Marketing Mix Analysis of Cross Timbers Royalty Trust (CRT)

Welcome to a deep dive into the intriguing world of Cross Timbers Royalty Trust (CRT). This unique entity operates under the principles of the marketing mix, focusing on four essential components: Product, Place, Promotion, and Price. Discover how CRT’s interests in oil and natural gas, their geographic significance, investor outreach strategies, and price fluctuations shape their operations and potential for profitability. Read on to unravel the intricate details behind these pivotal aspects of their business!

Cross Timbers Royalty Trust (CRT) - Marketing Mix: Product

Oil and Natural Gas Interests

Cross Timbers Royalty Trust primarily focuses on royalty interests in oil and natural gas properties. As of August 2023, the trust owns interests in approximately 4,700 acres in various states, generating income primarily through the production of oil and natural gas. CRT's interests historically derive a vast proportion of its income from its upstream operations, capitalizing on market fluctuations.

Royalties from Wells in Texas, Oklahoma, and New Mexico

The trust has established royalty agreements on wells located across three states:

• Texas: Approximately 65% of total revenue originates from this state, with gross production of approximately 1.2 million barrels of oil equivalent as of 2022.
• Oklahoma: Contributes roughly 30% of revenue, benefitting from advancements in fracturing technology that enhance production.
• New Mexico: Accounts for the remaining 5% of royalty revenue, with a growing number of operational rigs deploying new extraction techniques.

Revenue Generated from Mineral Production

In the fiscal year 2022, Cross Timbers reported total revenue of $17.4 million, with a notable increase of 15% year-over-year attributed to higher oil prices and increased production levels. The revenue streams rely heavily on:

• Oil Sales: $12 million from approximately 192,000 barrels sold.
• Natural Gas Sales: $5.4 million from around 1.3 billion cubic feet of gas.

The trust’s revenue from mineral production is expected to continue to grow, driven by increasing demand and strategic enhancements in extraction processes across its properties.

Long-Term Passive Income Assets

Cross Timbers Royalty Trust serves as a vehicle for long-term passive income, with consistent distributions to unitholders. In August 2023, the monthly distribution was approximately $0.07 per unit, amounting to an annual yield of around 5.8% based on its trading price of $14.00

No Direct Operational Control Over Wells

CRT operates under a specific business model that delegates operational decisions to lessees. The trust does not engage in direct operational control, which minimizes its overhead costs. As of the latest report, approximately:

• 150 wells are currently producing under its royalty agreements, with varying production ramps based on regional market conditions.

This structure allows Cross Timbers Royalty Trust to maintain a focus on income generation without the complexities associated with operating well facilities, thereby maximizing returns for its investors.

Cross Timbers Royalty Trust (CRT) - Marketing Mix: Place

Royalties Tied to Geographical Locations of Wells

The revenues for Cross Timbers Royalty Trust are primarily derived from royalties tied to oil and gas produced from wells located in specific geographical regions. This geographical linkage is critical in determining the revenue streams and reflects the importance of location in the trust's operations.

Majority Reserves Based in Texas

Approximately 91% of Cross Timbers Royalty Trust's reserves are located in Texas. This concentration includes numerous prolific areas known for their rich oil and gas fields. Some of the most significant areas include:

• Fort Worth Basin
• Permian Basin
• Eagle Ford Shale

As of September 30, 2023, the estimated proved reserves in Texas are around 7.2 million barrels of oil equivalent (Boe).

Additional Interests in Oklahoma and New Mexico

The Cross Timbers Royalty Trust also possesses additional interests outside Texas, amounting to approximately 9% of its total reserves. These include:

• Oklahoma: This state contributes an estimated 0.9 million Boe, mainly from the Anadarko Basin.
• New Mexico: Reserves here are also minimal, contributing around 0.1 million Boe.

Managed from a Trust Office

The management of Cross Timbers Royalty Trust is centralized at a trust office in Dallas, Texas. This office oversees the operations, including the distribution of royalties and adherence to regulations. Administrative functions are streamlined to support efficient management of the royalty interests across the different locations.

No Physical Storefront or Customer-Facing Locations

Cross Timbers Royalty Trust operates without any physical storefronts or direct customer-facing locations. Transactions and distributions are managed digitally, ensuring accessibility for investors and stakeholders through online platforms.

