SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1995
Commission File No. 1-8032
SAN JUAN BASIN ROYALTY TRUST
Texas I.R.S. No. 75-6279898
Bank One, Texas, N.A., Trust Department
P. O. Box 2604
Fort Worth, Texas 76113
Telephone Number 817/884-4630
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Number of units of beneficial interest outstanding at May 15, 1995: 46,608,796
Page 1 of 15
SAN JUAN BASIN ROYALTY TRUST
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements included herein have been prepared by Bank
One, Texas, N.A. as Trustee for the San Juan 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 San Juan Basin Royalty Trust
at March 31, 1995, and the distributable income and changes in trust corpus
for the three-month periods ended March 31, 1995 and 1994 have been included.
The distributable income for such interim periods is not necessarily
indicative of the distributable income for the full year.
Deloitte & Touche L.L.P., independent certified public accountants, has made a
review of the condensed financial statements as of March 31, 1995 and for the
three-month periods ended March 31, 1995 and 1994 included herein.
-2-
INDEPENDENT ACCOUNTANTS' REPORT
Bank One, Texas, N.A. as Trustee for the
San Juan Basin Royalty Trust:
We have reviewed the accompanying condensed statement of assets, liabilities
and trust corpus of the San Juan Basin Royalty Trust as of March 31, 1995 and
the related condensed statements of distributable income and changes in trust
corpus for the three-month periods ended March 31, 1995 and 1994. These
financial statements are the responsibility of the Trustee.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
The accompanying condensed financial statements are prepared on a modified
cash basis as described in Note 1, which is a comprehensive basis of
accounting other than generally accepted accounting principles.
Based on our review, we are not aware of any material modifications that
should be made to such condensed financial statements for them to be in
conformity with the basis of accounting described in Note 1.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of assets, liabilities and trust corpus of the San
Juan Basin Royalty Trust as of December 31, 1994, 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, 1995, 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, 1994 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
- - - -----------------------------
DELOITTE & TOUCHE LLP
May 2, 1995
-3-
<TABLE>
<CAPTION>
SAN JUAN BASIN ROYALTY TRUST
CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
MARCH 31, DECEMBER 31,
ASSETS 1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash and short-term investments $ 1,480,728 $ 589,365
Net overriding royalty interest in producing
oil and gas properties (net of accumulated
amortization of $59,396,857 and $58,333,488
at March 31, 1995 and December 31, 1994,
respectively) 73,878,671 74,942,040
----------- ----------
$ 75,359,399 $ 75,531,405
=========== ==========
LIABILITIES AND TRUST CORPUS
Distribution payable to Unit holders $ 1,480,728 $ 589,365
Commitments and contingencies (Note 3)
Trust corpus - 46,608,796 Units of beneficial
interest authorized and outstanding 73,878,671 74,942,040
----------- ----------
$ 75,359,399 $ 75,531,405
=========== ==========
<CAPTION>
CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------
1995 1994
---- ----
<S> <C> <C>
Royalty income $ 4,476,479 $ 7,232,294
Interest income 7,785 8,130
---------- ----------
Total 4,484,264 7,240,424
General and administrative expenditures 261,756 179,046
---------- ----------
Distributable income $ 4,222,508 $ 7,061,378
========== ==========
Distributable income per Unit (46,608,796 Units) $ .090595 $ .151503
========== ==========
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of these statements.
-4-
<TABLE>
<CAPTION>
SAN JUAN BASIN ROYALTY TRUST
CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1995 1994
---- ----
<S> <C> <C>
Trust corpus, beginning of period $ 74,942,040 $ 79,898,032
Amortization of net overriding royalty interest (1,063,369) (1,453,159)
Distributable income 4,222,508 7,061,378
Distributions declared (4,222,508) (7,061,378)
----------- -----------
Trust corpus, end of period $ 73,878,671 $ 78,444,873
=========== ===========
</TABLE>
The accompanying notes to condensed financial statements are an integral part
of this statement.
-5-
SAN JUAN BASIN ROYALTY TRUST
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED
1. BASIS OF ACCOUNTING
The San Juan Basin Royalty Trust ("Trust") was established as of
November 1, 1980. The financial statements of the Trust are prepared
on the following basis:
* Royalty income recorded for a month is the amount computed and paid
by the interest owner, Southland Royalty Company ("Southland"), to
the Trustee for the Trust. Royalty income consists of the amounts
received by the owner of the interest burdened by the net overriding
royalty interest ("Royalty") 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%.
