DALLAS, May 5 /PRNewswire-FirstCall/ -- Williams Coal
Seam Gas Royalty Trust (NYSE: WTU) announced today that there will
be a cash distribution to the holders of its units of beneficial
interest of $0.011100 per unit,
payable May 28, 2010 to unitholders
of record on May 17, 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 is 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 assets
will now be marketed by Albrecht and Associates, the "Advisor" for
this transaction.
The trustee will then use best efforts, assisted by 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 is
required to notify WPC of the highest of any other offers
acceptable to the trustee (which must be an all-cash offer),
received during such period. WPC then has 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. 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 will be
deposited into a separate account effective as of the March 1, 2010 termination date. If a sale
of the royalty interests is made or a definitive contract for sale
of the royalty interests is entered into within a 150-day period
following the March 1, 2010
termination date, the buyer of the royalty interests, and not the
Trust or the unitholders, will be entitled to all proceeds of
production attributable to the royalty interests following the
termination date. The Trust is withholding an additional
$300,000 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 1.3 trillion British thermal
units (TBtu) during the period associated with this quarterly cash
distribution compared to 6.7 TBtu during the preceding period.
When prior period adjustments and the infill deficits for 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 January and
February only while the previous quarter was for three months.
The net contract price per MMBtu for this quarter was
$3.51 as compared to $1.23 per MMBtu for the previous quarter.
WPC also reported approximately 450 infill wells have been
drilled and of those, 439 wells are producing as of February 28, 2010, and are now in "pay" status to
the Trust since early June 2008.
Production attributable to the infill wells for this period
was .78 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 $117,016.
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