-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SpTdrx6zxP8GVLuMfFGnd89TOVhfAUvC9ZHA/minsiGWvEJF3tTYw8iCpEJrEtCP 3ADI1NHfX/gzNqBK62vlrg== 0000912057-01-515215.txt : 20010515 0000912057-01-515215.hdr.sgml : 20010515 ACCESSION NUMBER: 0000912057-01-515215 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MESA ROYALTY TRUST/TX CENTRAL INDEX KEY: 0000313364 STANDARD INDUSTRIAL CLASSIFICATION: OIL ROYALTY TRADERS [6792] IRS NUMBER: 746284806 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07884 FILM NUMBER: 1632180 BUSINESS ADDRESS: STREET 1: 712 MAIN STREET CITY: HOUSTON STATE: TX ZIP: 77210 BUSINESS PHONE: 7132165100 MAIL ADDRESS: STREET 1: P O BOX 4717 CITY: HOUSTON STATE: TX ZIP: 77210 10-Q 1 a2047817z10-q.txt 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 / / 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 1-7884
------------------------ MESA ROYALTY TRUST (Exact name of registrant as specified in its charter) TEXAS 74-6284806 (State of Incorporation (I.R.S. Employer or Organization) Identification No.) THE CHASE MANHATTAN BANK, 77002 INSTITUTIONAL TRUST SERVICES (Zip Code) 712 MAIN STREET HOUSTON, TEXAS (Address of Principal Executive Offices)
1-800-852-1422 (Registrant's Telephone Number, Including Area Code) ------------------------ 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 / / Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of May 10, 2001--1,863,590 Units of Beneficial Interest in Mesa Royalty Trust. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. MESA ROYALTY TRUST STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ----------------------- 2001 2000 ---------- ---------- Royalty income.............................................. $3,830,016 $1,621,389 Interest income............................................. 44,123 22,124 General and administrative expense.......................... (5,934) (4,763) ---------- ---------- Distributable income...................................... $3,868,205 $1,638,750 ========== ========== Distributable income per unit............................. $ 2.0757 $ 0.8794 ========== ==========
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
MARCH 31, DECEMBER 31, 2001 2000 ------------ ------------ (UNAUDITED) ASSETS Cash and short-term investments............................. $ 3,824,082 $ 2,658,110 Interest receivable......................................... 44,123 25,199 Net overriding royalty interest in oil and gas properties... 42,498,034 42,498,034 Accumulated amortization.................................... (30,832,951) (30,636,131) ------------ ------------ Total assets.......................................... $ 15,533,288 $ 14,545,212 ============ ============ LIABILITIES AND TRUST CORPUS Distributions payable....................................... $ 3,868,205 $ 2,683,309 Trust corpus (1,863,590 units of beneficial interest authorized and outstanding)............................... 11,665,083 11,861,903 ------------ ------------ Total liabilities and trust corpus.................... $ 15,533,288 $ 14,545,212 ============ ============
(The accompanying notes are an integral part of these financial statements.) 1 MESA ROYALTY TRUST STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------- 2001 2000 ----------- ----------- Trust corpus, beginning of period........................... $11,861,903 $12,673,262 Distributable income...................................... 3,868,205 1,638,750 Distributions to unitholders.............................. (3,868,205) (1,638,750) Amortization of net overriding royalty interest........... (196,820) (282,434) ----------- ----------- Trust corpus, end of period................................. $11,665,083 $12,390,828 =========== ===========
(The accompanying notes are an integral part of these financial statements.) 2 MESA ROYALTY TRUST NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1--TRUST ORGANIZATION The Mesa Royalty Trust (the "Trust") was created on November 1, 1979 when Mesa Petroleum Co. conveyed to the Trust a 90% net profits overriding royalty interest (the "Royalty") in certain producing oil and gas properties located in the Hugoton field of Kansas, the San Juan Basin field of New Mexico and Colorado and the Yellow Creek field of Wyoming (collectively, the "Royalty Properties"). Mesa Petroleum Co. was the predecessor to Mesa Limited Partnership ("MLP"), the predecessor to MESA Inc. On April 30, 1991, MLP sold its interests in the Royalty Properties located in the San Juan Basin field to Conoco Inc. ("Conoco"). Conoco sold the portion of its interests in the San Juan Basin Royalty Properties located in Colorado to MarkWest Energy Partners, Ltd. (effective January 1, 1993) and Red Willow Production Company (effective April 1, 1992). On October 26, 1994, MarkWest Energy Partners, Ltd. sold substantially all of its interest in the Colorado San Juan Basin Royalty Properties to Amoco Production Company ("Amoco"), a subsidiary of BP Amoco. Until August 7, 1997, MESA Inc. operated the Hugoton Royalty Properties through Mesa Operating Co., a wholly owned subsidiary of MESA Inc. On August 7, 1997, MESA Inc. merged with and into Pioneer Natural Resources Company ("Pioneer"), formerly a wholly owned subsidiary of MESA Inc., and Parker & Parsley Petroleum Company merged with and into Pioneer