* Trust expenses recorded are based on liabilities paid and cash
reserves established from royalty income for liabilities and
contingencies.
* Distributions to Unit holders are recorded when declared by the
Trustee.
* The conveyance which transferred the overriding royalty interest to
the Trust provides that any excess of production costs over gross
proceeds must be recovered from future net profits.
The financial statements of the Trust differ from financial statements
prepared in accordance with generally accepted accounting principles
("GAAP") because revenues are not accrued in the month of production
and certain cash reserves may be established for contingencies which
would not be accrued in financial statements prepared in accordance
with GAAP; and amortization of the Royalty calculated on a unit-of-
production basis is charged directly to trust corpus.
2. FEDERAL INCOME TAXES
For Federal income tax purposes, the Trust constitutes a fixed
investment trust which is taxed as a grantor trust. A grantor trust
is not subject to tax at the trust level. The Unit holders are
considered to own the Trust's income and principal as though no trust
were in existence. The income of the Trust is deemed to have been
received or accrued by each Unit holder at the time such income is
received or accrued by the Trust rather than when distributed by the
Trust.
The Royalty constitutes an "economic interest" 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 Royalty is treated as a single property for
depletion purposes.
The Trust has on file technical advice memoranda confirming the tax
treatment described above.
The Trust began receiving royalty income from coal seam wells
beginning in 1989. Under Section 29 of the Internal Revenue Code,
production from coal seam gas wells drilled prior to January 1, 1993,
qualifies for the federal income tax credit for producing non-
conventional fuels. This tax credit was approximately $1.01 per MMBtu
for the year 1994 and is adjusted for inflation annually. The credit
currently applies to production through the year 2002. Each Unit
holder must determine his pro rata share of such production based upon
the number of Units owned during each month of the year and apply the
tax credit against his own income tax liability, but such credit may
not reduce his regular tax liability (after the foreign tax credit and
certain other nonrefundable credits) below his tentative minimum tax.
Section 29 also provides that any amount of Section 29 credit
disallowed for the tax
-6-
year solely because of this limitation will increase his credit for
prior year minimum tax liability, which may be carried forward
indefinitely as a credit against the taxpayer's regular tax liability,
subject, however, to the limitations described in the preceding
sentence. There is no provision for the carryback or carryforward of
the Section 29 credit in any other circumstances.
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 reduce passive losses.
3. COMMITMENTS AND CONTINGENCIES
On June 4, 1992, the Trustee filed suit against Meridian Oil Inc.
("MOI") and Southland in state district court in Rio Arriba County,
New Mexico. MOI and Southland are the operators of certain of the
Trust properties. The claims asserted on behalf of the Trust in this
lawsuit include breach of contract, violation of the operator's duties
and breach of fiduciary duty. The relief sought included compensatory
and punitive damages as well as the equitable remedy of removal of
Southland and MOI from certain positions including that of marketer of
the Trust's gas.
In response, Southland filed suit on August 7, 1992, against the
Trustee in probate court in Tarrant County, Texas. The lawsuit seeks
declaratory relief that: (I) the rights and duties of the Trustee be
governed in accordance with and by the terms and provisions of the
trust instruments which established the Trust as well as the Texas
Trust Code, (II) the Trustee cannot object to Southland's reports or
audits after 180 days, (III) the interests held by the Trust are not
subject to partition, and (IV) the Trust is without standing to remove
Southland as operator of the Trust properties. The lawsuit also seeks
to remove Bank One, Texas, N.A. as Trustee.
In a decision filed August 8, 1994, the Supreme Court of New Mexico
ruled in the lawsuit filed by the Trustee against MOI and Southland in
state district court in Rio Arriba County, New Mexico in June 1992,
that venue was not proper in Rio Arriba County and remanded the case
for dismissal without prejudice to its refiling. In its ruling, the
Supreme Court of New Mexico also ruled that venue was proper in Santa
Fe County, New Mexico. The August 8 decision does not relate to the
merits of the Trust's claims. The Trustee refiled the lawsuit in
Santa Fe County, New Mexico on August 31, 1994. The claims asserted
and the relief sought on behalf of the Trust in the suit filed in
Santa Fe County include breach of contract, breach of fiduciary duty
and breach of the covenant of good faith and fair dealing. The relief
sought includes compensatory and punitive damages, an accounting and a
permanent injunction relating to the operation of the Trust
properties. Trial is currently set in the Santa Fe County lawsuit for
October 23, 1995.
