UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 23, 2015
SABINE ROYALTY TRUST
(Exact name of Registrant as specified in its charter)
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Texas |
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1-8424 |
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75-6297143 |
(State or other jurisdiction of
incorporation or organization) |
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(Commission
File Number) |
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(I.R.S. Employer
Identification No.) |
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Southwest Bank
P. O. Box 962020 Fort
Worth, Texas |
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76162 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants Telephone Number, including area code: (855) 588-7839
Not Applicable
(Former
name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01. Other Events.
On March 23, 2015, the Registrant received its audit report from Weaver & Tidwell, L.L.P. with respect to the statement of fees
and expenses paid to the trustee and escrow agent of the Registrant. A copy of the report and the accompanying statement of fees and expenses is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
d. Exhibits
99.1 Report dated
March 23, 2015 of the Statement of Fees and Expenses paid by Sabine Royalty Trust to Bank of America, N.A. and Southwest Bank, as Trustee and Escrow Agent.
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.
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SABINE ROYALTY TRUST |
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By: |
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SOUTHWEST BANK, TRUSTEE |
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By: |
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/s/ RON E. HOOPER |
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Ron E. Hooper |
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SVP Royalty Trust Management |
Date: March 23, 2015
EXHIBIT INDEX
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Exhibit Number |
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Description |
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99.1 |
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Report dated March 23, 2015 of the Statement of Fees and Expenses paid by Sabine Royalty Trust to Bank of America, N.A. and Southwest Bank, as Trustee and Escrow Agent. |
Exhibit 99.1
Report of Independent Registered Public Accounting Firm
To the Management of the Trustee on Behalf of
Unit Holders of
Sabine Royalty Trust
We have audited the accompanying statement of fees and expenses (as defined in Exhibit C to the Sabine Royalty Trust
Agreement) paid by Sabine Royalty Trust to Bank of America, N.A. and Southwest Bank (collectively, the Trustee) as trustee and escrow agent, for the year ended December 31, 2014. This statement is the responsibility of the Trustees management.
Our responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of fees and expenses is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements of fees and expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As
described in Note 3, the Statement of Fees and Expenses was prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.
In our opinion, the Statement of Fees and Expenses referred to above presents fairly, in all material respects, the fees and expenses paid by
Sabine Royalty Trust to Bank of America, N.A. and Southwest Bank, as trustee and escrow agent, for the year ended December 31, 2014, in conformity with the modified cash basis of accounting as described in Note 3.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
March 23, 2015
STATEMENT OF FEES AND EXPENSES
PAID BY SABINE ROYALTY TRUST TO
BANK OF AMERICA, N.A. AND SOUTHWEST BANK,
AS TRUSTEE AND ESCROW AGENT, FOR
THE YEAR ENDED DECEMBER 31, 2014
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2014 |
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Trustees fee |
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307,579 |
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Escrow agents fee |
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922,737 |
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Total fees and expenses |
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1,230,316 |
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The accompanying notes are an integral part of this statement.
Notes
1. Sabine Royalty
Trust (the Trust) is an express trust formed under the laws of Texas by the Sabine Corporation Royalty Trust Agreement (the Trust Agreement) made and entered into effective as of December 31, 1982, between Sabine
Corporation (Sabine), as trustor, and InterFirst Bank Dallas, N.A. (a predecessor to Bank of America, N.A.), as trustee. Southwest Bank (the Bank) became trustee (Trustee) effective May 30, 2014. Contemporaneously
with the execution of the Trust Agreement, Sabine, the initial trustee and the predecessor of the Bank, as escrow agent (the Escrow Agent), entered into an escrow agreement which establishes an escrow (the Escrow). Prior to
distribution of units of beneficial interest (the Units) in the Trust to Sabines shareholders, Sabine transferred to the Trust royalty and mineral interests, including landowners royalties, overriding royalty interests,
minerals (other than executive rights, bonuses and delay rentals), production payments and other similar, non-participatory interests, in certain producing and proved undeveloped oil and gas properties in six
states (the Royalty Properties).
