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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2016

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File Number: 1-10982





Cross Timbers
Royalty Trust

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Texas                                                          |  | 75-6415930                          
|(State or other jurisdiction of
Incorporation or organization) |  | (I.R.S. Employer
Identification No.)



|                                                          |  |           
|--------------------------------------------------------- |  | ----------
|Southwest Bank Trustee
P.O. Box 962020, Fort Worth, Texas |  | 76162-2020
|(Address of principal executive offices)                  |  | (Zip Code)

(855) 588-7839

(Registrants telephone number, including area code)

NONE

(Former
name, former address and former fiscal year, if change since last report)

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act (check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule
12b-2).    Yes   ̈    No  x

Indicate the number of units of beneficial interest outstanding, as of the latest practicable date:

Outstanding as of April 1, 2016

6,000,000









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CROSS TIMBERS ROYALTY TRUST

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016

TABLE OF CONTENTS



|         |  |                                                                                                       |  |      |    | 
|-------- |  | ----------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                       |  | Page |   
|         |  |                                                                                                      
|         |  | Glossary of Terms                                                                                     |  |      | 3  | 
|         |  |                                                                                                      
|PART I.  |  | FINANCIAL INFORMATION                                                                                 |  |      |    | 
|         |  |                                                                                                      
|Item 1.  |  | Financial Statements                                                                                  |  |      | 4  | 
|         |  |                                                                                                      
|         |  | Report of Independent Registered Public Accounting Firm                                               |  |      | 5  | 
|         |  |                                                                                                      
|         |  | Condensed Statements of Assets, Liabilities and Trust Corpus at March 
31, 2016 and December 31, 2015 |  |      | 6  | 
|         |  |                                                                                                      
|         |  | Condensed Statements of Distributable Income for the Three Months Ended March 31,
 2016 and 2015      |  |      | 7  | 
|         |  |                                                                                                      
|         |  | Condensed Statements of Changes in Trust Corpus for the Three Months Ended March 31,
 2016 and 2015   |  |      | 8  | 
|         |  |                                                                                                      
|         |  | Notes to Condensed Financial Statements                                                               |  |      | 9  | 
|         |  |                                                                                                      
|Item 2.  |  | Trustees Discussion and Analysis                                                                     |  |      | 12 | 
|         |  |                                                                                                      
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                            |  |      | 16 | 
|         |  |                                                                                                      
|Item 4.  |  | Controls and Procedures                                                                               |  |      | 16 | 
|         |  |                                                                                                      
|PART II. |  | OTHER INFORMATION                                                                                     |  |      |    | 
|         |  |                                                                                                      
|Item 1A. |  | Risk Factors                                                                                          |  |      | 17 | 
|         |  |                                                                                                      
|Item 6.  |  | Exhibits                                                                                              |  |      | 17 | 
|         |  |                                                                                                      
|         |  | Signatures                                                                                            |  |      | 18 | 



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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 proceeds                                       |  | Gross proceeds received by XTO Energy from sale of production from the underlying properties, less applicable costs, as defined in the net profits interest conveyances.                                                                                                                                                                       
|                                                   | 
|net profits income                                 |  | Net proceeds multiplied by the applicable net profits percentage of 75% or 90%, which is paid to the Trust by XTO Energy. Net profits income is referred to as royalty income for income tax purposes.                                                                                                                                     
|                                                   | 
|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. The following defined net profits interests were conveyed to the Trust from the underlying
properties:                                                                                               
|                                                   | 
|                                                   |  | 90% net profits interests  interests that entitle the Trust to receive 90% of the net proceeds from the underlying properties that are royalty or overriding royalty interests in Texas, Oklahoma and New Mexico.                                                                                                                             
|                                                   | 
|                                                   |  | 75% net profits interests  interests that entitle the Trust to receive 75% of the net proceeds from the underlying properties that are working interests in Texas and Oklahoma.                                                                                                                                                               
|                                                   | 
|royalty interest (and overriding
royalty interest) |  | A nonoperating interest in an oil and gas property that provides the owner a specified share of production without any production expense or development costs.                                                                                                                                                                                
|                                                   | 
|underlying properties                              |  | XTO Energys interest in certain oil and gas properties from which the net profits interests were conveyed. The underlying properties include royalty and overriding royalty interests in producing and nonproducing 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 expense and development costs.                                                                                                                                                                      



