Hugoton Royalty Trust (OTCQB: HGTXU) warns on going-concern risk

Rhea-AI Filing Summary

Hugoton Royalty Trust reported that it will not pay a cash distribution for March 2026 because all three net profits interests remain in excess cost positions, and the cash reserve was reduced by $27,000 to cover expenses. The Trustee expects to replenish this reserve before any future distributions and does not foresee distributions in the near term.

The Trust highlighted severe liquidity pressure and stated that accumulated excess costs and a reduced expense reserve raise substantial doubt about its ability to continue as a going concern. Prior advance distributions totaling $1,000,000, lower oil and gas prices, and high development and operating costs have contributed to the cash shortfall. The Trustee is exploring alternatives, including a potential sale of assets or termination of the Trust, but noted limited third-party interest and no assurance of any ultimate payout to unitholders.

Positive

• None.

Negative

• No March 2026 cash distribution will be paid, and the Trustee does not foresee distributions in the near term due to persistent excess cost positions.
• Substantial doubt about going concern is disclosed, as the Trust lacks sufficient cash to meet obligations over the year following issuance of year-end financial statements.
• High cumulative excess costs remain on the Kansas ($3,094,000), Oklahoma ($11,986,000), and Wyoming ($11,303,000) net profits interests, despite some recoveries.
• Limited strategic options are identified: financing appears unlikely, prior outreach to potential asset buyers produced no interest, and even a sale or termination may not yield distributable proceeds for unitholders.

Insights

Energy income securities analyst

No March payout and going-concern doubts signal severe stress.

Hugoton Royalty Trust is suspending its March 2026 cash distribution because all three net profits interests remain in excess cost positions. The cash reserve was drawn down by $27,000, and the Trustee does not expect near-term distributions.

The Trust discloses substantial doubt about its ability to continue as a going concern, citing lower commodity prices, high development and operating costs, and two prior advance distributions totaling $1,000,000. Significant cumulative excess costs remain in Kansas, Oklahoma, and Wyoming, even after some recent recoveries.

The Trustee has deferred its own fee, sought financing, and contacted potential buyers but sees limited prospects for sufficient funding or a sale. It is actively evaluating alternatives such as asset sales or Trust termination, subject to at least 80% unitholder approval, with no assurance of any residual value after obligations are met.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 20, 2026

HUGOTON ROYALTY TRUST

(Exact name of registrant as specified in its charter)

Texas			001-10476	58-6379215
(State or other jurisdiction of incorporation)			(Commission File Number)	(IRS Employer Identification No.)
Argent Trust Company Trustee 3838 Oak Lawn Ave, Suite 1720
Dallas, Texas				75219-4518
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (855) 588-7839

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Units of Beneficial Interest		HGTXU		OTCQB

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On March 20, 2026, the Registrant issued a news release that it will not declare a monthly cash distribution for the month of March 2026. A copy of the news release is furnished as Exhibit 99.1.

The information in this Current Report, including the news release attached hereto, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits.
	Exhibit 99.1		News Release dated March 20, 2026

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		HUGOTON ROYALTY TRUST
		By:	ARGENT TRUST COMPANY, TRUSTEE
Date:	March 20, 2026	By:	/s/ NANCY WILLIS
			Nancy Willis
			Director of Royalty Trust Services

Hugoton Royalty Trust

HUGOTON ROYALTY TRUST DECLARES NO MARCH CASH DISTRIBUTION; ADDRESSES TRUST LIQUIDITY CONCERNS

Dallas, Texas, March 20, 2026 – 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 March 2026 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 $27,000 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. Based on the current excess costs, the Trustee does not foresee any distributions in the near term.

Trust Liquidity

As previously disclosed, accumulated excess costs for the Kansas, Oklahoma, and Wyoming conveyances have resulted in insufficient net proceeds to the Trust which have resulted in no unitholder distributions since July 2023, and a reduction in the Trust’s expense reserve. These conditions raise substantial doubt about the Trust’s ability to continue as a going concern as the Trust does not have sufficient cash to meet its obligations during the one-year period after the dates that the year-end financial statements are issued. Factors attributable to the cash shortage are primarily lower oil and natural gas prices, development costs, the two advance distributions totaling $1,000,000, and the previously disclosed excess cost positions on the Kansas, Oklahoma, and Wyoming Conveyances.

The Trustee has curtailed spending as much as possible by deferring or eliminating unnecessary expenses, including the Trustee fee, which has been deferred since April 2024. This does not mitigate the fact that there are dwindling funds, and the Trust may have to take drastic measures to continue to exist. The Trustee has sought sources of financing but currently believes that financing in an amount sufficient to satisfy the Trust’s long-term liquidity needs is unlikely to be a viable option for the Trust moving forward. As a result, the Trustee has reviewed and intends to continue to review options for the Trust, which may include alternatives to continuing as a going concern, such as seeking to terminate the Trust or marketing the Trust’s interest (which are net profits interests burdened by excess costs) for a potential sale. The Trustee has reached out to potential third parties regarding interest in the Trust’s assets, but no interest resulted from such discussions. As a result, the Trustee believes that a potential sale of the Trust’s assets may be unlikely in the near term, however it will continue to consider any and all viable options. Even if a sale of the Trust assets was to occur, there is no assurance that the proceeds would result in funds to distribute to unitholders after all financial obligations of the Trust are met. Any material sale of assets and/or termination of the Trust requires unitholder approval by at least 80 percent of all outstanding units.

