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Hugoton Royalty Trust (HGT) is a royalty trust that operates in the United States. The trust was created by XTO Energy Inc. (now a subsidiary of ExxonMobil) to own a net profit interests (NPI) in certain natural gas producing properties located in various states, primarily in Kansas and Texas.
HGT generates revenue through the ownership of these NPIs, which entitle the trust to receive a portion of the proceeds from the sale of natural gas produced from these properties. The amount of revenue the trust receives is dependent on the market price of natural gas and the amount of natural gas produced from the properties.
As a royalty trust, HGT does not have any employees or operations of its own, and its primary objective is to distribute its cash receipts to unitholders in the form of quarterly distributions. The distributions are based on the trust's cash receipts and are determined on a quarterly basis.
In terms of financial performance, HGT's revenue and earnings are closely tied to the market price of natural gas and the production volumes from its underlying properties. In recent years, the trust has experienced declining revenue and distributions due to a sustained low natural gas price environment and a decline in production volumes from its properties.
In 2020, HGT reported revenue of $10.4 million, down from $13.7 million in 2019, reflecting the continued weakness in natural gas prices and lower production volumes. The trust's cash distributions to unitholders were $1.16 per unit, down from $1.53 per unit in the prior year.
In conclusion, Hugoton Royalty Trust is a royalty trust with a focus on owning NPIs in natural gas producing properties. The trust's financial performance is closely tied to the market price of natural gas and the production volumes from its underlying properties. Over the past few years, the trust has experienced a decline in revenue and distributions, reflecting the challenging environment in the natural gas market.
It is important to note that investing in HGT involves significant risks, and potential investors should conduct their own due diligence and consult with a financial professional before making any investment decisions.