Hugoton Royalty Trust (HGTXU) ends payout and flags going-concern risk

Rhea-AI Filing Summary

Hugoton Royalty Trust reported that it will not declare a cash distribution for May 2026 and highlighted serious liquidity issues. Excess costs on its Kansas, Oklahoma, and Wyoming net profits interests have prevented any unitholder distributions since July 2023 and have eroded its cash reserve. The Trustee increased the cash reserve by $4,000 from a refunded expense but does not foresee distributions in the near term and sees substantial doubt about the Trust’s ability to continue as a going concern. The Trustee is reviewing alternatives including a potential sale of assets or termination of the Trust, though prior outreach to potential buyers produced no interest and any sale might not yield funds for unitholders after obligations are paid.

Positive

• None.

Negative

• No current or near-term distributions: The Trust will not pay a cash distribution for May 2026 and does not foresee distributions in the near term due to excess cost positions on all three net profits interests.
• Going-concern doubt: Management states that accumulated excess costs and limited cash raise substantial doubt about the Trust’s ability to continue as a going concern over the one-year period after the year-end financial statements.
• Severe liquidity and reporting constraints: Cash shortages have led the Trust to defer expenses, including Trustee fees, and it is unable to engage an auditor, file ongoing SEC reports, or provide audited financials and reserve reports.
• Limited strategic options and weak asset marketability: Attempts to obtain financing and solicit interest in the Trust’s assets have not been successful, and any potential sale or termination would require 80% unitholder approval with no assurance of proceeds for unitholders.
• Exchange-listing risk and potential capital loss: The inability to maintain SEC reporting could negatively affect the OTCQB market price and could result in delisting, while failure to continue as a going concern could cause significant or total losses for unitholders.

Insights

Income trust and credit risk analyst

No distributions, rising excess costs, and going-concern doubt signal elevated risk.

Hugoton Royalty Trust has stopped its May 2026 cash distribution because all three net profits interests remain in excess cost positions. These accumulated excess costs, combined with lower oil and gas prices and prior $1,000,000 advance distributions, have drained liquidity.

The Trust discloses “substantial doubt” about its ability to continue as a going concern over the next year. It has deferred expenses, including the Trustee fee since April 2024, but still lacks sufficient cash to meet obligations. Attempts to secure financing and gauge third-party interest in its assets have been unsuccessful so far.

Management is evaluating options such as terminating the Trust or selling its net profits interests, both of which would require navigating high cumulative excess costs and, for termination or a material asset sale, at least 80% unitholder approval. The Trust also warns it cannot maintain SEC filings or audited reporting, which may pressure the OTCQB listing and could lead to significant or total losses for unitholders if it cannot remain a going concern.

8-K Event Classification

2 items: 2.02, 9.01

2 items

Item 2.02 Results of Operations and Financial Condition Financial

Disclosure of earnings results, typically an earnings press release or preliminary financials.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, and exhibit attachments filed with this report.

Key Figures

Cash reserve increase: $4,000 Advance distributions: $1,000,000 Kansas excess costs: $3,193,000 +5 more

8 metrics

Cash reserve increase $4,000 Refund of a Trust expense added to cash reserve

Advance distributions $1,000,000 Total advances from XTO Energy net to the Trust

Kansas excess costs $3,193,000 Cumulative excess costs including $369,000 interest

Oklahoma excess costs $14,176,000 Cumulative excess costs including $1,227,000 interest

Wyoming excess costs $11,582,000 Cumulative excess costs including $1,450,000 interest

Underlying gas volume 669,000 Mcf Current month distribution, primarily March production

Gas price $3.30 per Mcf Average price for current month distribution

Development, production, overhead $137,000; $1,262,000; $912,000 Current month costs used in royalty calculation

Key Terms

going concern, excess costs, net profits interests, advance distributions, +1 more

5 terms

going concern financial

"These conditions raise substantial doubt about the Trust’s ability to continue as a going concern"

A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.

excess costs financial

"accumulated excess costs for the Kansas, Oklahoma, and Wyoming conveyances have resulted in insufficient net proceeds"

Excess costs are expenses a company incurs that are above its normal or expected operating costs—unexpected charges, one-time losses, or spending beyond budget, like a household suddenly paying for major repairs. They matter to investors because they can temporarily or permanently reduce profits and cash flow, and frequent or large excess costs may signal operational problems or higher risk, helping investors decide whether a profit hit is a short-term anomaly or a lasting issue.

net profits interests financial

"the Trust’s conveyances of net profits interests"

A net profits interest is a non‑operating claim on the earnings from a specific asset (commonly oil, gas, or mineral production) that pays its holder a percentage of the money left over after production revenues and agreed costs are deducted. Think of it like owning a share of the profits from a single project without running it; payouts can be attractive but fluctuate with output and expenses, so investors use NPIs to gain income exposure while avoiding operating responsibilities.

advance distributions financial

"the two advance distributions totaling $1,000,000"

OTCQB financial

"could have a negative impact on the market price for the Trust units and could result in removal of Trust units from the OTCQB"

OTCQB is a tier of the over‑the‑counter (OTC) market where smaller or developing companies list their shares for trading without being on a major stock exchange. Think of it like a well‑kept side street market: companies must meet basic reporting and transparency checks so investors get more information than the lowest OTC tier, but trading is usually less liquid and riskier than on big exchanges. Investors care because OTCQB listings can offer early access to growth stories but come with higher price swings and greater chance of limited resale options.

