<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarterly Period Ended March 31, 2000
--------------
Commission File No. 1-10982
-------
CROSS TIMBERS ROYALTY TRUST
Texas I.R.S. No. 75-6415930
Bank of America, N.A.
P.O. Box 830650
Dallas, Texas 75283-0650
Telephone Number 877/228-5084
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
------- -------
Number of units of beneficial interest outstanding at May 1, 2000: 6,000,000
---------
<PAGE>
CROSS TIMBERS ROYALTY TRUST
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
- -------------------------------------------------------
TABLE OF CONTENTS
Page
----
Glossary of Terms............................................... 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................ 4
Report of Independent Public Accountants........................ 5
Condensed Statements of Assets, Liabilities and Trust Corpus
at March 31, 2000 and December 31, 1999........................ 6
Condensed Statements of Distributable Income
for the Three Months Ended March 31, 2000 and 1999............. 7
Condensed Statements of Changes in Trust Corpus
for the Three Months Ended March 31, 2000 and 1999............. 8
Notes to Condensed Financial Statements......................... 9
Item 2. Trustee's Discussion and Analysis............................... 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk...... 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................ 16
Signatures...................................................... 17
2
<PAGE>
CROSS TIMBERS ROYALTY TRUST
GLOSSARY OF TERMS
- -----------------
The following are definitions of significant terms used in this Form 10-Q:
Bbl Barrel (of oil)
Mcf Thousand cubic feet (of natural gas)
MMBtu One million British Thermal Units, a common energy
measurement
net profits interest An interest in an oil and gas property measured by net
profits from the sale of production, rather than a
specific portion of production
net proceeds Gross proceeds received by Cross Timbers Oil Company
from sale of production from the underlying properties,
less applicable costs
royalty income Net proceeds, multiplied by the net profits percentage
of 75% or 90%, that is paid to the trust
royalty interest A nonoperating interest in an oil and gas property that
(and overriding provides the owner a specified share of production
royalty interest) without any production or development costs
royalty trust interests Defined net profits interests that were carved from the
underlying properties and entitle the trust to receive
for each of the following:
90% royalty trust interests - 90% of the net proceeds
from the underlying properties, which are royalty and
overriding royalty interests in Texas, Oklahoma and New
Mexico
75% royalty trust interests - 75% of the net proceeds
from the underlying properties, which are working
interests in Texas and Oklahoma
underlying properties Cross Timbers Oil's interest in certain oil and gas
properties from which the royalty trust interests were
carved. The underlying properties include royalty and
overriding royalty interests in producing and non-
producing properties in Texas, Oklahoma and New Mexico,
and working interests in producing properties located in
Texas and Oklahoma.
working interest An operating interest in an oil and gas property that
provides the owner a specified share of production that
is subject to all production and development costs
3
<PAGE>
CROSS TIMBERS ROYALTY TRUST
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements.
The condensed financial statements included herein are presented, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in annual
financial statements have been condensed or omitted pursuant to such rules and
regulations, although the trustee believes that the disclosures are adequate to
make the information presented not misleading. These condensed financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the trust's latest annual report on Form 10-K. In the
opinion of the trustee, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the assets, liabilities and trust
corpus of the Cross Timbers Royalty Trust at March 31, 2000, and the
distributable income and changes in trust corpus for the three-month periods
ended March 31, 2000 and 1999, have been included. Distributable income for
such interim periods is not necessarily indicative of distributable income for
the full year.
4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Bank of America, N.A., as Trustee
for the Cross Timbers Royalty Trust:
We have reviewed the accompanying condensed statement of assets, liabilities and
trust corpus of the Cross Timbers Royalty Trust as of March 31, 2000 and the
related condensed statements of distributable income and changes in trust corpus
for the three-month periods ended March 31, 2000 and 1999. These financial
statements are the responsibility of the trustee.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
auditing standards generally accepted in the United States, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
The accompanying condensed financial statements are prepared on a modified cash
basis as described in Note 1 which is a comprehensive basis of accounting other
than accounting principles generally accepted in the United States.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with the basis of accounting described in Note 1.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the statement of assets, liabilities and trust
corpus of the Cross Timbers Royalty Trust as of December 31, 1999 included in
the trust's 1999 annual report on Form 10-K, and in our report dated March 8,
2000, we expressed an unqualified opinion on that statement. In our opinion,
the information set forth in the accompanying condensed statement of assets,
liabilities and trust corpus as of December 31, 1999 is fairly stated in all
material respects in relation to the statement of assets, liabilities and trust
corpus included in the trust's 1999 annual report on Form 10-K from which it has
been derived.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
May 5, 2000
5
<PAGE>
CROSS TIMBERS ROYALTY TRUST
- --------------------------------------------------------------------------------
Condensed Statements of Assets, Liabilities and Trust Corpus
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and short-term investments........................ $ 713,563 $ 912,164
Interest to be received................................ 1,391 1,840
Net profits interests in oil and gas properties - net.. 32,507,596 33,005,334
----------- ------------
$33,222,550 $33,919,338
=========== ============
LIABILITIES AND TRUST CORPUS
Distribution payable to unitholders.................... $ 714,954 $ 914,004
Trust corpus (6,000,000 units of beneficial
interest authorized and outstanding)................. 32,507,596 33,005,334
----------- ------------
$33,222,550 $33,919,338
=========== ============
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.
