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Hugoton Royalty Trust Message Board

  • thecandidate2008 thecandidate2008 Jun 20, 2012 1:46 PM Flag

    Wyoming Fields unaffected by lawsuit

    Green River Basin fields in Wyoming were unaffected by the lawsuit, they comprise approx 29% of HGT's gas production. Is this worth holding the next 18 months while we wait for the penalty to be paid off, and collect 29% of the monthly coupon from gas sales?

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    • I think your caveats may apply to some investors but certainly not all nor do I believe they apply to the market as you state since at this point in time HGT has become a speculative vehicle. By definition a vehicle that has no current income, or more correctly in this case, no current income after perhaps two more months, is in fact pure speculation.

    • One point however. The speed with which HGT pays off the settlement is determined by the price of natural gas in the future. The value one ascribes to HGT is determined by cash flow which is discounted to present value. That cash flow is also determined by future natural gas prices. Therefor, both the speed at which the settlement is liquidated and the future value of HGT are highly correlated to each other and to the price of natural gas going forward.

    • collelungo

      Great post, I too concur.

    • I am going to step in here and point out on misstated fact. The distribution has nothing to do with the valuation of HGT as an asset. The suit that was settled has a knopwn value and can be subtracted from the ultimate value you assign to HGT's assets. The distribution may have an effect on the price of the security as certain owners may not want to hold HGT due to cut in cash flow received from HGT.

      Ultimately HGT is worth the NPV of all future cash flows it receives from its portion on the properties it has interests in. Whatever you want to use for the estimated value on NG, life of the properties, proven reserves, etc...is up to you. But the lawsuit had a finite and definitve value. How quickly HGT pays off this settlement is irrelevant to its underlying value.

      What is still unknown is the value that will be subtracted as a result of resolving the other 2 pending suits.

      IMO you are arguing where HGT should trade based on a short term dividend payment adjustment it is truly irrelevant over the long term of valuing HGT and you are "guessing" where the market will clear HGT trades in the short term.

    • Liza

      "Yes, the whole MLP and trust space was up today after being beaten down for months. Disappointment at the outcome of the Euro summit will send them right back down again."
      What ever happen to supply & demand.
      What drove down MLP's was the wheather mild winter.
      What will drive them up the summer heat.
      You call me clueless.

    • $3.30 natural gas pays off the settlement in 6 months! $3.00 natural gas takes 8 months. If it takes two years to settle the other law suits, there is income in the interval. Income, however, is secondary to capital appreciation.

    • Keep your eye on Nat Gas futures. A little more uptick and that 75 cent settlement will go away real fast!

      She must be eating too many sour grapes!

    • rhianni

      I see it.
      She like's to post old and outdate news. I have cross paths with her on other boards like NKA SJT. HGT is up 7.2% today.
      With the hot wheather around the country we should see higher prices in NG and coal.

    • Oh come on.
      She listed the text, and the page, and the document where she got her info from.... and she posted it in this very thread.

    • Perhaps he reveals himself as an individual who has someone else prepare his income taxes!

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HGT
9.83-0.19(-1.90%)Sep 2 4:00 PMEDT

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