sounds very bad
Freeport McMoRan Oil and Gas Royalty Trust Makes Announcement
HOUSTON--(BUSINESS WIRE)--July 14, 2000--Freeport McMoRan Oil and Gas Royalty Trust (OTCBB:FMOLS - news) announced that for the month of May 2000 Gross Proceeds exceeded the Trust's Class A costs by $373,950. As a result of the above, the Class A cost carry-forward has decreased to $20,102,725. The Working Interest Owner is entitled to recoup the cumulative carry-forward from future Gross Proceeds prior to making royalty payments to the Trust. In addition, net current month Trust administrative expenses of $5,952 were paid from the Trust administrative reserve resulting in $742,741 remaining in the expense reserve.
For the month, Gross Proceeds included oil and condensate revenues of approximately $335,841 and gas revenues of approximately $377,214 from sales volumes of 12,930 barrels and 139,383 mcf, respectively, net to the Trust's interest. Class A costs included $143,406 in operating and transportation costs and $37,858 in capital expenditures related to workover activities on West Cameron 498, net to the Trust's interest. Class A costs also included $157,841 in interest charges related to the Class A cost carry-forward.
The Trust is also pleased to announce that it has settled the lawsuit filed by IMC Global Inc. (``IMC'') against Chase Bank of Texas, N.A., in its capacity as Trustee of the Trust. The lawsuit filed March 9, 1999, by IMC, the working interest owner, to enjoin the Trustee's approval of the unit holders' vote to extend the Trust for two years, was abated by court order dated March 31, 2000 to give the parties an opportunity to reach a settlement agreement. IMC has agreed to dismiss its lawsuit without prejudice. The Trust expects that the motion to dismiss without prejudice will be filed shortly and an order of dismissal should then be forthcoming from the court. As soon as the court's order approving the dismissal is entered, the Trustee will formally approve the unit holder vote. The extension expires at the end of this year. At that time, pursuant to the Trust indenture, the Trustee is required to liquidate the Trust and conduct a sale of the Trust assets. The Trustee expects that a sale of the Trust assets will occur in the first or second quarter of the year 2001.
To further the settlement negotiations that resulted in a dismissal of IMC's lawsuit, the Trustee, on behalf of the Trust, engaged Albrecht & Associates Inc. (``Albrecht''), oil and gas divestment specialists, to appraise the Trust's assets and IMC's working interest. Ignoring the Class A cost carry-forward and assuming a joint sale of the working interest and the Trust assets, Albrecht estimated that as of April 2000 the combined interest of the Trust and IMC has a market value in the range of $4.0 - $7.5 million, with a most likely market price of approximately 4.5 million. These estimates confirm previous appraisals by Ryder Scott Company, Petroleum consultants, and indicate that the Trust cannot retire the Class A cost carry-forward. |
