FORT WORTH, Texas, Aug. 21, 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 August 2018 due to the excess cost positions on
all three of the Trust's conveyances of net profits interests.
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
June.
|
|
Underlying Gas
Sales
|
|
|
|
|
Volumes (Mcf)
(a)
|
|
Average
Gas
|
|
|
Total
|
|
Daily
|
|
Price per
Mcf
|
|
|
|
|
|
|
|
Current
Month
|
|
1,132,000
|
|
38,000
|
|
$2.10
|
|
|
|
|
|
|
|
Prior
Month
|
|
1,083,000
|
|
35,000
|
|
$2.44
|
|
|
(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 $2,188,000,
production expense of $1,901,000 and
overhead of $984,000 in determining
the royalty calculation for the Trust for the current
month.
Litigation and Arbitration Proceedings - Chieftain
As
previously disclosed, XTO Energy advised the Trustee that it has
reached a tentative settlement with the plaintiffs in the
Chieftain class action royalty case. XTO Energy
advised the Trustee that on March 27,
2018, the judge signed orders approving the settlement,
including the plaintiffs' initial plan to allocate the net
settlement fund among the wells covered by the Chieftain
class. The portion of the settlement allocable to the Trust cannot
be finally determined until after the judge approves the final plan
of allocation. On July 27,
2018, plaintiffs submitted their final plan of allocation
which was approved by the court on the same date. XTO Energy
is analyzing the final plan of allocation to calculate the impact
on the Trust and will report to the Trustee when that analysis is
complete. XTO Energy has advised the Trustee that depending on its
analysis of the final plan of allocation, the portion of the
settlement XTO Energy believes should be allocated to the Trust may
exceed $20 million. On
May 2, 2018, the Trustee submitted a
demand for arbitration styled Simmons
Bank (successor to Southwest Bank and Bank of America, N.A.)
vs. XTO Energy Inc. (the "Arbitration") through the American
Arbitration Association seeking 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 Trust's
payments now or in the future as a result of the Chieftain
litigation. In the Arbitration, the Trustee also made claims
for disputed amounts on the computation of the Trust's net proceeds
for 2014 through 2016 in excess of $5
million. XTO Energy filed its Answering Statement
denying the Trustee's claims. A three-member arbitration
panel has been appointed.
Excess Costs
XTO Energy has advised the Trustee that continued low gas prices
caused costs to exceed revenues by $76,000 on properties underlying the Kansas net profits interests. Underlying
cumulative excess costs remaining on the Kansas net profits interests totaled
$1,096,000, including accrued
interest of $142,000.
XTO Energy has advised the Trustee that increased budgeted
development costs in the current month, primarily due to the
projected drilling of four horizontal wells in Major County, Oklahoma during the second half
of 2018, caused costs to exceed revenues by $2,068,000 on properties underlying the
Oklahoma net profits interests.
Underlying cumulative excess costs remaining on the Oklahoma net profits interests totaled
$8,360,000, including accrued
interest of $0. XTO has advised
the Trustee that is has determined not to accrue interest on the OK
excess costs balance at this time.
XTO Energy has advised the Trustee that continued low gas prices
and increased budgeted development costs caused costs to exceed
revenues by $233,000 on properties
underlying the Wyoming net profits
interests. Underlying cumulative excess costs remaining on the
Wyoming net profits interests
totaled $952,000, including accrued
interest of $7,000.
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 and Part II, Item 1A of the Trust's Quarterly Report on
Form 10-Q for the quarter ended June
30, 2018.
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SOURCE Hugoton Royalty Trust