Hugoton Royalty Trust Files Quarterly Report on Form 10-Q

TL;DR

<b>Hugoton Royalty Trust submitted its quarterly report (10-Q) for the period ending March 31, 2024, detailing its financial status and operations.</b>

AI Summary

HUGOTON ROYALTY TRUST (HGTXU) filed a Quarterly Report (10-Q) with the SEC on May 14, 2024. Hugoton Royalty Trust filed a Form 10-Q for the quarterly period ended March 31, 2024. The trust is registered under the Securities Exchange Act of 1934. Units of Beneficial Interest are traded under the symbol HGTXU on the OTCQB exchange. The filing indicates the registrant is a smaller reporting company and not a shell company. The principal executive offices are located in Dallas, Texas.

Why It Matters

For investors and stakeholders tracking HUGOTON ROYALTY TRUST, this filing contains several important signals. This filing provides investors with an update on the trust's financial performance and operational status for the first quarter of 2024. As a smaller reporting company, this 10-Q offers key insights into the trust's financial health and market position.

Risk Assessment

Risk Level: low — HUGOTON ROYALTY TRUST shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain immediate material changes or significant new risks beyond typical operational disclosures.

Analyst Insight

Review the detailed financial statements and operational updates within the 10-Q to assess the trust's performance and outlook.

Key Numbers

• 2024-03-31 — Quarterly Period End Date (Reported period)
• 10-Q — Form Type (Type of filing)
• OTCQB — Exchange (Where HGTXU is traded)

Key Players & Entities

• HUGOTON ROYALTY TRUST (company) — Registrant name
• March 31, 2024 (date) — Quarterly period ended
• 0000862022 (company) — Central Index Key
• 6792 (industry) — Standard Industrial Classification
• TX (location) — State of incorporation
• 586379215 (company) — IRS Number
• ARGENT TRUST COMPANY (company) — Corporate Trustee
• HGTXU (stock_symbol) — Trading Symbol

FAQ

Risk Factors

• Reporting Requirements [low — regulatory]: The registrant must file all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934.

Key Dates

• 2024-03-31: Quarterly Period End — End date for the financial reporting period covered by the 10-Q.
• 2024-05-14: Filing Date — Date the 10-Q was officially submitted to the SEC.

Glossary

Form 10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC) that provides a continuing disclosure of financial information. (This filing provides the latest financial and operational data for Hugoton Royalty Trust.)

Units of Beneficial Interest

Represents ownership in a trust, similar to shares of stock in a corporation. (These are the securities traded by investors in Hugoton Royalty Trust.)

Smaller Reporting Company

A classification for public companies that meet certain revenue and public float thresholds, allowing for scaled disclosure requirements. (Indicates Hugoton Royalty Trust has less stringent reporting obligations compared to larger filers.)

Key Financial Figures

• $247,066,951 — g value of the net profits interests of $247,066,951 represents XTO Energy&#x2019;s historic
• $28,801,000 — s was written down to its fair value of $28,801,000, resulting in an impairment of $57,306,
• $57,306,527 — ,801,000, resulting in an impairment of $57,306,527 charged directly to trust corpus. Durin
• $15,681,533 — of zero, resulting in an impairment of $15,681,533 charged directly to trust corpus. Amort
• $174,078,891 — st corpus. Accumulated amortization was $174,078,891 as of September 30, 2019, when the net
• $14.6 million — nergy has estimated to be approximately $14.6 million net to the Trust. This adjustment would
• $24.3 million — Trustee that it believes approximately $24.3 million in additional production costs should b
• $80 million — its decision has ruled that out of the $80 million settlement, the &#x201c;Trust is obliga
• $48 million — y its share under the Conveyance of the $48 million that was received by the plaintiffs in
• $32 million — the Conveyance to pay any share of the $32 million received by the lawyers for the plainti
• $492,120 — ended March 31, 2024, excess costs were $492,120 ($393,697 net to the Trust) on properti
• $393,697 — h 31, 2024, excess costs were $492,120 ($393,697 net to the Trust) on properties underly
• $528,804 — 24, net recoveries of excess costs were $528,804 ($423,043 net to the Trust) on properti
• $423,043 — coveries of excess costs were $528,804 ($423,043 net to the Trust) on properties underly
• $376,393 — ended March 31, 2024, excess costs were $376,393 ($301,114 net to the Trust) on properti

Filing Documents

• hgt_10-q_2403.htm (10-Q) — 426KB
• hgtxu-ex31.htm (EX-31) — 14KB
• hgtxu-ex32.htm (EX-32) — 11KB
• 0000950170-24-059608.txt (&nbsp;) — 452KB

&#x2011; FINANCIAL INFORMATION

PART I &#x2011; FINANCIAL INFORMATION 4 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Condensed Statements of Assets, Liabilities and Trust Corpus at March 31, 2024 and December 31, 2023 5 Condensed Statements of Distributable Income for the Three Months Ended March 31, 2024 and 2023 6 Condensed Statements of Changes in Trust Corpus for the Three Months Ended March 31, 2024 and 2023 7 Notes to Condensed Financial Statements 8 Item 2. Trustee&#x2019;s Discussion and Analysis 12 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 16 Item 4.

