DALLAS, Aug. 4 /PRNewswire-FirstCall/ -- Williams Coal
Seam Gas Royalty Trust (NYSE: WTU) announced today that, pursuant
to the governing trust documents, there will be a cash distribution
to the holders of its units of beneficial interest of $0.132276 per unit, payable August 27, 2010 to unitholders of record on
August 16, 2010.
Termination and Liquidation of the Trust
Pursuant to the terms of the Trust Agreement, the Trust has been
terminated effective March 1, 2010
because the reserve report as of December 31, 2009, reflects
that, as of such date, the net present value (discounted at
10 percent) of the estimated future net revenues for proved
reserves attributable to the royalty interests but using the
average monthly Blanco Hub Spot Price for the past calendar year
less certain gathering costs was equal to or less than
$30 million thereby triggering a termination of the Trust.
Based on a report prepared by independent petroleum
engineers, the Trust's computed termination present value
(discounted at 10 percent) of the estimated future net revenues for
proved reserves calculated in accordance with the Trust Agreement
was approximately $8.4 million.
Following termination, the trustee will continue to act as
trustee of the Trust until all Trust assets are sold and the net
proceeds from such sales distributed to unitholders. The
trustee will use best efforts to sell the Trust's assets in
accordance with the procedures set forth in the Trust Agreement.
These procedures are described in more detail in the Trust's
most recent annual report on Form 10-K filed with the Securities
and Exchange Commission.
Williams Production Company, LLC ("WPC") had the option, within
60 days following the March 1,
2010 termination date, to make a cash offer to purchase all
of the remaining royalty interests then held by the Trust. As
of April 30, 2010, WPC declined to
make an initial offer for the assets of the Trust.
The trustee has used best efforts, assisted by Albrecht and
Associates (the "Advisor"), to obtain alternative offers for the
remaining royalty interests. At the end of a 120-day period
following the March 1, 2010
termination date, the trustee notified WPC of the highest of any
other offers acceptable to the trustee, received during such
period. WPC then had the exclusive right, but not the
obligation, to purchase all remaining royalty interests for a cash
purchase price equal to 105 percent of the highest acceptable
offer. WPC declined to do so.
Currently, the trustee is attempting to negotiate the terms of a
sale of the remaining royalty interests; however, no assurances can
be given as to when or if such sale will occur.
If no acceptable offers are received for all remaining royalty
interests, the trustee may request WPC to submit an offer for
consideration by the trustee and may accept or reject such offer.
Acceptance of an offer by the trustee shall be conditioned
upon the opinion of the Advisor of the fairness of the offer.
In accordance with the Trust Agreement, all proceeds of
production attributable to the Trust's royalty interests have been
deposited into a separate account effective as of the March 1, 2010 termination date. Because a
sale of the royalty interests was not made or a definitive contract
for sale of the royalty interests was not entered into within a
150-day period following the March 1,
2010 termination date, the Trust or the unitholders, and not
any buyer of the royalty interests, will be entitled to all
proceeds of production attributable to the royalty interests
following the termination date. The Trust is withholding an
additional $200,000 for anticipated
expenses relating to this termination process.
The Trust owns net profits interests in certain proved coal seam
gas properties owned by WPC and located in the San Juan Basin of northwestern New Mexico (the "Working Interest Properties")
and southwestern Colorado,
including WPC's 35 percent net profits interest in 5,348 gross
acres in La Plata County, Colorado
(the "Farmout Properties"). WPC reported that production
attributable to its gross interests in the properties burdened by
the Trust's net profits interests was 4.2 trillion British thermal
units (TBtu) during the period associated with this quarterly cash
distribution compared to 2.2 TBtu during the preceding period.
When prior period adjustments and the infill deficits are
excluded, production in the current quarter was 2.2 TBtu compared
to 3.8 TBtu in the preceding quarter. This quarter's
distribution represents proceeds for the months of March, April,
May, and June (estimate) for underlying and infill properties and
March, April and May for Farmout properties while the previous
quarter was for only two months of underlying and infill properties
and three months of Farmout properties. The net contract
price per MMBtu for this quarter was $1.95 as compared to $
3.51 per MMBtu for the previous quarter.
WPC also reported approximately 450 infill wells have been
drilled and of those, 440 wells are producing as of July 31, 2010, and are now in "pay" status to the
Trust since early June 2008.
Production attributable to the infill wells for this period
was 1.6 TBtu. In accordance with the original conveyance, the
Trust is entitled to only 20% of the net-profit interests from
these wells as opposed to the 60% of the original producing wells.
Net proceeds from the infill wells were $210,262.
The Trust is a grantor trust formed by The Williams Companies,
Inc., parent company of WPC, and was designed to provide
unitholders with quarterly cash distributions and tax credits under
Section 29 of the Internal Revenue Code, which has expired as of
12/31/2002, from certain coal seam gas properties. The units
are listed on The New York Stock Exchange under the symbol
"WTU".
Additional information including Williams' cash distribution
history, current and prior year financial reports, a link to
filings made with the Securities and Exchange Commission and more
can be found on its website at
http://www.wtu-williamscoalseamgastrust.com/.
SOURCE Williams Coal Seam Gas Royalty Trust
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