-----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, L3yEDPkIim482ArLDXpUzCB9pelL8eBxMCUYkXzIVfwnoqp8lRKpxE9fwVedkK2Q wQgqdyRl7p+jPjk7ybCSSw== 0000950134-96-006246.txt : 19961118 0000950134-96-006246.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950134-96-006246 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96665418 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 FORM 10-Q PERIOD END SEPTEMBER 30, 1996 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 September 30, 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 November 14, 1996: 46,608,796 2 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 September 30, 1996, and the distributable income and changes in trust corpus for the three-month and nine-month periods ended September 30, 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 LLP, independent certified public accountants, has made a limited review of the condensed financial statements as of September 30, 1996 and for the three-month and nine-month periods ended September 30, 1996 and 1995 included herein. - 2 - 3 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 September 30, 1996 and the related condensed statements of distributable income and changes in trust corpus for the three-month and nine-month periods ended September 30, 1996 and 1995. These financial statements are the responsibility of the Trustee. We conducted our reviews 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 reviews, 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 November 1, 1996 - 3 - 4 PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS - -------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, ASSETS 1996 1995 (UNAUDITED) Cash and short-term investments $ 3,116,478 $ 1,195,294 Net overriding royalty interests in producing oil and gas properties (net of accumulated amortization of $7,127,723 and $6,917,588 at September 30, 1996 and December 31, 1995, respectively) 3,847,493 4,057,628 ------------ ------------ $ 6,963,971 $ 5,252,922 ============ ============ LIABILITIES AND TRUST CORPUS Distribution payable to Unit holders $ 3,116,478 $ 1,195,294 Trust corpus - 46,608,796 Units of beneficial interest authorized, issued and outstanding 3,847,493 4,057,628 ------------ ------------ $ 6,963,971 $ 5,252,922 ============ ============
CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED) - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- ------------------------- 1996 1995 1996 1995 Royalty income $ 7,061,959 $ 2,609,871 $13,471,220 $ 8,036,227 Interest income 8,057 4,938 19,785 18,790 ----------- ----------- ----------- ----------- 7,070,016 2,614,809 13,491,005 8,055,017 General and administrative expenditures 106,898 68,968 374,654 351,010 ----------- ----------- ----------- ----------- Distributable income $ 6,963,118 $ 2,545,841 $13,116,351 $ 7,704,007 =========== =========== =========== =========== Distributable income per Unit (46,608,796 Units) $ .149395 $ .054621 $ .281414 $ .165289 =========== =========== =========== ===========
The accompanying notes to condensed financial statements are an integral part of these statements. - 4 - 5 PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED) - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------- ---------------------------- 1996 1995 1996 1995 Trust corpus, beginning of period $ 3,950,015 $ 4,185,235 $ 4,057,628 $ 4,296,056 Amortization of net overriding royalty interests (102,522) (52,341) (210,135) (163,162) Distributable income 6,963,118 2,545,841 13,116,351 7,704,007 Distributions declared (6,963,118) (2,545,841) (13,116,351) (7,704,007) ------------ ------------ ------------ ------------ Trust corpus, end of period $ 3,847,493 $ 4,132,894 $ 3,847,493 $ 4,132,894 ============ ============ ============ ============
The accompanying notes to condensed financial statements are an integral part of these statements. - 5 - 6 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: o Royalty income recorded for a month is the amount computed and paid by the interest owner, Burlington Resources Oil & Gas Company ("Burlington"), 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. o Trust expenses recorded are based on liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies. o Distributions to Unit holders are recorded when declared by the Trustee. o 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 and certain cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with GAAP. 