FORT WORTH, Texas, Jan. 19, 2018 /PRNewswire/ -- Southwest
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 the month of
January 2018. XTO Energy has advised
the Trustee that it has reached a tentative settlement with the
plaintiffs in the Chieftain class action royalty case.
XTO Energy informed the Trustee on January
17, 2018, that it 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 to be advised by XTO as the matter progresses and, once
additional information is made available to 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.
If $20 million of the
Chieftain settlement is required to be borne by the Trust,
it would result in excess costs under the Oklahoma conveyance that, based on recent
distribution levels under such conveyance, would likely result in
no distributions under the Oklahoma conveyance for several years.
In light of this recent information, the Trustee has made the
decision to hold in reserve the $258,000 ($0.006450
per unit) that would have been distributed for January. After
a review of the settlement agreement and analysis of XTO's
allocation calculation, a determination will be made as to whether
the reserve will be maintained for anticipated future Trust
expenses.
Neither the Kansas nor
Wyoming conveyances are affected
by the Chieftain settlement, but as noted below,
Kansas is currently in an excess
cost position.
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
November.
|
|
Underlying Gas
Sales
|
|
|
|
|
Volumes (Mcf)
(a)
|
|
Average
Gas
|
|
|
Total
|
|
Daily
|
|
Price per
Mcf
|
|
|
|
|
|
|
|
Current
Month
|
|
1,097,000
|
|
37,000
|
|
$2.91
|
|
|
|
|
|
|
|
Prior Month
|
|
1,154,000
|
|
37,000
|
|
$2.85
|
|
|
(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 $1,490,000,
overhead of $988,000 and recovered
net excess costs of $4,000 in
determining the royalty payment to the Trust for the current
month.
Excess Costs
XTO Energy has advised the Trustee that improved gas prices in
relation to costs resulted in the partial recovery of excess costs
of $4,000 on properties underlying
the Kansas net profits interests.
However, after the partial recovery there were no remaining
proceeds from properties underlying the Kansas net profits interests to be included
for the current month. Underlying cumulative excess costs remaining
on the Kansas net profits
interests total $883,000, including
accrued interest of $115,000.
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,
2016.
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content:http://www.prnewswire.com/news-releases/hugoton-royalty-trust-declares-no-january-cash-distribution-and-gives-notice-of-tentative-xto-settlement-amount-300585441.html
SOURCE Hugoton Royalty Trust