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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, 2016, and the distributable income and changes in trust corpus for the three-month periods ended March 31,
2016 and 2015, have been included. Distributable income for such interim periods is not necessarily indicative of distributable income for the full year. The condensed financial statements as of March 31, 2016, and for the three-month periods
ended March 31, 2016 and 2015 have been subjected to a review by PricewaterhouseCoopers LLP, the Trusts independent registered public accounting firm, whose report is included herein.



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Report of Independent Registered Public Accounting Firm

To the Unitholders of Cross Timbers Royalty Trust and

Southwest
Bank, Trustee:

We have reviewed the accompanying condensed statement of assets, liabilities and trust corpus of Cross Timbers Royalty Trust (the
Trust) as of March 31, 2016, and the related condensed statements of distributable income and changes in trust corpus for the three-month periods ended March 31, 2016 and 2015. These interim financial statements are the
responsibility of the Trustee.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States).
A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board (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.

As described in Note 1, these financial statements were prepared on the modified cash basis of accounting, which is a comprehensive basis of
accounting other than accounting principles generally accepted in the United States of America.

Based on our review, we are not aware of any material
modifications that should be made to the accompanying condensed interim financial statements for them to be in conformity with the basis of accounting described in Note 1.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statement of assets, liabilities
and trust corpus as of December 31, 2015, and the related statements of distributable income and changes in trust corpus for the year then ended (not presented herein), and in our report dated March 11, 2016, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed statement of assets, liabilities and trust corpus as of December 31, 2015 is fairly stated in all material respects in relation to
the statement of assets, liabilities and trust corpus from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Dallas, TX

May 5, 2016



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CROSS TIMBERS ROYALTY TRUST

Condensed Statements of Assets, Liabilities and Trust Corpus



|                                                                                 |  |               |            |  |                  |   |            | 
|-------------------------------------------------------------------------------- |  | ------------- | ---------- |  | ---------------- | - | ---------- | 
|                                                                                 |  | March 31,2016 |            |  | December 31,2015 |  
|                                                                                 |  | (Unaudited)   |            |  |                  |  
|ASSETS                                                                           |  |               |            |  |                  |   |            | 
|Cash and short-term investments                                                  |  | $             | 1,311,478  |  |                  | $ | 969,700    | 
|Interest to be received                                                          |  |               | 40         |  |                  |   | 4          | 
|Net profits interests in oil and gas properties - net (Note 1)                   |  |               | 10,328,091 |  |                  |   | 10,542,236 | 
|                                                                                 |  |               |            |  |                  |   |            | 
|                                                                                 |  | $             | 11,639,609 |  |                  | $ | 11,511,940 | 
|                                                                                 |  |               |            |  |                  |   |            | 
|LIABILITIES AND TRUST CORPUS                                                     |  |               |            |  |                  |   |            | 
|Distribution payable to unitholders                                              |  | $             | 736,518    |  |                  | $ | 694,704    | 
|Expense reserve (a)                                                              |  |               | 575,000    |  |                  |   | 275,000    | 
|Trust corpus (6,000,000 units of beneficial interest authorized and outstanding) |  |               | 10,328,091 |  |                  |   | 10,542,236 | 
|                                                                                 |  |               |            |  |                  |   |            | 
|                                                                                 |  | $             | 11,639,609 |  |                  | $ | 11,511,940 | 
|                                                                                 |  |               |            |  |                  |   |            | 



|(a) | Expense reserve allows trustee to pay its obligations should it be unable to pay them out of the net profits income.
|--- | --------------------------------------------------------------------------------------------------------------------

The accompanying notes to condensed financial statements are an integral part of these statements.



