Hugoton Royalty Trust Declares December Cash Distribution
DALLAS, Dec. 20, 2012
DALLAS, Dec. 20, 2012 /PRNewswire/ --U.S. Trust, Bank of America Private
Wealth Management, as Trustee of the Hugoton Royalty Trust (NYSE – HGT), today
declared a cash distribution to the holders of its units of beneficial
interest of $0.059478 per unit, payable on January 15, 2013, to unitholders of
record on December 31, 2012. The following table shows underlying gas sales
and average prices attributable to the net overriding royalty payments made by
XTO Energy Inc. (XTO Energy) to the Trust for both the current month and prior
month distributions. Underlying gas sales volumes attributable to the current
month distribution were primarily produced in October.
Underlying Gas Sales
Volumes (Mcf) ^(a) Average Gas
Total Daily Price per Mcf
Current Month Distribution 1,732,000 56,000 $3.36
Prior Month Distribution 1,708,000 57,000 $3.02
(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 deducted budgeted development
costs of $500,000, production expense of $1,926,000 and overhead of $967,000
in determining the royalty payment to the Trust for the current month.
Regarding the $37 million settlement reached by XTO Energy on the Fankhouser
v. XTO Energy, Inc. litigation, XTO Energy notified the trustee with the
September 2012 distribution that it charged the trust $28.5 million of the
settlement, of which $23.4 million affected the net proceeds from Oklahoma and
$5.1 million affected the net proceeds from Kansas. Based on recent revenue
and expense levels, XTO Energy has advised the trustee that it expects the
settlement deductions to cause costs to exceed revenues for the next 12 months
on properties underlying the Oklahoma net profits interests and 7 years on
properties underlying the Kansas net profits interests; however, changes in
oil or natural gas prices or expenses could cause the time period to increase
or decrease, correspondingly.
As mentioned in the third quarter Form 10-Q filed on November 5, 2012, the
trustee disagrees with XTO Energy that all or any portion of the settlement
should be deducted from Trust revenues, and the dispute is being arbitrated.
The three member panel of arbitrators (the "Tribunal") has been named and
pleadings have been filed by both parties. The arbitration hearing is
tentatively scheduled for May 13, 2013 in Fort Worth, Texas if not sooner
disposed of by the parties by agreement or by the Tribunal on motion. The
trustee requested that the Tribunal enjoin XTO Energy from continuing to
deduct the Fankhouser settlement amount while the arbitration is pending. A
hearing on the injunction was held on October 27, 2012. The Tribunal ordered
that pending the issuance of a final award or further order of the Tribunal,
XTO Energy should not treat any costs or expenses associated with the
Fankhouser settlement as chargeable against the trust's net profit interest
under the conveyances. The Tribunal denied the trust's request for an interim
order directing XTO Energy to pay the trust the amounts offset against the
trust's September and October 2012 distributions on the basis of the
Fankhouser litigation. Based on this decision, deductions associated with the
Fankhouser settlement were suspended starting in November 2012.
For more information on the Trust, please visit our web site at
Statements made in this press release regarding future events or conditions
are forward looking statements. Actual future results, including development
costs, the outcome of litigation, and future net profits, could differ
materially due to changes in natural gas prices and other economic conditions
affecting the gas 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, 2011.
SOURCE U.S. Trust
Contact: Nancy G. Willis, Vice President, U.S. Trust, Bank of America Private
Wealth Management, Trustee, (Toll Free) 1-877-228-5083
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