Public Royalty Trusts

A royalty trust is a type of corporation usually involved in mining. It is taxed according to special regulations, whereby its profits are not taxed at the corporate level provided a certain high percentage (e.g. 90%) of profits are distributed to share holders as dividends. The dividends are then taxed as personal income. This system, similar to real estate investment trusts, effectively avoids the double-taxation of corporate dividends. Three public royalty trusts include the following:

• San Juan Basin Royalty Trust
• Cross Timbers Royalty Trust
• Sabine Royalty Trust

San Juan Basin Royalty Trust

The Trust was established in November 1980 by Trust Indenture between Southland Royalty and The Fort Worth National Bank. Pursuant to the Indenture, Southland Royalty conveyed to the Trust a 75% net overriding royalty interest (equivalent to a net profits interest) carved out of Southland Royalty's oil and gas leasehold and royalty interest in the San Juan Basin of northwestern New Mexico. This net overriding royalty interest (the "Royalty") is the principal asset of the Trust.

Under the Trust Indenture, Compass Bank (successor trustee) as Trustee, has the primary function of collecting monthly net proceeds ("Royalty Income") attributable to the Royalty and making the monthly distributions to the Unit holders after deducting administrative expenses and any amounts necessary for cash reserves.

The San Juan Basin Royalty Trust is a New York Stock Exchange-listed entity, with Units trading under the symbol “SJT.”

San Juan Basin Royalty Trust
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Cross Timbers Royalty Trust

Cross Timbers Royalty Trust was created on February 12, 1991 by conveyance of 90% net profits interests in certain royalty and overriding royalty interest properties in Texas, Oklahoma and New Mexico, and 75% net profits interests in certain working interest properties in Texas and Oklahoma. XTO Energy Inc. owns the underlying properties from which these net profits interests were conveyed. The net profits interests are the only assets of the trust, other than cash held for trust expenses and for distribution to unitholders.

The trust was created to collect and distribute monthly net profits income to unitholders. Trust net profits income is received from two major components, the 90% net profits interests and the 75% net profits interests.

The 90% net profits interests were conveyed from underlying royalty and overriding royalty interests in producing properties in Texas, Oklahoma and New Mexico. Most net profits income is from long-lived gas properties in the San Juan Basin of northwestern New Mexico. Because the 90% net profits interests are not subject to production or development costs, net profits income from these interests generally only varies because of changes in sales volumes or prices.

The 75% net profits interests were conveyed from underlying working interests in seven large, predominantly oil-producing properties in Texas and Oklahoma. Net profits income from these properties is calculated separately for each state and is reduced by production and development costs.
Net profits income received by the trust on the last business day of each month is calculated and paid by XTO Energy based on net proceeds received from the underlying properties in the prior month. Distributions, as calculated by the trustee, are paid to month-end unitholders of record within ten business days.

Units of beneficial interest in the trust were sold in its initial public offering in February 1992, and are listed and traded on the New York Stock Exchange under the symbol “CRT.” As of March 2004, XTO Energy is not a unitholder of the trust.

Cross Timbers Royalty Trust
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Sabine Royalty Trust

Sabine Royalty Trust (the Trust) is an express trust formed to receive Sabine Corporation's royalty and mineral interests, including landowner's royalties, overriding royalty interests, minerals (other than executive rights, bonuses and delay rentals), production payments and any other similar, non-participatory interest, in certain producing and proved undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas (the Royalty Properties). The conveyances of the Royalty Properties to the Trust were effective with respect to Production on January 1, 1983. The current trustee of the Trust is Bank of America, N.A.

Sabine Royalty Trust (the "Trust") was established as of December 31, 1982 by the Sabine Corporation Royalty Trust Agreement (the "Trust Agreement") between Sabine Corporation and InterFirst Bank Dallas, N.A., as Trustee, and by the transfer from Sabine Corporation to the Trust of certain royalty and mineral interests in producing and proved undeveloped oil and gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas. These royalty interests are the only assets of the Trust, other than cash being held for the payment of expenses and liabilities and for distribution to the Unit holders.

Sabine Royalty Trust
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