<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _________
Commission File Number 1-12474
Torch Energy Royalty Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 74-6411424
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1100 North Market Street, Wilmington, Delaware 19890
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 302/651-8584
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
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 (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
<PAGE>
TORCH ENERGY ROYALTY TRUST
PART 1 - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
INTRODUCTION
The financial statements included herein have been prepared by Torch Energy
Advisors Incorporated ("Torch"), pursuant to an administrative services
agreement between Torch and Torch Energy Royalty Trust (the "Trust"), pursuant
to the rules and regulations of the Securities and Exchange Commission.
Wilmington Trust Company serves as the trustee ("Trustee") of the Trust pursuant
to the trust agreement dated October 1, 1993. Certain information and footnote
disclosures normally included in the annual financial statements have been
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 financial statements be read in
conjunction with the December 31, 1996 financial statements and notes thereto
included in the Trust's latest annual report on Form 10-K. In the opinion of
Torch, all adjustments necessary to present fairly the assets, liabilities and
trust corpus of the Trust as of March 31, 1997 and December 31, 1996, the
distributable income and changes in trust corpus for the three-month periods
ended March 31, 1997 and 1996 have been included. All such adjustments are of a
normal recurring nature. The distributable income for such interim periods is
not necessarily indicative of the distributable income for the full year.
The financial statements as of March 31, 1997 and for the three-month periods
ended March 31, 1997 and 1996 included herein have been reviewed by Deloitte &
Touche LLP, independent public accountants, as stated in their report appearing
herein.
2
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Wilmington Trust Company
as Trustee of Torch Energy Royalty Trust
and the Unitholders:
We have reviewed the accompanying statement of assets, liabilities and trust
corpus of the Torch Energy Royalty Trust as of March 31, 1997 and the related
statements of distributable income and changes in trust corpus for the three-
month periods ended March 31, 1997 and 1996. 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 of 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.
As described in Note 2 to the financial statements, these financial statements
were prepared on the modified cash basis of accounting, 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 financial statements for them to be in conformity with the basis
of accounting described in Note 2.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of assets, liabilities and trust corpus of Torch Energy
Royalty Trust as of December 31, 1996, 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 18, 1997, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying statement of assets, liabilities and
trust corpus as of December 31, 1996 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
Houston, Texas
April 30, 1997
3
<PAGE>
TORCH ENERGY ROYALTY TRUST
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, 1997 December 31,1996
-------------- ----------------
(Unaudited)
<S> <C> <C>
Cash............................................. $ 7 $ 3
Net profits interests in oil and gas properties
(Net of accumulated amortization of $62,595
and $59,077 at March 31, 1997 and
December 31, 1996, respectively)................ 118,005 121,523
-------- --------
$118,012 $121,526
======== ========
LIABILITIES AND TRUST CORPUS
Trust expense payable............................ $ 171 $ 164
Trust corpus..................................... 117,841 121,362
-------- --------
$118,012 $121,526
======== ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
4
<PAGE>
TORCH ENERGY ROYALTY TRUST
STATEMENTS OF DISTRIBUTABLE INCOME
(In thousands, except per Unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
--------- ---------
<S> <C> <C>
Net profits income......................... $4,579 $4,747
Interest income............................ 2 7
------ ------
4,581 4,754
------ ------
General and administrative expenses........ 164 149
------ ------
Distributable income....................... $4,417 $4,605
====== ======
Distributable income
per Unit (8,600,000 Units)................ $ .51 $ .54
====== ======
Distributions per Unit..................... $ .51 $ .54
====== ======
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
5
<PAGE>
TORCH ENERGY ROYALTY TRUST
STATEMENTS OF CHANGES IN TRUST CORPUS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Trust corpus, beginning of period...... $121,362 $137,014
Amortization of net profits interests.. (3,518) (4,429)
Distributable income................... 4,417 4,605
Distributions to Unitholders........... (4,420) (4,601)
-------- --------
Trust corpus, end of period............ $117,841 $132,589
======== ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
6
<PAGE>
TORCH ENERGY ROYALTY TRUST
1. Trust Organization and Nature of Operations
The Torch Energy Royalty Trust ("Trust") was formed effective October 1, 1993,
pursuant to a trust agreement ("Trust Agreement") among Wilmington Trust
Company, as trustee ("Trustee"), Torch Royalty Company ("TRC") and Velasco Gas
Company, Ltd. ("Velasco") as owners of certain oil and gas properties
("Underlying Properties") and Torch Energy Advisors Incorporated ("Torch") as
grantor. TRC and Velasco created net profits interests ("Net Profits
Interests") and conveyed such interests to Torch. Torch conveyed the Net
Profits Interests to the Trust in exchange for an aggregate of 8,600,000 units
of beneficial interest ("Units"). Such Units were sold to the public through
various underwriters beginning November 1993. Pursuant to the Trust Agreement,
Torch provides accounting, bookkeeping, informational and other services related
to the Net Profits Interests.
