UNITED STATES 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 SEPTEMBER 30, 2002 [ ] 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 1-8033 PERMIAN BASIN ROYALTY TRUST (EXACT NAME OF REGISTRANT AS SPECIFIED IN THE PERMIAN BASIN ROYALTY TRUST INDENTURE) Texas 75-6280532 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) Bank of America, N.A. Trust Department 901 Main Street Dallas, Texas 75202 (Address of Principal Executive Offices; Zip Code) (214) 209-2400 (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 [ ] Number of Units of beneficial interest of the Trust outstanding at November 1, 2002: 46,608,796. PERMIAN BASIN ROYALTY TRUST PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The condensed financial statements included herein have been prepared by Bank of America, N.A. as Trustee for the Permian Basin Royalty Trust, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to such rules and regulations, although the Trustee believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Trust's latest annual report on Form 10-K. In the opinion of the Trustee, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the assets, liabilities and trust corpus of the Permian Basin Royalty Trust at September 30, 2002, and the distributable income and changes in trust corpus for the three-month and nine-month periods ended September 30, 2002 and 2001 have been included. The distributable income for such interim periods is not necessarily indicative of the distributable income for the full year. Deloitte & Touche LLP, independent certified public accountants, has made a limited review of the condensed financial statements as of September 30, 2002 and for the three-month and nine-month periods ended September 30, 2002 and 2001 as stated in their report appearing herein. 2 INDEPENDENT ACCOUNTANTS' REPORT Bank of America, N.A., as Trustee for the Permian Basin Royalty Trust We have reviewed the accompanying condensed statement of assets, liabilities and trust corpus of the Permian Basin Royalty Trust as of September 30, 2002 and the related condensed statements of distributable income and changes in trust corpus for the three-month and nine-month periods ended September 30, 2002 and 2001. These financial statements are the responsibility of the Trustee. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, 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 1 to the condensed financial statements, these condensed financial statements have been prepared on a modified cash basis of accounting which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Based on our reviews, we are not aware of any material modifications that should be made to such condensed financial statements for them to be in conformity with the basis of accounting described in Note 1. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the statement of assets, liabilities and trust corpus of the Permian Basin Royalty Trust as of December 31, 2001, and the related statements of distributable income and changes in trust corpus for the year then ended (not presented herein); and in our report dated March 22, 2002, 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, 2001 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 Dallas, Texas November 6, 2002 3 PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
September 30, December 31, 2002 2001 ------------ ------------ (Unaudited) ASSETS Cash and short-term investments $ 2,158,014 $ 1,842,420 Net overriding royalty interests in producing oil and gas properties (net of accumulated amortization of $8,750,210, and $8,604,029 at September 30, 2002 and December 31, 2001, respectively) 2,225,006 2,371,187 ------------ ------------ TOTAL ASSETS $ 4,383,020 $ 4,213,607 ============ ============ LIABILITIES AND TRUST CORPUS Distribution payable to Unit holders $ 2,158,014 $ 1,842,420 Commitments and contingencies Trust corpus - 46,608,796 Units of beneficial interest authorized and outstanding 2,225,006 2,371,187 ------------ ------------ TOTAL LIABILITIES AND TRUST CORPUS $ 4,383,020 $ 4,213,607 ============ ============
The accompanying notes are an integral part of these financial statements. - -------------------------------------------------------------------------------- 4 PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 ----------------------------- ----------------------------- 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Royalty income $ 6,305,922 $ 8,433,236 $ 16,534,462 $ 32,568,650 Interest income 4,319 17,543 12,211 68,002 ------------ ------------ ------------ ------------ 6,310,241 8,450,779 16,546,673 32,636,652 General and administrative expenditures 69,703 74,320 365,082 371,336 ------------ ------------ ------------ ------------ Distributable income $ 6,240,538 $ 8,376,459 $ 16,181,591 $ 32,265,316 ============ ============ ============ ============ Distributable income per Unit (46,608,796 Units) $ .133892 $ .179718 $ .347179 $ .692258 ============ ============ ============ ============
The accompanying notes to condensed financial statements are an integral part of these statements. - -------------------------------------------------------------------------------- 5 PERMIAN BASIN ROYALTY TRUST CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------------ ------------------------------ 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Trust corpus, beginning of period $ 2,272,994 $ 2,477,296 $ 2,371,187 $ 2,595,254 Amortization of net overriding royalty interests (47,988) (50,042) (146,181) (168,000) Distributable income 6,240,538 8,376,459 16,181,591 32,265,316 Distributions declared (6,240,538) (8,376,459) (16,181,591) (32,265,316) ------------ ------------ ------------ ------------ Total Trust Corpus, end of period $ 2,225,006 $ 2,427,254 $ 2,225,006 $ 2,427,254 ============ ============ ============ ============ Distributions per unit $ .133892 $ .179718 $ .347179 $ .692258 ============ ============ ============ ============
