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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 March31, 2023 OR [    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from
 to
. Cross Timbers Royalty Trust (Exact name of registrant as specified in its charter)  Texas

1-10982

75-6415930(State or other jurisdiction of
incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification No.) c/o The Corporate Trustee: Argent Trust Company 2911 Turtle Creek Blvd, Suite 850 Dallas, Texas 75219 (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code (855) 588-7839 (Former name, former address and former fiscal year, if change since last report) NONE Securities registered pursuant to Section 12(b) of the Act:  Title of each class

Trading symbol

Name of each exchange on which
registeredUnits of Beneficial Interest

CRT

New York Stock Exchange 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 ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data
File required to be submitted 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 such
files). Yes ☐ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and
emerging growth company in Rule 12b-2 of the Exchange Act.  Large accelerated filer

☐

Accelerated filer

☐Non-accelerated filer

☑

Smaller reporting company

☑Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ☐ No ☑ Indicate the number of units of beneficial interest outstanding, as of the latest practicable date: Outstanding as of May 2, 2023 6,000,000




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CROSS TIMBERS ROYALTY TRUST FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023  Table of ContentsGlossary of Terms


3PART I - FINANCIAL INFORMATION


4Item 1.  Financial Statements (Unaudited)


4Condensed Statements of Assets, Liabilities and Trust Corpus at March 
31, 2023 and December 31, 2022


5Condensed Statements of Distributable Income for the Three Months Ended March 31,
 2023 and 2022


6Condensed Statements of Changes in Trust Corpus for the Three Months Ended March 31,
 2023 and 2022


7Notes to Condensed Financial Statements


8Item 2.  Trustees Discussion and Analysis


12Item 3.  
Quantitative and Qualitative Disclosures about Market Risk


16Item 4.  Controls and Procedures


17PART II - OTHER INFORMATION


18Item 1A.  Risk Factors


18Item 6.     Exhibits


18Signatures


19




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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 measurementnet 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
substantially all 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 non-operating 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.  3




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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. Unless specified otherwise, all amounts included herein are presented in U.S. dollars. 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 for a fair statement of the
assets, liabilities and trust corpus of the Cross Timbers Royalty Trust at March 31, 2023, and the distributable income and changes in trust corpus for the three-month periods ended March 31, 2023 and 2022, have been included.
Distributable income for such interim periods is not necessarily indicative of the distributable income for the full year.  4




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CROSS TIMBERS ROYALTY TRUST  Condensed Statements of
Assets, Liabilities and Trust Corpus(Unaudited)  March 31,2023


December 31,2022ASSETSCash and short-term investments

$
2,070,031


$
1,898,638Interest to be received


5,505



3,372Net profits interests in oil and gas properties - net (Note 1)


2,832,930



2,961,955$
4,908,466


$
4,863,965LIABILITIES AND TRUST CORPUSDistribution payable to unitholders

$
1,075,536


$
902,010Expense reserve (a)


1,000,000



1,000,000Trust corpus (6,000,000 units of beneficial interestauthorized and outstanding)


2,832,930



2,961,955$
4,908,466


$
4,863,965  (a)
Expense reserve allows the Trustee to pay its obligations should it be unable to pay them out of the net
profits income. The reserve is currently funded at $1,000,000. The accompanying notes to condensed financial statements are an integral
part of these statements.  5




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CROSS TIMBERS ROYALTY TRUST  Condensed Statements of
Distributable Income(Unaudited)  Three Months EndedMarch 312023


2022Net profits income

$
3,912,704


$
1,951,672Interest income


14,338



34Total income


3,927,042



1,951,706Administration expense


287,844



266,774Distributable income

$
3,639,198


$
1,684,932Distributable income per unit (6,000,000 units)

$
0.606533


$
0.280822 The accompanying notes to condensed financial statements are an integral part of these statements.  6




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CROSS TIMBERS ROYALTY TRUST  Condensed Statements of
Changes in Trust Corpus(Unaudited)  Three Months EndedMarch 312023


2022Trust corpus, beginning of period

$
2,961,955


$
3,266,356Amortization of net profits interests


(129,025
)