See more from StockTitan in Google Search and AI answers. Adds StockTitan as a preferred source · opens Google

Add on Google Not now

Understanding 8-K Material Events →

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): June 18, 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 June 18, 2026, the Registrant issued a news release that it will not declare a monthly cash distribution for the month of June 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 June 18, 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:	June 18, 2026	By:	/s/ NANCY WILLIS
			Nancy Willis
			Director of Royalty Trust Services

Hugoton Royalty Trust

HUGOTON ROYALTY TRUST DECLARES NO JUNE CASH DISTRIBUTION;

ADDRESSES TRUST LIQUIDITY CONCERNS

Dallas, Texas, June 18, 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 May 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 increased by $4,000 due to a refund of a Trust expense. To the extent any 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 or alternatively may have to terminate. 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

SEC Filings and Exchange Status

On May 15, 2026, the Trust filed a Form 12b-25 stating that it would be unable to file the quarterly report on Form 10-Q for the quarter ended March 31, 2026, because it is not currently seeking engagement of a new independent registered public accounting firm, due to cash constraints. Since the Trust is not able to continue to make SEC filings, provide reporting to unitholders, or provide audited financial statements or third-party reserve reports, the unitholders and potential investors may have limited or no information on which to base investment decisions, which could have a negative impact on the market price for the Trust units and could result in removal of Trust units from the OTCQB. If the Trust is unable to continue as a going concern, unitholders could incur significant losses on their investment in the Trust or lose their entire investment in the Trust altogether.

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 March.

		Underlying Sales
		Volumes (a)								Average Price
		Gas (Mcf)				Oil (Bbls)				Gas (Mcf)				Oil (Bbls)
Current Month Dist			669,000				17,000			$	3.30			$	80.55
Prior Month Dist			664,000				12,000			$	7.08			$	60.04
(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 $137,000, production expense of $1,262,000 and overhead of $912,000 in determining the royalty calculation for the Trust for the current month.

Excess Costs

Mach has advised the Trustee that excess costs increased by $41,000 on properties underlying the Kansas net profits interests. Underlying cumulative excess costs remaining on the Kansas net profits interests total $3,193,000 including accrued interest of $369,000.

Mach has advised the Trustee that $766,000 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 $14,176,000, including accrued interest of $1,227,000.

Mach has advised the Trustee that excess costs increased by $406,000 on properties underlying the Wyoming net profits interests. Underlying cumulative excess costs remaining on the Wyoming net profits interests total $11,582,000, including accrued interest of $1,450,000.

Hugoton Royalty Trust

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, future net profits (if any), recoupment of excess costs, ability to make future filings with the Securities and Exchange Commission and continued listing on 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, 2025.

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 May 2026 cash distribution?

Hugoton Royalty Trust is not paying a May 2026 distribution because all three net profits interests remain in excess cost positions. These excess costs eliminate distributable net profits, leaving insufficient proceeds to pay unitholders and forcing preservation of limited cash for obligations.

What going-concern risks did Hugoton Royalty Trust (HGTXU) disclose?

The Trust disclosed that accumulated excess costs and cash shortages raise substantial doubt about its ability to continue as a going concern. It does not have enough cash to meet obligations over the year after its year-end financial statements, creating heightened risk for unitholder capital recovery.

How large are Hugoton Royalty Trust’s excess costs in Kansas, Oklahoma, and Wyoming?

Cumulative excess costs total $3,193,000 for Kansas, $14,176,000 for Oklahoma, and $11,582,000 for Wyoming, each including accrued interest. These large balances must be recovered from future net profits before distributions can resume, delaying any potential unitholder payments.

What strategic options is Hugoton Royalty Trust (HGTXU) considering?

The Trustee is evaluating alternatives to continuing as a going concern, including possibly terminating the Trust or marketing its net profits interests for sale. Prior outreach to potential buyers produced no interest, and any material sale or termination would require at least 80% approval of all outstanding units.

How do reporting constraints affect Hugoton Royalty Trust unitholders?

Due to cash constraints, the Trust is not engaging a new auditor and cannot continue SEC filings or provide audited financials and third-party reserve reports. This reduces information available to unitholders and potential investors and may pressure the OTCQB listing and unit market price.

What were recent underlying production volumes and prices for Hugoton Royalty Trust?

For the current distribution month, underlying sales attributable to the royalty included 669,000 Mcf of gas at an average price of $3.30 per Mcf and 17,000 barrels of oil at $80.55 per barrel. These volumes were primarily produced in March.

Filing Exhibits & Attachments

1 document

Press Releases

• EX-99.1 EX-99.1 60.8 KB