The following discussion should be read in conjunction with the trustee's discussion and analysis contained in the trust's 2008 annual report, 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.crosstimberstrust.com.

Distributable Income

For the quarter ended March 31, 2009, net profits income was $2,805,299 compared to $6,885,854 for first quarter 2008. This 59% decrease in net profits income is the result of lower oil and gas prices, lawsuit settlement proceeds included in first quarter 2008 and increased production expense, partially offset by excess costs on the Texas and Oklahoma working interest properties in first quarter 2009. See "Net Profits Income" and "Other Proceeds" below.

After considering interest income of $72 and administration expense of $135,581, distributable income for the quarter ended March 31, 2009 was $2,669,790, or $0.444965 per unit of beneficial interest. Administration expense for the quarter increased 8% from the prior year quarter primarily because of the timing of expenditures. For first quarter 2008, distributable income was $6,766,278, or $1.127713 per unit. Distributions to unitholders for the quarter ended March 31, 2009 were:

                                                        Distribution
                   Record Date        Payment Date        per Unit
                January 30, 2009    February 13, 2009      $0.222855
                February 27, 2009   March 13, 2009          0.104132
                March 31, 2009      April 14, 2009          0.117978

                                                           $0.444965

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.

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

                                             Three Months Ended
                                                March 31 (a)            Increase
                                           2009             2008       (Decrease)
      Sales Volumes
      Oil (Bbls) (b)
      Underlying properties                  56,631           57,619           (2 %)
      Average per day                           616              626           (2 %)
      Net profits interests                  14,370           32,787          (56 %)

      Gas (Mcf) (b)
      Underlying properties                 504,727          503,759           -
      Average per day                         5,486            5,476           -
      Net profits interests                 435,785          448,374           (3 %)

      Average Sales Prices
      Oil (per Bbl)                     $     41.50     $      85.60          (52 %)
      Gas (per Mcf) (c)                 $      6.12     $      10.55          (42 %)

      Revenues
      Oil sales                         $ 2,350,344     $  4,932,096          (52 %)
      Gas sales (c)                       3,087,310        5,313,683          (42 %)

      Total Revenues                      5,437,654       10,245,779          (47 %)


      Costs
      Taxes, transportation and other       906,910        1,156,988          (22 %)
      Production expense (d)              1,527,575          944,516           62 %
      Development costs                     314,861          353,661          (11 %)
      Excess costs (e)                     (440,888 )             -            -

      Total Costs                         2,308,458        2,455,165           (6 %)


      Other Proceeds
      Interest Income (c)                        -           212,654         (100 %)

      Net Proceeds                      $ 3,129,196     $  8,003,268          (61 %)


      Net Profits Income                $ 2,805,299     $  6,885,854          (59 %)

(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. Changes in any of these factors may result in disproportionate fluctuations in volumes allocated to the net profits interests. Therefore, comparative discussion of oil and gas sales volumes is based on the underlying properties.

(c) In first quarter 2008, $827,446 was received related to a lawsuit settlement for underpayment of royalties on certain San Juan Basin properties. Included in this settlement was estimated interest of $212,654. This settlement increased the average gas sales price by $1.22 for the quarter ended March 31, 2008. The total one-time settlement, net to trust, was $744,702, or $0.12 per unit.

(d) Includes an overhead charge which is deducted and retained by XTO Energy. As of March 31, 2009, this charge was $31,810 per month (including a monthly overhead charge of $2,809 which XTO Energy deducts as operator of the Penwell Unit) and is subject to adjustment each May based on an oil and gas industry index.

(e) See note 4 to Condensed Financial Statements.

The following are explanations of significant variances on the underlying properties from first quarter 2008 to first quarter 2009:

Sales Volumes

Oil

Oil sales volumes decreased 2% from first quarter 2008 to first quarter 2009 primarily because of natural production decline, partially offset by the timing of cash receipts.

Gas

Gas sales volumes remained relatively flat from first quarter 2008 to first quarter 2009 as the timing of cash receipts and increased production from new wells and workovers were partially offset by natural production decline.

