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EXHIBIT 99.1
DEVELOPMENT PLANS AND OPERATIONAL OUTLOOK
ANNOUNCED FOR HUGOTON ROYALTY TRUST
DALLAS, TX (Dec. 20, 2000) - The following development plans and operational
outlook for properties underlying the Hugoton Royalty Trust (NYSE-HGT) have been
provided by Cross Timbers Oil Company (NYSE-XTO) to Bank of America, N.A., the
trustee of the Trust. Cross Timbers Oil Company owns the underlying properties
as well as 54% of the Trust units.
DEVELOPMENT PLANS AND OPERATIONAL OUTLOOK
The following estimates for the underlying properties for the fourth quarter
of 2000 and the year 2001 have been prepared based on current expectations for
development expenditures, production, expenses and other parameters. These
statements are forward-looking, as described in the final paragraph of this
release, and actual results may differ materially. These statements do not
reflect the potential impact of unforeseen events that may occur after this
release.
Each month, Cross Timbers collects cash received from the sale of production,
deducts property and production taxes and other cash expenses, development and
production costs and overhead paid during that month and distributes 80% of the
net proceeds to the Trust. The distributions are determined primarily on a cash
basis. As a result, the distributions may vary significantly from month to
month.
Distributions declared by the Trust are typically two months after the month
of production or the time related costs and expenses were incurred. Information
provided below for the underlying properties for fourth quarter 2000 generally
relates to Trust distributions declared for December 2000 through February 2001,
and information provided for the underlying properties for the year 2001
generally relates to Trust distributions declared for March 2001 through
February 2002.
Fourth Quarter 2000
Production
Gas production from the underlying properties of the Trust during the fourth
quarter is expected to average between 100 million cubic feet of gas per day
(Mmcfd) and 103 Mmcfd. Oil production is expected to average about 1,000
barrels of oil per day (Bbls/day).
Development Costs
Cross Timbers increased its development activity during the second half of
2000 and now expects to incur approximately $20 million for development
activities on the underlying properties of the Trust during 2000. As a result,
development costs are expected to be higher in the second half of 2000 than in
the first half.
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Development Plans and Operational Outlook Announced for Hugoton Royalty Trust
Commodity Prices
Contract terms for the primary producing areas of the Trust are described
in its 1999 Form 10-K. Gas attributable to the Trust is sold on a month-to-month
basis at prices based upon the relevant indices in each area. Realized gas
prices for the underlying properties during the fourth quarter are anticipated
to average $0.35 to $0.45 below the NYMEX Henry Hub index. The index prices in
the Rocky Mountain area, where approximately 30% of the Trust's gas is produced,
have recently been highly variable compared to the NYMEX Henry Hub index. As a
result, realized gas prices for any individual month during the quarter may be
more or less than this range. The underlying properties of the Trust should
realize crude oil prices of about $0.50 below the average NYMEX price.
Year 2001
Development Plans
Cross Timbers has budgeted about $23 million for development activities on
the underlying properties of the Trust during 2001. The Company plans to drill
37 (35 net) wells and perform 61 (58 net) workovers and recompletions on the
underlying properties. More than half of the development budget will be spent
in the Anadarko Basin of Oklahoma with the remainder allocated between the Green
River Basin of Wyoming and the Hugoton area of Oklahoma and Kansas. While
development activities will occur throughout 2001, expenditures will not be
uniform and may vary significantly from month-to-month.
Production
Natural gas production during 2001 is expected to average about 102 Mmcfd.
Oil production is expected to average 1,000 Bbls/day during the year.
Commodity Prices
For 2001, realized natural gas prices for the underlying properties are
anticipated to average $0.30 to $0.40 below the NYMEX Henry Hub index. The
realized crude oil prices should be about $0.50 below the average 2001 NYMEX
price.
Expenses
The following table presents the expected 2001 costs and expenses assuming
a $4.50 per Mcf NYMEX gas price and $28.00 per barrel NYMEX oil price:
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Development Plans and Operational Outlook Announced for Hugoton Royalty Trust
Costs and Expenses (in thousands)
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Development costs.................................. $23,000
Taxes, transportation and other (a)................ 16,000
Production expense................................. 15,500
Overhead (b)....................................... 7,600
(a) based upon approximately 9.75% of oil and gas revenue
(b) assumes 5% COPAS adjustment during 2001
Financial Matrix
The following table presents mid-point distribution estimates for 2001
using hypothetical NYMEX natural gas prices, $28 per barrel NYMEX oil price and
the above parameters. Due to the timing of the receipt of revenues and payment
of expenses, these distributions generally correspond to the twelve-month period
beginning March 2001. The distributions are determined on a cash basis and may
vary significantly from month to month. Comparison of actual distributions to
estimates should be made for the annual period presented.
Gas Prices Annual Distribution
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$3.50 $1.37
4.50 2.05
5.50 2.72
6.50 3.40
Contact: Ron E. Hooper Louis G. Baldwin
Senior Vice President Executive Vice President and Chief
Bank of America, N.A. Financial Officer
(Toll Free) (877) 228-5083 Cross Timbers Oil Company
(817) 870-2800
Statements made in this press release, including those relating to future
production, prices, pricing differentials, production, development and other
costs and expenses, development activities, and expected distributions are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based on assumptions and estimates that Cross Timbers management
believes are reasonable based on currently available information; however, Cross
Timbers management's assumptions and the Trust's future performance are both
subject to a wide range of business risks and uncertainties and there is no
assurance that these goals and projections can or will be met. Any number of
factors could cause actual results to differ materially from those in the
forward-looking statements, including, but not limited to, the timing and extent
of changes in oil and gas prices, changes in underlying demand for oil and gas,
the timing and results of development activity, the availability of drilling
equipment, higher than expected costs and the timing of cash receipts and
disbursements and changes in the ownership and/or the operator of the underlying
properties. The Trust and Cross Timbers Oil Company undertake no obligation to
publicly update or revise any forward-looking statements. Further information
on risks and uncertainties is available in the Trust's and Cross Timbers Oil
Company's filings with the Securities and Exchange Commission, which are
incorporated by this reference as though fully set forth herein.
