-----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, Ol2uJiGSlNuPIztYH4QLlRYxm2zIyMCOlnCcKR6UdBOJiuEocoX3gorDGy4A1N21 xpw1xC9OtSizoaOy9YflRQ== 0001025970-98-000006.txt : 19980814 0001025970-98-000006.hdr.sgml : 19980814 ACCESSION NUMBER: 0001025970-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 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: SEC FILE NUMBER: 001-08033 FILM NUMBER: 98686278 BUSINESS ADDRESS: STREET 1: 1300 SUMMIT AVENUE CITY: FT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173906905 MAIL ADDRESS: STREET 1: 1300 SUMMIT AVENUE SUITE 300 CITY: FORTH WORTH STATE: TX ZIP: 76102 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 June 30, 1998 Commission File No. 1-8033 PERMIAN BASIN ROYALTY TRUST Texas I.R.S. No. 75-6280532 NationsBank, 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 of the Trust outstanding at August 13, 1998: 46,608,796 Page 1 of 16 PERMIAN BASIN ROYALTY TRUST PART I - FINANCIAL STATEMENTS ITEM 1. FINANCIAL STATEMENTS The condensed financial statements included herein have been prepared by NationsBank, 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 June 30, 1998, and the distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 1998 and 1997 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 June 30, 1998 and for the three-month and six-month periods ended June 30, 1998 and 1997 included herein. -2- INDEPENDENT ACCOUNTANTS' REPORT NationsBank, 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 June 30, 1998 and the related condensed statements of distributable income and changes in trust corpus for the three-month and six-month periods ended June 30, 1998 and 1997. 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, 1997, 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 20, 1998, 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, 1997 is fairly stated, in all material respects, in relation to the statement of assets, liabilities and trust corpus from which it has been derived. /s/ - ---------------------- DELOITTE & TOUCHE LLP July 8, 1998 -3-
PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS - ------------------------------------------------------------------------------------------------------------ June 30, December 31, ASSETS 1998 1997 (Unaudited) Cash and short-term investments $ 271,758 $ 1,724,192 Net overriding royalty interests in producing oil and gas properties (net of accumulated amortization of $7,563,845 and $7,478,622 at June 30, 1998 and December 31, 1997, respectively) 3,411,371 3,496,594 --------- --------- $ 3,683,129 $ 5,220,786 ========= ========= LIABILITIES AND TRUST CORPUS Distribution payable to Unit holders $ 271,758 $ 1,724,192 Commitments and contingencies Trust corpus - 46,608,796 Units of beneficial interest authorized and outstanding 3,411,371 3,496,594 --------- --------- $ 3,683,129 $ 5,220,786 ========= ========= CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED) - ------------------------------------------------------------------------------------------------------------ Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1998 1997 1998 1997 Royalty income $ 1,599,573 $ 4,185,854 $ 6,852,540 $12,890,261 Interest income 7,045 14,218 17,913 25,539 --------- --------- --------- --------- 1,606,618 4,200,072 6,870,453 12,915,800 General and administrative expenditures 148,573 177,535 273,002 321,540 --------- --------- --------- --------- Distributable income $ 1,458,045 $ 4,022,537 $ 6,597,451 $12,594,260 ========= ========= ========= ========= Distributable income per Unit (46,608,796 Units) $ .031283 $ .086304 $ .141550 $ .270211 ========= ========= ========= ========= 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 Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1998 1997 1998 1997 Trust corpus, beginning of period $ 3,444,230 $ 3,672,335 $ 3,496,594 $ 3,760,939 Amortization of net overriding royalty interests (32,859) (51,520) (85,223) (140,124) Distributable income 1,458,045 4,022,537 6,597,451 12,594,260 Distributions declared (1,458,045) (4,022,537) (6,597,451) (12,594,260) ---------- ---------- ----------- ---------- Trust corpus, end of period $ 3,411,371 $ 3,620,815 $ 3,411,371 $ 3,620,815 ========== ========== ========== ========== 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 net overriding royalties conveyed to the Trust include: (1) a 75% net overriding royalty carved out of Southland Royalty Company's fee mineral interests in the Waddell ranch in Crane County, Texas (the "Waddell Ranch