating value through a sophisticated business model. By leveraging partnerships with key players in the oil and gas sector, CRT expertly balances risk and reward to deliver regular income to its unitholders. Want to delve deeper into how CRT capitalizes on its royalty interests and ensures regulatory compliance? Read on to explore the intricacies of CRT's business model canvas.

Cross Timbers Royalty Trust (CRT) - Business Model: Key Partnerships

Oil and gas operators

Cross Timbers Royalty Trust partners with various oil and gas operators to leverage their expertise in extraction and production. The trust primarily derives its income from royalties earned on oil and gas production. For the fiscal year ending December 31, 2022, CRT received approximately $10 million in oil and natural gas royalty revenues from several operators, including:

Operator Name	Royalty Revenue (USD)	Production Volume (BOE)
Devon Energy	$4.2 million	300,000 BOE
Pioneer Natural Resources	$3.5 million	250,000 BOE
Newfield Exploration	$2.3 million	180,000 BOE
Others	$0.9 million	60,000 BOE

These partnerships enable CRT to capitalize on the operational capabilities of established companies, ensuring effective management and extraction of resources.

Financial institutions

Cross Timbers Royalty Trust collaborates with financial institutions to secure financing and manage investments. In 2022, CRT reported approximately $15 million in cash and cash equivalents, supported by lines of credit with major banks.

Some key financial relationships include:

• Bank of America: $5 million line of credit
• Wells Fargo: $3 million term loan
• Citibank: Investment management services for $7 million in assets

These relationships are crucial for maintaining liquidity and funding operational expenditures and investments.

Legal advisors

The trust relies on legal advisors for regulatory compliance, contracts, and litigation support. In 2022, CRT allocated approximately $500,000 towards legal services, which include consultations on land leases, royalty agreements, and compliance with federal regulations.

Prominent legal partners include:

• Vinson & Elkins LLP
• Baker Botts LLP
• Bracewell LLP

These firms help mitigate legal risks and ensure adherence to industry regulations, fostering a more stable operational environment.

Regulatory bodies

Engagement with regulatory bodies is crucial for Cross Timbers Royalty Trust to navigate the complex legal landscape of the energy sector. CRT maintains compliance with organizations such as:

• U.S. Securities and Exchange Commission (SEC)
• Texas Railroad Commission (RRC)
• Environmental Protection Agency (EPA)

In 2022, CRT faced compliance costs amounting to approximately $300,000 related to regulatory filings and environmental assessments.

These partnerships ensure that CRT operates within the legal frameworks necessary for sustainable business operations, aligning with industry best practices.

Cross Timbers Royalty Trust (CRT) - Business Model: Key Activities

Monitoring production

Cross Timbers Royalty Trust (CRT) primarily engages in monitoring the production of oil and natural gas from their royalty properties. In 2022, the average daily production was approximately 1,800 barrels of oil equivalent per day (BOE/d). The trust holds interests in over 1,000 producing wells, largely in the state of Texas. The production revenue for 2022 was reported at approximately $26.4 million.

Year	Average Daily Production (BOE/d)	Total Production Revenue ($ Millions)
2020	1,500	$18.9
2021	1,750	$23.1
2022	1,800	$26.4

Managing royalty interests

The management of royalty interests is a key activity for CRT, overseeing various agreements and contracts tied to the mineral rights. As of December 31, 2022, the trust held approximately 1,800 net royalty acres. The earnings from royalty interests contributed roughly 82% of total income, reflecting their vital role in the overall financial performance.

• Total Net Royalty Acres: 1,800
• Percentage of Income from Royalty Interests: 82%
• Average Royalty Rate: 20%

Ensuring regulatory compliance

CRT ensures regulatory compliance by adhering to federal and state laws governing oil and gas production. The trust engages in regular audits and assessments. Compliance costs amounted to approximately $500,000 in 2022, including legal, accounting, and regulatory fees. The trust is subject to financial reporting regulations and royalty payment restrictions set forth by the Securities and Exchange Commission (SEC).

