Hugoton Royalty Trust (OTCMKTS:HGTXU) is an oil and gas royalty trust established in 1989 to hold net profits interests in producing hydrocarbons from the historic Hugoton Gas Field. Organized as an unincorporated, perpetual trust, it provides investors with a direct interest in royalty revenues generated by a diversified portfolio of wells, without the operational risks or expenses typically associated with exploration and production companies.
The trust’s assets consist of non-operated royalty and overriding royalty interests in thousands of oil and gas wells across southwestern Kansas, the Oklahoma Panhandle and adjacent areas of Texas and New Mexico. Production is derived primarily from the Hugoton, Panoma and Keyes fields, with hydrocarbons sold under prevailing market prices. Daily operations and well servicing are conducted by third-party operators, while the trust itself holds only the revenue rights.
Revenue is collected on a net profits basis, with the trust entitled to a fixed percentage of gross proceeds less defined operating costs. Monthly distributions are made to unitholders, reflecting the sale of oil, natural gas and associated liquids. As reserves decline over time, the size of distributions can vary with production levels, commodity prices and changes in operating expenses.
Hugoton Royalty Trust is administered by an independent corporate trustee under the terms of a master trust indenture. The trustee oversees the collection and distribution of royalty revenue, maintains trust accounting and ensures compliance with regulatory requirements. With no employees of its own, the trust offers a streamlined structure for investors seeking exposure to long-life royalty cash flows from one of North America’s most prolific natural gas basins.
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