Form 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 20, 1996
(September 4, 1996)
SAN JUAN BASIN ROYALTY TRUST
_____________________________________________________
(Exact name of registrant as specified in its charter)
Texas 1-8032 75-6279898
____________________________ _________________ ___________
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) (Identification No.)
Bank One, Texas, NA, Trust Department
P. O. Box 2604, Fort Worth, Texas 76113
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 884-4630
Not applicable
____________________________________________________________
(Former name or former address, if changed since last report)
Item 1. Not Applicable.
Item 2. Not Applicable.
Item 3. Not Applicable.
Item 4. Not Applicable.
Item 5. Other Events.
See (a) Press Release dated September 4, 1996, and attached hereto
as Exhibit 99.1; and (b) Letter to Unit Holders dated September
13, 1996, and attached hereto to Exhibit 99.2.
Item 6. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) Exhibits
(99.1) Press Release dated September 4, 1996
(99.2) Letter to Unit Holders dated September 13, 1996
Item 8. Not Applicable.
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 hereunto duly authorized.
BANK ONE, TEXAS, NA
Trustee of the
San Juan Basin Royalty Trust
By: /s/ Lee Ann Anderson
________________________________
Lee Ann Anderson
Vice President
DATE: September 20, 1996
(The Trust has no directors or executive officers.)
EXHIBIT INDEX
Exhibit No. Exhibit Page
____________ _____________________________________ _____
99.1 Press Release dated September 4, 1996
99.2 Letter to Unit Holders dated September
13, 1996
EXHIBIT 99.1
SAN JUAN BASIN ROYALTY TRUST NEWS RELEASE
POST OFFICE BOX 2604
FORT WORTH, TEXAS 76113
TELEPHONE 817/884-4417
SETTLEMENT REACHED IN SAN JUAN BASIN ROYALTY TRUST LITIGATION
FORT WORTH, Texas, September 4, 1996 -- Bank One, Texas, N.A., Trustee
of the San Juan Basin Royalty Trust (the "Trust"), announced today the
settlement of the litigation filed by the Trustee against Meridian Oil Inc.
(now known as Burlington Resources Oil & Gas Company) ("Burlington") and
Southland Royalty Company in the state district court of Santa Fe County,
New Mexico in Cause No. SF 94-1982(c).
Burlington, in consideration of the release of the disputed claims
brought against it, has agreed to pay $19,750,000 in cash and to provide
the Trust certain credits pertaining to lease operating expenses and gas
gathering and processing charges. A protocol has been developed whereby
the Trustee and Burlington will work cooperatively to effect new, more
formal, financial reporting and audit procedures applicable to the Trust's
net overriding royalty interest. The Trustee and Burlington have agreed to
the transfer to others of Burlington's gas marketing obligations under the
Trust instruments and have acknowledged that benefits will be recognized by
both parties as a result of such transfer.
The $19,750,000 (or $.423739 per unit of beneficiary interest) will be
paid to the Trust on September 30 and distributed on October 15, 1996 to
unitholders of record as of September 30, 1996. This distribution will be
in addition to the regular monthly distribution on that date.
The principal asset of the Trust consists of a 75% net overriding royalty
interest carved out of certain of Southland Royalty'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").
Burlington is the operator of certain of the Trust Properties.
###
Contact: Lee Ann Anderson
Vice President
Bank One, Texas, N.A.
(817) 884-4630
San Juan Basin Royalty Trust
Post Office Box 2604
Fort Worth, Texas 76113
Telephone 817/884-4417
September 13, 1996
TO UNIT HOLDERS:
Bank One, Texas, N.A. ("Trustee"), Trustee of the San Juan Basin Royalty
Trust (the "Trust"), announced on September 4, 1996, the settlement of the
litigation (the "Litigation") filed by the Trustee against Meridian Oil,
Inc., now known as Burlington Resources Oil & Gas Company, ("Burlington")
and Southland Royalty Company. The Litigation, which was filed in the state
district court of Santa Fe County, New Mexico, Cause No. SF 94-1982(c), was
dismissed on September 12, 1996.