(53,565
)Distributable income


3,639,198



1,684,932Distributions declared


(3,639,198
)


(1,684,932
)Trust corpus, end of period

$
2,832,930


$
3,212,791 The accompanying notes to condensed financial statements are an integral part of these statements.  7




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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 (the 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. (XTO
Energy), the owner of the underlying properties, to Argent Trust Company, as trustee (the 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. In addition to those costs, the 75% net profits interests include deductions for production expense, development costs, operating charges and other costs.  -
Net profits income is computed separately for each of the 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 and distribution payable to unitholders include interest earned on the previous months
investment.  -
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 Trusts financial statements 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.  8




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Impairment of Net Profits Interests 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 an indication of impairment. 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 events and circumstances indicate the carrying value may not be
recoverable, 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, including commodity pricing and other information provided by XTO Energy such as estimates of future production and development and operating expenses. During the first quarter of 2023, no trigger event occurred that would indicate a need for an impairment assessment.
Accordingly, there was no impairment of the NPI as of March 31, 2023. Any impairment recorded for book purposes would not result in a loss for tax purposes for the unitholders until the loss is recognized. Net profits interests in oil and gas properties 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 using
proved reserves and is charged directly to trust corpus. Accumulated amortization was $58,267,519 as of March 31, 2023, and $58,138,494 as of December 31, 2022. Amortization of the NPI does not impact unitholder distributions.  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. Impairments recorded for book purposes will not result in a
deductible loss by the unitholders for tax purposes until the loss is recognized. 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
an Oklahoma income tax return 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. Oklahoma and New Mexico tax the
income of nonresidents from real property located within those states, and the Trust has been advised by counsel that such states will tax nonresidents on income from the net profits interests located in those states. Oklahoma and New Mexico also
impose a corporate income tax that may apply to unitholders organized as corporations (subject to certain exceptions for S corporations and limited liability companies, depending on their treatment for federal income tax purposes).  9




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Texas imposes a franchise tax at a rate of 0.75% on gross revenues less
certain deductions, as specifically set forth in the Texas franchise tax statutes. Entities subject to tax generally include trusts and most other types of entities that provide limited liability protection, unless otherwise exempt. Trusts that
receive at least 90% of their federal gross income from certain passive sources, including royalties from mineral properties and other non-operated mineral interest income, and do not receive more than 10% of
their income from operating an active trade or business, generally are exempt from the Texas franchise tax as passive entities. The Trust has been and expects to continue to be exempt from Texas franchise tax as a passive entity. Because
the Trust should be exempt from Texas franchise tax at the trust level as a passive entity, each unitholder that is a taxable entity under the Texas franchise tax will generally be required to include its Texas portion of Trust revenues in its own
Texas franchise tax computation. This revenue is sourced to Texas under provisions of the Texas Administrative Code providing that such income is sourced according to the principal place of business of the Trust, which is Texas. The Trust may be required to bear a portion of the settlement costs arising from theChieftain royalty class
action settlement. For information on contingencies, see Note 3 to Condensed Financial Statements. In the event that the Trust is determined to be responsible for such costs, XTO Energy will deduct the costs in its calculation of the net profits
income payable to the Trust from the applicable net profits interests. Thus, for unitholders, the portion of the settlement payment to the Chieftainroyalty owner class for which the Trust is determined to be responsible will be reflected
through a reduction in net profits income received from the Trust and thus in a reduction in the gross royalty income reported by and taxable to the unitholders. In the event that the Trustee objects to such claimed reductions, the Trustee may also
incur legal fees in representing the Trusts interests. For unitholders, such costs would be reflected through an increase in the Trusts administrative expenses, which would be deductible by unitholders in determining the net royalty
income from the Trust. Each unitholder should consult their 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 more detailed discussion of federal and state tax matters.  3.
Contingencies Litigation A federal district court approved the settlement of a royalty class action lawsuit against XTO Energy Inc. (Chieftain
Royalty Company v. XTO Energy Inc.) in March 2018. In July 2018, the class plaintiffs submitted their plan to allocate the settlement funds among members of the class. After that plan of allocation was approved, XTO Energy advised the Trustee
that, based upon that plan, approximately $40,000 should be allocated to the Trust as additional production costs. The
Trustee has objected to similar claims relating to the Chieftain settlement with respect to another trust for which it serves as trustee (the Hugoton Royalty Trust) in an arbitration styled Simmons Bank (successor to Southwest Bank and
Bank of America, N.A.) vs. XTO Energy Inc. through the American Arbitration Association. In that arbitration, the Trustee requested a declaratory judgment that the Chieftain settlement is not a production cost and that XTO Energy is
prohibited from charging the settlement as a production cost under the conveyance or otherwise reducing the Hugoton Royalty Trusts payments now or in the future as a result of the Chieftain litigation. Similar issues have arisen as
between XTO Energy and the Trust, but it was agreed those issues would be considered once the Panel issued its decisions with respect to the Hugoton Royalty Trust. On January 20, 2021, the Panel issued its  10




