PR Newswire
DALLAS, Aug. 4
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.