The Underlying Properties constitute working interests in the Chalkley Field in
Louisiana ("Chalkley Field"), the Robinson's Bend Field in the Black Warrior
Basin in Alabama ("Robinson's Bend Field"), fields that produce from the Cotton
Valley formations in Texas ("Cotton Valley Fields") and fields that produce from
the Austin Chalk formation in Texas ("Austin Chalk Fields"). Sales of coal seam
and tight sands gas attributable to the Net Profits Interests between November
23, 1993 and January 1, 2003 result in the unitholders ("Unitholders") receiving
quarterly allocations of tax credits under Section 29 of the Internal Revenue
Code of 1986 ("Section 29 Credits"). The Section 29 Credit available for 1996
and 1995 production from qualifying coal seam properties was approximately $1.03
and $1.01, respectively, for each MMBtu of gas produced and sold. This rate is
adjusted annually for inflation. The Section 29 Credit available for production
from qualifying tight sands properties is approximately $0.52 for each MMBtu of
gas produced and sold, and such amount is not adjusted for inflation.
The only assets of the Trust, other than cash and temporary investments being
held for the payment of expenses and liabilities and for distribution to
Unitholders, will be the Net Profits Interests. The Net Profits Interests
(other than the Net Profits Interest covering the Robinson's Bend Field) entitle
the Trust to receive 95% of the Net Proceeds ("Net Proceeds") attributable to
oil and gas produced and sold from wells (other than infill wells) on the
Underlying Properties. Net Proceeds are generally defined as gross revenues
received from the sale of production attributable to the Underlying Properties
during any period less property, production, severance and similar taxes, and
development, operating, and certain other costs. In calculating Net Proceeds
from the Robinson's Bend Field, operating and development costs incurred prior
to January 1, 2003 are not deducted. In addition, the amounts paid to the Trust
from the Robinson's Bend Field during any calendar quarter are subject to a
volume limitation ("Volume Limitation") equal to the gross proceeds from the
sale of 912.5
7
<PAGE>
TORCH ENERGY ROYALTY TRUST
MMcf of gas, less property, production, severance and related taxes. The
production for the three-month periods ended December 31, 1996 and 1995 from the
Underlying Properties in the Robinson's Bend Field was approximately 15%
(138,634 Mcf) and 6.2% (56,149 Mcf), respectively, below the Volume Limitation.
The Net Profits Interests also entitle the Trust to 20% of the aggregate gross
proceeds received from the sale of production from Infill Wells (as defined
below) less operating and development costs and taxes ("Infill Net Proceeds").
Infill Wells mean any wells drilled on the Underlying properties to formations
in which the Trust has an interest, other that wells drilled to replace damaged
or destroyed wells. As of December 31, 1996, drilling commenced for one infill
well in the Cotton Valley Fields. Net profits income for the quarter ended
March 31, 1997 (generated by production during the quarter ended December 31,
1996) was not impacted by this infill well as the well's gross proceeds did not
exceed costs and expenses.
