Williams Coal Seam Gas Royalty Trust Announces No Cash Distribution for Third Quarter
04 August 2009 - 8:00PM
PR Newswire (US)
DALLAS, Aug. 4 /PRNewswire-FirstCall/ -- Williams Coal Seam Gas
Royalty Trust (NYSE:WTU) announced today that there will be no
Trust income distribution for the third quarter of 2009 because
Trust expenses will exceed royalty income for the period. Royalty
income which related to production for the quarter ending June 30,
2009 was $77,767 while Trust expenses payable will be approximately
$100,000. At July 31, 2009 the Trust had accounts payable of
approximately $57,000. The Trust owns net profits interests in
certain proved coal seam gas properties owned by Williams
Production Company (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 2.6 trillion British thermal units (TBtu)
during the period associated with this quarterly cash distribution
compared to 3.9 TBtu during the preceding period. When prior period
adjustments are excluded, production in the current quarter for the
original wells was 2.6 TBtu compared to 3.9 TBtu in the preceding
quarter. The net contract price per MMBtu for this quarter was
$0.75 per MMBtu as compared to $1.69 per MMBtu for the previous
quarter. WPC also reported approximately 447 infill wells have been
drilled and of those, 437 wells are producing as of June 30, 2009,
and are now in "pay" status to the Trust since early June 2008.
Production attributable to the infill wells was 1.5 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 ($66,939), and did not contribute to this
quarter's distribution. Deficits accumulate and no income is
recognized until results are positive. Gross proceeds prior to
deductions for production costs for the second quarter of 2009 by
property were as follows: $1,754,457 for Working Interest
Properties, $218,187 for Farmout Properties. For Working Interest
Properties, production costs for the second quarter 2009 were as
follows: $644,811 for royalties, $194,545 for taxes, $998,333 for
operating costs and $5,342 in excess capital costs. Gross proceeds
(Net Profit Interest) from the Farmout Properties after deductions
as stated above were $218,187. The substantial decline in both
production and price of natural gas has resulted in net proceeds to
the Trust of $77,767. Termination and Liquidation of the Trust
Pursuant to the terms of the Trust Agreement, the Trust will
terminate no later than December 31, 2012 or upon the first to
occur of certain events, including (i) the disposition by the Trust
of all royalty interests; (ii) following an affirmative vote in
favor of termination of the Trust by the holders of record of more
than 50% of the then outstanding Units; (iii) such time as the
ratio of cash received by the Trust with respect to the royalty
interests (excluding the effect on cash distributions received by
the Trust in respect of the royalty interests of excess capital
costs) to administrative costs of the Trust is less than 1.2 to 1.0
for three (3) consecutive calendar quarters, and (iv) March 1 of
any calendar year if, based on a reserve report as of December 31
of the prior year, it is determined that, as of such date, the net
present value (discounted at 10 percent) of the estimated future
net revenues (calculated in accordance with criteria established by
the Securities and Exchange Commission) 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 is equal to or less than $30 million. As indicated
in the notes to the financial statements of the Trust included in
the Trust's most recent annual report on Form 10-K filed with the
Securities and Exchange Commission, the 2009 commodity price
outlook has resulted in uncertainty regarding the Trust's ability
to avoid a termination event pursuant to the terms of the Trust
Agreement. 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". For
additional information, including the latest financial reports on
Williams Coal Seam Gas Royalty Trust, please visit our website at
http://www.wtu-williamscoalseamgastrust.com/. DATASOURCE: Williams
Coal Seam Gas Royalty Trust CONTACT: Ron E. Hooper, Senior Vice
President of U.S. Trust, Bank of America Private Wealth Management,
Trustee, 1-800-365-6544, for Williams Coal Seam Gas Royalty Trust
Web Site: http://www.wtu-williamscoalseamgastrust.com/
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