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CROSS TIMBERS ROYALTY TRUST

Condensed Statements of Distributable Income(Unaudited)



|                                                |  |                            |           |  |      |   |           | 
|----------------------------------------------- |  | -------------------------- | --------- |  | ---- | - | --------- | 
|                                                |  | Three Months EndedMarch 31 |          
|                                                |  | 2016                       |           |  | 2015 |  
|Net profits income                              |  | $                          | 2,706,106 |  |      | $ | 2,824,371 | 
|Interest income                                 |  |                            | 58        |  |      |   | 12        | 
|                                                |  |                            |           |  |      |   |           | 
|Total income                                    |  |                            | 2,706,164 |  |      |   | 2,824,383 | 
|Administration expense                          |  |                            | 225,182   |  |      |   | 158,393   | 
|Cash reserves withheld for Trust expenses       |  |                            | 300,000   |  |      |   | 100,000   | 
|                                                |  |                            |           |  |      |   |           | 
|Distributable income                            |  | $                          | 2,180,982 |  |      | $ | 2,565,990 | 
|                                                |  |                            |           |  |      |   |           | 
|Distributable income per unit (6,000,000 units) |  | $                          | 0.363497  |  |      | $ | 0.427665  | 
|                                                |  |                            |           |  |      |   |           | 

The accompanying notes to condensed financial statements are an integral part of these statements.



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CROSS TIMBERS ROYALTY TRUST

Condensed Statements of Changes in Trust Corpus(Unaudited)



|                                      |  |                             |            |   |      |   |            |  
|------------------------------------- |  | --------------------------- | ---------- | - | ---- | - | ---------- | -
|                                      |  | Three Months Ended March 31 |           
|                                      |  | 2016                        |            |   | 2015 |  
|Trust corpus, beginning of period     |  | $                           | 10,542,236 |   |      | $ | 10,994,298 |  
|Amortization of net profits interests |  |                             | (214,145   | ) |      |   | (126,405   | )
|Distributable income                  |  |                             | 2,180,982  |   |      |   | 2,565,990  |  
|Distributions declared                |  |                             | (2,180,982 | ) |      |   | (2,565,990 | )
|                                      |  |                             |            |   |      |   |            |  
|Trust corpus, end of period           |  | $                           | 10,328,091 |   |      | $ | 10,867,893 |  
|                                      |  |                             |            |   |      |   |            |  

The accompanying notes to condensed financial statements are an integral part of these statements.



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CROSS TIMBERS ROYALTY TRUST

Notes to Condensed Financial Statements (Unaudited)

1. Basis of Accounting

The financial
statements of Cross Timbers Royalty Trust are prepared on the following basis and are not intended to present financial position and results of operations in conformity with U.S. generally accepted accounting principles (GAAP):



| |  |  | Net profits income recorded for a month is the amount computed and paid by XTO Energy Inc., the owner of the underlying properties, to Southwest Bank, as trustee for the Trust. XTO Energy is a wholly owned subsidiary of
Exxon Mobil Corporation. Net profits income consists of net proceeds received by XTO Energy from the underlying properties in the prior month, multiplied by net profit percentages of 90% for the 90% net profits interests, and 75% for the 75% net
profits interests.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Costs deducted in the calculation of net proceeds for the 90% net profits interests generally include
applicable taxes, transportation, marketing and legal costs, and do not include production expense or development costs. For the 75% net profits interests, costs deducted in the calculation of net proceeds include production expense, development
costs, applicable taxes, transportation, marketing and legal costs, operating charges and other costs.



