XTO must pay $6.1 million to Hugoton Royalty Trust
04/24/2014 4:30 PM
04/24/2014 4:31 PM
Fort Worth-based XTO Energy must pay $6.1 million to the trustee of Hugoton Royalty Trust after an award by an arbitration panel.
According to U.S. Trust, XTO deducted $4.4 million in oil and gas revenue due the Hugoton trust during two months in 2012. XTO made the deductions after a $37 million settlement in a class-action lawsuit brought by royalty owners in the Hugoton Field, located in the Texas and Oklahoma panhandles and Kansas.
U.S. Trust, part of Bank of America, argued that XTO’s plan to charge $28.5 million of the settlement to the trust as a production expense was improper. On Monday, three arbitrators agreed.
The award includes the $4.4 million in improper deductions, interest, and $1.2 million in attorneys’ fees and other expenses. XTO, a subsidiary of Exxon Mobil, said in a statement that it “is working with the trust to comply with the order.”
Royalty trusts distribute earnings from established oil and natural gas properties to investors, called unit holders. Hugoton Royalty Trust was created in 1999 by XTO, then named Cross Timbers Oil Co., and XTO continued to operate the properties.
In 2004, XTO was sued in Oklahoma court by the Hugoton royalty owners, who argued that XTO improperly deducted post-production expenses from their payments. The case was granted class-action status in 2010 and settled in April 2012.
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