2. Basis of Accounting
The financial statements of the Trust are prepared on a modified cash basis and
are not intended to present the financial position and results of operations in
conformity with generally accepted accounting principles ("GAAP"). Preparation
of the Trust's financial statements on such basis includes the following:
- - Revenues are recognized in the period in which amounts are received by the
Trust. Therefore, revenues recognized during the three-month periods ended
March 31, 1997 and 1996 are derived from oil and gas production sold during
the three-month periods ended December 31, 1996 and 1995, respectively.
General and administrative expenses are recognized on an accrual basis.
- - Amortization of the Net Profits Interests is calculated on a unit-of-
production basis and charged directly to trust corpus.
- - Distributions to Unitholders are recorded when declared by the Trustee.
- - The Net Profits Interests in oil and gas properties is limited to the sum
of future net cash flows attributable to the Trust's oil and gas reserves
at year end using current product prices plus the estimated future Section
29 Credit for Federal income tax purposes. If the net amount of net
profits interests in oil and gas properties exceeds this amount, an
impairment provision will be recorded and charged to the trust corpus.
The financial statements of the Trust differ from financial statements prepared
in accordance with GAAP because net profits income is not accrued in the period
of
8
<PAGE>
TORCH ENERGY ROYALTY TRUST
production and amortization of the Net Profits Interests is not charged
against operating results.
3. Federal Income Taxes
Tax counsel has advised the Trust that, under current tax law, the Trust is
classified as a grantor trust for Federal income tax purposes and not an
association taxable as a corporation. However, the opinion of tax counsel is
not binding on the Internal Revenue Service. As a grantor trust, the Trust is
not subject to Federal income tax.
Because the Trust is treated as a grantor trust for Federal income tax purposes
and a Unitholder is treated as directly owning an interest in the Net Profits
Interests, each Unitholder is taxed directly on such Unitholder's pro rata share
of income attributable to the Net Profits Interests consistent with the
Unitholder's method of accounting and without regard to the taxable year or
accounting method employed by the Trust. Amounts payable with respect to the
Net Profits Interests are paid to the Trust on the quarterly record date
established for quarterly distributions in respect to each calendar quarter
during the term of the Trust, and the income, deductions and income tax credits
relating to Section 29 Credits resulting from such payments are allocated to the
Unitholders of record on such date.
4. Distributions and Income Computations
Distributions are determined for each quarter and are based on the amount of
cash available for distribution to Unitholders. Such amount (the "Quarterly
Distribution Amount") is equal to the excess, if any, of the cash received by
the Trust, on the last day of the second month following the previous calendar
quarter (or the next business day thereafter) ending prior to the dissolution of
the Trust, from the Net Profits Interests then held by the Trust plus, with
certain exceptions, any other cash receipts of the Trust during such quarter,
subject to adjustments for changes made during such quarter in any cash reserves
established for the payment of contingent or future obligations of the Trust.
Based on the payment procedures relating to the Net Profits Interests, cash
received by the Trust on the last day of the second month of a particular
quarter from the Net Profits Interests generally represents proceeds from the
sale of oil and gas produced from the Underlying Properties during the preceding
calendar quarter. The Quarterly Distribution Amount for each quarter is payable
to Unitholders of record on the last day of the second month of the calendar
quarter unless such day is not a business day in which case the record date is
the next business day thereafter. The Quarterly Distribution Amount is
distributed within approximately 10 days after the record date to each person
who was a Unitholder of record on the associated record date.
9
<PAGE>
TORCH ENERGY ROYALTY TRUST
5. Related Party Transactions
Marketing Arrangements
TRC and Velasco, as owners of the Underlying Properties subject to and burdened
by the Net Profits Interests, contracted to sell the oil and gas production from
such properties to Torch Energy Marketing, Inc. ("TEMI"), a subsidiary of Torch,
under a purchase contract ("Purchase Contract"). Under the Purchase Contract,
TEMI is obligated to purchase all net production attributable to the Underlying
Properties for an index price for oil and gas ("Index Price"), less certain
gathering, treating and transportation charges, which are calculated monthly.