- -------------------------------------------------------------------------------- 6 PERMIAN BASIN ROYALTY TRUST NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF ACCOUNTING The Permian Basin Royalty Trust ("Trust") was established as of November 1, 1980. The net overriding royalties conveyed to the Trust include: (1) a 75% net overriding royalty carved out of Southland Royalty Company's fee mineral interests in the Waddell ranch in Crane County, Texas (the "Waddell Ranch properties"); and (2) a 95% net overriding royalty carved out of Southland Royalty Company's major producing royalty interests in Texas (the "Texas Royalty properties"). The net overriding royalty for the Texas Royalty properties is subject to the provisions of the lease agreements under which such royalties were created. The financial statements of the Trust are prepared on the following basis: o Royalty income recorded for a month is the amount computed and paid to Bank of America, N.A. ("Trustee") as Trustee for the Trust by the interest owners: Burlington Resources Oil & Gas Company ("BROG") for the Waddell Ranch properties and River hill Energy Corporation ("River hill Energy"), formerly a wholly owned subsidiary of River hill Capital Corporation ("River hill Capital") and formerly an affiliate of Coastal Management Corporation ("CMC"), for the Texas Royalty properties. CMC currently conducts all field, technical and accounting operations on behalf of BROG with regard to the Waddell Ranch properties. CMC also conducts the accounting operations for the Texas Royalty properties on behalf of River hill Energy. Royalty income consists of the amounts received by the owners of the interest burdened by the net overriding royalty interests ("Royalties") from the sale of production less accrued production costs, development and drilling costs, applicable taxes, operating charges, and other costs and deductions multiplied by 75% in the case of the Waddell Ranch properties and 95% in the case of the Texas Royalty properties. As was previously reported, in February 1997, BROG sold its interest in the Texas Royalty properties to River hill Energy. The Trustee has been advised that in the first quarter of 1998, Schlumberger Technology Corporation ("Schlumberger") acquired all of the shares of stock of River hill Capital. Prior to such acquisition by Schlumberger, CMC and River hill Energy were wholly owned subsidiaries of River hill Capital. The Trustee has further been advised that in connection with Schlumberger's acquisition of River hill Capital, the shareholders of River hill Capital acquired ownership of all of the shares of stock of River hill Energy. Thus, the ownership in the Texas Royalty properties referenced above remained in River hill Energy, the stock ownership of which was acquired by the former shareholders of River hill Capital. o Trust expenses recorded are based on liabilities paid and cash reserves established out of cash received or borrowed funds for liabilities and contingencies. 7 o Distributions to Unit holders are recorded when declared by the Trustee. o Royalty income is computed separately for each of the conveyances under which the Royalties were conveyed to the Trust. If monthly costs exceed revenues for any conveyance ("excess costs"), such excess cannot reduce royalty income from other conveyances, but is carried forward with accrued interest to be recovered from future net proceeds of that conveyance. The financial statements of the Trust differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("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. Amortization of the Royalties calculated on a unit-of-production basis is charged directly to trust corpus. New Accounting Standards The Company has not completed the process of evaluating the impact that will result from adopting Statement of Financial Accounting Standards ("SFAS") No. 143 "Accounting for Asset Retirement Obligations" and SFAS 146 "Accounting for Costs associated with exit or disposal activities". The Company is therefore unable to disclose the impact that adopting SFAS 143 and SFAS 146 will have on its financial position and results of operations when such statement is adopted. 2. FEDERAL INCOME TAXES For Federal income tax purposes, the Trust constitutes a fixed investment trust which is taxed as a grantor trust. A grantor trust is not subject to tax at the trust level. The Unit holders are considered to own the Trust's income and principal as though no trust were in existence. The income of the Trust is deemed to have been received or accrued by each Unit holder at the time such income is received or accrued by the Trust and not when distributed by the Trust. The Royalties constitute "economic interests" in oil and gas properties for Federal income tax purposes. Unit holders must report their share of the revenues from the Royalties as ordinary income from oil and gas royalties and are entitled to claim depletion with respect to such income. The Trust has on file technical advice memoranda confirming the tax treatment described above. The classification of the Trust's income for purposes of the passive loss rules may be important to a Unit holder. As a result of the Tax Reform Act of 1986, royalty income will generally be treated as portfolio income and will not offset passive losses. 