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 and not 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 - 7 ITEM 2. TRUSTEE'S DISCUSSION AND ANALYSIS THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 In the quarter ended September 30, 1996, royalty income received by the Trust amounted to $7,061,959 compared to $2,609,871 for the quarter ended September 30, 1995. The approximate $4.5 million increase in royalty income is primarily due to increases in oil and gas prices received and decreased capital expenditures. Interest income for the quarter ended September 30, 1996 was $8,057, compared with $4,938 for the quarter ended September 30, 1995. The increase in interest income is attributable primarily to an increase in funds available for investment and an increase in interest rates. General and administrative expenses during the third quarter of 1996 amounted to $106,898 compared to $68,968 during the third quarter of 1995. The increase in general and administrative expenses is primarily due to timing differences in the receipt and payment of these expenses. These transactions resulted in distributable income for the quarter ended September 30, 1996 of $6,963,118, or $.149359 per Unit of beneficial interest. Distributions of $.036376, $.046154 and $.066865 per Unit were made to Unit holders of record on July 31, August 30 and September 30, 1996, respectively. For the quarter ended September 30, 1995, distributable income was $2,545,841, or $.054621 per Unit of beneficial interest. Royalty income for the Trust for the quarter ended September 30, 1996 is associated with actual oil and gas production for the period May through July 1996 from the properties from which the Trust's net overriding royalty interests ("Royalties") were carved. Oil and gas production attributable to the Royalties and the properties from which the Royalties were carved are as follows:
THREE MONTHS ENDED SEPTEMBER 30, ----------------------- 1996 1995 ROYALTIES: Oil sales (Bbls) 266,027 130,859 Gas sales (Mcf) 959,162 373,842 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 469,422 427,980 Average per day (Bbls) 5,102 4,652 Average price/Bbl $19.59 $16.65 Gas: Total gas sales (Mcf) 1,877,362 1,923,573 Average per day (Mcf) 20,406 20,908 Average price/Mcf $2.29 $1.57
The posted price of oil increased for the third quarter of 1996 compared to the third quarter of 1995, resulting in an average price per barrel of $19.59 in the third quarter of 1996 compared to $16.65 in the third quarter of 1995. Gas prices also increased in the third quarter of 1996, resulting in an average price per Mcf of gas of $2.29 in the third quarter of 1996 compared to $1.57 in the third quarter of 1995. - 7 - 8 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 costs (including capital expenditures), those production amounts do not provide a meaningful comparison. The gas sales from the properties from which the Royalties are carved decreased for the third quarter of 1996 compared to the third quarter of 1995 primarily due to natural decline in deliverability from the wells. The Trustee has been advised that oil sales from the Waddell Ranch properties were up slightly for the third quarter of 1996 compared to the third quarter of 1995 primarily due to increased production resulting from 1996 capital projects. The oil from the Waddell Ranch properties is 72% and 74% of the total oil sales from the properties from which the royalties were carved for the third quarters of 1996 and 1995, respectively. Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the third quarter of 1996 totaled $347,115 as compared to $3.1 million in the third quarter of 1995. The Trust has been advised that the decrease in expenditures is due to a revision of an estimate to accurately reflect costs actually incurred in the first nine months of 1996. Burlington has advised the Trust that the revised 1996 capital expenditures budget is approximately $10 million. The total amount of the capital expenditures budget for 1995 was $10.5 million. Lease operating expense and property taxes increased from $3.4 million in the third quarter of 1995 to $3.6 million in the third quarter of 1996. The Trust has been advised that there were no wells completed during the three months ended September 30, 1996 and there were 2 gross (1 net) wells in progress at September 30, 1996. During the three months ended September 30, 1995, there were 8 gross (3.875 net) wells drilled and completed and 11 gross (5.0 net) wells in progress at September 30, 1995. NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 For the nine months ended September 30, 1996, royalty income received by the Trust amounted to $13,471,220 compared with royalty income of $8,036,227 during the first nine months of 1995. The approximate $5.4 million increase in royalty income is primarily due to increases in oil and gas prices received. Interest income for the nine months ended September 30, 1996 was $19,785, compared with $18,790 during the first nine months of 1995. The increase in interest income results primarily from an increase in the amount of funds available for investment. General and administrative expenses during the 1996 period amounted to $374,654. During the first nine months of 1995, general and administrative expenses amounted to $351,010. The increase in general and administrative expenses is primarily due to timing differences in the receipt and payment of these expenses. These transactions resulted in distributable income for the nine months ended September 30, 1996 of $13,116,351, or $.281414 per Unit of beneficial interest. For the first nine months of 1995, the distributable income was $7,704,007, or $.165289 per Unit. - 8 - 9 Royalty income for the Trust for the nine-month period ended September 30, 1996, is associated with actual oil and gas production for the period November 1995 through July 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 are as follows:
NINE MONTHS ENDED SEPTEMBER 30, -------------------------- 1996 1995 ROYALTIES: Oil sales (Bbls) 547,232 404,967 Gas sales (Mcf) 1,813,974 1,201,043 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 1,358,680 1,222,110 Average per day (Bbls) 4,959 4,477 Average price/Bbl $18.77 $16.57 Gas: Total gas sales (Mcf) 5,484,012 5,663,218 Average per day (Mcf) 20,015 20,744 Average price/Mcf $2.12 $1.58
The posted price of oil increased during the nine months ended September 30, 1996 compared to the same period in 1995, resulting in an average price per barrel of $18.77 in the nine months ended September 30, 1996 compared to $16.57 in the nine months ended September 30, 1995. The increase in the average price of gas from $1.58 in the nine months ended September 30, 1995 to $2.12 in the same period in 1996 is primarily the result of a 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), the production amounts do not provide a meaningful comparison. There was an increase in oil sales from the properties from which the Royalties were carved in the first nine months of 1996 as compared to the first nine months of 1995. The decrease in the gas sales volumes for the nine months ended September 30, 1996 compared to the gas sales volumes for the same period of 1995 can be attributed primarily to natural decline in deliverability of the wells. The lease operating expense and property taxes on the Waddell Ranch properties for the nine months ended September 30, 1996 were $8,594,000 compared to $7,879,000 for the same period in 1995. The increase is primarily due to an increase in ad valorem taxes. The Trust was advised by Burlington 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 12 months beginning in March 1995. This charge was being made by Burlington deducting approximately $87,000 per month from the gross proceeds attributable to the Texas Royalty properties until the full amount of the ad valorem taxes were recovered in February 1996. Capital expenditures in 1996 totaled $8,519,000 compared to $9,163,000 in 1995. The Trustee has been advised that the decrease in these costs is associated with the timing of expenditures. The Trust has been advised that 20 gross (8.3 net) productive oil wells on the Waddell Ranch properties were drilled and completed during the nine months ended September 30, 1996 and 21 gross (9.375 net) productive oil wells were drilled and completed during the nine months ended September 30, 1995. In addition, there were 2 gross (1 net) wells in progress at September 30, 1996, and 11 gross (5.0 net) wells in progress at September 30, 1995. - 9 - 10 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 quarters ended September 30, 1996 and 1995, respectively, was computed as shown in the table below:
THREE MONTHS ENDED SEPTEMBER 30, -------------------------------------------------------- 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 $ 6,681,083 $ 2,516,631 $ 5,303,295 $ 1,821,644 Gas proceeds 3,734,157 558,795 2,693,276 325,110 ----------- ----------- ----------- ----------- Total 10,415,240 3,075,426 7,996,571 2,146,754 ----------- ----------- ----------- ----------- Less: Severance tax: Oil 273,597 92,671 222,052 76,599 Gas 277,454 32,724 201,226 24,333 Lease operating expense and property tax: Oil and gas 3,131,071 482,512 2,900,851 460,290 Capital expenditures 347,115 3,098,860 Other costs 63,954 24,970 43,303 46,414 ----------- ----------- ----------- ----------- Total 4,093,191 632,877 6,466,292 607,636 ----------- ----------- ----------- ----------- Net profits 6,322,049 2,442,549 1,530,279 1,539,118 Net overriding royalty interests 75% 95% 75% 95% ----------- ----------- ----------- ----------- Royalty income $ 4,741,537 $ 2,320,422 $ 1,147,709 $ 1,462,162 =========== =========== =========== ===========
