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MESA OFFSHORE TRUST ANNOUNCES DISTRIBUTION OF ROYALTY INCOME

     MESA OFFSHORE TRUST ANNOUNCES DISTRIBUTION OF ROYALTY INCOME
    HOUSTON, Feb. 25 /PRNewswire/ -- Mesa Offshore Trust (the trust) (NYSE: MOS) announced today that it has been advised by MESA Inc. (Mesa) that the trust will receive a distribution of royalty income for the month of February in the amount of approximately $70,000.  This amount represents the trust's share of the proceeds from the royalty properties after recovery by Mesa of operating, drilling and workover costs accrued during or prior to such month and the payment of reserve amounts required for estimated plugging and abandonment costs.  As previously announced, Mesa has been and is currently conducting additional drilling on the South Marsh Island 155 block, the costs of which will have to be recovered by Mesa before further royalty income will be paid to the trust.  However, because the costs of a substantial portion of such drilling will not be accrued until after the month of February, the $70,000 royalty income amount is available for distribution to the trust.  The distribution is expected to be received on Feb. 28, 1992, and the trustee of the trust intends to apply this amount toward reduction of the trust's unpaid administrative expenses. As previously announced, due to the lack of royalty income in recent periods, the trust has been unable to pay its ongoing administrative expenses.  After taking into account the application of the $70,000 royalty income payment, the trust will have a total of approximately $40,000 of outstanding unpaid administrative expenses.
    No further distributions are expected to be received by the trust until late 1992 or early 1993 at the earliest.  Mesa has advised the trust that drilling of the development well that is currently being drilled on the South Marsh Island 155 block is expected to be completed in April 1992 and that, based on current estimates of the cost and duration of such drilling program, expected future operational expenditures, and the expected level of future proceeds from the royalty properties, Mesa does not expect to complete recovery of all of the costs of the drilling on the South Marsh Island 155 block until late 1992 or early 1993 at the earliest.
    In anticipation of an extended time period during which no royalty income will be paid to the trust, the trustee is continuing to pursue various alternatives.  One alternative being pursued by the trust is the possibility of borrowing funds on behalf of the trust, although, at the present time, the trust has been unable to secure such financing.  In addition, the trustee is evaluating various ways to reduce trust administrative expenses, including transferring the listing of the trust units from the New York Stock Exchange to the Pacific Stock Exchange in order to reduce the amount of listing fees paid by the trust and having reserve reports for the royalty properties prepared by Mesa instead of DeGolyer and McNaughton, independent petroleum engineering consultants.
    The indenture governing the trust requires the trustee to sell the trust estate if the cash received by the trust falls below certain levels for each of three successive years.  Because the cash received by the trust in 1991 was above the threshold level, it is not expected that the indenture would require a sale of the trust estate until at least the end of 1994.  The trustee is therefore considering various possibilities for action prior to such time, including the sale of the trust estate with the approval of the unitholders.  Such a sale would require the approval of at least a majority of the outstanding trust units at a meeting of unitholders called for such purpose.  Meetings of unitholders may be called by the trustee or by unitholders owning at least 10 percent of the outstanding units.
    -0-        2/25/92
    /CONTACT:  David Snyder, Texas Commerce Bank, as trustee, 713-236-5100/
    (MOS) CO:  Mesa Offshore Trust ST:  Texas IN:  OIL SU:  DIV SH -- NY036 -- 2276 02/25/92 10:57 EST
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Publication:PR Newswire
Date:Feb 25, 1992
Words:658
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