On October 3, 1994, MOI and Southland filed a motion seeking to
dismiss the newly filed lawsuit on the grounds of forum non
conveniens. MOI and Southland also filed two additional motions
seeking the dismissal of the Trust's claims of breach of fiduciary
duty and breach of the covenant of good faith and fair dealing. The
Trustee has responded to these motions. May 25, 1995 has been set as
the date for the Court to hear arguments on the motions for dismissal
filed by MOI and Southland. The Trustee has filed a motion to amend
the complaint of August 1994 in order to allege that MOI and Southland
have failed to account to the Trustee for the volumes and revenues for
a large number of wells and to drop claims relating to the amendment by
Southland of old pipeline gas purchase contracts which occurred prior
to the Burlington Resources Inc. acquisition of Southland.
In an effort to resolve the claims involved in the above referenced
lawsuits, the Trustee, Meridian and Southland have entered into
nonbinding mediation. Such efforts are continuing; however, the
ultimate outcome of such efforts cannot be determined at this time.
-7-
A resolution of this matter favorable to the Trust could possibly have
a material effect on distributable income depending upon the nature
and terms of the resolution.
4. CONTRACTS
In connection with a settlement agreement entered into effective March
1, 1990 between Southland, Gas Company of New Mexico (a division of
Public Service Company of New Mexico) ("Gas Company") and Sunterra Gas
Gathering Company (a subsidiary of Public Service Company of New
Mexico) ("Sunterra"), Southland entered into five year gas purchase
agreements replacing intrastate and interstate gas purchase agreements
in effect at that time at prices favorable under market conditions at
the time of the settlement. In addition, new gas gathering,
transportation and processing agreements were executed in connection
with the settlement. While it is impossible to determine the exact
value to be derived under these agreements, Southland has advised the
Trustee that it considers the terms of the agreements to be favorable
and of substantial additional value. Unit holders should refer to
Note 6 of Notes to Financial Statements in the Trust's 1994 Annual
Report for further discussion of these contracts and their impact upon
the Trust.
Southland Royalty has also advised the Trust that Williams Field
Service ("Williams") is in the process of purchasing the Kutz and
Lybrook processing plants and the gathering systems behind these
plants which are all currently owned by Sunterra, Gas Company and
Sunterra Gas Processing Company ("SGPC") and that new gathering and
processing agreements with Williams have been entered into which
contain acceptable rates, terms and conditions. The new agreements
will replace the current gathering and processing agreements with Gas
Company, Sunterra and SGPC and will be effective on the closing date
of the sale of these facilities to Williams.
The Trust has further been advised by Southland Royalty that MOTI has
negotiated an agreement with Gas Company providing transportation on
Gas Company's Albuquerque mainline. This agreement will also be
effective on the closing date of the sale of Gas Company's gathering
and processing facilities to Williams. This transportation agreement
will be necessary to deliver volumes of gas behind the Lybrook
processing plant to mainline delivery points.
Southland Royalty has further advised the Trust that on September 13,
1994, MOTI, one of the first purchasers of Meridian Oil Inc. producing
affiliates' gas, entered into a gas sales agreement with Gas Company
for the next five winter periods beginning November 1, 1995 and ending
March 31, 2000. MOTI will be purchasing the gas supplied for this
sale from Meridian Oil Inc. producing affiliates and other third party
sellers. Sales will be based on a monthly published index as opposed
to the previous fixed price agreement. Valid delivery points under
the agreement will be the tailgate of the Lybrook Plant, the tailgate
of the Kutz plant, the Blanco Hub, or Rio Puerco.
* * * * * *
-8-
Item 2. Trustee's Discussion and Analysis
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
During the first quarter of 1995 the San Juan Basin Royalty Trust received
royalty income of $4,476,479. Distributable income consists of royalty income
plus interest income less administrative expenses. Interest income for the
quarter was $7,785 and administrative expenses were $261,756. Thus,
distributable income totaled $4,222,508. Based on 46,608,796 Units
outstanding, the per Unit distributions were as follows:
January $ .022396
February .036430
March .031769
-------
Quarter total $ .090595
=======
The amount distributed to Unit holders in the first quarter of 1995 was less
than the $.151503 distributed in the first quarter of 1994. The decrease was
primarily attributable to a decrease in the average gas price from $1.72 per
Mcf for the first quarter of 1994 to $1.50 per Mcf for the first quarter of
1995, decreased gas production and higher capital costs. The tax credit
relating to production from coal seam wells totaled approximately $.03 per
Unit for the first quarter of 1995 compared to $.05 per Unit for the first
quarter of 1994.