The Index Price equals 97% of the average spot market prices of oil and gas
("Average Market Prices") at the four locations where TEMI sells production,
which, prior to September 1, 2000, is adjusted to reflect the terms of a hedge
contract ("Hedge Contract") to which TEMI is a party. Under the Hedge Contract,
TEMI receives prices specified in the Hedge Contract ("Specified Prices") for
quantities of oil and gas specified therein ("Specified Quantities"). While the
Index Price calculation reflects the terms of the Hedge Contract, the Trust's
net profits income is not impacted by payments or receipts made by or received
by TEMI in connection with its participation in the Hedge Contract. In
calculating the Index Price for gas (which represents approximately 97% of the
estimated reserves as of January 1, 1997, on an Mcfe basis), the Specified
Prices currently receive a weighting of approximately 60% and decline to less
than 10%, and the Average Market Prices receive the balance of the weighting.
The Specified Prices for gas increase each year from $1.81 per MMBtu in 1995 to
$1.89 per MMBtu in 2000 and are adjusted to reflect the difference between the
settlement prices for oil and gas in the futures markets and the Average Market
Prices.
The Purchase Contract also provides that the minimum price paid by TEMI for gas
production is $1.70 per MMBtu ("Minimum Price"). When TEMI pays a purchase
price based on the Minimum Price, it receives price credits ("Price Credits")
equal to the difference between the Index Price and the Minimum Price that it is
entitled to deduct in determining the purchase price when the Index Price for
gas exceeds the Minimum Price. As of March 31, 1997, TEMI had no accumulated
Price Credits. Price credits in the amount of $330,000, net to the Trust, were
deducted in calculating the purchase price related to production during the
quarter ended December 31, 1996. In addition, if the Index Price for gas
exceeds $2.10 per MMBtu, TEMI is entitled to deduct 50% of such excess ("Price
Differential") from the purchase price. Beginning January 1, 2001, TEMI has an
annual option to discontinue the Minimum Price commitment. However, if TEMI
discontinues the Minimum Price commitment, it will no longer be entitled to
10
<PAGE>
TORCH ENERGY ROYALTY TRUST
deduct the Price Differential in calculating the purchase price and will forfeit
all accrued Price Credits. TEMI has purchased put option contracts granting
TEMI the right to sell estimated gas production in excess of the Specified
Quantities at a price intended to limit TEMI's losses in the event the Index
Price falls below the Minimum Price. Gross revenues (before deductions for
applicable gathering, treating and transportation charges) from TEMI included in
net profits income for the three months ended March 31, 1997 and 1996 were
$5,932,000, and $6,251,000, respectively.
Gathering, Treating and Transportation Arrangements
The Purchase Contract entitles TEMI to deduct certain gas gathering, treating
and transportation costs in calculating the purchase price for gas in the
Robinson's Bend, Austin Chalk and Cotton Valley Fields. The amounts that may be
deducted in calculating the purchase price for such gas are set forth in the
Purchase Contract and are not affected by the actual costs incurred by TEMI to
gather, treat and transport gas. For the Robinson's Bend Field, TEMI is entitled
to deduct a gathering, treating and transportation fee of $0.26 per MMBtu
adjusted for inflation ($0.272 and $0.265 per MMBtu for 1996 and 1995
production, respectively), plus fuel usage equal to 5% of revenues, payable to
Bahia Gas Gathering, Ltd. ("Bahia"), a former affiliate of Torch, pursuant to a
gas gathering agreement. On October 1, 1996, Bahia was merged into TEMI.