Expense Category	2022 Amount ($)
Legal Fees	$200,000
Accounting Fees	$150,000
Regulatory Fees	$150,000
Total Compliance Costs:	$500,000

Distributing income to unitholders

Income distribution is a critical activity for CRT, ensuring unitholders receive a return on their investment. In 2022, the trust distributed approximately $22.7 million to its unitholders, translating to a distribution of $1.90 per unit. The distribution policy mandates at least 90% of taxable income to be distributed, thereby sustaining investor confidence and interest.

• Total Distribution in 2022: $22.7 million
• Distribution per Unit: $1.90
• Percentage of Taxable Income Distributed: 90%

Cross Timbers Royalty Trust (CRT) - Business Model: Key Resources

Royalty interests

Cross Timbers Royalty Trust has a significant portfolio of royalty interests primarily related to oil and natural gas production. As of the latest financial disclosures, CRT's royalty interests generated approximately $10.5 million in revenue for the fiscal year 2022. The trust mainly holds interests in properties located in the Barnett Shale and Permian Basin, which are known for high production rates and reserves.

Location	Royalty Interest (%)	Revenue Generated ($ million)
Barnett Shale	15%	6.0
Permian Basin	20%	4.5

Experienced management team

The management team at Cross Timbers Royalty Trust has extensive experience in the energy sector. The team comprises professionals with average industry experience of over 25 years. The board consists of various experts in financial management, operational efficiency, and regulatory compliance.

Recent leadership changes include the appointment of a new CEO who has previous experience with major oil and gas companies, contributing to an expected increase in operational efficiency by approximately 15% over the next fiscal year.

Financial assets

As of the end of Q3 2023, Cross Timbers Royalty Trust has reported total financial assets worth approximately $40 million, composed of cash equivalents and investment securities. The trust maintains a conservative financial strategy, ensuring adequate liquidity to meet operational costs and dividend distributions.

Overall financial performance indicates solid cash flow, with an operating cash flow of $12 million for Q3 2023. This represents a 10% increase compared to Q3 2022.

Financial Metric	Q3 2023 ($ million)	Q3 2022 ($ million)
Total Financial Assets	40	32
Operating Cash Flow	12	10.9

Legal expertise

Cross Timbers Royalty Trust benefits from a dedicated team of legal experts specializing in natural resource law. This legal expertise is essential for navigating complex regulatory environments affecting royalty interests and ensuring compliance with state and federal regulations. Legal costs for the trust amount to approximately $1.2 million annually.

• Expertise in oil and gas law
• Experience with regulatory compliance
• Assistance in dispute resolution

Cross Timbers Royalty Trust (CRT) - Business Model: Value Propositions

Regular Income Distribution

Cross Timbers Royalty Trust (CRT) is known for its regular income distribution to unitholders. As of 2022, CRT distributed $1.80 per unit, reflecting a significant yield for investors. The trust primarily generates revenue from the production of oil and natural gas, with a distribution policy that aims to provide consistent returns. The annualized yield based on the 2022 distribution was approximately 9.9%.

Diversified Energy Portfolio

The trust’s assets include interests in over 50,000 acres of oil and gas properties in Texas. This diverse portfolio aids in risk management and sustains cash flow. The portfolio comprises various production types, including:

• Oil
• Natural gas
• NGLs (Natural Gas Liquids)

Data from 2023 indicates that approximately 80% of the revenue comes from oil production, while natural gas accounts for the remaining 20%. This strategic mix allows CRT to capitalize on different market conditions.

Passive Investment Opportunity

CRT offers investors a passive investment vehicle, making it attractive to those seeking income without active management. The trust provides an efficient way for investors to gain access to cash flows generated from oil and gas production without the complexity of direct investing in energy projects. As of mid-2023, the market capitalization of CRT stands at approximately $130 million.

Transparency in Reporting

Cross Timbers Royalty Trust maintains a commitment to transparency in its financial reporting. The trust provides unitholders with detailed quarterly reports, financial statements, and operational updates. Key metrics are summarized as follows:

Reporting Period	Revenue ($ Million)	Net Income ($ Million)	Distribution ($ Million)
Q1 2023	15.6	8.4	4.0
Q2 2023	14.9	7.8	4.2
Q3 2023	16.1	8.7	4.5

These reports include insights into production volumes, price realizations, and future outlooks. This level of transparency helps to build trust and confidence among investors, aligning with the best practices in financial governance.

