FORT WORTH, Texas, May 18, 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 May 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 March.
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|
Underlying Gas
Sales
|
|
|
|
|
Volumes (Mcf)
(a)
|
|
Average
Gas
|
|
|
Total
|
|
Daily
|
|
Price per
Mcf
|
|
|
|
|
|
|
|
Current
Month
|
|
1,101,000
|
|
36,000
|
|
$2.43
|
Prior Month
|
|
967,000
|
|
35,000
|
|
$3.03
|
(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 $1,469,000 and
overhead of $957,000 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, which
plaintiffs are scheduled to submit by July
30, 2018. XTO Energy has advised the Trustee that
depending on 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 is currently reviewing the
arbitration documents and will respond in due course.
Excess Costs
XTO Energy has advised the Trustee that lower gas prices caused
costs to exceed revenues by $7,000 on
properties underlying the Kansas
net profits interests. Underlying cumulative excess costs remaining
on the Kansas net profits
interests totaled $979,000, including
accrued interest of $130,000.
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 $1,425,000 on properties underlying the
Oklahoma net profits interests.
Underlying cumulative excess costs remaining on the Oklahoma net profits interests totaled
$2,988,000, including accrued
interest of $6,000.
XTO Energy has advised the Trustee that lower gas prices and
increased budgeted development costs in the current month caused
costs to exceed revenues by $140,000
on properties underlying the Wyoming net profits interests. Underlying
cumulative excess costs remaining on the Wyoming net profits interests totaled
$255,000, including accrued interest
of $789.
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.
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SOURCE Hugoton Royalty Trust