| |  |  | Net profits income is computed separately for each of five conveyances under which the net profits interests were conveyed to the Trust. If monthly costs exceed revenues for any conveyance, such excess costs must be
recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from the other conveyances.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest income, interest to be received and distribution payable to unitholders include interest to be earned on net profits income 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 trustee reviews the Trusts net profits interests (NPI) in oil and gas properties for impairment whenever events or circumstances indicate that the carrying value of the NPI may not be recoverable.
In general, the trustee does not view temporarily low prices as a trigger event for conducting an impairment test. The markets for crude oil and natural gas have a history of significant price volatility and though prices will occasionally drop
significantly, industry prices over the long term will continue to be driven by market supply and demand. If a trigger event occurred, the trustee would use the estimated undiscounted future net cash flows from the NPI to evaluate the recoverability
of the Trust assets. If the undiscounted future net cash flows from the NPI are less than the NPI carrying value, the Trust would recognize an impairment loss for the difference between the NPI carrying value and the estimated fair value of the NPI.
The determination as to whether the NPI is impaired requires a significant amount of judgment by the trustee and is based on the best information available to the trustee at the time of the evaluation. There was no impairment of the assets as of
March 31, 2016.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The financial statements of the Trust differ from those prepared in conformity with U.S. GAAP
because revenues are recognized when received rather than accrued in the month of production, expenses are recognized when paid rather than when incurred, and certain cash reserves may be established by the trustee for contingencies which would not
be recorded under U.S. GAAP. This comprehensive basis of accounting other than U.S. GAAP corresponds to the accounting permitted for royalty trusts by the U.S. Securities and Exchange Commission, as specified by Staff Accounting Bulletin Topic 12:E,
Financial Statements of Royalty Trusts.

Most accounting pronouncements apply to entities whose financial statements are prepared in
accordance with U.S. GAAP, directing such entities to accrue or defer revenues and expenses in a period other than when such revenues were received or expenses were paid. Because the Trusts financial statements are prepared on the modified
cash basis, as described above, most accounting pronouncements are not applicable to the Trusts financial statements.

The initial
carrying value of the net profits interests of $61,100,449 represents XTO Energys historical net book value for the interests on February 12, 1991, the creation date of the Trust. Amortization of the net profits interests is calculated on
a unit-of-production basis and is charged directly to trust corpus. Accumulated amortization was $50,772,358 as of March 31, 2016 and $50,558,213 as of December 31, 2015.

2. Income Taxes

For federal income tax
purposes, the Trust constitutes a fixed investment trust that is taxed as a grantor trust. A grantor trust is not subject to tax at the trust level. Accordingly, no provision for income taxes has been made in the financial statements. The
unitholders are considered 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 each unitholder at the time such income is received or accrued by the
Trust and not when distributed by the Trust.

All revenues from the Trust are from sources within Texas, Oklahoma or New Mexico. Because
it distributes all of its net income to unitholders, the Trust has not been taxed at the Trust level in New Mexico or Oklahoma. While the Trust has not owed tax, the trustee is required to file a return with Oklahoma reflecting the income and
deductions of the Trust attributable to properties located in that state, along with a schedule that includes information regarding distributions to unitholders. Texas does not impose a state income tax, so no part of the Trusts income will be
subject to income tax at the Trust level in Texas.

Each unitholder should consult his or her own tax advisor regarding income tax
requirements, if any, applicable to such persons ownership of Trust units.

Unitholders should consult the Trusts latest
annual report on Form 10-K for a complete discussion of federal and state tax matters.



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3. Contingencies

Several states have enacted legislation requiring state income tax withholding from nonresident recipients of oil and gas proceeds. After
consultation with its tax counsel, the trustee believes that it is not required to withhold on payments made to the unitholders. However, regulations are subject to change by the various states, which could change this conclusion. Should amounts be
withheld on payments made to the Trust or the unitholders, distributions to the unitholders would be reduced by the required amount, subject to the filing of a claim for refund by the Trust or unitholders for such amount.