Sales Prices

Oil

The first quarter 2009 average oil price was $41.50 per Bbl, a 52% decrease from the first quarter 2008 average price of $85.60 per Bbl. Lower demand as a result of the U.S. recession and slowing global economy, the tightened credit markets and rising crude oil supplies have caused recent oil prices to decline. Oil prices are expected to remain volatile. The first quarter 2009 oil price is primarily related to production from November 2008 through January 2009, when the average NYMEX price was $46.91 per Bbl. The average NYMEX price for February and March 2009 was $43.77 per Bbl. At April 16, 2009, the average NYMEX futures price for the following twelve months was $57.67 per Bbl. Recent trust oil prices have averaged approximately 22% lower than the NYMEX price.

Gas

The first quarter 2009 average gas price was $6.12 per Mcf, a 42% decrease from the first quarter 2008 average price of $10.55 per Mcf. Excluding the effects of the lawsuit settlement in first quarter 2008, the average price was $9.33. See "Other Proceeds" below. Due to concerns of oversupply from shale gas development, declining demand due to the U.S. recession, falling oil prices and increased gas storage, recent gas prices have declined. Prices will continue to be affected by weather, oil prices, the U.S. economy, the level of North American production, storage levels and import levels of liquified natural gas. Natural gas prices are expected to remain volatile. The first quarter 2009 gas price is primarily related to production from October through December 2008, when the average NYMEX price was $6.94 per MMBtu. The average NYMEX price for January through March 2009 was $4.89 per MMBtu. At April 16, 2009, the average NYMEX futures price for the following twelve months was $4.76 per MMBtu. Recent trust gas prices have averaged approximately 14% lower than the NYMEX price.

Costs

Taxes, Transportation and Other

Taxes, transportation and other decreased 22% for the first quarter primarily because of lower production taxes related to lower oil and gas revenues, partially offset by increased property taxes related to the timing of expenditures.

Production Expense

Production expense increased 62% for the first quarter primarily because of increased overhead, maintenance and carbon dioxide injection costs, as well as the timing of expenditures.

Development

Development costs decreased 11% for the first quarter primarily because of decreased activity and costs related to Texas and Oklahoma properties underlying the 75% net profits interests.

Excess Costs

Significantly lower oil prices and elevated costs caused costs to exceed revenues by a total of $196,211 ($147,158 net to the trust) on properties underlying the Texas working interest for January through March 2009 and by $244,677 ($183,508 net to the trust) on properties underlying the Oklahoma working interest in February and March 2009. However, these costs did not reduce net proceeds from the remaining conveyances. With continued downward pressure on realized oil prices from the U.S. and global recessions, excess costs are expected to continue over the near term resulting in lower monthly distributions.

Contingencies

Several states have enacted legislation to require state income tax withholding from nonresident recipients of oil and gas proceeds. After consultation with its state tax counsel, XTO Energy has advised the trustee that it believes the trust is not subject to these withholding requirements. However, regulations are subject to change by the various states, which could change this conclusion. Should the trust be required to withhold state taxes, distributions to the unitholders would be reduced by the required amount, subject to the unitholder's right to file a state tax return to claim any refund due.

Other Proceeds

In January 2008, the calculation of net profits income included a lawsuit settlement of $827,446 related to underpayment of royalties on underlying properties in the San Juan Basin. Included in this settlement was interest of $212,654 and additional gas revenue of $614,792. The total settlement, net to the trust, was $744,702, or $0.12 per unit. Based on additional information received by XTO Energy in April 2008, the amount allocated to interest income was increased to $348,916. This reallocation did not change the total lawsuit settlement.

Pending Securities and Exchange Commission Rule

In December 2008, the Securities and Exchange Commission (SEC) released Final Rule, Modernization of Oil and Gas Reporting. The new disclosure requirements include provisions that permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserves volumes. The new requirements also will allow companies to disclose their probable and possible reserves to investors. In addition, the new disclosure requirements require companies to: (a) report the independence and qualifications of its reserves preparer or auditor;
(b) file reports when a third party is relied upon to prepare reserves estimates or conducts a reserves audit; and (c) report oil and gas reserves using an average price based upon the prior 12-month period rather than year-end prices. The new disclosure requirements are effective for financial statements for fiscal years ending on or after December 31, 2009. The effect of adopting the SEC rule has not been determined, but it is not expected to have a significant effect on the trust's reported financial position or distributable income.

Forward-Looking Statements

This report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements 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, 2008, which is incorporated by this reference as though fully set forth herein. Although XTO Energy and the trustee believe that the expectations reflected in such forward-looking statements are reasonable, neither XTO Energy nor the trustee can give any assurance that such expectations will prove to be correct.