Natural Resources USA, Inc. (successor to Mesa Operating Co.), a wholly owned subsidiary of Pioneer ("PNR") (collectively, the mergers are referred to herein as the "Merger"). Subsequent to the Merger, the Hugoton Royalty Properties have been operated by PNR. The San Juan Basin Royalty Properties located in New Mexico are operated by Conoco. The San Juan Basin Royalty Properties located in Colorado are operated by Amoco. As used in this report, PNR refers to the operator of the Hugoton Royalty Properties, Conoco refers to the operator of the San Juan Basin Royalty Properties, other than the portion of such properties located in Colorado, and Amoco refers to the operator of the Colorado San Juan Basin Royalty Properties unless otherwise indicated. The terms "working interest owner" and "working interest owners" generally refer to the operators of the Royalty Properties as described above, unless the context in which such terms are used indicates otherwise. NOTE 2--BASIS OF PRESENTATION The accompanying unaudited financial information has been prepared by The Chase Manhattan Bank ("Trustee"), the successor by merger to Chase Bank of Texas, National Association, in accordance with the instructions to Form 10-Q. The Trustee believes such information includes all the disclosures necessary to make the information presented not misleading. The information furnished reflects all adjustments which are, in the opinion of the Trustee, necessary for a fair presentation of the results for the interim periods presented. The financial information should be read in conjunction with the financial statements and notes thereto included in the Trust's 2000 Annual Report on Form 10-K. The Mesa Royalty Trust Indenture was amended in 1985, the effect of which was an overall reduction of approximately 88.56% in the size of the Trust; therefore, the Trust is now entitled to receive 90% of 11.44% of the net proceeds for the preceding month. Generally, net proceeds means the excess of the amounts received by the working interest owners from sales of oil and gas from the Royalty Properties over operating and capital costs incurred. 3 The financial statements of the Trust are prepared on the following basis: (a) Royalty income recorded for a month is the amount computed and paid by the working interest owners to the Trustee for such month rather than either the value of a portion of the oil and gas produced by the working interest owners for such month or the amount subsequently determined to be the Trust's proportionate share of the net proceeds for such month; (b) Interest income, interest receivable, and distributions payable to unitholders include interest to be earned on short-term investments from the financial statement date through the next date of distribution and; (c) Trust general and administrative expenses, net of reimbursements, are recorded in the month they accrue; (d) Amortization of the net overriding royalty interests, which is calculated on a unit-of-production basis, is charged directly to trust corpus since such amount does not affect distributable income; and (e) Distributions payable are determined on a monthly basis and are payable to unitholders of record as of the last business day of each month or such other day as the Trustee determines is required to comply with legal or stock exchange requirements. However, cash distributions are made quarterly in January, April, July and October, and include interest earned from the monthly record dates to the date of distribution. This basis for reporting distributable income is thought to be the most meaningful because distributions to the unitholders for a month are based on net cash receipts for such month. However, it will differ from the basis used for financial statements prepared in accordance with accounting principles generally accepted in the United States under such accounting principles, royalty income for a month would be based on net proceeds from production for such month without regard to when calculated or received and interest income for a month would be calculated only through the end of such month. 4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. NOTE REGARDING FORWARD-LOOKING STATEMENTS This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this Form 10-Q, including without limitation the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. Although the Working Interest Owners have advised the Trust that they believe that the expectations reflected in the forward-looking statements contained herein are reasonable, no assurance can be given that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from expectations ("Cautionary Statements") are disclosed in this Form 10-Q and in the Trust's Form 10-K. All subsequent written and oral forward-looking statements attributable to the Trust or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. SUMMARY OF ROYALTY INCOME AND AVERAGE PRICES (UNAUDITED) Royalty income is computed after deducting the Trust's proportionate share of capital costs, operating costs and interest on any cost carryforward from the Trust's proportionate share of "Gross Proceeds," as defined in the Royalty conveyance. The following summary illustrates the net effect of the components of the actual Royalty computation for the periods indicated.