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Corrected Interim Final Award (i) reject[ing] the Trusts contention that XTO has no right under the Conveyance to charge the [Hugoton Royalty] Trust with amounts XTO paid under
section 1.18(a)(i) as royalty obligations to settle the Chieftain litigation and (ii) stating [t]he next phase will determine how much of the Chieftain settlement can be so charged, if any of it can be, in the exercise
of the right found by the Panel. Following briefing by both parties, on May 18, 2021, the Panel issued its second interim final award over the amount of XTO Energys settlement in the Chieftain class action lawsuit that can be
charged to the Hugoton Royalty Trust as a production cost. The allocation of a portion of the Chieftain settlement to the Trust will be considered in the now re-commenced arbitration. Other Several states have enacted legislation requiring state income tax withholding from payments made to 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. The following summarizes excess
costs activity, cumulative excess costs balances and accrued interest to be recovered by conveyance as calculated by XTO Energy:  UnderlyingTX WI

OK WI

TotalCumulative excess costs remaining at 12/31/22

$
1,130,627


$
741,687


$
1,872,314Net excess costs (recovery) for the quarter ended 3/31/23


39,834



(151,450
)


(111,616
)Cumulative excess costs remaining at 3/31/23


1,170,461



590,237



1,760,698Accrued interest at 3/31/23


676,143



21,731



697,874Total remaining to be recovered at 3/31/23

$
1,846,604


$
611,968


$
2,458,572NPITX WI

OK WI

TotalCumulative excess costs remaining at 12/31/22

$
847,970


$
556,265


$
1,404,235Net excess costs (recovery) for the quarter ended 3/31/23


29,876



(113,587
)


(83,711
)Cumulative excess costs remaining at 3/31/23


877,846



442,678



1,320,524Accrued interest at 3/31/23


507,107



16,298



523,405Total remaining to be recovered at 3/31/23

$
1,384,953


$
458,976


$
1,843,929
 For the quarter ended March 31, 2023, excess costs were $39,834 ($29,876 net to the
Trust) on properties underlying the Texas working interest net profits interests.  11