Interest income for the first quarter of 1995 was less than the $8,130 in the
first quarter of 1994 due to decreased funds available for investment
partially offset by an increase in interest rates. Administrative expenses of
$261,756 were higher in the first three months of 1995 as compared to $179,046
in the first quarter of 1994 primarily as the result of a $10,000 credit
adjustment in 1994, differences in the timing of payment of certain expenses,
and increases for consulting, accounting and financial services relating to
litigation involving Bank One N.A., as Trustee, Meridian Oil Inc. ("MOI") and
Southland Royalty Company ("Southland"). (See Note 5 to Financial Statements
in the Trust's 1994 Annual Report for further information on such litigation.)
Capital expenditures incurred by Southland, attributable to the properties
from which the Royalty was carved, for the first quarter of 1995 amounted to
$2,294,638, primarily due to an increase in drilling activity. Capital
expenditures were $1,872,763 for the first quarter of 1994.
Lease operating expenses and property taxes totaled approximately $2,340,000
for the first quarter of 1995 compared to approximately $2,306,000 for the
first quarter of 1994. The increase in lease operating expense was due
primarily to normal inflation and an increase in overall activity.
In the first quarter of 1995, 3 gross (1.04 net) coal seam wells and 14 gross
(2.46 net) conventional gas wells were completed on the properties from which
the Royalty was carved. Three gross (3.00 net) coal seam wells and 16
gross (4.74 net) conventional wells were recompleted through March 31, 1995.
There were 4 gross (2.39 net) coal seam wells and 11 gross (5.85 net)
conventional wells in progress on March 31, 1995. In the first quarter of
1994, there were 6 gross (3.67 net) coal seam wells completed and 8
gross (4.78 net) coal seam wells and 19 gross (3.41 net) conventional
wells recompleted on the properties from which the Royalty was carved. There
were 4 gross (2.18 net) coal seam wells and 15 gross (2.07 net)
conventional wells in progress on March 31, 1994. Unit holders are referred
to "Description of the Properties" in the Trust's 1994 Annual Report for
further information concerning Southland's coal seam well drilling program in
the San Juan Basin. This program includes properties in which the Trust owns
an interest.
-9-
Royalty income for the Trust for the quarter ended March 31, 1995 is
associated with actual gas and oil production during November 1994 through
January 1995 from the properties from which the Royalty was carved. Gas and
oil sales for the quarters ended March 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED:
Gas:
<S> <C> <C>
Total sales (Mcf) 7,799,765 8,835,461
Mcf per day 84,780 96,038
Average price (per mcf) $1.50 $1.72
Oil:
Total sales (Bbls) 16,054 15,534
Bbls per day 175 169
Average price (per bbl) $13.96 $11.77
ROYALTIES:
Gas sales (Mcf) 3,266,783 4,582,495
Oil sales (Bbls) 7,017 8,329
</TABLE>
Gas volumes decreased in the first quarter of 1995 primarily due to lower
volumes of gas received from the San Juan 30-6 unit. Coal seam gas production
decreased from 4,984,538 Mcf in the first quarter of 1994 to 3,310,457 Mcf in
the first quarter of 1995.
The price received for gas production decreased in the first quarter of 1995
primarily due to decreases in spot prices. Southland previously informed the
Trust that contract amendments were agreed to with Gas Company of New Mexico
("Gas Company") and Sunterra Gas Gathering Company ("Sunterra") for the 1993-
1994 and 1994-1995 winter heating seasons. Under the 1994-1995 amendment, Gas
Company and Sunterra were required to purchase at the wellhead, an average
volume of 10.529 MMBtu per day at $2.884 per MMBtu for the period beginning
November 1, 1994 and ending March 31, 1995, and an additional 14,900 MMBtu per
day at $3.146 MMBtu for the period beginning December 1, 1994, and ending
February 28, 1995. Gas Company and Sunterra have been granted a make-up
period of four months beginning April 1, 1995, to fulfill this purchase
obligation. Gas Company and Sunterra have also been granted recall rights on
volumes up to 15,000 MMBtu per day at the tailgate of the Kutz and Lybrook
plants, provided they have nominated the full contract volume specified above.
The price for recall gas will be average of the first and second issues of the
Inside FERC EPNG SJ Index.
