FORT WORTH, Texas, June 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 June 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 April.
|
Underlying Gas
Sales
|
|
|
|
Volumes (Mcf)
(a)
|
|
Average
Gas
|
|
Total
|
|
Daily
|
|
Price per
Mcf
|
|
|
|
|
|
|
Current
Month
|
1,026,000
|
|
34,000
|
|
$2.50
|
|
|
|
|
|
|
Prior Month
|
1,101,000
|
|
36,000
|
|
$2.43
|
|
|
(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 $1,450,000 and
overhead of $985,000 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 filed its Answering Statement denying the Trustee's
claims. The parties have begun the process of assembling an
arbitration panel.
Excess Costs
XTO Energy has advised the Trustee that continued low gas prices
caused costs to exceed revenues by $14,000 on properties underlying the Kansas net profits interests. Underlying
cumulative excess costs remaining on the Kansas net profits interests totaled
$998,000, including accrued interest
of $134,000.
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 $1,684,000 on properties underlying the
Oklahoma net profits interests.
Underlying cumulative excess costs remaining on the Oklahoma net profits interests totaled
$4,684,000, including accrued
interest of $18,000.
XTO Energy has advised the Trustee that continued low gas prices
caused costs to exceed revenues by $264,000 on properties underlying the
Wyoming net profits interests.
Underlying cumulative excess costs remaining on the Wyoming net profits interests totaled
$521,000, including accrued interest
of $2,000.
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.
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SOURCE Hugoton Royalty Trust