Cross Timbers Royalty Trust (CRT) - Business Model: Customer Relationships

Transparent Communication

Cross Timbers Royalty Trust places a high emphasis on transparent communication with its stakeholders. The Trust utilizes various channels to ensure shareholders are informed about operational updates and financial performance. This level of transparency builds trust and loyalty among investors.

Regular Financial Updates

Financial updates are a critical aspect of maintaining customer relationships in CRT. The Trust aims to provide regular and timely financial disclosures, including quarterly earnings reports and updates on royalty income. In Q2 2023, Cross Timbers reported royalty income of $12.4 million, showing an increase of 15% from Q2 2022.

Quarter	Royalty Income ($ Million)	Year-over-Year Growth (%)
Q1 2022	$10.5	-
Q2 2022	$10.8	-
Q1 2023	$11.1	5%
Q2 2023	$12.4	15%

Investor Relations Support

The investor relations team at Cross Timbers Royalty Trust provides robust support to shareholders. They facilitate communication through various channels such as conference calls, webinars, and one-on-one meetings. In 2023, the team conducted 12 investor events, enhancing engagement and feedback.

• Number of investor events in 2023: 12
• Average attendance per event: 50
• Shareholder inquiries responded to in 2023: 150

Annual Reports

The Trust publishes comprehensive annual reports detailing financial performance, operations, and future outlook. The 2022 Annual Report highlighted total revenues of $45 million with a net income of $20 million, demonstrating the Trust's profitability and operational efficiency.

Year	Total Revenues ($ Million)	Net Income ($ Million)	Earnings per Share ($)
2020	$30	$15	$0.75
2021	$38	$18	$0.90
2022	$45	$20	$1.00

Cross Timbers Royalty Trust (CRT) - Business Model: Channels

Financial Advisors

Financial advisors play a crucial role in facilitating investments in Cross Timbers Royalty Trust (CRT). They provide clients with tailored investment advice that incorporates CRT's royalty interests, performance metrics, and potential returns. As of Q3 2023, the average advisory fee ranges from 0.75% to 1.25% of assets under management.

Brokerage Firms

Brokerage firms serve as important channels by which investors can purchase CRT units. Key statistics regarding brokerage transactions include:

Brokerage Firm	Commission Fee	Average Trade Volume (Q3 2023)
Charles Schwab	$0	1,500,000 shares
Fidelity Investments	$0	1,700,000 shares
TD Ameritrade	$0	1,200,000 shares
E*TRADE	$0	1,000,000 shares

Company Website

The official Cross Timbers Royalty Trust website is a primary information hub for investors. Key features of the website include:

• Investor Relations Section: Contains financial reports, unit price information, and sustainability reports.
• Current Unit Price (as of October 2023): $13.50 per unit.
• Market Capitalization: Approximately $340 million.
• Monthly Distributions: Average monthly distribution of $0.07 per unit.

Investor Presentations

Cross Timbers Royalty Trust conducts periodic investor presentations to communicate performance highlights, upcoming strategies, and market outlook. The recent 2023 presentation included:

Date	Topics Covered	Target Audience	Number of Attendees
September 15, 2023	Q2 Performance, Market Trends	Institutional Investors	300
June 10, 2023	Production Growth, Dividend Policy	Retail Investors	150

Cross Timbers Royalty Trust (CRT) - Business Model: Customer Segments

Individual investors

Individual investors are a significant customer segment for Cross Timbers Royalty Trust. These investors typically seek income-generating investments and have an affinity for stocks that pay dividends. CRT has consistently distributed dividends, with a 2022 annual distribution of approximately $0.58 per share, representing a yield of about 8.5% based on the average share price of $6.82 in 2022.

Institutional investors

Institutional investors comprise mutual funds, pension funds, and other large investment vehicles that allocate considerable assets into dividend-oriented stocks like CRT. As of 2023, institutional ownership of CRT shares stands at around 47%, indicating strong confidence among robust financial entities. The trust's market capitalization was approximately $475 million as of mid-2023, attracting institutional attention for its stability and income potential.

Financial advisors

Financial advisors play a crucial role in guiding individual clients toward investments like CRT. With the ongoing focus on building income portfolios amid fluctuating market conditions, many advisors are increasingly recommending CRT due to its historical representation of reliable income. As of Q2 2023, approximately 28% of financial advisors include energy sector trusts in their client portfolios, reflecting a growing recognition of CRT's benefits.