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For the quarter ended March 31, 2023, excess costs of $151,450
($113,587 net to the Trust) were recovered on properties underlying the Oklahoma working interest net profits interests. Underlying cumulative excess costs for the Texas and Oklahoma working interest conveyances remaining as of March 31,
2023, totaled $2.5 million ($1.8 million net to the Trust), including accrued interest of $0.7 million ($0.5 million net to the Trust).  5.
Related Party Transactions In computing net proceeds for the 75% net profits interests, XTO Energy deducts an overhead charge as reimbursement for costs
associated with monitoring these interests. This monthly overhead charge as of March 31, 2023, was $44,445 ($33,334 net to the Trust) and is subject to annual adjustment based on an oil and gas industry index. XTO Energy deducts a monthly overhead charge for reimbursement of administrative expenses as operator of the Hewitt Unit,
which is one of the properties underlying the Oklahoma 75% net profits interests. As of March 31, 2023, this monthly charge was approximately $30,823 ($23,118 net to the Trust) and is subject to annual adjustment based on an oil and gas
industry index. Other than this property, XTO Energy and ExxonMobil do not operate or control any of the properties underlying the 75% net profits interests.  6.
Administration Expense Administrative expenses are incurred so that the Trustee may meet its reporting obligations to the unitholders and regulatory
entities and otherwise manage the administrative functions of the Trust. These obligations include, but are not limited to, all expenses, taxes, compensation to the Trustee for managing the Trust, fees to consultants, accountants, attorneys,
transfer agents, other professional and expert persons, expenses for clerical and other administrative assistance, and fees and expenses for all other services. 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 2022
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 website at www.crt-crosstimbers.com. Distributable Income For the quarter ended March 31, 2023, net profits income was $3,912,704 compared to $1,951,672 for first quarter 2022. This
100 percent increase in net profits income is primarily the result of net excess costs activity ($2.8 million), increased gas production ($2.7 million), higher oil prices ($1.6 million), and decreased development costs ($0.3 million), partially
offset by decreased oil production ($4.2 million), increased taxes, transportation and other costs ($0.6 million), increased production expenses ($0.3 million), and lower gas prices ($0.3 million). See Net Profits Income below. After considering interest income of $14,338 and administration expense of $287,844, distributable income for the quarter ended March 31,
2023, was $3,639,198, or $0.606533 per unit of beneficial interest. Administration expense for the quarter increased $21,070 from the prior year quarter, primarily related to the timing of receipt and payment of Trust expenses and terms of
professional services. Changes in interest income are attributable to fluctuations in net profits income, expense reserve, and interest rates. For first quarter 2022, distributable income was $1,684,932, or $0.280822 per unit.  12




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Distributions to unitholders for the quarter ended March 31, 2023, were:  Record Date

Payment
Date

Distributionper UnitJanuary 31, 2023

February 14, 2023

$
0.312668February 28, 2023

March 14, 2023


0.114609March 31, 2023

April 14, 2023


0.179256$
0.606533 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:  1.
oil and gas sales volumes; 2.
oil and gas sales prices; and 3.
costs deducted in the calculation of net profits income. Because properties underlying the 90% net profits interests are primarily royalty and overriding royalty interests, the calculation of net
profits income from these interests 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, development costs and overhead since the related underlying properties are working interests.  13




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The following is a summary of the calculation of net profits income
received by the Trust:  Three MonthsEnded March 31 (a)

Increase2023

2022

(Decrease)Sales VolumesOil (Bbls) (b)Underlying properties


43,158



116,295



(63%)Average per day


469



1,264



(63%)Net profits interests


13,851



11,471



21%Gas (Mcf) (b)Underlying properties


811,264



248,673



226%Average per day


8,818



2,703



226%Net profits interests


645,042



205,807



213%Average Sales PricesOil (per Bbl)


$ 80.49



$ 60.25



34%Gas (per Mcf)


$   5.43



$   6.88



(21%)RevenuesOil sales


$ 3,474,032



$ 7,006,631



(50%)Gas sales


4,403,962



1,710,399



157%Total Revenues


7,877,994



8,717,030



(10%)CostsTaxes, transportation and other


1,232,816



559,502



120%Production expense (c)


1,592,149



1,178,382



35%Development costs


593,964



992,067



(40%)Excess costs (d)


111,616



3,812,006



(97%)Total Costs


3,530,545



6,541,957



(46%)Net Proceeds


$ 4,347,449



$ 2,175,073



100%Net Profits Income


$ 3,912,704



$ 1,951,672



100%  (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 by dividing Trust net cash inflows by
average sales prices. As oil and gas prices change, the Trusts allocated production volumes are impacted as the quantity of production necessary to cover expenses changes inversely with price. As such, the underlying property production volume
changes may not correlate with the Trusts allocated production volumes in any given period. Therefore, comparative discussion of oil and gas sales volumes is based on the underlying properties.  (c)
Production expense includes an overhead charge which is deducted and retained by the operator. XTO Energy
deducts an overhead charge as reimbursement for costs associated with monitoring these interests. See Note 5 to Condensed Financial Statements.  (d)
See Note 4 to Condensed Financial Statements.  14