Amounts that would have been previously payable to Bahia from TEMI will continue
to be deducted by TEMI. Additionally, a fee of $0.05 per MMBtu, representing a
gathering fee payable to a non-affiliate of Torch, is deducted in calculating
the purchase price for production from 68 of the 410 wells in the Robinson's
Bend Field. TEMI also deducts $0.38 per MMBtu plus 17% of revenues in
calculating the purchase price for production from the Austin Chalk Fields, as a
fee to gather, treat and transport gas production. TEMI is entitled to deduct a
transportation fee of $.045 per MMBtu, payable to a third party, from
production attributable to certain wells in the Cotton Valley Fields. During
the three months ended March 31, 1997 and 1996, gathering, treating and
transportation fees charged by TEMI, attributable to production during the three
months ended December 31, 1996 and 1995 in the Robinson's Bend, Austin Chalk and
Cotton Valley Fields, totaled $544,000 and $511,000, respectively. No amounts
for gathering, treating or transportation are deducted in calculating the
purchase price from the Chalkley Field.
Administrative Services Agreement
Pursuant to the Trust Agreement, Torch and the Trust entered into an
administrative services agreement effective October 1, 1993. The Trust is
obligated, throughout the term of the Trust, to pay to Torch each quarter an
administrative services fee for accounting, bookkeeping, informational and other
services relating to the Net Profits Interests. The administrative services fee
is $87,500 per calendar quarter commencing
11
<PAGE>
TORCH ENERGY ROYALTY TRUST
October 1, 1993. The amount of the administrative services fee is adjusted
annually based upon the change in the Producer's Price Index as published by the
Department of Labor, Bureau of Labor Statistics. Administrative services fees
paid by the Trust to Torch during the three months ended March 31, 1997 and 1996
were $92,000 and $89,000 per period, respectively.
On September 30, 1996, Torch Acquisition Company, a company formed by executive
management of Torch, acquired all of the outstanding shares of capital stock of
Torch from United Investors Management Company ("United"), a subsidiary of
Torchmark Corporation. Immediately prior to this transaction, Torch distributed
all of the outstanding capital stock of TRC to United. None of the obligations
of Torch or TRC to the Trust were changed as a result of such transfers and
Torch believes that such transfers will not adversely affect the Trust or the
Unitholders.
Compensation of the Trustee and Transfer Agent
The Trust Agreement provides that the Trustee be compensated for its
administrative services, out of the Trust assets, in an annual amount of
$41,000, plus an hourly charge for services in excess of a combined total of 250
hours annually at its standard rate. The Trustee receives a transfer agency fee
of $5.00 annually per account (minimum of $15,000 annually), subject to change
each December, beginning December 1994, based upon the change in the Producer's
Price Index as published by the Department of Labor, Bureau of Labor Statistics,
plus $1.00 for each certificate issued. Total administrative and transfer agent
fees paid by the Trust to the Trustee during the three months ended March 31,
1997 and 1996 were $14,000 per period. The Trustee is also entitled to
reimbursement for out-of-pocket expenses.
12
<PAGE>
TORCH ENERGY ROYALTY TRUST
ITEM 2. TRUSTEE'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Because a modified cash basis of accounting is utilized by the Trust, net
profits income of the Trust for the three months ended March 31, 1997 and 1996
is derived from actual oil and gas produced during the three months ended
December 31, 1996 and 1995, respectively. Oil and gas sales attributable to the
working interests burdened by the Underlying Properties for such periods are as
follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------
1997 1996
----------------- -----------------
Bbls Mcf Bbls Mcf
of Oil of Gas of Oil of Gas
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Chalkley Field 12,918 1,199,978 19,472 1,618,622
Robinson's Bend Field --- 814,596 --- 901,422
Cotton Valley Fields 1,840 398,798 2,356 438,830
Austin Chalk Fields 20,604 190,304 18,162 185,098
------ --------- ------ ---------
35,362 2,603,676 39,990 3,143,972
====== ========= ====== =========
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
For the three months ended March 31, 1997, net profits income was $4,579,000,
down 4% from net profits income of $4,747,000 for the same period in 1996. Such
decrease is primarily due to a decline in oil and gas production attributable to
the Underlying Properties.
Gas production attributable to the Underlying Properties for the three months
ended March 31, 1997 was 2,603,676 Mcf, or 17% lower than gas production of
3,143,972 Mcf for the same period in 1996. Oil production attributable to the
Underlying Properties for the three months ended March 31, 1997 was 35,362 Bbls,
as compared to 39,990 Bbls for the same period in 1996. Such decreases in
production are mainly due to normal production declines.
