#USA #Dallas #cash distribution #Hugoton Trust #Net Profits Interest

Overview of Hugoton Royalty Trust's Financial State

The Hugoton Royalty Trust, under the management of Argent Trust Company, has recently made an announcement that has significant implications for its unitholders. The Trust has declared that there will be no cash distribution for the month of December 2024. This decision stems from the prevailing conditions that have resulted in increased costs across the Trust’s conveyances of net profits interests.

Reason Behind No Distribution

The announcement highlights the excess cost positions that the Trust has faced, with a notable reduction of $15,000 from its cash reserve, which is designated for covering Trust-related expenses. The Trustee has expressed optimism about future distributions, depending on net profits income in the upcoming months. The expectation is to potentially replenish the cash reserve, ensuring that unitholders can receive distributions once financial conditions improve.

This latest declaration follows similar announcements in previous months, reflecting ongoing challenges within the energy sector, particularly related to gas and oil prices. These factors are important considerations as they directly impact the Trust’s operational viability and overall financial health.

A Closer Look at Sales Volumes

The Trust's latest distribution figures provide insight into its current operational state:

• - Gas Sales: 791,000 Mcf
• - Oil Sales: 18,000 Bbls
• - Average Prices: $2.67 per Mcf for gas and $69.27 per Bbl for oil.

In contrast, previous month figures showed sales of 648,000 Mcf and 12,000 Bbls, indicating a notable increase in gas and oil production. However, such increases in sales volumes have not translated into recognizable cash flow due to the existing excess costs that exceed revenue from the sales.

Insights on Excess Costs

The excess costs reported by the Trust include a significant increase of $128,000 relating to the Kansas net profits interests. Cumulatively, this has resulted in excess costs reaching $1,377,000 for Kansas alone, a factor that heavily impacts the Trust’s distribution capability.

Furthermore, the situation is exacerbated for Oklahoma and Wyoming net profits, where additional excess costs of $1,477,000 and $7,799,000, respectively, are being reported. These figures include accrued interest values that cannot be overlooked for effective financial management moving forward.

Development Costs and Future Prospects

The Trust also faces concerns tied to development costs, particularly in Major County, Oklahoma. As of now, $10.4 million in development costs is recorded for four non-operated wells, with a share of approximately $8.3 million falling under the Trust’s responsibilities. Out of these wells, two have been completed already, with ongoing assessments from XTO Energy regarding their operational performance.

The upcoming months are crucial for the Trust as they address financial setbacks while looking towards profitability. The Trustee remains committed to keeping stakeholders informed on developments related to the four non-operated wells and other matters of interest to unitholders.

Conclusion

In light of the Trust’s declaration of no cash distribution for December, unitholders are left with a mix of concern and caution. While the statement from Argent Trust Company conveys that they are actively managing the situation, future distributions are heavily dependent on the fluctuations in the energy market and how effectively the Trust can manage its excess costs. Stakeholders are encouraged to stay informed via the Trust's official communication channels to understand better the evolving situation.

For updated information on the Hugoton Royalty Trust, readers can visit www.hgt-hugoton.com.