4. Excess Costs

If monthly costs exceed
revenues for any conveyance, such excess costs must be recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from other conveyances.



|                                               |  |       |           |  |              |   |           |       |  |   |           | 
|---------------------------------------------- |  | ----- | --------- |  | ------------ | - | --------- | ----- |  | - | --------- | 
|                                               |  |       |           |  | Conveyances  |   |           |       | 
|                                               |  |       |           |  | (Underlying) |   |           |       | 
|                                               |  | TX WI |           |  | OK WI        |   |           | Total | 
|Cumulative excess costs remaining at 12/31/15  |  | $     | 959,151   |  |              | $ | 1,066,920 |       |  | $ | 2,026,071 | 
|Net excess costs for the quarter ended 3/31/16 |  |       | 392,377   |  |              |   | 115,984   |       |  |   | 508,361   | 
|                                               |  |       |           |  |              |   |           |       |  |   |           | 
|Cumulative excess costs remaining at 3/31/16   |  | $     | 1,351,528 |  |              | $ | 1,182,904 |       |  | $ | 2,534,432 | 
|                                               |  |       |           |  |              |   |           |       |  |   |           | 

XTO Energy advised the trustee that lower oil prices resulted in net excess costs of $392,377 ($294,283 net to
the Trust) on properties underlying the Texas working interest for the quarter ended March 31, 2016.

XTO Energy advised the trustee
that lower oil prices resulted in net excess costs of $115,984 ($86,988 net to the Trust) on properties underlying the Oklahoma working interest for the quarter ended March 31, 2016.

XTO Energy advised the trustee that lower oil prices and increased costs caused costs to exceed revenues by a total of $410,337 ($307,753 net
to the Trust) on properties underlying the Texas working interest for the quarter ended March 31, 2015.

XTO Energy advised the
trustee that lower oil prices caused costs to exceed revenues by a total of $43,414 ($32,560 net to the Trust) on properties underlying the Oklahoma working interest for the quarter ended March 31, 2015.

Cumulative excess costs for the Texas and Oklahoma working interest conveyances remaining as of March 31, 2016 totaled $2,534,432
($1,900,824 net to the Trust).



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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 2015
Annual Report on Form 10-K, as well as the condensed financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The Trusts Annual Report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and all amendments to those reports are available on the Trusts web site at www.crt-crosstimbers.com.

Distributable Income

For the quarter
ended March 31, 2016, net profits income was $2,706,106 compared to $2,824,371 for first quarter 2015. This 4% decrease in net profits income is primarily the result of lower oil and gas prices ($1.8 million), partially offset by increased gas
production ($1.2 million), decreased production expense ($0.3 million) and lower development costs ($0.2 million). See Net Profits Income below.

After considering interest income of $58, administration expense of $225,182 and additions to the cash reserve of $300,000, distributable
income for the quarter ended March 31, 2016 was $2,180,982, or $0.363497 per unit of beneficial interest. Administration expense for the quarter increased $66,789 from the prior year quarter. For first quarter 2015, distributable income was
$2,565,990, or $0.427665 per unit. Distributions to unitholders for the quarter ended March 31, 2016 were:



|                  |  |                   |  |                      |          | 
|----------------- |  | ----------------- |  | -------------------- | -------- | 
|Record Date       |  | Payment Date      |  | Distributionper Unit |         
|January 29, 2016  |  | February 12, 2016 |  | $                    | 0.168727 | 
|February 29, 2016 |  | March 14, 2016    |  |                      | 0.072017 | 
|March 31, 2016    |  | April 14, 2016    |  |                      | 0.122753 | 
|                  |  |                   |  |                      |          | 
|                  |  |                   |  | $                    | 0.363497 | 
|                  |  |                   |  |                      |          | 

Net Profits Income

Net profits income is recorded when received by the Trust, which is the month following receipt by XTO Energy, and generally two months after
oil production and three months after gas production. Net profits 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 net profits income.
| | - |  | --------------------------------------------------------

Because properties underlying the 90%
net profits interests are royalty and overriding royalty interests, the calculation of net profits income from these interests only includes deductions for production and property taxes, legal costs, and marketing and transportation charges. In
addition to these costs, the calculation of net profits income from the 75% net profits interests includes deductions for production expense and development costs since the related underlying properties are working interests.