3. SUBSEQUENT EVENTS Subsequent to September 30, 2002, the Trust declared a distribution on October 21, 2002 of $.052198 payable on November 15, 2002. 8 ITEM 2. TRUSTEE'S DISCUSSION AND ANALYSIS FORWARD LOOKING INFORMATION Certain information included in this report contains, and other materials filed or to be filed by the Trust with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward looking statements may be or may concern, among other things, capital expenditures, drilling activity, development activities, production efforts and volumes, hydrocarbon prices and the results thereof, and regulatory matters. Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are subject to numerous risks and uncertainties and the Trustee can give no assurance that they will prove correct. There are many factors, none of which is within the Trustee's control, that may cause such expectations not to be realized, including, among other things, factors such as actual oil and gas prices and the recoverability of reserves, capital expenditures, general economic conditions, actions and policies of petroleum-producing nations and other changes in the domestic and international energy markets. Such forward looking statements generally are accompanied by words such as "estimate," "expect," "predict," "anticipate," "goal," "should," "assume," "believe," or other words that convey the uncertainty of future events or outcomes. THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2001 For the quarter ended September 30, 2002 royalty income received by the Trust amounted to $6,305,922 compared to royalty income of $8,433,236 during the third quarter of 2001. The decrease in royalty income is primarily attributable to significant decreases in both oil and gas prices and lower production for both oil and gas. Interest income for the quarter ended September 30, 2002, was $4,319 compared to $17,543 during the third quarter of 2001. The decrease in interest income is primarily attributable to less funds available for investment and lower interest rates. General and administrative expenses during the third quarter of 2002 amounted to $69,703 compared to $74,320 during the third quarter of 2001. The decrease in general and administrative expenses can be primarily attributed to the timing of payment of expenses. These transactions resulted in distributable income for the quarter ended September 30, 2002 of $6,240,538, or $.13 per Unit of beneficial interest. Distributions of $.036621, $.050969 and $.046300 per Unit were made to Unit holders of record as of July 31, August 30 and September 30, 2002, respectively. For the third quarter of 2001, distributable income was $8,376,459, or $.18 per Unit of beneficial interest. Royalty income for the Trust for the third quarter of the calendar year is associated with actual oil and gas production for the period of May, June and July 2002 from the properties from which the Trust's net overriding royalty interests ("Royalties") were carved. Oil and gas sales 9 attributable to the Royalties and the properties from which the Royalties were carved are as follows:
THIRD QUARTER ----------------------------- 2002 2001 ------------ ------------ ROYALTIES: Oil sales (Bbls) 177,014 216,148 Gas sales (Mcf) 767,274 944,179 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 317,453 343,865 Average per day (Bbls) 3,451 3,738 Average price per Bbl $ 24.41 $ 24.59 Gas: Total gas sales (Mcf) 1,565,863 1,636,098 Average per day (Mcf) 17,020 17,784 Average price per Mcf $ 2.99 $ 3.74
The posted price of oil decreased to an average price per barrel of $24.41 per Bbl in the third quarter of 2002, compared to $24.59 per Bbl in the third quarter of 2001. The Trustee has been advised by BROG that for the period August 1, 1993, through September 30, 2002, the oil from the Waddell Ranch properties was being sold under a competitive bid to a third party. The average price of gas decreased from $3.74 per Mcf in the third quarter of 2001 to $2.99 per Mcf in the third quarter of 2002. This decrease is primarily attributable to a significant increase in gas prices earlier in the year of 2001. Since the oil and gas sales attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), the production amounts in the Royalties section of the above table do not provide a meaningful comparison. Oil and gas sales volumes from the Underlying Properties decreased for the applicable period in 2002 compared to 2001. Capital expenditures for drilling, remedial and maintenance activities on the Waddell Ranch properties during the third quarter of 2002 totaled $1,434,435 as compared to $394,000 for the third quarter of 2001. BROG has informed the Trustee that the 2002 capital expenditures budget has been revised to $4.1 million for the Waddell Ranch. The total amount of capital expenditures for 2001 was $4.6 million. Through the third quarter of 2002, capital expenditures of $3.1 million have been expended. The Trustee has been advised that there were 3 wells completed or in progress during the three months ended September 30, 2002 as compared to 3 wells for the three months ended September 30, 2001 on the Waddell Ranch properties. Lease operating expense and property taxes totaled $2.4 million for the third quarter of 2002, compared to $2.6 million in the third quarter of 2001 on the Waddell Ranch properties. This decrease is primarily attributable to lower maintenance costs for the quarter. 