The principal asset of the Trust consists of a seventy-five percent
(75%) net overriding royalty interest carved out of certain of Burlington'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"). Burlington is the operator of the Trust
Properties.
The claims asserted on behalf of the Trust in the Litigation included
breach of contract, breach of the covenant of good faith and fair dealing,
breach of express good faith duty, constructive fraud, unjust enrichment,
prima facia tort, intentional interference with contract and conspiracy.
The relief sought included compensatory and punitive damages, an accounting
and an injunction relating to marketing the production from the Trust
Properties. Burlington has denied and continues to deny the allegations made
against it in the Litigation, but the parties have agreed to settle the
Litigation as outlined herein.
Burlington has agreed (i) to pay $19,750,000 in cash plus interest
earnings thereon from September 5, 1996, in settlement of underpayment of
royalty claims of the Trust; and (ii) commencing in 1997, to credit the
Trust with $250,000 per year for five years as an offset against lease
operating expenses chargeable to the Trust. Burlington also agreed to
make certain adjustments that represent cost reductions favorable to the
Trust in the ongoing charges for coal seam gas gathering and treating on
Burlington's Val Verde system. Additionally, the Trustee and Burlington
established a formal protocol that will provide the Trustee and its
representatives improved access to Burlington's books and records
applicable to the Trust Properties.
Agreement was also reached regarding marketing arrangements for the sale
of Trust gas, oil and natural gas liquids products going forward as follows:
1) Burlington's pre-existing contract with a third-party purchaser as
pertains to baseload gas volumes in the firm amount of 45,000 MMBtu per day
will remain effective for a period of one year from July 1, 1996.
Negotiations for the sale of these volumes after June 30, 1997, will be
entered into prior to the expiration of the primary term of that contract;
2) The remaining volumes of Trust gas will be marketed by an
independent marketer, El Paso Energy Marketing Company ("El Paso"), a
subsidiary of El Paso Energy Corporation, beginning October 1, 1996, under
an arrangement which provides for a sharing of amounts, if any, earned in
excess of established gas price threshholds. El Paso's compensation for
its marketing services will consist solely of its proportionate part of
any amounts for which the gas is sold in excess of the threshholds.
Burlington's contract with El Paso is for a two-year term beginning October
1, 1996, subject to renewal by agreement of the parties;
3) Burlington will continue to market the Trust oil and natural gas
liquids but will remit to the Trust actual proceeds from such sales.
Burlington will no longer use posted prices as the basis for calculating
proceeds to the Trust nor make a deduction for marketing fees associated
with sales of oil or natural gas liquids products; and
4) the Trust has retained access to Burlington's current gas
transportation, gathering, processing and treating agreements with third
parties through the remainder of their primary term. Additionally, El
Paso may utilize Burlington's eastern transportation agreement for
delivery from the San Juan Basin on El Paso Natural Gas Company pipeline to
pipelines in West Texas of up to 13,333 MMBtu per day of gas produced from
Trust properties for a period of one year commencing October 1, 1996.
Confidentiality agreements with purchasers of the gas produced from
the Trust Properties prohibit public disclosure of certain terms and
conditions of gas sales contracts with those entities, including specific
pricing terms, gas receipt points, etc. Such disclosure could compromise
the ability to compete effectively in the marketplace for the sale of gas
produced from the Trust Properties.
The $19,750,000 (or $.423739 per unit of beneficial interest) will be
paid to the Trust on September 30 and distributed on October 15, 1996, to
unit holders of record as of September 30, 1996, (the "Record Date"). The
distribution will be taxable to unit holders as of such Record Date. This
distribution will be in addition to the regular monthly distribution on
October 15.
Sincerely,
/s/ LEE ANN ANDERSON
_______________________
Lee Ann Anderson
Vice President
Bank One, Texas, N.A.
(817) 884-4630
