Development . Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures. for HUGOTON ROYALTY TRUST (HGT)

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Hugoton Royalty Trust (HGT)

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HGT » Topics » Development . Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

These excerpts taken from the HGT 10-K filed Feb 25, 2009.

Development. Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

Overhead. Overhead increased 10% from fourth quarter 2007 to 2008 primarily because of the annual rate adjustment based on an oil and gas industry index.

TABLE OF CONTENTS

Excess Costs. Costs exceeded revenues by $970,780 ($776,624 net to the trust) on properties underlying the Wyoming net profits interests in November 2008. Scheduled pipeline maintenance and limited regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Years Ended December 31, 2008, 2007 and 2006 — Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interests, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy has advised the trustee that the onset of winter demand and the completion of scheduled pipeline maintenance led to a partial rebound of Rocky Mountain gas prices, resulting in the full recovery of excess costs plus accrued interest of $3,192 ($2,554 net to the trust) in December 2008.

Costs exceeded revenues by $853,468 ($682,774 net to the trust) on properties underlying the Wyoming net profits interests in November and December 2007. Limited pipeline capacity and moderate regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interest, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy advised the trustee that with the onset of winter demand and the completion of the first phase of a major pipeline expansion in January 2008, Rocky Mountain gas prices increased and the excess costs, plus accrued interest of $10,090 ($8,072 net to the trust), was fully recovered by February 2008.

For further information about costs, see “Years Ended December 31, 2008, 2007 and 2006 — Costs” above.

See Item 7 of the accompanying Form 10-K for disclosures regarding liquidity and capital resources, off-balance sheet arrangements, contractual obligations and commitments, related party transactions and critical accounting policies of the trust. See Item 7A of the accompanying Form 10-K for quantitative and qualitative disclosures about market risk affecting the trust.

TABLE OF CONTENTS

Development. Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

Overhead. Overhead increased 10% from fourth quarter 2007 to 2008 primarily because of the annual rate adjustment based on an oil and gas industry index.

TABLE OF CONTENTS

For further information about costs, see “Years Ended December 31, 2008, 2007 and 2006 — Costs” above.

TABLE OF CONTENTS

Development. Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

Overhead. Overhead increased 10% from fourth quarter 2007 to 2008 primarily because of the annual rate adjustment based on an oil and gas industry index.

TABLE OF CONTENTS

Excess Costs. Costs exceeded revenues by $970,780 ($776,624 net to the trust) on properties underlying the Wyoming net profits interests in November 2008. Scheduled pipeline maintenance and limited regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Years Ended December 31, 2008, 2007 and 2006 — Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interests, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy has advised the trustee that the onset of
winter demand and the completion of scheduled pipeline maintenance led to a partial rebound of Rocky Mountain gas prices, resulting in the full recovery of excess costs plus accrued interest of $3,192 ($2,554 net to the trust) in December 2008.

Costs exceeded revenues by $853,468 ($682,774 net to the trust) on properties underlying the Wyoming net profits interests in November and December 2007. Limited pipeline capacity and moderate regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interest, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy advised the trustee that with the onset of winter demand and the completion of the first phase of a major pipeline expansion in
January 2008, Rocky Mountain gas prices increased and the excess costs, plus accrued interest of $10,090 ($8,072 net to the trust), was fully recovered by February 2008.

For further information about costs, see “Years Ended December 31, 2008, 2007 and 2006 — Costs” above.

TABLE OF CONTENTS

Development. Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

Overhead. Overhead increased 10% from fourth quarter 2007 to 2008 primarily because of the annual rate adjustment based on an oil and gas industry index.

TABLE OF CONTENTS

Excess Costs. Costs exceeded revenues by $970,780 ($776,624 net to the trust) on properties underlying the Wyoming net profits interests in November 2008. Scheduled pipeline maintenance and limited regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Years Ended December 31, 2008, 2007 and 2006 — Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interests, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy has advised the trustee that the onset of
winter demand and the completion of scheduled pipeline maintenance led to a partial rebound of Rocky Mountain gas prices, resulting in the full recovery of excess costs plus accrued interest of $3,192 ($2,554 net to the trust) in December 2008.

Costs exceeded revenues by $853,468 ($682,774 net to the trust) on properties underlying the Wyoming net profits interests in November and December 2007. Limited pipeline capacity and moderate regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interest, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy advised the trustee that with the onset of winter demand and the completion of the first phase of a major pipeline expansion in
January 2008, Rocky Mountain gas prices increased and the excess costs, plus accrued interest of $10,090 ($8,072 net to the trust), was fully recovered by February 2008.

For further information about costs, see “Years Ended December 31, 2008, 2007 and 2006 — Costs” above.

TABLE OF CONTENTS

Development. Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

Overhead. Overhead increased 10% from fourth quarter 2007 to 2008 primarily because of the annual rate adjustment based on an oil and gas industry index.

TABLE OF CONTENTS

Excess Costs. Costs exceeded revenues by $970,780 ($776,624 net to the trust) on properties underlying the Wyoming net profits interests in November 2008. Scheduled pipeline maintenance and limited regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Years Ended December 31, 2008, 2007 and 2006 — Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interests, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy has advised the trustee that the onset of
winter demand and the completion of scheduled pipeline maintenance led to a partial rebound of Rocky Mountain gas prices, resulting in the full recovery of excess costs plus accrued interest of $3,192 ($2,554 net to the trust) in December 2008.

Costs exceeded revenues by $853,468 ($682,774 net to the trust) on properties underlying the Wyoming net profits interests in November and December 2007. Limited pipeline capacity and moderate regional demand led to lower realized gas prices for production in the Rocky Mountain region (see “Prices” above). These lower gas prices caused costs to exceed revenues on properties underlying the Wyoming net profits interest, however, these excess costs did not reduce net proceeds from the remaining conveyances. XTO Energy advised the trustee that with the onset of winter demand and the completion of the first phase of a major pipeline expansion in
January 2008, Rocky Mountain gas prices increased and the excess costs, plus accrued interest of $10,090 ($8,072 net to the trust), was fully recovered by February 2008.

For further information about costs, see “Years Ended December 31, 2008, 2007 and 2006 — Costs” above.

TABLE OF CONTENTS

EXCERPTS ON THIS PAGE:

10-K (5 sections)	Feb 25, 2009

Hugoton Royalty Trust (HGT)

HGT » Topics » Development . Development costs, which were deducted based on budgeted development costs, increased 7% from fourth quarter 2007 to 2008 primarily because of the timing of expenditures.

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