Hugoton Royalty Trust Announces No Cash Distribution for September
Hugoton Royalty Trust Declares No Cash Distribution for September
Argent Trust Company, serving as the Trustee for Hugoton Royalty Trust (OTCQB: HGTXU), has officially announced that there will be no cash distribution to unit holders for the month of September. This decision stems from an excess of cost positions affecting all three profit interests the Trust holds. The cash reserve for September has seen a decline, with Trust expenses totaling $42,000 deducted from the reserves.
Understanding the Financial Impacts
The lack of cash distribution is primarily attributed to fluctuations in net profits income. The Trustee has indicated that in upcoming months, as net profits are received, there will be efforts to restore the cash reserve in anticipation of future distributions. This focuses on the potential for increased cash reserves, dependent on the situation assessed by the Trustee.
Sales Volumes and Pricing Insights
In terms of sales activities, the reason for the financial constraints is highlighted by the gas and oil sales volumes for the current month which were largely produced in July. The monthly distribution data reveals that current month distributions for gas totaled 737,000 Mcf, while oil volumes reached 15,000 Bbls. The average price for gas stood at $2.80 per Mcf, and oil prices averaged $75.57 per Bbl during this cycle.
Excess Costs Affecting Profit Margins
Additionally, the Trust has faced increased excess costs. XTO Energy, which advises the Trustee, reported an increase of $26,000 in excess costs associated with properties in Kansas. This brings the cumulative excess costs for the Kansas net profits interests to a staggering $1,420,000. The financial ramifications extend to Oklahoma as well, where XTO highlighted a recovery of $289,000, but the remaining proceeds were not sufficient for distribution this month. The cumulative excess costs for Oklahoma currently total $2,847,000.
Development Initiatives and Future Plans
The Trust's recent developments include the participation in four non-operated wells in an area that shows potential. Approximately $10.2 million in development costs have been attributed to this initiative, with the Trustee and XTO Energy committed to sharing relevant updates regarding their progress.
Looking Forward: The Path Ahead
As the Trust navigates these financial challenges, it remains essential for the Trustee to monitor cash flows closely, adjusting to market conditions and operational performances. The future of cash distributions is tied to net profit recoveries and strategic decreases in excess costs. Awareness of market conditions and proactive management will be crucial as the Trust moves forward.
Frequently Asked Questions
What is the reason for no cash distribution in September?
The Trust cited increased costs on net profits interests and a reduction in cash reserves for the month.
How does the Trust plan to replenish cash reserves?
The Trustee anticipates restoring cash reserves as net profit income is received in future months.
What were the reported sales volumes for the current month?
The Trust reported 737,000 Mcf for gas and 15,000 Bbls for oil in terms of sales volume.
Are there any ongoing development projects?
Yes, the Trust is currently active in the development of four non-operated wells.
What are the cumulative excess costs for Kansas?
The cumulative excess costs for Kansas net profits interests stand at $1,420,000.
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