6
<PAGE>
CROSS TIMBERS ROYALTY TRUST
- --------------------------------------------------------------------------------
Condensed Statements of Distributable Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Royalty income................................... $2,352,880 $1,479,855
Interest income.................................. 3,949 2,028
---------- ----------
Total income..................................... 2,356,829 1,481,883
Administration expense........................... 56,033 41,495
---------- ----------
Distributable income............................. $2,300,796 $1,440,388
========== ==========
Distributable income per unit (6,000,000 units).. $0.383466 $ 0.240065
========== ==========
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.
7
<PAGE>
CROSS TIMBERS ROYALTY TRUST
- --------------------------------------------------------------------------------
Condensed Statements of Changes in Trust Corpus (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Trust corpus, beginning of period................. $33,005,334 $36,024,941
Amortization of net profits interests............. (497,738) (453,978)
Distributable income.............................. 2,300,796 1,440,388
Distributions declared............................ (2,300,796) (1,440,388)
----------- -----------
Trust corpus, end of period....................... $32,507,596 $35,570,963
=========== ===========
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.
8
<PAGE>
CROSS TIMBERS ROYALTY TRUST
- --------------------------------------------------------------------------------
Notes to Condensed Financial Statements (Unaudited)
1. Basis of Accounting
The financial statements of the Cross Timbers Royalty Trust are prepared on
the following basis:
- Royalty income recorded for a month is the amount computed and paid by
the interest owner, Cross Timbers Oil Company, to Bank of America, N.A.,
as trustee for the trust. Royalty income consists of net proceeds
received by Cross Timbers Oil from the underlying properties in the
prior month, multiplied by net profit percentages of 90% for the 90%
royalty trust interests, and 75% for the 75% royalty trust interests.
Costs deducted in the calculation of net proceeds for the 90% royalty
trust interests generally include applicable taxes, transportation,
marketing and legal costs, and do not include other production and
development costs. For the 75% royalty trust interests, costs deducted
in the calculation of net proceeds include production expenses,
development costs, applicable taxes, operating charges and other costs.
- Royalty income is computed separately for each of five conveyances under
which the royalty trust interests were conveyed to the trust. If monthly
costs exceed revenues for any conveyance, such excess costs cannot
reduce royalty income from other conveyances, but are carried forward
with accrued interest to be recovered from future net proceeds of that
conveyance. See Note 3.
- Interest income, interest to be received and distribution payable to
unitholders include interest to be earned from the monthly record date
(last business day of the month) through the date of the next
distribution to unitholders.
- Trust expenses are recorded based on liabilities paid and cash reserves
established by the trustee for liabilities and contingencies.
- Distributions to unitholders are recorded when declared by the trustee.
The financial statements of the trust differ from financial statements
prepared in accordance with generally accepted accounting principles
("GAAP") because revenues are not accrued in the month of production,
expenses are recognized when paid rather than when incurred, and certain
cash reserves may be established for contingencies which would not be
accrued under GAAP. The initial carrying value of the royalty trust
interests ($61,100,449) represents Cross Timbers Oil's historical net book
value on February 12, 1991, the creation date of the trust. Amortization of
the royalty trust interests is calculated on a unit-of-production basis and
is charged directly to trust corpus. Accumulated amortization was
$28,592,853 as of March 31, 2000 and $28,095,115 as of December 31, 1999.
9
<PAGE>
2. Federal Income Taxes
Tax counsel has advised the trust that, under current tax laws, the trust
will be classified as a grantor trust for federal income tax purposes and
therefore is not subject to taxation at the trust level. However, the
opinion of tax counsel is not binding on the Internal Revenue Service.
The unitholders are considered, for federal income tax purposes, to own the
trust's income and principal as though no trust were in existence. The
income of the trust is deemed to have been received or accrued by the
unitholders at the time such income is received or accrued by the trust,
rather than when distributed by the trust.