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The following is a summary of the calculation of net profits income received by the Trust:



|                                |  |                                |           |   |                    |   |           |   |  |  |     |   
|------------------------------- |  | ------------------------------ | --------- | - | ------------------ | - | --------- | - |  |  | --- | --
|                                |  | Three Months EndedMarch 31 (a) |           |   | Increase(Decrease) |  
|                                |  | 2016                           |           |   | 2015               |   |          
|Sales Volumes                   |  |                                |           |   |                    |   |           |   |  |  |     |   
|Oil (Bbls) (b)                  |  |                                |           |   |                    |   |           |   |  |  |     |   
|Underlying properties           |  |                                | 58,866    |   |                    |   | 59,883    |   |  |  | (2  | %)
|Average per day                 |  |                                | 640       |   |                    |   | 651       |   |  |  | (2  | %)
|Net profits interests           |  |                                | 16,215    |   |                    |   | 20,757    |   |  |  | (22 | %)
|Gas (Mcf) (b)                   |  |                                |           |   |                    |   |           |   |  |  |     |   
|Underlying properties           |  |                                | 711,787   |   |                    |   | 368,231   |   |  |  | 93  | % 
|Average per day                 |  |                                | 7,737     |   |                    |   | 4,003     |   |  |  | 93  | % 
|Net profits interests           |  |                                | 635,806   |   |                    |   | 321,520   |   |  |  | 98  | % 
|Average Sales Prices            |  |                                |           |   |                    |   |           |   |  |  |     |   
|Oil (per Bbl)                   |  | $                              | 36.16     |   |                    | $ | 62.80     |   |  |  | (42 | %)
|Gas (per Mcf)                   |  | $                              | 4.15      |   |                    | $ | 5.71      |   |  |  | (27 | %)
|Revenues                        |  |                                |           |   |                    |   |           |   |  |  |     |   
|Oil sales                       |  | $                              | 2,128,439 |   |                    | $ | 3,760,645 |   |  |  | (43 | %)
|Gas sales                       |  |                                | 2,956,199 |   |                    |   | 2,102,668 |   |  |  | 41  | % 
|                                |  |                                |           |   |                    |   |           |   |  |  |     |   
|Total Revenues                  |  |                                | 5,084,638 |   |                    |   | 5,863,313 |   |  |  | (13 | %)
|                                |  |                                |           |   |                    |   |           |   |  |  |     |   
|Costs                           |  |                                |           |   |                    |   |           |   |  |  |     |   
|Taxes, transportation and other |  |                                | 828,062   |   |                    |   | 741,563   |   |  |  | 12  | % 
|Production expense (c)          |  |                                | 1,371,919 |   |                    |   | 1,745,022 |   |  |  | (21 | %)
|Development costs               |  |                                | 386,234   |   |                    |   | 644,775   |   |  |  | (40 | %)
|Excess costs (d)                |  |                                | (508,361  | ) |                    |   | (453,751  | ) |  |  | 12  | % 
|                                |  |                                |           |   |                    |   |           |   |  |  |     |   
|Total Costs                     |  |                                | 2,077,854 |   |                    |   | 2,677,609 |   |  |  | (22 | %)
|                                |  |                                |           |   |                    |   |           |   |  |  |     |   
|Net Proceeds                    |  | $                              | 3,006,784 |   |                    | $ | 3,185,704 |   |  |  | (6  | %)
|                                |  |                                |           |   |                    |   |           |   |  |  |     |   
|Net Profits Income              |  | $                              | 2,706,106 |   |                    | $ | 2,824,371 |   |  |  | (4  | %)
|                                |  |                                |           |   |                    |   |           |   |  |  |     |   



