-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PUOOsk1oPEgdbZp1NqVfI5ryk+04sAD/a0Xtt7ixhABW8oXDxOj3nIoNgZPXIO9x Hk64Vk3stujDXFaQQmLsvQ== 0000919297-96-000017.txt : 19960515 0000919297-96-000017.hdr.sgml : 19960515 ACCESSION NUMBER: 0000919297-96-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERMIAN BASIN ROYALTY TRUST CENTRAL INDEX KEY: 0000319654 STANDARD INDUSTRIAL CLASSIFICATION: OIL ROYALTY TRADERS [6792] IRS NUMBER: 756280532 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08033 FILM NUMBER: 96562975 BUSINESS ADDRESS: STREET 1: P O BOX 1317 CITY: FT WORTH STATE: TX ZIP: 76101 BUSINESS PHONE: 8173906905 MAIL ADDRESS: STREET 1: P O BOX 1317 CITY: FORTH WORTH STATE: TX ZIP: 76101 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 1996 Commission File No. 1-8033 PERMIAN BASIN ROYALTY TRUST Texas I.R.S. No. 75-6280532 NationsBank of Texas, N.A., Trust Department P. O. Box 1317 Fort Worth, Texas 76101 Telephone Number 817/390-6905 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of units of beneficial interest outstanding at May 14, 1996: 46,608,796 - ---------- Page 1 of 11 PERMIAN BASIN ROYALTY TRUST PART I - FINANCIAL STATEMENTS Item 1. Financial Statements The condensed financial statements included herein have been prepared by NationsBank of Texas, N.A. as Trustee for the Permian Basin Royalty Trust, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations, although the Trustee believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Trust's latest annual report on Form 10-K. In the opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the assets, liabilities and trust corpus of the Permian Basin Royalty Trust at March 31, 1996, and the distributable income and changes in trust corpus for the three-month periods ended March 31, 1996 and 1995 have been included. The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year. Deloitte & Touche, L.L.P. independent certified public accountants, has made a review of the condensed financial statements as of March 31, 1996 and for the three-month periods ended March 31, 1996 and 1995 included herein. -2- INDEPENDENT ACCOUNTANTS' REPORT NationsBank of Texas, N.A. as Trustee for the Permian Basin Royalty Trust: We have reviewed the accompanying condensed statement of assets, liabilities and trust corpus of the Permian Basin Royalty Trust as of March 31, 1996 and the related condensed statements of distributable income and changes in trust corpus for the three-month periods ended March 31, 1996 and 1995. These financial statements are the responsibility of the Trustee. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. The accompanying condensed financial statements are prepared on a modified cash basis as described in Note 1, which is a comprehensive basis of accounting other than generally accepted accounting principles. Based on our review, we are not aware of any material modifications that should be made to such condensed financial statements for them to be in conformity with the basis of accounting described in Note 1. We have previously audited, in accordance with generally accepted auditing standards, the statement of assets, liabilities and trust corpus of the Permian Basin Royalty Trust as of December 31, 1995, and the related statements of distributable income and changes in trust corpus for the year then ended (not presented herein); and in our report dated March 22, 1996 we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed statement of assets, liabilities and trust corpus as of December 31, 1995 is fairly stated in all material respects in relation to the statement of assets, liabilities and trust corpus from which it has been derived. DELOITTE & TOUCHE LLP May 10,1996 -3- PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS - -------------------------------------------------------------------------------
ASSETS March 31, December 31, 1996 1995 (Unaudited) Cash and short-term investments $ 507,321 $1,195,294 Net overriding royalty interests in producing oil and gas properties (net of accumulated amortization of $6,966,198 and $6,917,588 at March 31, 1996 and December 31, 1995, respectively) 4,009,018 4,057,628 ---------- ---------- $4,516,339 $5,252,922 ========== ========== LIABILITIES AND TRUST CORPUS Distribution payable to Unit holders $ 507,321 $1,195,294 Trust corpus - 46,608,796 Units of beneficial interest authorized and outstanding 4,009,018 4,057,628 ---------- ---------- $4,516,339 $5,252,922 ========== ========== CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED) Three Months Ended March 31, --------------------------------- 1996 1995 Royalty income $2,570,041 $3,174,416 Interest income 7,732 9,311 ---------- ---------- 2,577,773 3,183,727 General and administrative expenditures 124,408 149,582 ---------- ---------- Distributable income $2,453,365 $3,034,145 ========== ========== Distributable income per Unit (46,608,796 Units) $ .052637 $ .065097 ========== ==========
The accompanying notes to condensed financial statements are an integral part of these statements. -4- PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
Three Months Ended March 31, ------------------------------- 1996 1995 Trust corpus, beginning of period $4,057,628 $4,296,056 Amortization of net overriding royalty interests (48,610) (64,431) Distributable income 2,453,365 3,034,145 Distributions declared (2,453,365) (3,034,145) ---------- ---------- Trust corpus, end of period $4,009,018 $4,231,625 ========== ==========
