Profile: Hugoton Royalty Trust (HGT)

Hugoton Royalty Trust (the Trust) is an express trust created under the laws of Texas pursuant to the Hugoton Royalty Trust Indenture entered into on December 1, 1998 between XTO Energy Inc., as grantor, and NationsBank, N.A., as trustee. Bank of America, N.A. succeeded NationsBank as the trustee of the Trust. XTO Energy conveyed to the Trust 80% net profits interests in certain natural gas producing working interest properties in Kansas, Oklahoma and Wyoming under three separate conveyances. In exchange for these net profits interest conveyances to the Trust, 40 million units of beneficial interest were issued to XTO Energy. XTO Energy distributed all of its remaining 21.7 million trust units. As of December 31, 2008, XTO Energy is not a unitholder of the trust. The net profits interests entitle the Trust to receive 80% of the net proceeds from the sale of oil and gas from the underlying properties. Each month XTO Energy determines the amount of cash received from the sale of production and deducts property and production taxes, production expense, development costs and overhead.

As a working interest owner, XTO Energy can generally decline participation in any operation and allow consenting parties to conduct operations, such as provided under the operating agreements. XTO Energy also can assign, sell, or otherwise transfer its interest in the underlying properties, subject to the net profits interests, or can abandon an underlying property if it is incapable of producing in paying quantities, as determined by XTO Energy. XTO Energy is responsible for marketing its production from the underlying properties under existing sales contracts or new arrangements on the best terms reasonably obtainable in the circumstances.

Approximately 85% of the net profits income received by the trust during the year ended December 31, 2008, as well as 92% of the estimated proved reserves of the net profits interests as of December 31, 2008, is attributable to natural gas. The net profits interests are the principal assets of the Trust. The trustee cannot acquire any other assets, with the exception of certain short-term investments. The trustee may sell or otherwise dispose of all or any part of the net profits interests if approved by at least 80% of the unitholders, or upon termination of the Trust. Otherwise, the Trust may only sell up to 1% of the value of the net profits interests in any calendar year, pursuant to notice from XTO Energy of its desire to sell the related underlying properties. The underlying properties are predominantly natural gas producing leases located in the states of Kansas, Oklahoma and Wyoming. The principal productive areas are the Hugoton area, Anadarko Basin and Green River Basin. All the underlying properties are owned by XTO Energy. XTO Energy may sell all or any portion of the underlying properties at any time, subject to and burdened by the net profits interests.

Hugoton Area

Natural gas was discovered in the Hugoton area in 1922. During 2008, sales volumes from the underlying properties in the Hugoton area averaged approximately 20,900 thousand cubic feet (Mcf) of gas and 51 barrels (Bbls) of oil per day. Production from the underlying properties in the Hugoton area is from the Chase formation. XTO Energy has drilled wells to these formations . XTO Energy delivers its Hugoton gas production to a gathering and processing system operated by a subsidiary. Other Hugoton gas production is sold under a third party contract. Under the contract, XTO Energy receives 74.5% of the net proceeds received from the sale of the residue gas and liquids.

Anadarko Basin

Oil and gas were discovered in the Anadarko Basin of western Oklahoma in 1945. Daily sales volumes from the underlying properties in the Anadarko Basin averaged 35,500 Mcf of gas and 822 Bbls of oil in 2008. The fields in the Major County area are characterized by oil and gas production from a variety of structural and stratigraphic traps. Productive include the Oswego, Red Fork, Inola, Chester, Manning, Mississippian, Hunton and Arbuckle formations. Within this area, XTO Energy successfully drilled 16 gross (10.6 net) wells and performed 28 workovers in 2008.

The fields within Woodward County are characterized primarily by gas production from a variety of structural and stratigraphic traps. Productive zones include the Cottage Grove, Oswego, Chester and Mississippian formations. Within this area, XTO Energy successfully drilled 11 gross (8.7 net) wells and performed five workovers in 2008.

The Elk City field on the eastern edge of Beckham County produces oil and gas from a structural anticline with stratigraphic trapping features. Production include the Hoxbar, Atoka and Morrow formations. Within this area, XTO Energy successfully drilled one gross (0.9 net) wells and performed seven workovers in 2008.

Green River Basin

The Green River Basin is located in southwestern Wyoming. Natural gas was discovered in the Fontenelle Field of the Green River. The producing reservoirs are the Cretaceous-aged Frontier, Baxter and Dakota sandstones. Daily 2008 sales volumes from the underlying properties in the Fontenelle Field averaged 20,600 Mcf of natural gas and 43 Bbls of oil. In 2008, XTO Energy successfully drilled seven gross (7 net) wells and performed nine workovers.