Cross Timbers Oil has advised the trustee that the trust receives royalty
income from coal seam gas wells. Production from coal seam gas wells
drilled after December 31, 1979, and prior to January 1, 1993, qualifies
for the federal income tax credit for producing nonconventional fuels under
Section 29 of the Internal Revenue Code. This tax credit, which was
approximately $1.02 per MMBtu for 1999, is recalculated annually based on
each year's qualified production through the year 2002. Such credit, based
on the unitholder's pro rata share of qualifying production, may not reduce
the unitholder's regular tax liability (after the foreign tax credit and
certain other nonrefundable credits) below his tentative minimum tax. Any
part of the Section 29 credit not allowed for the tax year solely because
of this limitation is subject to certain carryover provisions. Unitholders
should consult their tax advisors regarding use of this credit and other
trust tax compliance matters.
Based on 2000 qualifying sales volumes and the factors used in the
calculation of the 1999 coal seam tax credit, the credit is estimated to be
$0.032 per unit for the quarter ended March 31, 2000. The actual coal seam
tax credit was $0.042 per unit for first quarter 1999. Final 2000 coal seam
tax credit data will be provided to unitholders with year-end tax
information.
3. Excess Costs
The following is a summary of changes in excess costs by conveyance during
the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
2000 1999
--------- ------------------
Texas Texas Oklahoma
--------- -------- --------
<S> <C> <C> <C>
Cumulative excess costs and accrued interest -
beginning of period............................ $ 375,802 $519,817 $ -
Excess costs.................................... - 276,134 24,349
Recovery of excess costs and accrued interest... (236,633) - (5,193)
Accrued interest................................ 6,702 12,410 145
--------- -------- -------
Cumulative excess costs and accrued interest -
end of period.................................. $ 145,871 $808,361 $19,301
========= ======== =======
Net to trust (75%).............................. $ 109,403 $606,271 $14,476
========= ======== =======
</TABLE>
10
<PAGE>
Excess costs and accrued interest for each conveyance must be fully
recovered from the respective future net proceeds of the 75% royalty trust
interests before such interests can again contribute to trust royalty
income. Excess costs and accrued interest from the Oklahoma 75% royalty
trust interests as of March 31, 1999 were fully recovered in October 1999.
As of April 2000, excess costs and accrued interest for the Texas 75%
royalty trust interests totaled approximately $29,000 ($21,750 net to the
trust). See Item 2, "Trustee's Discussion and Analysis - Costs."
11
<PAGE>
Item 2. Trustee's Discussion and Analysis.
The following discussion should be read in conjunction with the trustee's
discussion and analysis contained in the trust's 1999 annual report, as well as
the condensed financial statements and notes thereto included in this quarterly
report on Form 10-Q.
Distributable Income
Quarter
For the quarter ended March 31, 2000, royalty income was $2,352,880 compared to
$1,479,855 for the first quarter of 1999. This 59% increase in royalty income
is primarily the result of higher oil and gas prices. See "Royalty Income"
below.
After considering interest income of $3,949 and administration expense of
$56,033, distributable income for the quarter ended March 31, 2000 was
$2,300,796, or $0.383466 per unit of beneficial interest. For the quarter ended
March 31, 1999, distributable income was $1,440,388, or $0.240065 per unit.
Distributions to unitholders for the quarter ended March 31, 2000 were:
<TABLE>
<CAPTION>
Distribution
Record Date Payment Date per Unit
------------------- ----------------- ------------
<S> <C> <C>
January 31, 2000 February 14, 2000 $ 0.136770
February 29, 2000 March 14, 2000 0.127537
March 31, 2000 April 14, 2000 0.119159
------------
$ 0.383466
============
</TABLE>
Royalty Income
Royalty income is recorded when received by the trust, which is the month
following receipt by Cross Timbers Oil, and generally two months after oil
production and three months after gas production. Royalty income is generally
affected by three major factors:
- oil and gas sales volumes,
- oil and gas sales prices, and
- costs deducted in the calculation of royalty income.
Because properties underlying the 90% royalty trust interests are royalty and
overriding royalty interests, they generally bear no costs other than production
and property taxes, related legal costs, and marketing and transportation
charges. In addition to these costs, the 75% royalty trust interests are
subject to production and development costs, since the properties underlying the
75% royalty trust interests are working interests.