Southland Royalty has further advised the Trust that on September 13, 1994,
MOTI, one of the first purchasers of Meridian Oil Inc. producing affiliates'
gas, entered into a gas sales agreement with Gas Company for the next five
winter periods beginning November 1, 1995 and ending March 31, 2000. MOTI
will be purchasing the gas supplied for this sale from Meridian Oil Inc.
producing affiliates and other third party sellers. Sales will be based on a
monthly published index as opposed to the previous fixed price of $2.884 per
MMBtu discussed above. Valid delivery points under the agreement will be the
tailgate of the Lybrook Plant, the tailgate of the Kutz plant, the Blanco Hub,
or Rio Puerco.
Southland Royalty has also advised the Trust that Williams Field Service
("Williams") is in the process of purchasing the Kutz and Lybrook processing
plants and the gathering systems behind these plants which are all currently
owned by Sunterra, Gas Company and Sunterra Gas Processing Company ("SGPC") and
that new gathering and processing agreements with Williams have been entered
into which contain acceptable rates, terms and conditions. The new agreements
will replace the current gathering and processing agreements with Gas Company,
Sunterra and SGPC and will be effective on the closing date of the sale of
these facilities to Williams.
-10-
The Trust has further been advised by Southland Royalty that MOTI has
negotiated an agreement with Gas Company providing for transportation on Gas
Company's Albuquerque mainline. This agreement will also be effective on the
closing date on the sale of Gas Company's gathering and processing facilities
to Williams. This transportation agreement will be necessary to deliver
volumes of gas behind the Lybrook processing plant to mainline delivery
points.
The price received per barrel of oil in the first quarter of 1995 was higher
than that received in the first quarter of 1994 due to increases in the posted
prices. Since the gas and oil sales attributable to the Royalty are based on
an allocation formula that is dependent on such factors as price and cost
(including capital expenditures), those production volumes do not provide a
meaningful comparison.
-11-
<TABLE>
<CAPTION>
CALCULATION OF ROYALTY INCOME
Royalty income received by the Trust for the three months ended March 31, 1995
and 1994 was computed as shown in the following table:
Three Months Ended
March 31,
--------------------------------
1995 1994
---- ----
<S> <C> <C>
Gross proceeds of sales from the properties from
which the net overriding royalty was carved:
Gas proceeds $ 11,671,158 $ 15,238,435
Oil proceeds 224,177 182,805
---------- ----------
Total 11,895,335 15,421,240
---------- ----------
Less production costs:
Severance tax - Gas 1,271,066 1,585,580
Severance tax - Oil 21,115 13,762
Lease operating expense and property tax 2,339,878 2,306,077
Capital expenditures 2,294,638 1,872,763
---------- ----------
Total 5,926,697 5,778,182
---------- ----------
Net profits 5,968,638 9,643,058
Net overriding royalty interest 75% 75%
---------- ----------
Royalty income $ 4,476,479 $ 7,232,294
=========== ===========
</TABLE>
-12-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Trustee of the San Juan Basin Royalty Trust (the
"Trust"), has filed suit against Meridian Oil Inc. ("MOI")
and Southland Royalty Company ("Southland") in state
district court in Rio Arriba County, New Mexico, Cause No.
RA 92-1211(C).
The principal asset of the Trust consists of a seventy-
five percent (75%) net overriding royalty interest carved
out of certain of Southland's oil and gas leasehold and
royalty interests in the San Juan Basin located in San
Juan, Rio Arriba and Sandoval counties of northwestern New
Mexico (the "Trust Properties"). MOI and Southland are
the operators of the Trust Properties.
The claims asserted on behalf of the Trust in the lawsuit
include breach of contract, violation of the operator's
duties and breach of fiduciary duty. The relief sought
includes compensatory and punitive damages as well as the
equitable remedies of removal of Southland and MOI from
certain positions including that of marketer of the
Trust's gas.
In response, Southland filed suit on August 7, 1992
against the Trustee in probate court in Tarrant County,
Texas, Cause No. 92-1927-2. The lawsuit seeks declaratory
relief that: (i) the rights and duties of the Trustee be
governed in accordance with and by the terms and
provisions of the trust instruments which established the
Trust as well as the Texas Trust Code, (ii) the Trustee
cannot object to Southland's reports or audits after 180
days, (iii) the interests held by the Trust are not
subject to partition, and (iv) the Trust is without
standing to remove Southland as operator of the Trust
properties. The lawsuit also seeks to remove Bank One,
Texas, N.A. as Trustee.