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The following are explanations of significant variances on the underlying properties from
first quarter 2022 to first quarter 2023: Sales Volumes Oil Oil sales volumes decreased
63 percent from first quarter 2022 to first quarter 2023 primarily due to the absence of North Cowden Unit adjustment in first quarter 2022 and natural production decline. Gas Gas sales volumes increased
226 percent from first quarter 2022 to first quarter 2023 primarily due to timing of receipts for the New Mexico royalty interest net profits interests related to March 2018 to December 2020 production, partially offset by natural production
decline. The estimated rate of natural production decline on the underlying oil and gas properties is approximately 6 to 8 percent a
year. Sales Prices Oil The average oil price increased 34 percent to $80.49 per Bbl for first quarter 2023. The first quarter 2023 oil price is primarily
related to production from November 2022 through January 2023, when the average NYMEX price was $79.78 per Bbl. Gas The average gas price decreased 21 percent to $5.43 per Mcf for first quarter 2023. The first quarter 2023 gas price is primarily related
to production from October through December 2022, when the average NYMEX price was $6.26 per MMBtu. Costs Taxes, Transportation and Other Taxes, transportation and other costs increased 120 percent for first quarter 2023 primarily because of increased gas deductions and gas
severance taxes on higher revenues driven by timing of receipts. Production Expense Production expense increased 35 percent for first quarter 2023 primarily because of higher processing costs driven by timing of receipts and
increased power and fuel costs.  15




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Development Costs Development costs related to properties underlying the 75% net profits interests decreased 40 percent for first quarter 2023 primarily
because of decreased drilling activity in the Hewitt Unit. 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. Underlying cumulative excess costs for the Texas and Oklahoma working interest conveyances remaining as of March 31, 2023, totaled $2.5 million ($1.8 million
net to the Trust), including accrued interest of $0.7 million ($0.5 million net to the Trust). For further information on excess costs, see Note 4 to Condensed Financial Statements. Contingencies For information on
contingencies, see Note 3 to Condensed Financial Statements. Forward-Looking Statements Certain information included in this quarterly report and other materials filed, or to be filed, by the Trust with the Securities and Exchange
Commission (as well as information included in oral statements or other written statements made or to be made by XTO Energy or the Trustee) contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to the Trust, operations of the underlying properties and the oil and gas industry. Such forward-looking statements are based on XTO Energys and the
Trustees current plans, expectations, assumptions, projections and estimates and are identified by words such as may, expects, intends, plans, believes, estimates,
should, could, would, and similar words that convey the uncertainty of future events. Such forward-looking statements may concern, among other things, development activities, future development plans by area,
increased density drilling, reserve-to-production ratios, future production, future net cash flows, maintenance projects, development, production, regulatory and other
costs, oil and gas prices and expectations for future demand, the impact of inflation and economic downturns on economic activity, government policy and its impact on oil and gas prices and future demand, the development and competitiveness of
alternative energy sources, pricing differentials, proved reserves, production levels, expense reserve budgets, availability of financing, arbitration, litigation, liquidity, financing, political and regulatory matters, such as tax and environmental
policy, climate policy, trade barriers, sanctions, competition, war and other political or security disturbances. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult
to predict, including those detailed in Part I, Item 1A of the Trusts Annual Report on Form 10-K for the year ended December 31, 2022, which is incorporated by this reference as though fully set
forth herein. Therefore, actual financial and operational results may differ materially from expectations, estimates or assumptions expressed in, implied in, or forecasted in such forward-looking statements. 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 Not applicable. Upon qualifying as a smaller reporting company, this information is no longer required.  16




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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 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.  17




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PART II - OTHER INFORMATION 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, 2022. Item 6.  Exhibits  (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 30, 2023 (incorporated herein by reference)  18




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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 ARGENT TRUST COMPANY, TRUSTEEBy

/S/ NANCY WILLISNancy WillisVice PresidentEXXON MOBIL CORPORATIONDate:  May 12, 2023



By

/S/ WENDI POWELLWendi PowellUpstream Controller  19