|(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 net profits interests based upon a formula that considers oil and gas prices and the total amount of production expense and development costs. As product prices
change, the Trusts share of the production volumes is impacted as the quantity of production to cover expenses in reaching the net profits break-even level changes inversely with price. As such, the underlying property production volume
changes may not correlate with the Trusts net profit share of those volumes in any given period. Therefore, comparative discussion of oil and gas sales volumes is based on the underlying properties.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | Production expense is primarily from seven working interest properties in the 75% net profits interest. Six of these properties are not operated by XTO Energy or ExxonMobil. Production expense includes an
overhead charge which is deducted and retained by the operator. As of March 31, 2016, this charge was $38,430 per month (including a monthly overhead charge of $5,490 which XTO Energy deducts as operator of the Hewitt Unit) and is subject to
adjustment each May based on an oil and gas industry index.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | See Note 4 to Condensed Financial Statements.
|--- | ---------------------------------------------



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The following are explanations of significant variances on the underlying properties from first quarter 2015 to
first quarter 2016:

Sales Volumes

Oil

Oil sales volumes decreased 2% from first quarter 2015 to first quarter 2016 primarily due to the timing of cash receipts and natural production decline,
partially offset by increased production from new wells and workovers.

Gas

Gas sales volumes increased 93% from first quarter 2015 to first quarter 2016 primarily due to the timing of cash receipts related to purchaser payments
covering production back to 2013.

The estimated rate of natural production decline on the underlying oil and gas properties is approximately 6% to 8% a
year.

Sales Prices

Oil

The first quarter 2016 average oil price was $36.16 per Bbl, a 42% decrease from the first quarter 2015 average price of $62.80 per Bbl. Oil prices are
expected to remain volatile. The first quarter 2016 oil price is primarily related to production from November 2015 through January 2016, when the average NYMEX price was $37.44 per Bbl. The average NYMEX price for February and March 2016 was $34.18
per Bbl. At April 21, 2016, the average NYMEX futures price for the following twelve months was $45.49 per Bbl.

Gas

The first quarter 2016 average gas price was $4.15 per Mcf, a 27% decrease from the first quarter 2015 average price of $5.71 per Mcf. Excluding the impact of
the prior period production payments received in first quarter 2016 the adjusted gas price was $2.97 per Mcf. Natural gas prices are affected by natural gas liquids prices, the level of North American production, weather, crude oil, the U.S.
economy, storage levels and import levels of liquefied natural gas. Natural gas prices are expected to remain volatile. The first quarter 2016 gas price is primarily related to production from October through December 2015, when the average NYMEX
price was $2.27 per MMBtu. The average NYMEX price for January through March 2016 was $2.09 per MMBtu. At April 21, 2016, the average NYMEX futures price for the following twelve months was $2.62 per MMBtu.

Costs

Taxes, Transportation and Other

Taxes, transportation and other increased 12% for the first quarter primarily because of increased gas production taxes and other deductions related to higher
gas revenues, partially offset by decreased oil production taxes related to lower oil revenues and decreased property taxes related to decreased valuations.



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Production Expense

Production expense decreased 21% for the first quarter primarily because of decreased outside operated and repairs and maintenance costs.

Development Costs

Development costs decreased 40% for
the first quarter primarily because of decreased activity and costs related to non-operated Texas and Oklahoma oil properties underlying the 75% net profits interests.

Excess Costs

If monthly costs exceed revenues for any
conveyance, such excess costs must be recovered, with accrued interest, from future net proceeds of that conveyance and cannot reduce net proceeds from any other conveyance.

XTO Energy advised the trustee that lower oil prices resulted in net excess costs of $392,377 ($294,283 net to the Trust) on properties underlying the Texas
working interest for the quarter ended March 31, 2016.

XTO Energy advised the trustee that lower oil prices resulted in net excess costs of $115,984
($86,988 net to the Trust) on properties underlying the Oklahoma working interest for the quarter ended March 31, 2016.

XTO Energy advised the
trustee that lower oil prices and increased costs caused costs to exceed revenues by a total of $410,337 ($307,753 net to the Trust) on properties underlying the Texas working interest for the quarter ended March 31, 2015.

