Hugoton Royalty Trust (the “Trust”) is an express trust created
under the laws of Texas pursuant to the Hugoton Royalty Trust
Indenture entered into on December 1, 1998 between XTO Energy
Inc. (formerly known as Cross Timbers Oil Company and, hereafter,
“XTO Energy”), as grantor, and NationsBank, N.A., as Trustee.
Simmons Bank (the “Trustee”) is now the Trustee of the Trust.
The principal office of the Trust is 2911 Turtle Creek Blvd, Suite
850, Dallas, Texas 75219. (Telephone number 855-588-7839). The Trust’s
internet website is www.hgt-hugoton.com. We make
available free of charge, through our website, our Annual Report on
Form 10-K, quarterly
reports on Form 10-Q,
current reports on Form 8-K
and all amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
These reports are accessible through our internet website as soon
as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange
Commission. Information on our website is not incorporated into
Effective December 1, 1998, XTO Energy conveyed to the Trust
80% net profits interests in certain predominantly natural gas
producing working interest properties in Kansas, Oklahoma and
Wyoming under three separate conveyances. In exchange for these net
profits interest conveyances to the Trust, 40 million units of
beneficial interest were issued to XTO Energy. In April and May
1999, XTO Energy sold a total of 17 million units in the
Trust’s initial public offering. In 1999 and 2000, XTO Energy also
sold 1.3 million Trust units to certain of its officers. The
Trust did not receive the proceeds from these sales of Trust units.
In May 2006, XTO Energy distributed all of its remaining
21.7 million Trust units as a dividend to its common
stockholders. XTO Energy currently is not a unitholder of the
Trust. Units were listed and traded on the New York Stock Exchange
under the symbol “HGT” until August 27, 2018, when the Trust
units were delisted from the NYSE and began to be quoted on the
OTCQX, which is maintained by the OTC Market Group Inc., under the
symbol “HGTXU.” The Trust transitioned from the OTCQX to the OTCQB
on May 19, 2020.
On June 25, 2010, XTO Energy became a wholly-owned subsidiary
of Exxon Mobil Corporation.
The net profits interests entitle the Trust to receive 80% of the
net proceeds from the sale of oil and gas from the underlying
properties. Each month XTO Energy determines the amount of cash
received from the sale of production and deducts property and
production taxes, production expense, development costs and
Net proceeds payable to the Trust depend upon production
quantities, sales prices of oil and gas and costs to develop and
produce oil and gas in the prior month. If monthly costs exceed
revenues for any of the three conveyances (one for each of the
states of Kansas, Oklahoma and Wyoming), such excess costs must be
recovered, with accrued interest, from future net proceeds of that
conveyance and cannot reduce net proceeds from other conveyances.
For further information on excess costs, see Note 4 to Financial
Statements under Item 8. Financial Statements and Supplementary
The Trust is not liable for any production costs or liabilities
attributable to the underlying properties. If at any time the Trust
receives net profits income in excess of the amount due, the Trust
is not obligated to return such overpayment, but future net profits
income payable to the Trust will be reduced until the overpayment,
plus interest at the prime rate, is recovered.
As a working interest owner, XTO Energy can generally decline
participation in any operation and allow consenting parties to
conduct such operations, as provided under the operating
agreements. XTO Energy also can assign, sell, or otherwise transfer
its interest in the underlying properties, subject to the net
profits interests, or can abandon an underlying property if it is
incapable of producing in paying quantities, as determined by XTO
To the extent allowed, XTO Energy is responsible for marketing its
production from the underlying properties under existing sales
contracts, or new arrangements on the best terms reasonably
obtainable in the circumstances. See “Pricing and Sales
Information” under Item 2. Properties.