Energy sector enthusiasts

Energy sector enthusiasts, including both retail and professional investors, form another vital customer segment for CRT. Those engaged in energy markets look towards royalty trusts for exposure to oil and gas sectors without direct operations management. The U.S. Energy Information Administration (EIA) reported that in 2023, around 60% of energy investors express interest specifically in royalty trusts as part of their investment strategy due to favorable oil prices and extraction technologies.

Customer Segment	Characteristics	Investment Strategy	Market Share (%)
Individual Investors	Seeking dividend-generating stocks	Long-term income	25%
Institutional Investors	High asset allocation	Income-focused strategies	47%
Financial Advisors	Attentive to client needs	Diversified portfolio construction	28%
Energy Sector Enthusiasts	Interest in oil and gas sectors	Sector-specific investments	60%

Cross Timbers Royalty Trust (CRT) - Business Model: Cost Structure

Administrative expenses

Administrative expenses for Cross Timbers Royalty Trust include costs associated with day-to-day operations, salaries, and general administrative support. For the fiscal year ending December 31, 2022, total administrative expenses were approximately $6.2 million.

Legal and compliance costs

Legal and compliance costs are significant for Cross Timbers Royalty Trust due to the regulatory environment in which it operates. As reported in their 2022 annual report, legal and compliance fees totaled around $1.5 million, encompassing costs associated with compliance audits and legal consultations.

Distribution expenses

Distribution expenses pertain to the costs incurred in the distribution of royalties to trust unit holders. In 2022, Cross Timbers Royalty Trust had distribution expenses amounting to $2.4 million. This covers the logistical aspects of tracking and disbursing funds to unit holders.

Operational fees

Operational fees account for costs related to managing the trust’s assets, including monitoring production, valuation of resources, and partnership fees. For the year 2022, operational fees were reported as approximately $3.1 million.

Cost Categories	Amount (in million $)	Percentage of Total Costs
Administrative Expenses	6.2	38.9%
Legal and Compliance Costs	1.5	9.4%
Distribution Expenses	2.4	15.1%
Operational Fees	3.1	19.4%
Total Costs	15.2	100%

Cross Timbers Royalty Trust (CRT) - Business Model: Revenue Streams

Royalties from oil production

Cross Timbers Royalty Trust primarily generates revenue through royalties derived from oil production. For the fiscal year 2022, the trust reported approximately $13.9 million in revenue from oil royalties. The average price per barrel of oil during this period was around $82.00.

Year	Oil Production (Barrels)	Revenue from Oil Royalties	Average Price per Barrel
2022	169,000	$13.9 million	$82.00
2021	175,000	$8.5 million	$49.00
2020	180,000	$6.8 million	$38.00

Royalties from gas production

In addition to oil, Cross Timbers Royalty Trust earns revenue from natural gas royalties. For the same fiscal year 2022, the total revenue from gas production was approximately $4.6 million. The trust reported an average price of about $4.50 per MCF (thousand cubic feet) for gas.

Year	Gas Production (MCF)	Revenue from Gas Royalties	Average Price per MCF
2022	1,020,000	$4.6 million	$4.50
2021	1,100,000	$3.2 million	$2.90
2020	1,200,000	$2.5 million	$2.10

Interest income on investments

The trust also earns interest income from its investments. In 2022, the interest income amounted to approximately $0.5 million. This income reflects the trust's conservative investment strategy aimed at maximizing returns on cash reserves.

Year	Interest Income	Investment Strategy
2022	$0.5 million	Conservative
2021	$0.3 million	Conservative
2020	$0.2 million	Conservative

Capital gains from asset sales

Cross Timbers Royalty Trust occasionally realizes capital gains from the sale of assets. In 2022, the trust reported capital gains totaling $1.2 million from its strategic asset sales, contributing to its overall revenue strength.

Year	Capital Gains from Asset Sales	Reason for Sale
2022	$1.2 million	Strategic Portfolio Management
2021	$0.8 million	Divestment of Non-Core Assets
2020	$0.5 million	Portfolio Optimization