12
<PAGE>
The following is a summary of the calculation of royalty income received by the
trust:
<TABLE>
<CAPTION>
Three Months
Ended March 31 (a)
----------------------- Increase
2000 1999 (Decrease)
---------- ---------- ----------
<S> <C> <C> <C>
Sales Volumes
Oil (Bbls) (b)
Underlying properties................................ 88,459 88,000 1%
Average per day..................................... 962 957 1%
Royalty trust interests.............................. 35,448 19,431 82%
Gas (Mcf) (b)
Underlying properties................................ 796,014 918,825 (13%)
Average per day..................................... 8,652 9,987 (13%)
Royalty trust interests.............................. 686,565 793,697 (13%)
Average Sales Prices
Oil (per Bbl)........................................ $24.20 $10.44 132%
Gas (per Mcf)........................................ $2.72 $1.73 57%
Revenues
Oil sales............................................ $2,140,997 $ 919,160 133%
Gas sales............................................ 2,167,742 1,592,021 36%
---------- ----------
Total Revenues...................................... 4,308,739 2,511,181 72%
---------- ----------
Costs
Taxes, transportation
and other........................................... 578,305 231,669 150%
Production expense (c)............................... 593,490 570,606 4%
Development costs.................................... 213,896 359,239 (40%)
Excess costs......................................... - (300,483) -
Recovery of excess costs and accrued interest........ 236,633 5,193 -
---------- ----------
Total Costs......................................... 1,622,324 866,224 87%
---------- ----------
Net Proceeds........................................... $2,686,415 $1,644,957 63%
========== ==========
Royalty Income......................................... $2,352,880 $1,479,855 59%
========== ==========
</TABLE>
- --------------------
(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 royalty trust interests
based upon a formula that considers oil and gas prices and the total amount
of production expenses and development costs. Changes in any of these
factors may result in disproportionate fluctuations in volumes allocated to
the royalty trust interests. Therefore, comparative discussion of oil and
gas sales volumes is based on the underlying properties.
(c) Includes an overhead fee which is deducted and retained by Cross Timbers
Oil. This fee is currently $22,684 per month and is subject to adjustment
each May based on an oil and gas industry index.
13
<PAGE>
The following are explanations of significant variances:
Sales Volumes
Oil sales volumes remained relatively constant as production increased slightly
on one of the Oklahoma working interest properties that experienced mechanical
complications in 1998 and 1999. Production also increased on one of the Texas
working interest properties as a result of carbon dioxide injections. These
increases were largely offset by natural production decline.
Decreased gas sales volumes were primarily related to the timing of cash
receipts. The natural decline in production is estimated to be 5%.
Sales Prices
Oil
The average oil price for first quarter 2000 was $24.20 per Bbl, an increase of
132% from the first quarter 1999 price of $10.44 per Bbl. The first quarter
1999 average oil price includes production months of November 1998 through
January 1999. During December 1998, the average posted West Texas Intermediate
crude oil price fell to $8.00, the lowest level since 1978. After OPEC members
and other oil producers agreed to production cuts in March 1999, oil prices
climbed through the remainder of 1999 and first quarter 2000. The posted price
reached $31.25 in March 2000, the highest level since the 1990 Persian Gulf War.
OPEC members met on March 27, 2000 and agreed to increase production quotas by
6.3%, which resulted in a decline in prices in April to an average posted price
of $22.77 per Bbl.
Gas
Gas prices for first quarter 2000 averaged $2.72 per Mcf, or 57% higher than the
first quarter 1999 price of $1.73. Part of this price increase is related to
purchaser deductions which were netted in the gas price prior to second quarter
1999. Since then, these purchaser deductions are included in taxes,
transportation and other costs (see "Costs" below). Considering the effect of
this change, gas prices increased 38% from 1999 to 2000. Gas prices were lower
in 1999 primarily because of the abnormally warm winter of 1998-1999 across the
United States that resulted in higher levels of gas in storage. After declining
briefly at year end, gas prices have continued to strengthen in 2000, as gas
storage remains lower than prior year levels. At May 1, 2000, the average NYMEX
price for the following twelve months was $3.21 per MMBtu.
Costs
Taxes
Taxes, transportation and other for the quarter increased primarily because of
approximately $240,000 in purchaser deductions for gathering and compression
charges which were netted in the gas sales price prior to second quarter 1999.
The remaining increase is due to higher production taxes related to increased
oil and gas revenues.
Development
Significantly lower development costs reflect completion of the carbon dioxide
injection project on one of the underlying Texas working interest properties in
third quarter 1999.
14
<PAGE>
Excess Costs
Costs exceeded revenues by $300,483 ($225,362 net to the trust) in first quarter
1999. Because of lower development costs and higher oil and gas prices,
recovery of excess costs and accrued interest during first quarter 2000 was
$236,633 ($177,475 net to the trust). See Note 3 to the condensed financial
statements.