THREE MONTHS ENDED MARCH 31, --------------------------------------------------- 2001 2000 ------------------------ ------------------------ OIL, OIL, CONDENSATE CONDENSATE NATURAL AND NATURAL NATURAL AND NATURAL GAS GAS LIQUIDS GAS GAS LIQUIDS ---------- ----------- ---------- ----------- The Trust's proportionate share of Gross Proceeds(1).................................. $3,940,564 $836,005 $1,804,813 $616,042 Less the Trust's proportionate share of: Capital costs recovered(2)................... (159,733) -- (149,975) -- Operating costs.............................. (701,202) (85,618) (565,379) (75,043) Interest on cost carryforward................ -- -- (9,069) -- ---------- -------- ---------- -------- Royalty income................................. $3,079,629 $750,387 $1,080,390 $540,999 ========== ======== ========== ======== Average sales price............................ $ 5.44 $ 26.27 $ 2.34 $ 17.03 ========== ======== ========== ======== (Mcf) (Bbls) (Mcf) (Bbls) Net production volumes attributable to the Royalty...................................... 565,823 28,563 462,586 31,762 ========== ======== ========== ========
- ------------------------ (1) Gross Proceeds from natural gas liquids attributable to the Hugoton and San Juan Basin Properties are net of a volumetric in-kind processing fee retained by PNR and Conoco, respectively. 5 (2) Capital costs recovered represents capital costs incurred during the current or prior periods to the extent that such costs have been recovered by the working interest owners from current period Gross Proceeds. Cost carryforward represents capital costs incurred during the current or prior periods which will be recovered from future period Gross Proceeds. The cost carryforward resulting from the Fruitland Coal drilling program was $504,411 and $504,876 at March 31, 2001 and March 31, 2000, respectively and relates solely to the San Juan Basin Colorado properties. THREE MONTHS ENDED MARCH 31, 2001 AND 2000 The distributable income of the Trust for each period includes the royalty income received from the working interest owners during such period, plus interest income earned to the date of distribution. Trust administration expenses are deducted in the computation of distributable income. Distributable income for the quarter ended March 31, 2001 was $3,868,205, representing $2.0757 per unit, compared to $1,638,750, representing $.8794 per unit, for the first quarter ended March 31, 2000. Based on 1,863,590 units outstanding for the quarters ended March 31, 2001 and 2000, respectively, the per unit distributions were as follows:
2001 2000 -------- -------- January.................................................... $ .5811 $.3510 February................................................... .6710 .2801 March...................................................... .8236 .2483 ------- ------ $2.0757 $.8794 ======= ======
HUGOTON FIELD PNR has advised the Trust that since June 1, 1995 natural gas produced from the Hugoton field has generally been sold under short-term and multi-month contracts at market clearing prices to multiple purchasers including Williams Energy Supply ("WESCO"), Oneok Gas Marketing, Inc., Amoco Production Company and Anadarko Energy Services, Inc. PNR has advised the Trust that it expects to continue to market gas production from the Hugoton field under short-term and multi-month contracts. Overall market prices received for natural gas from the Hugoton Royalty Properties were higher in the first quarter of 2001 compared to the first quarter of 2000. In June 1994, PNR entered into a Gas Transportation Agreement ("Gas Transportation Agreement") with Western Resources, Inc. ("WRI") for a primary term of five years commencing June 1, 1995. This contract has been continued in effect on a year-to-year basis being effective June 1, 2000. PNR has extended the contract to June 1, 2001. Pursuant to the Gas Transportation Agreement, WRI has agreed to compress and transport up to 160 MMcf per day of gas and redeliver such gas to PNR at the inlet of PNR's Satanta Plant. PNR agreed to pay WRI a fee of $0.06 per Mcf escalating 4% annually as of June 1, 1996. This Gas Transportation Agreement was assigned to Midcontinent Market Center. Royalty income attributable to the Hugoton Royalty increased to $2,023,291 in the first quarter of 2001, from $1,111,789 in the first quarter of 2000 due to higher prices received for production of natural gas and liquids from the Hugoton Royalty Properties. The average price received in the first quarter of 2001 for natural gas and natural gas liquids sold from the Hugoton Royalty Properties was $5.39 per MCF and $24.88 per barrel, respectively, compared to $2.41 per Mcf and $16.41 per barrel, respectively, in the 6 first quarter of 2000. Net production attributable to the Hugoton Royalty decreased to 294,498 Mcf of natural gas and 17,522 barrels of natural gas liquids in the first quarter of 2001 from 306,027 Mcf of natural gas and 22,807 barrels of natural gas liquids in the first quarter of 2000. Allowable rates of production in the Hugoton field are set by the Kansas Corporation Commission (the "KCC") based on the level of market demand. The KCC has set the Hugoton field allowable for the period April 1, 2001 through September 30, 2001, at 156.2 Bcf of gas, compared with 170.5 Bcf of gas during the same period last year. SAN JUAN BASIN Royalty income from the San Juan Basin Royalty Properties is calculated and paid to the Trust on a state-by-state basis. Royalty income from the San Juan Basin Royalty Properties located in the state of New Mexico was $1,806,725 during the first quarter of 2001 as compared with royalty income of $509,600 in the first quarter of 2000. The increase in Royalty income was due primarily to increased natural gas and natural gas liquids prices in the first quarter of 2001. No royalty income was received from Amoco with respect to the San Juan Basin Royalty Properties located in the state of Colorado for the first quarter of 2001 and 2000, as costs associated with the Fruitland Coal drilling program on such properties have not been fully recovered. Net production attributable to the San Juan Basin Royalty was 271,325 Mcf of natural gas and 11,041 barrels of natural gas liquids in the first quarter of 2001, compared to 156,559 Mcf of natural gas and 8,955 barrels of natural gas liquids in the first quarter of 2000. The average price received in the first quarter of 2001 for natural gas and natural gas liquids sold from the San Juan Basin Royalty Properties was $5.50 per Mcf and $28.48 per barrel, respectively, compared to $2.19 per Mcf and $18.62 per barrel during the same period in 2000. The Trust's interest in the San Juan Basin was conveyed from PNR's working interest in 31,328 net producing acres in northwestern New Mexico and southwestern Colorado. The San Juan Basin-New Mexico reserves represent approximately 54% of the Trust's reserves. Substantially all of the natural gas produced from the San Juan Basin is currently being sold on the spot market. The San Juan Basin Royalty Properties located in Colorado account for less than 5% of the Trust's reserves. No distributions related to the Colorado portion of the San Juan Basin Royalty have been made since 1990, as the costs of the Fruitland Coal drilling in Colorado have not yet been recovered. Conoco has informed the Trust that it believes the production from the Fruitland Coal formation will generally qualify for the tax credits provided under Section 29 of the Internal Revenue Code of 1986, as amended. Thus, unitholders are potentially eligible to claim their share of the tax credit attributable to this qualifying production. Each unitholder should consult his tax advisor regarding the limitations and requirements for claiming this tax credit. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Trust does not utilize market risk sensitive instruments. However, see the discussion of marketing by the working interest owners above. 7 PART II--OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) EXHIBITS (Asterisk indicates exhibit previously filed with the Securities and Exchange Commission and incorporated herein by reference. The Chase Manhattan Bank is successor by merger to Chase Bank of Texas, National Association. Chase Bank of Texas, National Association was the successor name of Texas Commerce Bank National Association.)
SEC FILE OR REGISTRATION EXHIBIT NUMBER NUMBER ------------ -------- 4(a) * Mesa Royalty Trust Indenture between Mesa Petroleum Co. and Texas Commerce Bank National Association, as Trustee, dated November 1, 1979............................................ 2-65217 1(a) 4(b) * Overriding Royalty Conveyance between Mesa Petroleum Co. and Texas Commerce Bank, as Trustee, dated November 1, 1979..... 2-65217 1(b) 4(c) * First Amendment to the Mesa Royalty Trust Indenture dated as of March 14, 1985 (Exhibit 4(c) to Form 10-K for year ended December 31, 1984 of Mesa Royalty Trust).................... 1-7884 4(c) 4(d) * Form of Assignment of Overriding Royalty Interest, effective April 1, 1985, from Texas Commerce Bank National Association, as Trustee, to MTR Holding Co. (Exhibit 4(d) to Form 10-K for year ended December 31, 1984 of Mesa Royalty Trust)...................................................... 1-7884 4(d) 4(e) * Purchase and Sale Agreement, dated March 25, 1991, by and among Mesa Limited Partnership, Mesa Operating Limited Partnership and Conoco, as amended on April 30, 1991 (Exhibit 4(e) to Form 10-K for year ended December 31, 1991 of Mesa Royalty Trust)...................................... 1-7884 4(e)
(B) REPORTS ON FORM 8-K No reports on Form 8-K were filed with the Securities and Exchange Commission by the Trust during the first quarter of 2001. 8 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. MESA ROYALTY TRUST By: THE CHASE MANHATTAN BANK, as Trustee By: /s/ MIKE ULRICH ----------------------------------------- Mike Ulrich SENIOR VICE PRESIDENT & TRUST OFFICER
Date: May 14, 2001 The Registrant, Mesa Royalty Trust, has no principal executive officer, principal financial officer, board of directors or persons performing similar functions. Accordingly, no additional signatures are available and none have been provided. 9 -----END PRIVACY-ENHANCED MESSAGE-----