10 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 For the nine months ended September 30, 2002, royalty income received by the Trust amounted to $16,534,462 compared to royalty income of $32,568,650 for the nine months ended September 30, 2001. The decrease in royalty income is primarily due to a decrease in gas prices in the first nine months of 2002, compared to the first nine months in 2001 and lower volume for both oil and gas. Interest income for the nine months ended September 30, 2002 was $12,211 compared to $68,002 for the nine months ended September 30, 2001. The decrease in interest income is attributable primarily to a decrease in funds available for investment and lower interest rates. General and administrative expenses for the nine months ended September 30, 2002 were $365,082. During the nine months ended September 30, 2001, general and administrative expenses were $371,336. The decrease in general and administrative expenses is primarily due to timing differences in the receipt and payment of these expenses. These transactions resulted in distributable income for the nine months ended September 30, 2002 of $16,181,591, or $.35 per Unit. For the nine months ended September 30, 2001, distributable income was $32,265,316 or $.69 per Unit. Royalty income for the Trust for the period ended September 30, 2002 is associated with actual oil and gas production for the period November 2001 through July 2002 from the properties from which the Royalties were carved. Oil and gas production attributable to the Royalties and the properties from which the Royalties were carved are as follows:
FIRST NINE MONTHS ----------------------------- 2002 2001 ------------ ------------ ROYALTIES: Oil sales (Bbls) 543,182 701,263 Gas sales (Mcf) 2,317,218 2,960,147 PROPERTIES FROM WHICH THE ROYALTIES WERE CARVED: Oil: Total oil sales (Bbls) 963,555 1,084,061 Average per day (Bbls) 3,530 3,970 Average price per Bbl $ 20.80 $ 25.59 Gas: Total gas sales (Mcf) 4,595,235 4,810,652 Average per day (Mcf) 16,832 17,621 Average price per Mcf $ 2.62 $ 5.36
The average price of oil decreased during the nine months ended September 30, 2002 to $20.80 per barrel compared to $25.59 per barrel for the same period in 2001. The decrease in the average price of oil is primarily due to lagging demand in 2002, caused by a worldwide economic slowdown. The decrease in the average price of gas from $5.36 per Mcf for the nine months ended September 30, 2001 to $2.62 per Mcf for the nine months ended September 30, 2002 is primarily the result of a decrease in the spot prices of natural gas. Since the oil and gas sales volumes attributable to the Royalties are based on an allocation formula that is dependent on such factors as price and cost (including capital expenditures), the production amounts in the Royalties section of the above table do not provide a meaningful 11 comparison. The oil and gas sales volumes from the properties from which the Royalties are carved have remained relatively constant for the applicable period of 2002 compared to 2001. The Trust has been advised that 8 gross and 3 net productive oil wells were drilled and completed on the Waddell Ranch properties during the nine months ended September 30, 2002 as compared to 7 gross and 3 net productive well during the same period in 2001. Capital expenditures for the Waddell Ranch properties for the nine months ended September 30, 2002 totaled $ 3.1 million compared to $2,999,000 for the same period in 2001. BROG has previously advised the Trust that the remaining 2002 capital expenditures budget for the Waddell Ranch properties is $1.0 million. Lease operating expense and property taxes totaled $6.5 million in 2002 compared to $7.0 million in 2001. The decrease in lease operating expense is primarily attributable to more efficient field operations on the Waddell Ranch properties. CALCULATION OF ROYALTY INCOME The Trust's royalty income is computed as a percentage of the net profit from the operation of the properties in which the Trust owns net overriding royalty interests. These percentages of net profits are 75% and 95% in the case of the Waddell Ranch properties and the Texas Royalty properties, respectively. Royalty income received by the Trust for the three months ended September 30, 2002 and 2001, respectively, were computed as shown in the table below:
THREE MONTHS ENDED SEPTEMBER 30, ------------------------------------------------------------------ 2002 2001 ------------------------------ ------------------------------ WADDELL TEXAS WADDELL TEXAS RANCH ROYALTY RANCH ROYALTY PROPERTIES PROPERTIES PROPERTIES PROPERTIES ------------ ------------ ------------ ------------ Gross proceeds of sales from the Underlying Properties Oil proceeds $ 5,534,415 $ 2,213,128 $ 6,403,660 $ 2,079,708 Gas proceeds 4,092,292 584,290 5,077,883 841,330 ------------ ------------ ------------ ------------ Total 9,626,707 2,797,418 11,481,543 2,921,038 ------------ ------------ ------------ ------------ Less: Severance tax: Oil 231,781 89,237 267,953 79,269 Gas 228,661 40,568 275,778 54,729 Lease operating expense and property tax: Oil and gas 2,435,911 180,000 2,623,728 155,125 Capital expenditures 1,434,435 -- 393,528 -- Other 38,999 -- 10,000 -- ------------ ------------ ------------ ------------ Total 4,369,787 309,805 3,570,987 289,123 ------------ ------------ ------------ ------------ Net profits 5,256,920 2,487,613 7,910,556 2,631,915 Net overriding royalty interests 75% 95% 75% 95% ------------ ------------ ------------ ------------ Royalty income $ 3,942,690 $ 2,363,232 $ 5,932,917 $ 2,500,319 ============ ============ ============ ============