Hugoton Royalty Trust

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 December.

		Underlying Sales
		Volumes (a)								Average Price
		Gas (Mcf)				Oil (Bbls)				Gas (Mcf)				Oil (Bbls)
Current Month Dist			710,000				15,000			$	3.31			$	61.71
Prior Month Dist			736,000				13,000			$	3.46			$	62.06
(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.

Mach Natural Resources (“Mach”) has advised the Trustee that development costs in the amount of $5,000, production expense of $1,721,000 and overhead of $921,000 in determining the royalty calculation for the Trust for the current month.

Additional Production Volumes and Expenses on New Non-Operated Wells

Mach has recently advised the Trustee that underlying out-of-period oil and gas volumes of approximately 18,000 Bbls and 87,000 Mcf, respectively, from a non-operated well in Major County, Oklahoma relating to first production dating from July through November 2025 were included with the current month’s production. Mach also advised the Trustee that expenses in the amount of approximately $1,800,000 underlying (approximately $1,500,000 net to the Trust) associated with the same non-operated well have not been processed, but Mach has advised the Trustee that it expects to have those costs processed sometime in the second quarter 2026.

Mach has also advised the Trustee that an additional non-operated well has been drilled in Major County, Oklahoma. Mach has advised the Trustee that the costs for this well, which Mach expects to be charged to the Trust in the second quarter 2026, are approximately $1,600,000 underlying (approximately $1,300,000 net to the Trust). Mach also advised the Trustee that no revenue has been received from this well.

Excess Costs

Mach has advised the Trustee that excess costs increased by $44,000 on properties underlying the Kansas net profits interests. Underlying cumulative excess costs remaining on the Kansas net profits interests total $3,094,000 including accrued interest of $315,000.

Hugoton Royalty Trust

Mach has advised the Trustee that $1,542,000 in excess costs was recovered on properties underlying the Oklahoma net profits interests. Underlying cumulative excess costs remaining on the Oklahoma net profits interests total $11,986,000, including accrued interest of $988,000.

Mach has advised the Trustee that $220,000 in excess costs was recovered on properties underlying the Wyoming net profits interests. Underlying cumulative excess costs remaining on the Wyoming net profits interests total $11,303,000, including accrued interest of $1,259,000.

Cumulative excess costs balances above do not include advance distributions made to the Trust by XTO Energy totaling $1,000,000 (net to the Trust), that can be treated as a production cost, except that the advances can be recouped, together with interest, from what would otherwise be distributable net profits under any of the three conveyances; provided, however that Mach shall only be entitled to withhold distributions of net proceeds as recoupment to the extent that such recoupment does not leave the Trust with less than $250,000 of available cash.

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, recoupment of excess costs, ability to make future filings with the Securities and Exchange Commission and admission to the OTCQB 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, 2024.

* * *

Contact: Nancy Willis Director of Royalty Trust Services Argent Trust Company, Trustee 855-588-7839

FAQ

Why is Hugoton Royalty Trust (HGTXU) not paying a March 2026 distribution?

Hugoton Royalty Trust will not pay a March 2026 cash distribution because all three net profits interests remain in excess cost positions. The Trustee also used a $27,000 cash reserve draw to pay expenses, further limiting funds available for unitholder payouts.

What did Hugoton Royalty Trust disclose about its liquidity and going concern status?

The Trust stated that accumulated excess costs and a reduced expense reserve create substantial doubt about its ability to continue as a going concern. It does not have enough cash to meet obligations for the one-year period after year-end financial statements are issued.

How much excess cost remains on Hugoton Royalty Trust’s Kansas, Oklahoma, and Wyoming interests?

Cumulative excess costs total $3,094,000 for Kansas, $11,986,000 for Oklahoma, and $11,303,000 for Wyoming, including accrued interest. These large balances must be recovered before net profits would again be available for Trust distributions.

What alternatives is Hugoton Royalty Trust’s Trustee considering for the Trust’s future?

The Trustee is reviewing options such as continuing operations, seeking to terminate the Trust, or marketing its net profits interests for sale. Any material asset sale or Trust termination would require approval from at least 80% of all outstanding units.

Have prior advance distributions affected Hugoton Royalty Trust’s current financial position?

Yes. Two advance distributions totaling $1,000,000 net to the Trust can be treated as production costs and are subject to recoupment with interest. This obligation, combined with weaker commodity prices and high costs, contributes to the current liquidity shortfall.

What cost and production updates did Mach Natural Resources provide to Hugoton Royalty Trust?

Mach reported current-month development costs of $5,000, production expense of $1,721,000, and overhead of $921,000, plus out-of-period volumes and roughly $3,400,000 in additional well-related costs expected to be charged to the Trust in Q2 2026.

Filing Exhibits & Attachments

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