- 10 - 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Trustee has been notified of the settlement of a class action lawsuit pending in the 270th District Court of Harris County, Texas, (the "Court") styled CAROLINE ALTHEIDE AND LANDGON HARRISON V. MERIDIAN OIL INC., MERIDIAN OIL HOLDING INC., MERIDIAN OIL TRADING INC., MERIDIAN OIL PRODUCTION INC., SOUTHLAND ROYALTY COMPANY, EL PASO PRODUCTION COMPANY, MERIDIAN OIL HYDROCARBONS INC., MERIDIAN OIL GATHERING INC., MERIDIAN OIL SERVICES INC. AND EDWARD PARKER ("Class Action"). The defendants in this lawsuit are collectively referred to herein as "Meridian." The members of the class ("Class Members") involved in the Class Action that was certified by the Court are all persons or entities who (i) at any time between December 1, 1986 and July 1, 1996 received payments directly from Meridian, (ii) the payments from Meridian were attributable to interests in natural gas that was sold at the wellhead to Meridian Oil Trading Inc., and (iii) the interests were either royalty interests, overriding royalty interests or interests of a similar nature that burdened the working interests of Meridian, or working interests in properties operated by Meridian, or royalty interests, overriding royalty interests or interests of a similar nature that burdened working interests in properties operated by Meridian. Meridian, the San Juan Basin Royalty Trust, the Burlington Resources Coal Seam Royalty Trust and the Commissioner of Public Lands of the New Mexico State Lands Office are not Class Members. In summary, the claims asserted in the Class Action ("Class Claims") are those asserted in Plaintiffs' Second Amended Original Petition filed in the Class Action which are based upon the manner in which Meridian calculated payments to its royalty owners and its joint working interest owners in natural gas- producing properties. It is alleged that those payments were based on wellhead prices that were set by a marketing affiliate, rather than upon the net prices that Meridian received for the gas and liquid components in arm's-length sales to non-affiliated purchasers. More specifically, such claims are based on Meridian's conduct in basing its payments to Class Members, for natural gas sold at the wellhead to Meridian Oil Trading Inc., on wellhead prices that resulted from one or more of the following: (i) Meridian's use of allegedly depressed prices for gas set by Meridian Oil Trading Inc.; (ii) Meridian's use of allegedly inflated cost factors for transportation services set by Meridian Oil Trading Inc.; (iii) Meridian's use of allegedly depressed net prices for liquids set by Meridian Oil Hydrocarbons Inc.; and (iv) Meridian's use of allegedly inflated rates for coal seam gathering and treating services set by Meridian Oil Gathering Inc. It was alleged that Meridian's conduct violated applicable legal principles. Meridian denied that its conduct had been unlawful or otherwise wrongful. The Court has not ruled on the merits of the Class Claims or on Meridian's defenses to such claims. The settlement reached by the parties in the Class Action provides for the payment of up to $42 million together with interest thereon beginning on July 17, 1996 until the date the settlement checks are initially mailed to the Class Members participating in the settlement. Such settlement amount is subject to reduction for certain adjustments such as (i) fees, costs and expenses awarded by the Court to the Class Counsel (Susman Godfrey L.L.P. and Dick Watt), (ii) extra compensation awarded by the Court to the named Plaintiffs (Caroline D. Altheide and Langdon D. Harrison), and (iii) the expenses incurred in giving notice and - 11 - 12 administering the proposed settlement ("Net Settlement Fund"). Concurrently with Meridian's payment of the Net Settlement Fund to Class Members who did not timely and validly elect to be excluded from the Class ("Settlement Class Members"), Meridian is obligated under the settlement to advise its then current recipients of royalty payments that Meridian intends (i) to commence calculating royalty payments based upon the net prices received by Meridian from non-affiliated third parties for natural gas and the liquids extracted therefrom, and (ii) in calculating royalty payments on gas produced from coal seam gas wells using the Val Verde Gathering System, to commence using a deduction for gathering and treating the gas produced from such wells that does not exceed 75% of the fee charged by Meridian Oil Gathering Inc. for similar services to the five largest (by volume) non-affiliated third party shippers. Meridian is not obligated to calculate royalty payments in such method in the future but, if it changes such method of calculation it is obligated to provide notice of such change in method of calculation to the then-current recipients of royalty payments. Of the Net Settlement Fund, (i) 48% thereof will be distributed among Class Members whose interests bear on "conventional" gas-producing properties (specifically, gas not gathered on the Val Verde Gathering System) that are located in Meridian's Farmington operating division (which is roughly coextensive with the San Juan Basin of New Mexico and Colorado), (ii) 42% thereof will be distributed among the Class Members whose interests bear on