The accompanying notes to condensed financial statements are an integral part of this statement. -5- PERMIAN BASIN ROYALTY TRUST NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF ACCOUNTING The Permian Basin Royalty Trust ("Trust") was established as of November 1, 1980. The financial statements of the Trust are prepared on the following basis: * Royalty income recorded for a month is the amount computed and paid by the working interest owner, Meridian Oil Inc.("MOI"), to NationsBank of Texas, N.A. ("Trustee") as Trustee for the Trust. Royalty income consists of the amounts received by the owner of the interest burdened by the net overriding royalty interests ("Royalties") from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges, and other costs and deductions, multiplied by 75% in the case of the Waddell Ranch Properties and 95% in the case of the Texas Royalty Properties. * Trust expenses recorded are based on liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies. * Distributions to Unit holders are recorded when declared by the Trustee. * The conveyance which transferred the overriding royalty interest to the Trust provides that any excess of production costs over gross proceeds must be recovered from future net profits. The financial statements of the Trust differ from financial statements prepared in accordance with generally accepted accounting principles ("GAAP") because revenues are not accrued in the month of production; certain cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with GAAP; and amortization of the Royalties calculated on a unit-of- production basis is charged directly to trust corpus. 2. FEDERAL INCOME TAXES For Federal income tax purposes, the Trust constitutes a fixed investment trust which is taxed as a grantor trust. A grantor trust is not subject to tax at the trust level. The Unit holders are considered to own the Trust's income and principal as though no trust were in existence. The income of the Trust is deemed to have been received or accrued by each Unit holder at the time such income is received or accrued by the Trust rather than when distributed by the Trust. The Royalties constitute "economic interests" in oil and gas properties for Federal income tax purposes. Unit holders must report their share of the revenues of the Trust as ordinary income from oil and gas royalties and are entitled to claim depletion with respect to such income. The Trust has on file technical advice memoranda confirming the tax treatment described above. The classification of the Trust's income for purposes of the passive loss rules may be important to a Unit holder. As a result of the Tax Reform Act of 1986, royalty income will generally be treated as portfolio income and will not offset passive losses. * * * * * -6- ITEM 2. Trustee's Discussion and Analysis THREE MONTHS ENDED MARCH 31, 1996 AND 1995 For the quarter ended March 31, 1996 royalty income received by the Trust amounted to $2,570,041, compared to royalty income of $3,174,416 during the first quarter of 1995. Interest income for the quarter ended March 31, 1996 was $7,732, compared to $9,311 during the first quarter of 1995. The decrease in interest income is primarily attributable to a decrease in funds available for investment. General and administrative expenses during the first quarter of 1996 amounted to $124,408, compared to $149,582 during the first quarter of 1995. The decrease in general and administrative expenses can be attributed primarily to timing differences in the receipt and payment of these expenses. These transactions resulted in distributable income for the quarter ended March 31, 1996 of $2,453,365 or $.052637 per Unit of beneficial interest. Distributions of $.030777, $.010975 and $.010885 per Unit were made to Unit holders of record as of January 31, February 29 and March 31, 1996, respectively. For the first quarter of 1995, distributable income was $3,034,145 or $.065097 per Unit. The Trust has been advised that effective January 1, 1996, Southland Royalty Company ("Southland") was merged with and into Meridian Oil Inc. ("Meridian"), a Delaware corporation, with Meridian being the surviving corporation. Meridian succeeded to the ownership of all the assets, has the rights, powers and privileges, and assumed all of the liabilities and obligations of Southland. Royalty income for the Trust for the quarter ended March 31, 1996 is associated with actual oil and gas production for the period November 1995 through January 1996 from the properties from which the Royalties were carved. Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved, excluding portions attributable to the adjustments discussed hereafter, are as follows:
First Quarter -------------------------------------- 1996 1995 ROYALTIES: Oil sales (Bbls) 128,100 158,127 Gas sales (Mcf) 343,038 513,949 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 451,033 399,487 Average per day (Bbls) 4,903 4,342 Average price per Bbl $17.14 $15.94 Gas: Total gas sales (Mcf) 1,791,091 1,833,983 Average per day (Mcf) 19,468 19,934 Average price per Mcf $1.93 $1.74
The posted price of oil increased for the first quarter of 1996, compared to the first quarter of 1995, resulting in an average price per barrel of $17.14 compared to $15.94 in the first quarter of 1995. The Trust has been advised by Meridian that for the period August 1, 1993, through June 30, 1996, the oil from the Waddell Ranch is being sold under a competitive bid to a third party. The increase in the average price of gas from $1.74 in the first quarter of 1995 to $1.93 in the first quarter of 1996 is primarily the result of an increase in the spot prices of natural gas. Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), those production amounts do not provide a meaningful comparison. The increase in oil sales from the properties from which the Royalties are carved is -7- primarily a result of an increase in production from the Waddell Ranch properties due to a successful drilling and recompletion program. The gas sales from the properties from which the Royalties were carved were relatively unchanged for the first quarter of 1996 compared to the first quarter of 1995. Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the first quarter of 1996 totaled $4.3 million as compared to $2.4 million for the first quarter of 1995. Meridian has informed the Trust that the 1996 capital expenditures budget is $9.6 million. The Trust has been advised that there were 4 gross (1.875 net) wells completed during the three months ended March 31, 1996 and there were 18 gross (8.25 net) wells in progress. For the three months ended March 31, 1995, there were 4 gross (1.875 net) wells completed and there were 2 gross (1.0 net) wells in progress at March 31, 1995. Lease operating expense and property taxes totaled $3.3 million for the first quarter of 1996 compared to $2.8 million for the same period in 1995. This increase is primarily attributable to an increase in lease operating expense on the Waddell Ranch properties and in ad valorem tax on the Texas Royalties properties. The Trust was previously advised by Southland that approximately $1.3 million in ad valorem taxes related to 1991 through 1994 for the Texas Royalty properties that Southland did not previously charge to gross proceeds attributable to the Trust would be charged to the Trust over twelve months beginning March 1995. Such amount has been charged by deducting $87,000 per month from gross proceeds attributable to the Texas Royalties properties until the full amount of the ad valorem taxes is recovered. -8- CALCULATION OF ROYALTY INCOME The Trust's royalty income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding royalty interests. These percentages of net profits are 75% and 95% in the case of the Waddell Ranch Properties and the Texas Royalty Properties, respectively. Royalty income received by the Trust for the three months ended March 31, 1996 and 1995, respectively, were computed as shown in the table below:
Three Months Ended March 31, ------------------------------------------------------------ 1996 1995 ---------------------------- ---------------------------- Waddell Texas Waddell Texas Ranch Royalty Ranch Royalty Properties Properties Properties Properties Gross proceeds of sales from properties from which the net overriding royalties were carved: Oil Proceeds $5,957,109 $1,774,005 $4,728,639 $1,638,003 Gas proceeds 3,067,370 389,795 2,891,010 296,703 ---------- ---------- ---------- ---------- Total 9,024,795 2,163,800 7,619,649 1,934,706 ---------- ---------- ---------- ---------- Less: Severance tax: Oil 251,044 67,572 200,239 72,278 Gas 228,657 23,056 215,164 20,957 Lease operating expense and property tax: Oil and gas 2,805,366 475,104 2,599,517 220,651 Capital expenditures 4,336,910 2,425,203 ---------- --------- ---------- ---------- Total 7,621,977 565,732 5,440,133 313,886 ---------- --------- ---------- ---------- Net profits 1,402,502 1,598,068 2,179,516 1,620,820 Net overriding royalty interests 75% 95% 75% 95% ---------- --------- ---------- ---------- Royalty income $1,051,876 $1,518,165 $1,634,637 $1,539,779 ========== ========== ========== ==========
-9- PART II - OTHER INFORMATION Items 1 through 5. Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (4)(a) Permian Basin Royalty Trust Indenture dated November 3, 1980, between Southland Royalty Company and The First National Bank of Fort Worth (now NationsBank of Texas, N.A.), as Trustee, heretofore filed as Exhibit (4)(a) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference. (4)(b) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company to The First National Bank of Fort Worth (now NationsBank of Texas, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference. (4)(c) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) from Southland Royalty Company to The First National Bank of Fort Worth (now NationsBank of Texas, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(c) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference. (27) Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 1996. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONSBANK OF TEXAS, N.A. TRUSTEE FOR THE PERMIAN BASIN ROYALTY TRUST By /s/ PAMELA J. BRADLEY -------------------------- Pamela J. Bradley Vice President Date: May 14, 1996 (The Trust has no directors or executive officers.) -11- INDEX TO EXHIBITS Sequentially Exhibit Numbered Number Exhibit Page (4)(a) Permian Basin Royalty Trust Indenture dated November 3, 1980, between Southland Royalty Company and The First National Bank of Fort Worth (now NationsBank of Texas, N.A.), as Trustee, heretofore filed as Exhibit (4)(a) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference.*[FN] (b) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company to The First National Bank of Fort Worth (now NationsBank of Texas, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference. *[FN] (c) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) from Southland Royalty Company to The First National Bank of Fort Worth (now NationsBank of Texas, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(c) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference. *[FN] (27) Financial Data Schedule **[FN] * A copy of this Exhibit is available to any Unit holder, at the actual cost of reproduction, upon written request to the Trustee, NationsBank of Texas, N.A., P. O. Box 1317, Fort Worth, Texas 76101. ** Filed herewith. -12- EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS OF PERMIAN BASIN ROYALTY TRUST AS OF MARCH 31, 1996, AND THE RELATED CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME AND CHANGES IN TRUST CORPUS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1996. 3-MOS DEC-31-1996 MAR-31-1996 $507,321 0 0 0 0 $507,321 $10,975,216 $6,966,198 $4,516,339 $507,321 0 0 0 0 $4,009,018 $4,516,339 0 $2,577,773 0 0 $124,408 0 0 $2,453,365 0 $2,453,365 0 0 0 $2,453,365 0 0
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