<PAGE> 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
<PAGE> 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.
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<PAGE> 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
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<PAGE> 4
PERMIAN BASIN ROYALTY TRUST
CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
(UNAUDITED)
<S> <C> <C>
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
============ ============
</TABLE>
CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
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
=========== =========== =========== ===========
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these statements.
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<PAGE> 5
PERMIAN BASIN ROYALTY TRUST
CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
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
============ ============ ============ ============
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these statements.
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<PAGE> 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.
******
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<PAGE> 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:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1996 1995
<S> <C> <C>
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
</TABLE>
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 -
<PAGE> 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 -
<PAGE> 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:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1995
<S> <C> <C>
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
</TABLE>
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 -
<PAGE> 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:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------
1996 1995
------------------------- --------------------------
WADDELL TEXAS WADDELL TEXAS
RANCH ROYALTY RANCH ROYALTY
PROPERTIES PROPERTIES PROPERTIES PROPERTIES
<S> <C> <C> <C> <C>
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
=========== =========== =========== ===========
</TABLE>
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<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
<S> <C>
(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 **
</TABLE>
* 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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,116,478
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,116,478
<PP&E> 10,975,216
<DEPRECIATION> 7,127,723
<TOTAL-ASSETS> 6,963,971
<CURRENT-LIABILITIES> 3,116,478
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,847,492
<TOTAL-LIABILITY-AND-EQUITY> 6,963,971
<SALES> 0
<TOTAL-REVENUES> 7,070,016
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 106,898
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,963,118
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,963,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,963,118
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