Cross Timbers Royalty Trust (CRT) - Marketing Mix: Promotion

Information available through financial reports

Cross Timbers Royalty Trust (CRT) provides detailed financial reports that provide insights into its operational performance and financial health. As of Q3 2023, the trust reported revenues of approximately $12 million and distributions of $2 million to unit holders. The net income for the same quarter was recorded at $9 million, indicating a healthy profit margin. Reports are made available quarterly and annually, shedding light on oil and gas production figures, royalty income, and costs incurred.

Investor relations activities

Investor relations comprise a critical aspect of CRT's promotional strategy. The trust conducts periodic conference calls and webinars to engage directly with investors. In 2023, CRT hosted three investor calls, with about 300 participants per session, focusing on operational updates and answering investor inquiries. The investor relations team has set a goal to respond to investor queries within 24 hours, ensuring transparency and proactive communication.

Listings on NYSE (ticker: CRT)

Cross Timbers Royalty Trust is officially listed on the NYSE under the ticker symbol CRT. The share price for CRT as of October 27, 2023, was approximately $16.45, with a market capitalization of around $250 million. The trust’s performance is closely monitored, with average trading volume reported at 30,000 shares per day, ensuring sufficient liquidity and engagement among retail and institutional investors.

Regular updates via trust website

The official website of Cross Timbers Royalty Trust serves as a primary platform for disseminating important updates and financial information. Key updates are posted on a monthly basis, providing investors with the latest distribution announcements and operational performance metrics. The website features an interactive section where users can access historical distribution data, current production reports, and governance information.

Financial news coverage and analysis

Cross Timbers Royalty Trust is frequently covered by financial media outlets. As of October 2023, analysts have given CRT a consensus rating of “Hold” with an average 12-month price target of $17.50, reflecting a potential upside of approximately 6.3% from current levels. Coverage from major financial platforms like Bloomberg and Reuters provides monthly analyses, discussing production rates and market trends impacting CRT's operations.

Cross Timbers Royalty Trust (CRT) - Marketing Mix: Price

Unit prices fluctuate based on market conditions

Unit prices for Cross Timbers Royalty Trust (CRT) are subject to significant fluctuations. For example, as of October 2023, the average price of oil stood around $83 per barrel, while natural gas prices averaged about $3.24 per MMBtu. These values directly impact the revenue generated by CRT, as the royalty income is contingent on these commodity prices.

Influenced by global oil and gas prices

The financial performance of CRT is heavily influenced by global oil and gas prices. The following table illustrates historical pricing trends and their correlation to CRT's distributions:

Traded on NYSE

Cross Timbers Royalty Trust is traded on the New York Stock Exchange under the ticker symbol CRT. As of October 2023, CRT’s market capitalization was approximately $365 million, with stock prices hovering around $18.50 per unit.

Dividends reflect underlying commodity prices

The dividends paid to CRT unitholders are closely tied to the underlying commodity prices. In the last fiscal year, CRT declared total dividends of $1.75, which represents a yield of approximately 9.46% based on the current stock price. This yield can fluctuate significantly based on changes in commodity prices:

Subject to supply-demand dynamics in energy markets

The pricing for CRT is also shaped by supply-demand dynamics within energy markets. In 2023, a robust demand recovery in the post-pandemic period has led to tighter supply, resulting in higher prices. Additionally, geopolitical tensions in oil-producing regions have further influenced market prices, directly impacting the revenue streams for CRT.

• In August 2023, approximately 36 million barrels were held in U.S. crude oil reserves, reflecting a significant decrease from previous months, which pressure prices upward.
• Natural gas storage levels as of September 2023 were reported at 3,250 billion cubic feet, indicating a potential tightness in supply, contributing to price variations.

The interaction of these factors creates a complex and dynamic pricing strategy for CRT, reflective of real-time market conditions and the trust’s operational framework.

In summary, the marketing mix of Cross Timbers Royalty Trust (CRT) reveals a unique blend of oil and natural gas interests that generate long-term, passive income through royalties primarily concentrated in Texas, Oklahoma, and New Mexico. With no physical storefronts and managed from a trust office, the place aspect emphasizes its geographical strategy. Promotion relies heavily on financial transparency through reports, investor relations, and digital channels like their trust website. Additionally, the price dynamics reflect broader market conditions, influenced by fluctuating oil and gas prices, underscoring CRT's position in the ever-evolving energy sector.