properties"); and (2) a 95% net overriding royalty carved out of Southland Royalty Company's major producing royalty interests in Texas (the "Texas Royalty properties"). The net overriding royalty for the Texas Royalty properties is subject to the provisions of the lease agreements under which such royalties were created. The financial statements of the Trust are prepared on the following basis: - Royalty income recorded for a month is the amount computed and paid to NationsBank, N.A. ("Trustee") as Trustee for the Trust by the interest owners: Burlington Resources Oil & Gas Company ("BROG") for the Waddell Ranch properties and Riverhill Energy Corporation ("Riverhill Energy"), formerly a wholly owned subsidiary of Riverhill Capital Corporation ("Riverhill Capital") and formerly an affiliate of Coastal Management Corporation ("CMC"), for the Texas Royalty properties. CMC currently conducts all field, technical and accounting operations on behalf of BROG with regard to the Waddell Ranch properties. CMC also conducts the accounting operations for the Texas Royalty properties on behalf of Riverhill Energy. Royalty income consists of the amounts received by the owners 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. As was previously reported, in February 1997, BROG sold its interest in the Texas Royalty properties that are subject to the Net Overriding Royalty Conveyance to the Trust dated effective November 1, 1980 ("Conveyance") to Riverhill Energy. The Trustee has been advised that in the first quarter of 1998 Schlumberger Technology Corporation acquired all of the shares of Riverhill Capital. CMC and Riverhill Energy were wholly owned subsidiaries of Riverhill Capital. The Trustee has further been advised that as part of the transaction, ownership of Riverhill Energy's interests in the Texas Royalty properties referenced above remain in Riverhill Energy which is now owned by the former shareholders of Riverhill Capital. Accounting operations pertaining to the Texas Royalty properties are being performed by CMC under the direction of Riverhill Energy. - 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. - Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust. If monthly costs exceed revenues for any conveyance ("excess costs"), such excess cannot reduce royalty income from other conveyances, but is carried forward with accrued interest to be recovered from future net proceeds of that conveyance (see Note 3). 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 -6- 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. 3. EXCESS COSTS In the calculation of royalty income for the month of June 1998, costs exceeded revenues for the Waddell Ranch properties underlying the Waddell Ranch Net Overriding Royalty Conveyance by $396,012. Such excess costs plus accrued interest must be recovered from future net proceeds of the underlying Waddell Ranch properties before these properties can again contribute to Trust royalty income. 4. CONTINGENCIES See Item 1 Legal Proceedings concerning the status of litigation matters. ****** -7- ITEM 2. TRUSTEE'S DISCUSSION AND ANALYSIS FORWARD LOOKING INFORMATION Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, and regulatory matters. Such forward looking statements generally are accompanied by words such as "estimate," "expect," "predict," "anticipate," "goal," "should," "assume," "believe," or other words that convey the uncertainty of future events or outcomes. YEAR 2000 ISSUE Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000. The Year 2000 issue affects virtually all companies and organizations. If a company or organization does not successfully address its Year 2000 issues, it may face material adverse consequences. The Trust is reliant on the performance of BROG and third party vendors for the receipt of Royalty income, payment of expenses and disbursement of distributable income. The Trust has made formal inquiries to BROG and significant third party vendors to determine the extent to which the Trust is vulnerable to BROG and third parties' failure to remediate their own Year 2000 issues. The Trustee can provide no assurance as to whether BROG and third party vendors will successfully address the Year 2000 issue. Failing to successfully address the Year 2000 issue by BROG and third party vendors could have a material adverse impact on the Trust and its Unit holders. THREE MONTHS ENDED JUNE 30, 1998 AND 1997 For the quarter ended June 30, 1998, royalty income received by the Trust amounted to $1,599,573 