In a decision filed August 8, 1994, the Supreme Court of
New Mexico ruled in the lawsuit filed by the Trustee
against MOI and Southland in state district court in Rio
Arriba County, New Mexico in June 1992, that venue was not
proper in Rio Arriba County and remanded the case for
dismissal without prejudice to its refiling. In its
ruling, the Supreme Court of New Mexico also ruled that
venue was proper in Santa Fe County, New Mexico. The
August 8 decision does not relate to the merits of the
Trust's claims. The Trustee refiled the lawsuit in Santa
Fe County, New Mexico on August 31, 1994. The claims
asserted and the relief sought on behalf of the Trust in
the suit filed in Santa Fe County include breach of
contract, breach of fiduciary duty and breach of the
covenant of good faith and fair dealing. The relief
sought includes compensatory and punitive damages, an
accounting and a permanent injunction relating to the
operation of the Trust properties. Trial is currently set
in the Santa Fe County lawsuit for October 23, 1995.
On October 3, 1994, MOI and Southland filed a motion seeking
to dismiss the newly filed lawsuit on the grounds of forum
non conveniens. MOI and Southland also filed two additional
motions seeking the dismissal of the Trust's claims of breach
of fiduciary duty and breach of the covenant of good faith
and fair dealing. The Trustee has responded to these
motions. May 25, 1995 has been set as the date for the Court
to hear arguments on the motions for dismissal filed by MOI
and Southland. The Trustee has filed a motion to amend the
complaint of August 1994 in order to allege that MOI and
Southland have failed to account to the Trustee for the volumes
and revenues for a large number of wells and to drop claims
relating to the amendment by Southland of old pipeline gas
purchase contracts which occurred prior to the Burlington
Resources Inc. acquisition of Southland.
In an effort to resolve the claims involved in the above
referenced lawsuits, the Trustee, Meridian and Southland have
entered into nonbinding mediation. Such efforts are
continuing; however, the ultimate outcome of such efforts
cannot be determined at this time.
-13-
A resolution of this matter favorable to the Trust could
possibly have a material effect on distributable income
depending upon the nature and terms of the resolution.
Items 2-5 Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(4)(a) San Juan Basin Royalty Trust Indenture
dated November 3, 1980, between
Southland Royalty Company and The Fort
Worth National Bank (now Bank One,
Texas, N.A.), as Trustee, heretofore
filed as Exhibit (4)(a) to the Trust's
Annual Report on Form 10-K to the
Securities and Exchange Commission for
the fiscal year ended December 31,
1980 is incorporated herein by
reference.
(4)(b) Net Overriding Royalty Conveyance from
Southland Royalty Company to The Fort
Worth National bank (now Bank One,
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.
(27) Financial Data Schedule
(b) No reports on Form 8-K have been filed during
the quarter for which this report is filed.
-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.
BANK ONE, TEXAS, N.A. AS TRUSTEE FOR THE
SAN JUAN BASIN ROYALTY TRUST
/s/Lee Ann Anderson
By --------------------------------------
Lee Ann Anderson
Vice President
Dated as of May 15, 1995
(The Trust has no directors or executive officers.)
-15-
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- - - --------- ------- -------------
(4)(a) San Juan Basin Royalty Trust Indenture dated November 3,
1980, between Southland Royalty Company and The Fort Worth
National Bank (now Bank One, Texas, N.A.), as Trustee,
heretofore filed as Exhibit (4)(a) to the Trust's Annual
Report on Form 10-K to the Securities and Exchange
Commission for the fiscal year ended December 31, 1980 is
incorporated herein by reference. *
(4)(b) Net Overriding Royalty Conveyance from Southland Royalty
Company to The Fort Worth National Bank (now Bank One,
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. *
(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, Bank One, Texas, NA,
P.O. Box 2604, Fort Worth, Texas 76113.
** 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
San Juan Basin Royalty Trust as of March 31, 1995, and the related
condensed statements of distributable income and changes in trust corpus
for the three-month period ended March 31, 1995.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,480,728
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,480,728
<PP&E> 133,275,528
<DEPRECIATION> 59,396,857
<TOTAL-ASSETS> 75,359,399
<CURRENT-LIABILITIES> 1,480,728
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 73,878,671
<TOTAL-LIABILITY-AND-EQUITY> 75,359,399
<SALES> 0
<TOTAL-REVENUES> 4,484,264
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 261,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,222,508
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,222,508
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,222,508
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
