HUGOTON ROYALTY TRUST DECLARES NO SEPTEMBER CASH DISTRIBUTION

Rhea-AI Summary

Hugoton Royalty Trust (OTCQB: HGTXU) announced no cash distribution for September 2024 due to excess cost positions on all three of the Trust's conveyances of net profits interests. The Trust's cash reserve was reduced by $42,000 for expenses. XTO Energy reported:

• Underlying gas sales of 737,000 Mcf at $2.80 per Mcf
• Oil sales of 15,000 Bbls at $75.57 per Bbl
• Inclusion of sales from three new non-operated wells in Major County, Oklahoma
• Deduction of $105,000 in development costs, $1,718,000 in production expense, and $823,000 in overhead

Excess costs increased on Kansas and Wyoming properties, while $289,000 was recovered on Oklahoma properties. Cumulative excess costs remain significant across all regions. Development costs for four non-operated wells in Major County, Oklahoma, have reached $10.2 million underlying ($8.1 million net to the Trust).

Positive

• Increase in underlying gas sales volumes from 650,000 Mcf to 737,000 Mcf
• Higher average gas price of $2.80 per Mcf compared to $2.40 per Mcf in the prior month
• Slight increase in average oil price from $74.93 to $75.57 per Bbl
• Partial recovery of $289,000 in excess costs on Oklahoma properties

Negative

• No cash distribution to unitholders for September 2024
• Reduction of Trust's cash reserve by $42,000 for expenses
• Decrease in oil sales volumes from 20,000 Bbls to 15,000 Bbls
• Increase in excess costs on Kansas properties by $26,000
• Increase in excess costs on Wyoming properties by $388,000
• Significant cumulative excess costs remaining: $1,420,000 for Kansas, $2,847,000 for Oklahoma, and $6,263,000 for Wyoming
• High development costs of $10.2 million for four non-operated wells in Oklahoma

DALLAS, Sept. 20, 2024 /PRNewswire/ -- Argent Trust Company, as Trustee of the Hugoton Royalty Trust (the "Trust") (OTCQB: HGTXU) announced today there would not be a cash distribution to the holders of its units of beneficial interest for September 2024 due to the excess cost positions on all three of the Trust's conveyances of net profits interests. The Trust's cash reserve was reduced by $42,000 for the payment of Trust expenses. To the extent net profits income is received in future months, the Trustee anticipates replenishing the cash reserve prior to declaring any future distributions to unitholders. Replenishment of the cash reserve may include any increase in the cash reserve total, as determined by the Trustee. The following table shows underlying gas and oil sales and average prices attributable to the net overriding royalty for both the current month and prior month. Underlying gas and oil sales volumes attributable to the current month were primarily produced in July.

		Underlying Sales
		Volumes (a)					Average Price
		Gas (Mcf)			Oil (Bbls)		Gas (per Mcf)		Oil (per Bbl)
Current Month Distribution		737,000			15,000		$2.80		$75.57
Prior Month Distribution			650,000		20,000		$2.40		$74.93

(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 included underlying sales volumes of approximately 3,000 Bbls and 26,000 Mcf from three new non-operated wells drilled in Major County, Oklahoma and has deducted development costs of $105,000, production expense of $1,718,000, and overhead of $823,000 in determining the royalty calculation for the Trust for the current month.

Excess Costs

XTO Energy has advised the Trustee that excess costs increased by $26,000 on properties underlying the Kansas net profits interests. Underlying cumulative excess costs remaining on the Kansas net profits interests total $1,420,000, including accrued interest of $86,000.

XTO Energy has advised the Trustee that $289,000 of excess costs were recovered on properties underlying the Oklahoma net profits interests. However, after the partial recovery, there were no remaining proceeds from the properties underlying the Oklahoma net profits interests to be included in the current month's distribution. Underlying cumulative excess costs remaining on the Oklahoma net profits interests total $2,847,000, including accrued interest of $344,000. 

XTO Energy has advised the Trustee that excess costs increased by $388,000 on properties underlying the Wyoming net profits interests. Underlying cumulative excess costs remaining on the Wyoming net profits interests total $6,263,000, including accrued interest of $240,000.

Development Costs

As previously disclosed, XTO Energy advised the Trustee that it elected to participate in the development of four non-operated wells in Major County, Oklahoma. As of the date hereof, $10.2 million underlying ($8.1 million net to the Trust) in development costs have been charged to the Trust for the four non-operated wells. Two wells were completed in second quarter 2023, the third was completed in fourth quarter 2023, and the fourth was completed in first quarter 2024. The Trustee and XTO Energy will continue to provide material updates on the four non-operated wells in subsequent communications.

For more information on the Trust, including the annual tax information, distribution amounts, and historical press releases, please visit our website 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 timing, and future net profits, could differ materially due to changes in natural gas and oil prices and other economic conditions affecting the gas and oil 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, 2023.

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SOURCE Hugoton Royalty Trust

FAQ

Why is Hugoton Royalty Trust (HGTXU) not distributing cash for September 2024?

Hugoton Royalty Trust (HGTXU) is not distributing cash for September 2024 due to excess cost positions on all three of the Trust's conveyances of net profits interests.

What are the current underlying gas and oil sales volumes for Hugoton Royalty Trust (HGTXU)?

For the current month, Hugoton Royalty Trust (HGTXU) reported underlying gas sales of 737,000 Mcf and oil sales of 15,000 Bbls.

How much are the cumulative excess costs for Hugoton Royalty Trust (HGTXU) properties?

Hugoton Royalty Trust (HGTXU) reported cumulative excess costs of $1,420,000 for Kansas, $2,847,000 for Oklahoma, and $6,263,000 for Wyoming properties.

What is the total development cost for the four non-operated wells in Major County, Oklahoma for Hugoton Royalty Trust (HGTXU)?

The total development cost for the four non-operated wells in Major County, Oklahoma is $10.2 million underlying ($8.1 million net to the Hugoton Royalty Trust (HGTXU)).