XTO Energy advised the trustee that lower oil prices caused costs to exceed revenues by a total of $43,414 ($32,560 net to the Trust) on properties underlying
the Oklahoma working interest for the quarter ended March 31, 2015.

Cumulative excess costs for the Texas and Oklahoma working interest conveyances
remaining as of March 31, 2016 totaled $2,534,432 ($1,900,824 net to the Trust).

Contingencies

Several states have enacted legislation requiring state income tax withholding from nonresident recipients of oil and gas proceeds. After consultation with its
tax counsel, the trustee believes that it is not required to withhold on payments made to the unitholders. However, regulations are subject to change by the various states, which could change this conclusion. Should amounts be withheld on payments
made to the Trust or the unitholders, distributions to the unitholders would be reduced by the required amount, subject to the filing of a claim for refund by the Trust or unitholders for such amount.



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Forward-Looking Statements

Statements in this report relating to future plans, predictions, events or conditions are forward-looking statements. All statements other than statements of
historical fact included in this Form 10-Q including, without limitation, statements regarding the net profits interests, underlying properties, development activities, development, production and other costs and expenses, oil and gas prices and
differentials to NYMEX prices, distributions to unitholders, and industry and market conditions, are forward-looking statements that are subject to risks and uncertainties which are detailed in Part I, Item 1A of the Trusts Annual Report
on Form 10-K for the year ended December 31, 2015, which is incorporated by this reference as though fully set forth herein. XTO Energy and the trustee assume no duty to update these statements as of any future date.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes in the Trusts market risks from the information disclosed in Part II, Item 7A of the Trusts Annual Report
on Form 10-K for the year ended December 31, 2015.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, the trustee carried out an evaluation of the effectiveness of the Trusts disclosure controls and
procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the trustee concluded that the Trusts disclosure controls and procedures are effective in timely recording, processing, summarizing and reporting, on a
timely basis, information required to be disclosed by the Trust in the reports that it files or submits under the Securities Exchange Act of 1934 and are effective in ensuring that information required to be disclosed by the Trust in the reports
that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the trustee to allow timely decisions regarding required disclosure. In its evaluation of disclosure controls and procedures, the trustee has
relied, to the extent considered reasonable, on information provided by XTO Energy. There has not been any change in the Trusts internal control over financial reporting during the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the Trusts internal control over financial reporting.



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##### Table of Contents

PART II - OTHER INFORMATION

Item 1.

Not applicable.

Item 1A. Risk Factors.

There have been no material changes in the risk factors disclosed under Part I, Item 1A of the Trusts Annual Report on Form 10-K for
the year ended December 31, 2015.

Items 2 through 5.

Not applicable.

Item 6. Exhibits.

(a) Exhibits.

Exhibit Number

and Description



| | (31) | Rule 13a-14(a)/15d-14(a) Certification
| | ---- | --------------------------------------



| | (32) | Section 1350 Certification
| | ---- | --------------------------



| | (99) | Items 1A, 7 and 7A to the Annual Report on Form 10-K for Cross Timbers Royalty Trust filed with the Securities and Exchange Commission on March 11, 2016 (incorporated herein by reference)
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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
SOUTHWEST BANK, TRUSTEE
|                  |  |  | 
|                  |  |  |  | By                                                     |  | /S/ NANCY G. WILLIS                        
|                  |  |  |  |                                                        |  | Nancy G. Willis                            
|                  |  |  |  |                                                        |  | Vice President                             
|                  |  | 
|                  |  |  |  | EXXON MOBIL CORPORATION                               
|                  |  |  | 
|Date: May 5, 2016 |  |  |  | By                                                     |  | /S/ BETH E. CASTEEL                        
|                  |  |  |  |                                                        |  | Beth E. Casteel                            
|                  |  |  |  |                                                        |  | Vice President - Upstream Business Services



18