Controls and Procedures

Controls and Procedures 16

- OTHER INFORMATION

PART II - OTHER INFORMATION 17 Item 1.

Legal Proceedings

Legal Proceedings 17 Item 1A.

Risk Factors

Risk Factors 17 Item 5. Other Information 18 Item 6. Exhibits 18

Signatures

Signatures 19 Table of Contents HUGOTON ROYALTY TRUST GLOSSA RY OF TERMS The following are definitions of significant terms used in this Form 10-Q: Bbl Barrel (of oil) Mcf Thousand cubic feet (of natural gas) MMBtu One million British Thermal Units, a common energy measurement net proceeds Gross proceeds received by XTO Energy from sale of production from the underlying properties, less applicable costs, as defined in the net profits interest conveyances. net profits income Net proceeds multiplied by the net profits percentage of 80%, which is paid to the Trust by XTO Energy. &#x201c;Net profits income&#x201d; is referred to as &#x201c;royalty income&#x201d; for income tax purposes. net profits interest An interest in an oil and gas property measured by net profits from the sale of production, rather than a specific portion of production. The following defined net profits interests were conveyed to the Trust from the underlying properties: 80% net profits interests - interests that entitle the Trust to receive 80% of the net proceeds from the underlying properties. underlying properties XTO Energy&#x2019;s interest in certain oil and gas properties from which the net profits interests were conveyed. The underlying properties include working interests in predominantly gas-producing properties located in Kansas, Oklahoma and Wyoming. working interest An operating interest in an oil and gas property that provides the owner a specified share of production that is subject to all production expense and development costs. 3 Table of Contents HUGOTON ROYALTY TRUST

&#x2011; FINA NCIAL INFORMATION

PART I &#x2011; FINA NCIAL INFORMATION

Financial Sta tements

Item 1. Financial Sta tements The condensed financial statements included herein are presented, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Unless specified otherwise, all amounts included herein are presented in U.S. dollars. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations, although the Trustee believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Trust&#x2019;s latest Annual Report on Form 10-K. In the opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the assets, liabilities and trust corpus of the Hugoton Royalty Trust at March 31, 2024, and the distributable income and changes in trust corpus for the three-month periods ended March 31, 2024 and 2023, have been included. Distributable income for such interim periods is not necessarily indicative of the distributable income for the full year. 4 Table of Contents HUGOTON ROYALTY TRUST Condensed Statement s of Assets, Liabilities and Trust Corpus (Unaudited) March 31, December 31, 2024 2023 ASSETS Cash and short-term investments $ 120,303 $ 344,048 Interest to be received &#x2014; &#x2014; Net profits interests in oil and gas properties - net (Note 1) $ &#x2014; $ &#x2014; $ 120,303 $ 344,048 LIABILITIES AND TRUST CORPUS Distribution payable to unitholders $ &#x2014; $ &#x2014; Expense reserve (a) 120,303 344,048 Trust corpus (40,000,000 units of beneficial interest authorized and outstanding) &#x2014; &#x2014; $ 120,303 $ 344,048 (a) The expense reserve allows the Trustee to pay its obligations should it be unable to pay

Trustee&#x2019;s Discussion and Analysis

Item 2. Trustee&#x2019;s Discussion and Analysis The following discussion should be read in conjunction with the Trustee&#x2019;s discussion and analysis contained in the Trust&#x2019;s 2023 Annual Report on Form 10-K, as well as the condensed financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The Trust&#x2019;s Annual Report on Form 10-K, Quarterly Reports on Form 10&#x2011;Q, Current Reports on Form 8-K and all amendments to those reports are available on the Trust&#x2019;s website at www.hgt-hugoton.com . Distributable Income For the quarter ended March 31, 2024, net profits income was $0 compared to $10,459,753 for first quarter 2023. This was primarily the result of lower gas and oil prices ($12.7 million), decreased gas production ($0.8 million), increased production expenses ($0.6 million), and increased overhead ($0.2 million), partially offset by decreased taxes, transportation and other costs ($2.0 million), decreased development costs ($0.9 million), increased oil production ($0.6 million), and net excess costs activity ($0.3 million). See &#x201c;Net Profits Income&#x201d; below. After adding interest income of $4,678, deducting administration expense of $228,423, and utilizing $223,745 of the cash reserve for the payment of Trust expenses, distributable income for the quarter ended March 31, 2024, was $0 or $0.000000 per unit of beneficial interest. Administration expense for the quarter decreased $73,114 compared to the prior year quarter, primarily related to the timing of receipt and payment of Trust expenses and terms of professional services. Changes in interest income are attributable to fluctuations in net profits income, cash reserve and interest rates. For first quarter 2023, distributable income was $10,175,760 or $0.254394 per unit. Distributions to unitholders for the quarter ended March 31, 2024, were: Record Date Payment Date Distribution per Unit January 31, 2024 February 14, 2024

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