The average price paid to the Trust during the three months ended March 31, 1997
was $1.92 per MMBtu for gas and $18.17 per Bbl for oil as compared to $1.70 per
MMBtu for gas $16.28 per Bbl for oil during the same period in 1996. When TEMI
pays a purchase price for gas based on the Minimum Price of $1.70 per MMBtu,
TEMI receives Price Credits which it is entitled to deduct in determining the
purchase price when the Index Price for gas exceeds the Minimum Price. As of
March 31, 1997, TEMI had no accrued Price Credits. Price Credits in the amount
of $330,000, net to the
13
<PAGE>
TORCH ENERGY ROYALTY TRUST
Trust, were deducted in calculating the purchase price related to production for
the three months ended December 31, 1996.
General and administrative expenses amounted to $164,000 for the three months
ended March 31, 1997 as compared to $149,000 during the three months ended March
31, 1996. These expenses primarily relate to administrative services provided
by Torch and the Trustee.
The foregoing resulted in distributable income of $4,417,000, or $.51 per Unit,
for the three months ended March 31, 1997 as compared to $4,605,000 or $.54 per
Unit, for the same period in 1996. On March 10, 1997, the Trust made a
distribution to Unitholders of record on February 28, 1997. The Section 29
Credits relating to this distribution, generated from production during the
three months ended December 31, 1996, was approximately $.10 per Unit.
14
<PAGE>
TORCH ENERGY ROYALTY TRUST
Net profits income received by the Trust during the three months ended March 31,
1997 and 1996, derived from production sold during the three months ended
December 31, 1996 and 1995, respectively, was computed as shown in the following
tables:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-------------------------------------------------
CHALKLEY,
COTTON VALLEY
AND ROBINSON'S
AUSTIN CHALK BEND
FIELDS FIELD TOTAL
---------------- ------------- ----------------
<S> <C> <C> <C>
Oil and gas revenues $4,120 $1,267
------ ------
Direct operating expenses:
Lease operating expenses and
property tax................... 573 ---
Severance tax................... 195 63
------ ------
768 63
------ ------
Net proceeds before capital
expenditures................... 3,352 1,204
Capital expenditures............ (201) ---
------ ------
Net proceeds.................... 3,553 1,204
Net profits percentage.......... 95% N/A
------ ------
Net profits income.............. $3,375 $1,204 $4,579
====== ====== ======
</TABLE>
15
<PAGE>
TORCH ENERGY ROYALTY TRUST
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
----------------------------------------------
CHALKLEY,
COTTON VALLEY
AND ROBINSON'S
AUSTIN CHALK BEND
FIELDS FIELD TOTAL
---------------- -------------- --------
<S> <C> <C> <C>
Oil and gas revenues............... $4,513 $1,227
------ ------
Direct operating expenses:
Lease operating expenses and
property tax................. 520 ---
Severance tax................. 183 71
------ ------
703 71
------ ------
Net proceeds before capital
expenditures............. 3,810 1,156
Capital expenditures............ 30 ---
------ ------
Net proceeds.................... 3,780 1,156
Net profits percentage.......... 95% N/A
------ ------
Net profits income.............. $3,591 $1,156 $4,747
====== ====== ======
</TABLE>
16
<PAGE>
TORCH ENERGY ROYALTY TRUST
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF UNITHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 - Financial Data Schedule.
17
<PAGE>
TORCH ENERGY ROYALTY TRUST
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.
TORCH ENERGY ROYALTY TRUST
By: Wilmington Trust Company,
Trustee
By:/s/ Bruce L. Bisson
-------------------
Vice President
Date: May 8, 1997
(The Trust has no employees, directors or executive officers.)
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 118,005
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,012
<CURRENT-LIABILITIES> 171
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 117,841
<TOTAL-LIABILITY-AND-EQUITY> 118,012
<SALES> 0
<TOTAL-REVENUES> 4,581
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 164
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,417
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,417
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
