Hugoton Royalty Trust Declares October Cash Distribution

           Hugoton Royalty Trust Declares October Cash Distribution

PR Newswire

DALLAS, Oct. 21, 2013

DALLAS, Oct. 21, 2013 /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 $0.068593 per unit, payable on November 15, 2013, to unitholders
of record on October 31, 2013. 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 August.

                            Underlying Gas Sales
                            Volumes (Mcf) ^(a)    Average Gas
                            Total        Daily    Price per Mcf
Current Month Distribution  1,591,000    51,000   $4.15
Prior Month Distribution    1,594,000    51,000   $4.06

            Sales volumes are recorded in the month the trust receives the
(a) related net profits income. Because of this, sales volumes may
            fluctuate from month to month based on the timing of cash

XTO Energy has advised the trustee that it has deducted budgeted development
costs of $600,000, production expense of $1,677,000 and overhead of $1,017,000
in determining the royalty payment to the Trust for the current month.

Arbitration Proceedings – XTO Energy

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, if deemed allowed by the arbitrators, to cause costs to
exceed revenues for approximately 12 months on properties underlying the
Oklahoma net profits interests and approximately 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 second quarter Form 10-Q filed
on August 6, 2013, 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 to begin November 12, 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

Arbitration Proceedings - Goebel

On August 12, 2013, a demand for arbitration styled Sandra G. Goebel vs. XTO
Energy, Inc., Timberland Gathering & Processing Company, Inc. and Bank of
America, N.A. was filed with the American Arbitration Association. The
claimant, Sandra Goebel, is a unitholder in the trust and alleges that XTO
Energy breached the conveyances by misappropriating funds from the trust by
failing to modify its existing sales contracts with its affiliate Timberland
Gathering & Processing Company, Inc. ("Timberland"). Goebel alleges that these
contracts do not currently reflect 'market rate' terms, and that XTO had a
duty to renegotiate the contracts to obtain more favorable terms. The claimant
further alleges that Bank of America breached its fiduciary duty by
acquiescing and facilitating XTO Energy's alleged self-dealing and concealing
information from unitholders that would have revealed XTO Energy's breaches.
The claim also alleges aiding and abetting breach of fiduciary duty by XTO
Energy, and disgorgement and unjust enrichment by Timberland. The claimant
seeks from the respondents damages of an estimated $59.6 million for alleged
royalty underpayments, exemplary damages, an accounting by XTO Energy, a
declaration, costs, reasonable attorneys' fees, and prejudgment and
postjudgment interest. The trustee filed a response to the arbitration demand
denying the claimant's allegations. The terms of the Trust indenture provide
that Bank of America shall be indemnified by the trust and shall have no
liability, other than for fraud, gross negligence or acts or omissions in bad
faith as adjudicated by final nonappealable judgment of a court of competent

Harold Lamb v. Bank of America and XTO Energy Inc.

On September 12, 2012, a lawsuit was filed against Bank of America as trustee
and XTO Energy styled Harold Lamb v. Bank of America and XTO Energy Inc., in
the U.S. District Court - Western District of Oklahoma. The plaintiff, Harold
Lamb, is a unitholder in the trust and alleges that XTO Energy failed to
properly pay and account to the trust under the terms of the net overriding
royalty conveyance on certain Kansas and Oklahoma properties and that Bank of
America, as trustee, failed to properly oversee such payment and accounting by
XTO Energy. Additionally, the plaintiff alleges that Bank of America and XTO
Energy have breached a fiduciary duty to the trust based on the allegations
found in the Fankhouser class action discussed above. The plaintiffs are
seeking unspecified amounts for actual/compensatory damages, punitive damages,
disgorgement and injunctive relief. Subsequently, the plaintiff dismissed
Bank of America from the lawsuit. The court granted XTO Energy's motion to
transfer venue and has transferred the case to the U.S. District Court for the
Northern District of Texas. The Court granted XTO's motion to dismiss and
dismissed the case citing the plaintiff's failure to make a sufficient
pre-suit demand on the trustee. Subsequent to the dismissal, attorneys for Mr.
Lamb sent a letter to the trustee demanding that the trustee initiate
proceedings against XTO Energy.

As previously disclosed, the trustee reserved a total of $900,000 from trust
distributions to help fund potential legal and other expenses relating to the
XTO Energy arbitration. As of September 2013, the reserve had been fully
depleted in connection with such expenses. Any additional expenses relating to
this arbitration will be deducted as administrative expense when incurred.
Additionally, the trustee anticipates that the trust will incur additional
legal and other expenses in connection with the Goebel arbitration. As a
result, the trustee intends to reserve an additional $1.6 million from trust
distributions, which it currently anticipates taking over a period of four
months. The current month's distribution reflects a deduction of $400,000 in
connection with such reserve.

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, 2012.


Contact: Nancy G. Willis, Vice President, U.S. Trust, Bank of America Private
Wealth Management, Trustee, (Toll Free), 877-228-5083
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