Hugoton Royalty Trust Files Q2 2024 10-Q

TL;DR

Hugoton Royalty Trust filed its Q2 10-Q. Financials are in.

AI Summary

Hugoton Royalty Trust filed its 10-Q for the quarterly period ended June 30, 2024. The filing details its financial performance and operational status. The trust is incorporated in Texas and its principal executive offices are located in Dallas, Texas.

Why It Matters

This filing provides investors with an update on Hugoton Royalty Trust's financial health and operational performance for the second quarter of 2024.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial information.

Key Numbers

• 0000862022 — Central Index Key (Unique identifier for the filer)
• 58-6379215 — IRS Number (Employer Identification Number)

Key Players & Entities

• HUGOTON ROYALTY TRUST (company) — Registrant
• June 30, 2024 (date) — Quarterly period end date
• 20240813 (date) — Filing date
• Argent Trust Company (company) — Corporate Trustee
• Dallas, Texas (location) — Business and Mail Address

FAQ

Key Financial Figures

• $500,000 — hed by one-time advance distribution of $500,000 from XTO Energy that was part of the Se
• $247,066,951 — g value of the net profits interests of $247,066,951 represents XTO Energy’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
• $7,300 — ent of its monthly fee of approximately $7,300 since April 2024. As previously discl
• $24.3 million — Trustee that it believes approximately $24.3 million in additional production costs should b
• $18,105,467 — nefit of XTO Energy is stipulated to be $18,105,467 (net to the Trust); • that the
• $17,275,086 — enefit of the Trust is stipulated to be $17,275,086 (net to the Trust); 10 Table of Con
• $830,381 — alance, to the benefit of XTO Energy of $830,381 (net to the Trust), which balance shall
• $250,000 — does not leave the Trust with less than $250,000 of available cash. The Trustee used t
• $264,416 — ended June 30, 2024, excess costs were $264,416 ($211,533 net to the Trust) on properti
• $211,533 — e 30, 2024, excess costs were $264,416 ($211,533 net to the Trust) on properties underly
• $968,719 — ended June 30, 2024, excess costs were $968,719 ($774,975 net to the Trust) on properti

Filing Documents

• hgt_10-q_2406.htm (10-Q) — 545KB
• hgtxu-ex31.htm (EX-31) — 15KB
• hgtxu-ex32.htm (EX-32) — 11KB
• 0000950170-24-096265.txt ( ) — 572KB

‑ FINANCIAL INFORMATION

PART I ‑ FINANCIAL INFORMATION 4 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Condensed Statements of Assets, Liabilities and Trust Corpus at June 30, 2024 and December 31, 2023 5 Condensed Statements of Distributable Income for the Three and Six Months Ended June 30, 2024 and 2023 6 Condensed Statements of Changes in Trust Corpus for the Three and Six Months Ended June 30, 2024 and 2023 7 Notes to Condensed Financial Statements 8 Item 2. Trustee’s Discussion and Analysis 13 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 18 Item 4.

Controls and Procedures

Controls and Procedures 18

- OTHER INFORMATION

PART II - OTHER INFORMATION 19 Item 1.

Legal Proceedings

Legal Proceedings 19 Item 1A.

Risk Factors

Risk Factors 20 Item 5. Other Information 20 Item 6. Exhibits 20

Signatures

Signatures 21 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. “Net profits income” is referred to as “royalty income” 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’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

‑ FINA NCIAL INFORMATION

PART I ‑ 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’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 June 30, 2024, and the distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 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) June 30, December 31, 2024 2023 ASSETS Cash and short-term investments $ 508,412 $ 344,048 Net profits interests in oil and gas properties - net (Note 1) — — $ 508,412 $ 344,048 LIABILITIES AND TRUST CORPUS Distribution payable to unitholders $ — $ — Expense reserve (a) (b) 508,412 344,048 Trust corpus (40,000,000 units of beneficial interest authorized and outstanding) — — $ 508,412 $ 344,048 (a) The expense reserve allows the Trustee to pay its obligations should it be unable to pay them out of the net profits income. (b

Trustee’s Discussion and Analysis

Item 2. Trustee’s Discussion and Analysis The following discussion should be read in conjunction with the Trustee’s discussion and analysis contained in the Trust’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’s Annual Report on Form 10-K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8-K and all amendments to those reports are available on the Trust’s website at www.hgt-hugoton.com . Distributable Income Quarter For the quarter ended June 30, 2024, net profits income was $0 compared to $1,008,161 for second quarter 2023. This was primarily the result of lower gas prices ($3.2 million) and decreased gas production ($0.8 million), partially offset by net excess costs activity ($1.8 million), decreased taxes, transportation and other costs ($0.7 million), increased oil production ($0.2 million), higher oil prices ($0.1 million), decreased development costs ($0.1 million), and decreased production expenses ($0.1 million). See “Net Profits Income” below. After adding interest income of $1,832, deducting administration expense of $113,723, and utilizing $111,891 of the cash reserve for the payment of Trust expenses, distributable income for the quarter ended June 30, 2024, was $0 or $0.000000 per unit of beneficial interest. Administration expense for the quarter decreased $782 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 second quarter 2023, distributable income was $920,760 or $0.023019 per unit. Distributions to unitholders for the quarter ended June 30, 2024, were: Record Date Payment Date Distribution per Unit April 30, 2024 May 14, 2024 $ 0.000000 M

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