As of April 2000, cumulative excess costs and accrued interest of approximately
$29,000 ($21,750 net to the trust) must be recovered before the Texas 75%
royalty trust interests again contribute to royalty income. Cross Timbers Oil
has advised the trustee that it anticipates full recovery of excess costs and
accrued interest on the Texas 75% royalty trust interests during second quarter
2000.
Forward Looking Statements
This report on Form 10-Q includes "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact included in this Form 10-Q, including,
without limitation, statements contained in this "Trustee's Discussion and
Analysis" regarding the royalty trust interests and industry conditions, are
forward looking statements. Although Cross Timbers Oil believes that the
expectations reflected in these forward looking statements are reasonable,
neither Cross Timbers Oil nor the trustee can give any assurance that such
expectations will prove to be correct.
Item. 3 Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in the trust's market risks, as disclosed in
the trust's Form 10-K for the year ended December 31, 1999.
15
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Items 1 through 5. Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit Number
and Description Page
--------------- ----
(4)(a) Cross Timbers Royalty Trust Indenture Amended and Restated
on January 13, 1992 by NCNB Texas National Bank (now Bank
of America, N.A.) as trustee, heretofore filed as Exhibit
3.1 to the trust's Registration Statement No. 33-44385
filed with the Securities and Exchange Commission on
February 19, 1992, is incorporated herein by reference.
(b) Net Overriding Royalty Conveyance (Cross Timbers Royalty
Trust, 90% - Texas) from South Timbers Limited Partnership,
West Timbers Limited Partnership, North Timbers Limited
Partnership, East Timbers Limited Partnership, Hickory
Timbers Limited Partnership, and Cross Timbers Partners,
L.P. (predecessors of Cross Timbers Oil Company, L.P. which
subsequently merged into Cross Timbers Oil Company) to NCNB
Texas National Bank (now Bank of America, N.A.), as trustee,
dated February 12, 1991 (without Schedules A and B),
heretofore filed as Exhibit 10.1 to the trust's
Registration Statement No. 33-44385 filed with the
Securities and Exchange Commission on February 19, 1992, is
incorporated herein by reference.
(c) Net Overriding Royalty Conveyance (Cross Timbers Royalty
Trust, 75% - Texas) from South Timbers Limited Partnership,
West Timbers Limited Partnership, North Timbers Limited
Partnership, East Timbers Limited Partnership, Hickory
Timbers Limited Partnership, and Cross Timbers Partners,
L.P. (predecessors of Cross Timbers Oil Company, L.P. which
subsequently merged into Cross Timbers Oil Company) to NCNB
Texas National Bank (now Bank of America, N.A.), as trustee,
dated February 12, 1991 (without Schedules A and B),
heretofore filed as Exhibit 10.5 to the trust's
Registration Statement No. 33-44385 filed with the
Securities and Exchange Commission on February 19, 1992, is
incorporated herein by reference.
(15) Awareness letter of Arthur Andersen LLP 18
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROSS TIMBERS ROYALTY TRUST
By BANK OF AMERICA, N.A., TRUSTEE
By RON E. HOOPER
-----------------------------------------
Ron E. Hooper
Vice President
CROSS TIMBERS OIL COMPANY
Date: May 11, 2000 By LOUIS G. BALDWIN
-----------------------------------------
Louis G. Baldwin
Executive Vice President
and Chief Financial Officer
17
<PAGE>
EXHIBIT 15
Bank of America, N.A. as Trustee
for the Cross Timbers Royalty Trust:
We are aware that Cross Timbers Oil Company and Cross Timbers Royalty Trust have
incorporated by reference in Registration Statement No. 333-56983 on Form S-3,
and that Cross Timbers Oil Company has incorporated by reference in its
Registration Statement No. 33-55784 on Form S-8, Cross Timbers Royalty Trust's
Form 10-Q for the quarter ended March 31, 2000, which includes our report dated
May 5, 2000, covering the unaudited interim financial information contained
therein. Pursuant to Regulation C of the Securities Act of 1933, that report is
not considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
May 11, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 713,563
<SECURITIES> 0
<RECEIVABLES> 1,391
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 714,954
<PP&E> 61,100,449
<DEPRECIATION> 28,592,853
<TOTAL-ASSETS> 33,222,550
<CURRENT-LIABILITIES> 714,954
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 32,507,596
<TOTAL-LIABILITY-AND-EQUITY> 33,222,550
<SALES> 2,352,880
<TOTAL-REVENUES> 2,356,829
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 56,033
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,300,796
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,300,796
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,300,796
<EPS-BASIC> 0.383
<EPS-DILUTED> 0.383
</TABLE>