the coal seam gas producing properties located in Meridian's Farmington operating division (specifically, gas gathered on the Val Verde Gathering System), and (iii) 10% thereof will be distributed among those Class Members whose interests bear on gas-producing properties located in areas other than Meridian's Farmington operating division. The Trust would fall into the last of these three classifications. It is estimated that the Trust's share of the Net Settlement Fund will be between $560,000 and $850,000, the exact amount of which cannot be determined at this time. Upon final judicial approval of the settlement, the settlement provides that a judgment be entered in the Class Action dismissing the Class Action with prejudice to its refiling. As a result of the settlement, Settlement Class Members release and discharge the Released Parties, and each of them, from and with respect to the Class Claims and such Class Members will not be able to pursue the Class Claims against the Released Parties. "Released Parties" as used herein means, severally and collectively, the Defendants and Meridian Oil Inc. and all Affiliates of Burlington Resources Inc. since December 1, 1986, collectively, and all past and present agents, employees, officers, directors, shareholders, representatives, attorneys, predecessors, successors, assigns and affiliates of each of the Defendants and of Meridian Oil Inc. and all Affiliates of Burlington Resources Inc. since December 1, 1986, collectively. "Released Parties" also includes all other person or entities who are liable or become liable for the conduct of any person or entity that is identified in the preceding sentence. "Affiliates" as used herein means Burlington Resources Inc.'s direct and indirect subsidiaries. It was determined by the Trustee that the Trust is part of the Class that was certified by the Court in the Class Action and that it was in the best interest of the Trust to elect to remain as part of the Class and share in the Net Settlement Fund. The Trustee believes that the Class Claims, if true, had little, if any, detrimental effect upon the Trust and the Trust is being adequately compensated as a result of this settlement. A hearing was scheduled for November 8, 1996 for the Court's consideration of the approval of the settlement and entry of a judgment. Such hearing has been continued and the Trustee does not know when the Court will consider approval of the settlement and entry of a judgment. Assuming that settlement is approved and judgment is entered on or before November 22, 1996, it is anticipated that the Trust would receive its share of the Net Settlement Fund during the month of December 1996 absent an appeal of the judgment. Such monies could, - 12 - 13 therefore, become part of the distribution made in January to Unit holders of record at December 31, 1996. There can be no assurance that the settlement will be approved and that judgment will be entered and, if such settlement is approved and judgment entered, that such will occur by such date nor that the funds will be received during December 1996. Items 2 through 5. Not applicable. Item 6. (a) Exhibits (4) (a) Permian Basin Royalty Trust Indenture dated November 3, 1980, between Southland Royalty Company (now Burlington Resources Oil & Gas 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. (b) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas 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. (c) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil & Gas 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 September 30, 1996. - 13 - 14 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 ERIC F. HYDEN ------------------------- Eric F. Hyden Vice President Date: November 14, 1996 (The Trust has no directors or executive officers.) - 14 - 15 INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBIT (4)(a) Permian Basin Royalty Trust Indenture dated November 3, 1980, between Southland Royalty Company (now Burlington Resources Oil & Gas 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.* (b) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas 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. * (c) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil & Gas 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 **
* 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. EX-27 2 FINANCIAL DATA SCHEDULE
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 SEPTEMBER 30, 1996, AND THE RELATED CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME AND CHANGES IN TRUST CORPUS FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1996. 9-MOS DEC-31-1996 SEP-30-1996 3,116,478 0 0 0 0 3,116,478 10,975,216 7,127,723 6,963,971 3,116,478 0 0 0 0 3,847,492 6,963,971 0 7,070,016 0 0 106,898 0 0 6,963,118 0 6,963,118 0 0 0 6,963,118 0 0
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