compared to royalty income of $4,185,854 during the second quarter of 1997. The decrease in royalty income is primarily due to a decrease in oil and gas prices in the second quarter of 1998, compared to the second quarter of 1997, as well as an increase in allocated capital expenditures in the second quarter of 1998. In the calculation of royalty income for the month of June 1998, costs exceeded revenues for the Waddell Ranch properties underlying the Waddell Ranch Net Overriding Royalty Conveyance by $396,012. Such excess costs plus accrued interest must be recovered from future net proceeds of the underlying Waddell Ranch properties before these properties can again contribute to Trust royalty income. Interest income for the quarter ended June 30, 1998, was $7,045, compared to $14,218 during the second quarter of 1997. The decrease in interest income is attributable primarily to a decrease in funds available for investment. General and administrative expenses during the second quarter of 1998 amounted to $148,573, compared to $177,535 during the second quarter of 1997. 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 June 30, 1998, of $1,458,045 or $.031283 per Unit of beneficial interest. Distributions of $.016830, $.008622 and $.005831 per Unit were made to Unit holders of record as of April 30, May 30 and June 30, 1998, respectively. For the second quarter of 1997, distributable income was $4,022,537 or $.086304 per Unit of beneficial interest. -8- Royalty income for the Trust for the second quarter of the calendar year is associated with actual oil and gas production for the period February through April 1998 from the properties from which the Trust's net overriding royalty interests ("Royalties") were carved. Oil and gas sales attributable to the Royalties and the properties from which the Royalties were carved are as follows:
Second Quarter ---------------------- 1998 1997 ROYALTIES: Oil sales (Bbls) 88,938 164,044 Gas sales (Mcf) 252,416 435,264 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 468,233 452,078 Average per day (Bbls) 5,261 5,080 Average price per Bbl $12.71 $19.38 Gas: Total gas sales (Mcf) 1,755,962 1,731,800 Average per day (Mcf) 19,730 19,458 Average price per Mcf $ 2.15 $ 2.39
The posted price of oil decreased for the second quarter of 1998, compared to the second quarter of 1997, resulting in an average price per barrel of $12.71, compared to $19.38 in the second quarter of 1997. The Trust has been advised by BROG that for the period August 1, 1993, through June 30, 1998, the oil from the Waddell Ranch properties was being sold under a competitive bid to a third party. The decrease in the average price of gas from $2.39 in the second quarter of 1997 to $2.15 in the second quarter of 1998 is primarily the result of a decrease 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 in the Royalties section of the above table do not provide a meaningful comparison. The oil and gas sales from the properties from which the Royalties are carved were relatively unchanged for the applicable period in 1998 compared to 1997. Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the second quarter of 1998 totaled $4.5 million as compared to $3.9 million for the second quarter of 1997. BROG has informed the Trust that the 1998 capital expenditures budget is $17.6 million for the Waddell Ranch properties, of which $7.5 million has been expended through the second quarter of 1998. The total amount of capital expenditures for 1997 was $11.8 million. The Trust has been advised that there were 20 gross (7 net) wells completed during the three months ended June 30, 1998, and there were 21 gross (8.125 net) wells in progress on the Waddell Ranch properties. For the three months ended June 30, 1997, there were 2 gross (.5 net) wells completed and there were 17 gross (6.875 net) wells in progress. Lease operating expense and property taxes totaled $3.8 million for the second quarter of 1998, compared to $3.3 million in the second quarter of 1997. This increase is primarily attributable to an increase in lease operating expense on the Waddell Ranch properties due to an increased number of wells operated. -9- SIX MONTHS ENDED JUNE 30, 1998 AND 1997 For the six months ended June 30, 1998, royalty income received by the Trust amounted to $6,852,540 compared to royalty income of $12,890,261 for the six months ended June 30, 1997. The decrease in royalty income is primarily due to a decrease in oil and gas prices in the first six months of 