In May 1988, Sabine was acquired by Pacific Enterprise (Pacific), a California
corporation. Through a series of mergers, Sabine was merged into Pacific Enterprises Oil Company (USA) (Pacific (USA)), a California corporation and a wholly owned subsidiary of Pacific, effective January 1, 1990. This acquisition
and the subsequent mergers had no effect on the Units. Pacific (USA), as successor to Sabine, has assumed by operation of law all of Sabines rights and obligations with respect to the Trust. As of July 31, 2006, Pacific (USA) was effectively
merged into PEC Minerals.
The compensation agreement under the Trust Agreement provides for a cost plus fee payable to the
Bank for all services rendered in its capacities as Trustee and as Escrow Agent. Generally, the fees payable to the Bank are calculated by dividing the expenses incurred by the Bank, as Trustee and as Escrow Agent, solely for services provided by
the Bank in the administration of the Trust and the Escrow by seven-tenths (0.7). Professional and other noncontributing (out-of-pocket) expenses incurred by the Bank,
as Trustee or as Escrow Agent, as the case may be, in the performance of its duties in the foregoing capacities are charged to the Trust or the Escrow, as the case may be, at cost. These expenses do not contribute to the fees payable to the Bank
described above. Annually, the Trustee must estimate Trust and Escrow expenses contributing to the fee for the forthcoming year and publish this amount in the Trusts first quarterly report to Unit holders. The Trustee can be penalized by
forfeiture of reimbursement for part of its expenses if such expenses exceed the estimate. The Trustee also can earn a bonus by administering the Trust for total costs that are lower than the estimate. Southwest Bank and Bank of America, N.A.
elected to forego bonuses earned of $52,391 in 2014.
2. Escrow Agents fees and Trustees fees consist of a profit
margin plus all fully allocated costs incurred by the Banks, as Trustee and as Escrow Agent, in performing administrative services to the Trust as specified in the Trust Agreement. Allocated costs do not include any professional and related expenses
paid to third parties.
All costs incurred by the Banks in its capacity as Trustee and as Escrow Agent are accumulated in one account. Fees
based thereon are allocated between the Trustee function and the Escrow Agent function according to the actual administrative services rendered by the Bank in each capacity. Any determinations by the Banks as to the allocation of the fee between the
Trustee and the Escrow Agent are conclusive and binding on the Unit holders and Pacific (USA), but in no event does the Banks allocation affect the aggregate fee payable to the Bank.
3. The Statement of Fees and Expenses is prepared on a modified cash basis, which is a comprehensive basis of accounting other than
accounting principles generally accepted in the United States of America. Trust expenses include payments made during the accounting period. Expenses are accrued to the extent of amounts that become payable on the next monthly record date following
the end of the accounting period. These statements differ from statements prepared in conformity with accounting principles generally accepted in the United States of America because expenses other than those expected to be paid on the following
monthly record date are not accrued.
This comprehensive basis of accounting other than accounting principles generally accepted in the
United States of America corresponds to the accounting permitted for royalty trusts by the U.S. Securities and Exchange Commission, as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.
4. On January 9, 2014, Bank of America, N.A. (as successor to InterFirst Bank Dallas, N.A.) gave notice to Unit holders that it was
resigning as the Trustee subject to certain conditions including the appointment of Southwest Bank as trustee of the Trust. At a special meeting of Trust Unit holders, the Unit holders approved the appointment of Southwest Bank as successor trustee
of the Trust, once Bank of America, N.A.s resignation took effect. The effective date of Bank of America, N.A.s resignation and the effective date of Southwest Banks appointment as successor trustee and successor escrow agent was
May 30, 2014. The defined term Trustee or Escrow Agent as used herein shall refer to Bank of America, N.A. for periods prior to May 30, 2014 and shall refer to Southwest Bank for periods on or after May 30, 2014.
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