12 ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in the Trust's market risk, as disclosed in the Trust's annual report on Form 10-K for the fiscal year ended December 31, 2001. 13 PART II - OTHER INFORMATION ITEMS 1 THROUGH 5. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (4)(a) Permian Basin Royalty Trust Indenture dated November 3, 1980, between Southland Royalty Company (now Burlington Resources Oil & Gas Company) and The First National Bank of Fort Worth (now Bank of America, 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 (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas Company) to The First National Bank of Fort Worth (now Bank of America, 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. (4)(c) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil & Gas Company) to The First National Bank of Fort Worth (now Bank of America, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(c) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference. 99.1 Certificate by Bank of America, Trustee of Permian Basin Royalty Trust, dated November 12, 2002 and submitted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350). (b) On August 14, 2002, the Trust filed a report on Form 8-K to furnish the Trustee's certification of the Trust's Quarterly Repot on Form 10-Q for the period ended June 30, 2002 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. No reports were filed during the quarter ended September 30, 2002. 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 OF AMERICA, N.A., TRUSTEE FOR THE PERMIAN BASIN ROYALTY TRUST By /s/ RON E. HOOPER ----------------------------------- Ron E. Hooper Senior Vice President Trust Administrator Date: November 12, 2002 (The Trust has no directors or executive officers.) 15 CERTIFICATIONS I, Ron Hooper, certify that: 1. I have reviewed this quarterly report of Form 10-Q of Permian Basin Royalty Trust, for which Bank of America, N.A., acts as Trustee; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, distributable income and changes in trust corpus of the registrant as of, and for, the periods presented in this quarterly report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14), or for causing such procedures to be established and maintained, for the registrant and I have: a) designed such disclosure controls and procedures, or caused such controls and procedures to be designed, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the registrant's auditors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves persons who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. In giving the certifications in paragraphs 4, 5 and 6 above, I have relied to the extent I consider reasonable on information provided to me by Burlington Resources Oil & Gas Company and River Hill Energy Corporation. Date November 12, 2002 By: /s/ Ron E. Hooper ------------------------------------------ Ron E. Hooper, Senior Vice President, Royalty Management Bank of America, N.A., 16 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- (4)(a) Permian Basin Royalty Trust Indenture dated November 3, 1980, between Southland Royalty Company (now Burlington Resources Oil & Gas Company) and The First National Bank of Fort Worth (now Bank of America, N.A.), as Trustee, heretofore filed as Exhibit (4)(a) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference.* (b) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust) from Southland Royalty Company (now Burlington Resources Oil & Gas Company) to The First National Bank of Fort Worth (now Bank of America, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(b) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference.* (c) Net Overriding Royalty Conveyance (Permian Basin Royalty Trust - Waddell Ranch) from Southland Royalty Company (now Burlington Resources Oil & Gas Company) to The First National Bank of Fort Worth (now Bank of America, N.A.), as Trustee, dated November 3, 1980 (without Schedules), heretofore filed as Exhibit (4)(c) to the Trust's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended December 31, 1980 is incorporated herein by reference.* 99.1 Certificate by Bank of America, Trustee of Permian Basin Royalty Trust, dated November 12, 2002 and submitted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
* A copy of this Exhibit is available to any Unit holder, at the actual cost of reproduction, upon written request to the Trustee, Bank of America, N.A., P. O. Box 830650, Dallas, Texas 75202. EX-99.1 3 d01236exv99w1.txt CERTIFICATE BY BANK OF AMERICA - TRUSTEE EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Permian Basin Royalty Trust (the "Trust") on Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, not in its individual capacity but solely as the trustee of the Trust, certifies pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to its knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust. BANK OF AMERICA, N.A., TRUSTEE FOR PERMIAN BASIN ROYALTY TRUST Date: November 12, 2002 By: /s/ Ron E. Hooper ----------------------------------------- Ron E. Hooper, Senior Vice President, Royalty Management -----END PRIVACY-ENHANCED MESSAGE-----