1998, compared to the first six months in 1997, as well as an increase in allocated capital expenditures in the first six months of 1998. In the calculation of royalty income for the month of June 1998, costs exceeded revenues for the Waddell Ranch properties underlying the Waddell Ranch Net Overriding Royalty Conveyance by $396,012. Such excess costs plus accrued interest must be recovered from future net proceeds of the underlying Waddell Ranch properties before these properties can again contribute to Trust royalty income. Included in the distributable income for March 1998 was approximately $1.1 million which represented the Trust's portion of an approximate $1.5 million severance tax refund received from the State of Texas by BROG, operator of record of the Waddell Ranch properties in Crane County, Texas. Interest income for the six months ended June 30, 1998 was $17,913 compared to $25,539 during the six months ended June 30, 1997. The decrease in interest income is attributable primarily to a decrease in funds available for investment. General and administrative expenses for the six months ended June 30, 1998 were $273,002. During the six months ended June 30, 1997, general and administrative expenses were $321,540. The decrease 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 six months ended June 30, 1998 of $6,597,451 or $.141550 per Unit. For the six months ended June 30, 1997, distributable income was $12,594,260 or $.270211 per Unit. Royalty income for the Trust for the period ended June 30, 1998 is associated with actual oil and gas production for the period November 1997 through April 1998 from the properties from which the Royalties were carved. Oil and gas production attributable to the Royalties and the properties from which the Royalties were carved are as follows:
First Six Months ---------------------- 1998 1997 ROYALTIES: Oil sales (Bbls) 258,828 422,261 Gas sales (Mcf) 1,015,594 1,354,339 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 903,710 891,313 Average per day (Bbls) 4,993 4,951 Average price per Bbl $14.33 $21.24 Gas: Total gas sales (Mcf) 3,538,550 3,503,081 Average per day (Mcf) 19,550 19,462 Average price per Mcf $ 2.32 $ 2.96
The average price of oil decreased during the six months ended June 30, 1998, compared to the same period in 1997, $14.33 per barrel as compared to $21.24 per barrel. The decrease in the average price of oil is primarily due to decreases in the posted price for oil. The decrease in the average price of gas from $2.96 per Mcf for the six months ended June 30, 1997 to $2.32 per Mcf for the six months ended June 30, 1998 is primarily the result of a decrease in the spot prices of natural gas. -10- 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 in the Royalties section of the above table do not provide a meaningful comparison. The oil and gas sales from the properties from which the Royalties are carved were relatively unchanged for the applicable period of 1998 compared to 1997. The Trust has been advised that 36 gross (13.62 net) productive oil wells on the Waddell Ranch properties were drilled and completed during the six months ended June 30, 1998, and that 3 gross (.5 net) productive oil wells on the Waddell Ranch properties were drilled and completed during the six months ended June 30, 1997. Capital expenditures for the Waddell Ranch properties for the six months ended June 30, 1998 totaled $7.5 million compared to $5.1 million for the same period in 1997. BROG has previously advised the Trust that the 1998 capital expenditures budget for the Waddell Ranch properties is $17.6 million. Lease operating expense and property taxes totaled $6.6 million in 1998 compared to $7.0 million in 1997. The decrease in lease operating expense is primarily attributable to timing in the payment of certain expenses pertaining to Waddell Ranch field operations. -11- 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 June 30, 1998 and 1997 respectively, were computed as shown in the table below:
Three Months Ended June 30, ------------------------------------------------------------ 1998 1997 ---------------------------- ----------------------------- 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 $4,602,226 $1,347,379 $6,435,433 $2,325,184 Gas proceeds 3,277,505 500,433 3,505,691 633,825 ---------- --------- --------- --------- Total 7,879,731 1,847,812 9,941,124 2,959,009 ---------- --------- --------- --------- Less: Severance tax: Oil 191,734 50,070 263,982 88,638 Gas (29,388) 25,837 216,617 34,096 Lease operating expense and property tax: Oil and gas 3,584,147 201,982 3,348,789 192,030 Capital expenditures 4,517,059 3,879,974 --------- -------- --------- -------- Total 8,263,552 277,889 7,709,362 314,763 --------- -------- --------- -------- Net profits (383,821) 1,569,923 2,231,762 2,644,246 Net overriding royalty interests 75% 95% 75% 95% --------- --------- -------- --------- (287,866) 1,491,427 1,673,821 2,512,033 Less: excess cost over revenues (a) 396,012 --------- --------- --------- ---------- Royalty income $ 108,146 $1,491,427 $1,673,821 $2,512,033 ========== ========== ========== ========== -12- (a) In calculating Trust royalty income for the month of June 1998, costs exceeded revenues by $396,012 for the Waddell Ranch properties underlying the Waddell Ranch Net Overriding Royalty Conveyance, dated November 1, 1980. Excess costs from one conveyance cannot reduce royalty income computed under another conveyance. Therefore, cumulative excess costs plus accrued interest must be recovered from future net proceeds of the underlying Waddell Ranch properties before these properties can again contribute to Trust royalty income.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. -13- PART II - OTHER INFORMATION Item 1. Legal Proceedings As has been previously reported, the Trust was notified in the third quarter of 1996 of the settlement of a class action lawsuit pending in the 270th District Court of Harris County, Texas (the "Court"), Cause No. 92-026182 styled Caroline Altheide and Langdon 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"), in which the Trust is a class member, remains the subject of an appeal filed by certain other class members ("Objectors"). The Trustee has been advised that the petition for review filed by the Objectors with the Texas Supreme Court was denied on June 23, 1998 and that a motion for rehearing has not been filed. One of the conditions set forth in the settlement agreement relating to the Class Action is that no settlement proceeds relating to such settlement may be distributed unless and until the judgment approving the settlement is no longer subject to further appeal and, if there is an appeal, not unless and until such judgment is affirmed or such appeal is dismissed and the time for any further proceedings in the appellate court of last resort has expired. Accordingly, there can be no distribution of settlement funds unless and until the Objectors have no further appellate procedures available. As a result of such appeal, no distribution of settlement proceeds has been made to the Trust and the Trustee does not know if or when the Trust will receive proceeds of such settlement. Items 2 through 4. Not applicable. Item 5. Other At the close of business on May 6, 1998, the Trustee merged with and into NationsBank, N.A. The Trustee is now NationsBank, N.A., successor by merger to NationsBank of Texas, N.A. as Trustee. 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 (now Burlington Resources Oil & Gas Company) and The First National Bank of Fort Worth (now NationsBank, 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 (now Burlington Resources Oil & Gas Company) to The First National Bank of Fort Worth (now NationsBank, 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. -14- (4)(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, 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 June 30, 1998. -15- 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, N.A. TRUSTEE FOR THE PERMIAN BASIN ROYALTY TRUST By /s/ Eric F. Hyden -------------------------------- Eric F. Hyden Vice President Date: August 13, 1998 (The Trust has no directors or executive officers.) -16- INDEX TO EXHIBITS Sequentially Exhibit Numbered Number Exhibit Page (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, 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, 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, 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, N.A., P.O. Box 1317, Fort Worth, Texas 76101. ** Filed herewith. 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 JUNE 30, 1998, AND THE RELATED CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME AND CHANGES IN TRUST CORPUS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1998. 6-MOS DEC-31-1998 JUN-30-1998 $271,758 0 0 0 0 $271,758 $10,975,216 $7,563,845 $3,683,129 $271,758 0 0 0 0 $3,411,371 $3,683,129 0 $6,870,453 0 0 $273,002 0 0 $6,597,451 0 $6,597,451 0 0 0 $6,597,451 0 0
-----END PRIVACY-ENHANCED MESSAGE-----