Hugoton Royalty Trust (OTCPK: HGTXU) announced on September 18, 2026, that it will not declare a cash distribution for September 2026. The Trustee, Argent Trust Company, cited excess cost positions on all three of the Trust's conveyances of net profits interests as the reason for the skipped payment.
The Trustee reported that the Trust's cash reserve decreased by $4,000 to cover Trust expenses. The Trustee anticipates replenishing the cash reserve with future net profits income, but stated that based on current excess costs, distributions are not expected in the near term.
According to the filing, accumulated excess costs on the Kansas, Oklahoma, and Wyoming conveyances have resulted in insufficient net proceeds since July 2023. The Trustee noted that these conditions raise substantial doubt about the Trust's ability to continue as a going concern. The Trustee has curtailed spending, including deferring the Trustee fee since April 2024, but stated that financing is unlikely to be a viable option.
The Trustee is reviewing alternatives to continuing as a going concern, which may include seeking to terminate the Trust or marketing the Trust's assets. The Trustee has reached out to potential third parties regarding interest in the Trust's assets, but no interest resulted from those discussions. Any material sale of assets or termination of the Trust requires unitholder approval by at least 80 percent of all outstanding units.
The Trust also provided an update on its SEC filings. On August 14, 2026, the Trust filed a Form 12b-25 stating it would be unable to file its quarterly report on Form 10-Q for the quarter ended June 30, 2026, due to cash constraints. As a result, the Trust units were removed from the OTCQB and are now trading on the Expert Market on an unsolicited quotes only basis.
The Trustee noted that the Trust is not able to continue making SEC filings or providing audited financial statements, which may limit information available to unitholders and investors.
Financial data for the month of September indicates underlying gas sales of 670,000 Mcf and oil sales of 14,000 Bbls at an average price of $2.92 per Mcf and $87.91 per Bbl, respectively. For the prior month, sales were 693,000 Mcf of gas and 13,000 Bbls of oil at an average price of $2.80 per Mcf and $100.73 per Bbl.
Development costs for the current month totaled $172,000, production expenses were $1,769,000, and overhead was $911,000. The Trustee reported that excess costs increased by $100,000 on Kansas properties, $9,000 on Oklahoma properties, and $504,000 on Wyoming properties.
Cumulative excess costs remaining on the Kansas net profits interests total $3,408,000, including accrued interest of $424,000. For Oklahoma, cumulative excess costs total $15,154,000, including accrued interest of $1,473,000. For Wyoming, cumulative excess costs total $13,312,000, including accrued interest of $1,658,000.
