FORT WORTH, Texas, March 19, 2018 /PRNewswire/ -- Simmons Bank,
as Trustee of the Hugoton Royalty Trust (NYSE: HGT) (the "Trust"),
today declared there would not be a cash distribution to the
holders of its units of beneficial interest for March 2018. XTO Energy has advised the Trustee
and previously disclosed in Form 10-K that total 2018 budgeted
development costs for the underlying properties are between
$30 million and $35 million, primarily due to the projected
drilling of four horizontal wells in Major Co., Oklahoma during the second half of 2018.
Increased development costs will be deducted beginning with the
April 2018 distribution. XTO Energy
has advised the Trustee that the monthly budgeted development costs
to be deducted will increase from $280,000 to approximately $2,200,000. Changes in oil or natural gas prices
could impact future development plans on the underlying
properties.
In light of the increase in development costs, as well as the
claimed reductions XTO Energy has advised the Trustee it
anticipates making with respect to the Chieftain settlement
described below, the Trustee has made the decision to hold in
reserve $414,000 that would have been
distributed for March. The Trust has ongoing administration
costs, including printing, mailing, audit and legal fees, trustee
and transfer agent fees, filing fees and other similar expenses
that must be paid even during months when no distribution is made
to the Trust. At this time, it is unknown if and when those
ongoing costs will be able to be covered by the monthly
distribution of net profits from the underlying properties to the
Trust.
The following table shows underlying gas sales and average
prices attributable to the net overriding royalty for both the
current month and prior month. Underlying gas sales volumes
attributable to the current month were primarily produced in
January.
|
|
Underlying Gas
Sales
|
|
|
|
|
Volumes (Mcf)
(a)
|
|
Average
Gas
|
|
|
Total
|
|
Daily
|
|
Price per
Mcf
|
|
|
|
|
|
|
|
Current
Month
|
|
1,133,000
|
|
37,000
|
|
$2.77
|
|
|
|
|
|
|
|
Prior Month
|
|
1,067,000
|
|
34,000
|
|
$3.24
|
(a) Sales volumes are recorded in the month the Trust
receives the related net profits income. Because of this, sales
volumes may fluctuate from month to month based on the timing of
cash receipts.
XTO Energy has advised the Trustee that it has deducted budgeted
development costs of $280,000,
production expense of $1,442,000 and
overhead of $929,000 in determining
the royalty payment to the Trust for the current month.
Litigation Proceedings - Chieftain
As previously
disclosed, XTO Energy has advised the Trustee that it has reached a
tentative settlement with the plaintiffs in the Chieftain
class action royalty case, and believes that the portion of the
settlement that relates to the Trust is as much as $20 million. XTO Energy has advised the Trustee
that the settlement requires final approval by a judge, which is
expected to occur in late first quarter of 2018. The Trustee
has asked for additional information regarding the allocation of
the settlement amount and has asked to be advised by XTO as the
matter progresses. Once additional information is made available,
the Trustee intends to review any claimed reductions in payment to
the Trust based on the facts and circumstances of the settlement.
The Trustee has previously stated that to the extent any such
claimed reductions are similar to claimed reductions from XTO
Energy's settlement in the Fankhouser v. XTO Energy, Inc.
class action lawsuit that an arbitration tribunal ruled were not
permitted to be borne by the Trust, the Trustee would likely object
to such claimed reductions. After a review of the claimed
reductions in payments to the Trust relating to the settlement and
a determination whether the Trustee will object to any such
reductions, a determination will be made as to what amount of
reserve will be maintained for anticipated future Trust
expenses.
Excess Costs
XTO Energy has advised the Trustee that lower gas prices caused
costs to exceed revenues by $15,000
on properties underlying the Kansas net profits interests. However, these
excess costs did not reduce net proceeds from the remaining
conveyances. Underlying cumulative excess costs remaining on the
Kansas net profits interests
totaled $966,000, including accrued
interest of $122,000.
XTO Energy has advised the Trustee that decreased costs in the
current month resulted in the partial recovery of excess costs of
$28,000 on properties underlying the
Wyoming net profits interests.
However, after the partial recovery there were no remaining
proceeds from properties underlying the Wyoming net profits interests to be included
for the current month. Underlying cumulative excess costs remaining
on the Wyoming net profits
interests totaled $33,000, including
accrued interest of $207.
For more information on the Trust, please visit our web site at
www.hgt-hugoton.com.
Statements made in this press release regarding future events
or conditions are forward looking statements. Actual future
results, including development costs and future net profits, could
differ materially due to changes in natural gas prices and other
economic conditions affecting the gas industry and other factors
described in Part I, Item 1A of the Trust's Annual Report on Form
10-K for the year ended December 31,
2017.
View original
content:http://www.prnewswire.com/news-releases/hugoton-royalty-trust-declares-no-march-cash-distribution-and-anticipated-increase-in-development-budget-300615721.html
SOURCE Hugoton Royalty Trust