Hugoton Royalty Trust Announces No Cash Distribution for December

Hugoton Royalty Trust's Distribution Update

Recently, Argent Trust Company, acting as the Trustee of Hugoton Royalty Trust (OTCQB: HGTXU), informed shareholders that there will be no cash distribution for the month of December. This decision stems from the Trust's prevailing excess cost positions regarding its net profits interests across all its conveyances. By reducing its cash reserves to cover Trust expenses, which totaled $15,000, the Trust is currently unable to pay out any distributions to its unitholders.

Understanding Trust's Financial Position

The situation surrounding the Trust's cash reserves indicates that while there may be potential for net profits to be received in subsequent months, the Trustee plans to first replenish these reserves before any future distributions are made. This replenishment might result from an increase in total cash reserves as determined by the Trustee, and the Trust looks forward to stabilizing its financial position in the coming periods.

Analysis of Gas and Oil Sales Data

In analyzing the Trust’s comprehensive financial performance, a detailed study of gas and oil sales is crucial. Sales volumes for the current month primarily reflect production data from October. Analyzing these volumes helps provide insight into overall Trust performance and anticipated future distributions. Underlying sales volumes indicate resource production and pricing trends that might affect profitability.

Gas and Oil Volumes

For the current month, gas production was significant, achieving approximately 791,000 Mcf, while oil production reached around 18,000 Bbls. The average selling prices were reported at $2.67 per Mcf for gas and $69.27 per Bbl for oil. In comparing these figures to the previous month, prior distributions for gas were at 648,000 Mcf and oil at 12,000 Bbls, with corresponding prices of $2.68 per Mcf and $67.67 per Bbl.

Excess Costs Impacting Financial Results

One of the challenges faced by Hugoton Royalty Trust is the ongoing issue of excess costs. Recently, XTO Energy, responsible for managing several Trust interests, reported a substantial rise in excess costs valued at $128,000 for properties governed by Kansas's net profits interests. Overall, cumulative excess costs have surged to $1,377,000, including accrued interest.

Cost Recoveries and Their Effects

Despite challenges, XTO Energy provided updates on cost recoveries. For Oklahoma properties, about $329,000 has been recovered; however, the remaining net profits interests faced no further proceeds to include in this month's distribution. The cumulative excess costs for Oklahoma currently sit at $1,477,000. Additionally, Wyoming properties have demonstrated escalating excess costs as well, now totaling $7,799,000.

Future Developments and Updates

Looking ahead, it's crucial to note that XTO Energy has indicated a commitment to developing four new non-operated wells, which presents both opportunities and challenges for the Trust. The total disclosed development costs approach $10.4 million, significantly affecting Trust reserves. Completion timelines for these projects span several quarters.

Management has pledged to keep unitholders informed on updates regarding these wells and any changes in financial standings. Ensuring consistent communication is key to maintaining confidence and transparency with investors.

Conclusion and Investor Information

As this scenario unfolds, investors should remain vigilant regarding the financial operations of Hugoton Royalty Trust. While the current lack of distribution might be disappointing, the focus remains on financial recovery and future profit maximization. More information concerning the Trust, including annual tax data, distribution specifics, and other updates, can always be found on their website.

Frequently Asked Questions

Why is there no cash distribution for December?

The Hugoton Royalty Trust has indicated that due to excess cost positions, they are unable to provide cash distributions for December.

What are the expected future distributions?

Future distributions will be dependent on replenishing the Trust's cash reserves, which is closely tied to the income received from net profits in future months.

What is the Trust's response to the current financial status?

The Trustee plans to stabilize cash reserves and communicate future updates related to the financial performance and distribution strategies.

How do excess costs affect the Trust?

Excess costs can significantly impact profitability, reducing the available cash for distributions to unitholders. Keeping track of these costs is essential for financial health.

Where can I find more information on Hugoton Royalty Trust?

Further information, including tax information and historical data, can be accessed on the Trust's official website.

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