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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 Form 10-Q þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2005 or o 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: 1-11608 WILLIAMS COAL SEAM GAS ROYALTY TRUST  Delaware
(State or other jurisdiction
of incorporation or
organization)
    
    75-6437433
(I.R.S. Employer
Identification No.)
 Trust Division
Bank of America, N.A.
901 Main Street
17th Floor
Dallas, Texas 75202
(Address of principal executive offices)
(Zip code) (214) 209-2400  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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). Yes þ No o Number of units of beneficial interest outstanding at May 2, 2005: 9,700,000   1




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Trustees Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 6. ExhibitsSIGNATURESINDEX TO EXHIBITSLetter Re: Unaudited Interim Financial InformationCertification Pursuant to Section 302Certificate Pursuant to Section 906    Table of Contents  
 PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements. The financial statements included herein have been prepared by Bank of America, N.A., as
Trustee (the Trustee) of Williams Coal Seam Gas Royalty Trust (the Trust), 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 notes thereto
included in the Trusts Annual Report on Form 10-K for the year ended December 31, 2004 (the 2004
Annual Report). The December 31, 2004 balance sheet is derived from the audited balance sheet of
that date. 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 Trust as
of March 31, 2005, the distributable income and the changes in trust corpus for the three-month
periods ended March 31, 2005 and 2004, have been included. 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, 2005, and for the three-month periods ended March 31,
2005 and 2004 included herein have been reviewed by Ernst & Young LLP, an independent registered
public accounting firm, as stated in their report appearing herein. 2




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Report of Independent Registered Public Accounting Firm The Trustee
Williams Coal Seam Gas Royalty Trust We have reviewed the condensed statement of assets, liabilities and trust corpus of the Williams
Coal Seam Gas Royalty Trust as of March 31, 2005, and the related condensed statements of
distributable income and changes in trust corpus for the three-month
periods ended March 31, 2005 and 2004. These financial statements are the responsibility of the
Trustees management. We conducted our reviews in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board, 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 have been prepared
on a modified cash basis of accounting, which is a comprehensive basis of accounting other than
U.S. generally accepted accounting principles. Based on our reviews, we are not aware of any material modifications that should be made to the
condensed financial statements referred to above for them to be in conformity with the
basis of accounting described in Note 2. We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the statement of assets, liabilities and trust corpus of the
Williams Coal Seam Gas Royalty Trust as of December 31, 2004, 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 11, 2005, 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, 2004, 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/ Ernst & Young LLP Tulsa, Oklahoma
May 6, 2005 3




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WILLIAMS COAL SEAM GAS ROYALTY TRUST CONDENSED STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (UNAUDITED)   March 31,
    
    
    December 31,2005
    
    
    2004ASSETSCurrent Assets  cash and cash equivalents
    
    $
    2,098
    
    
    $
    105,497Royalty interests in oil and gas properties
(less accumulated amortization
of $126,861,612 at
March 31, 2005 and
$126,354,339 at December 31,
2004) (Note 2)
    
    
    11,705,051
    
    
    
    12,212,324TOTAL ASSETS
    
    $
    11,707,149
    
    
    $
    12,317,821LIABILITIES AND TRUST CORPUSCurrent Liabilities:Other accounts payable
    
    $
    146,126
    
    
    $
    32,751146,126
    
    
    
    32,751Trust corpus - 9,700,000 units of
beneficial interest authorized
and outstanding (Note 2)
    
    
    11,561,023
    
    
    
    12,285,070TOTAL LIABILITIES
AND TRUST CORPUS
    
    $
    11,707,149
    
    
    $
    12,317,821
 The accompanying notes are an integral part of these financial statements. See accountants review report. 4




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WILLIAMS COAL SEAM GAS ROYALTY TRUST CONDENSED STATEMENTS OF DISTRIBUTABLE INCOME (UNAUDITED)   THREE MONTHS
    
    
    THREE MONTHSENDED
    
    
    ENDEDMarch 31, 2005
    
    
    March 31, 2004Royalty income (Note 2)
    
    $
    3,533,871
    
    
    $
    3,330,572Interest income
    
    
    5,348
    
    
    
    1,442Total
    
    
    3,539,219
    
    
    
    3,332,014General and administrative
expenses (Note 4)
    
    
    (396,776
    )
    
    
    (275,096
    )Distributable income
    
    $
    3,142,442
    
    
    $
    3,056,918Distributable income per unit
(9,700,000 units) (Note 2)
    
    $
    .32
    
    
    $
    .32
 The accompanying notes are an integral part of these financial statements. See accountants
review report.   5




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WILLIAMS COAL SEAM GAS ROYALTY TRUST CONDENSED STATEMENTS OF CHANGES IN TRUST CORPUS (UNAUDITED)   THREE MONTHS
    
    
    THREE MONTHSENDED
    
    
    ENDEDMarch 31, 2005
    
    
    March 31, 2004Trust corpus, beginning of period
    
    $
    12,285,070
    
    
    $
    14,638,833Amortization of royalty interests (Note 2)
    
    
    (507,273
    )
    
    
    (482,534
    )Distributable income
    
    
    3,142,442
    
    
    
    3,056,918Distributions to Unitholders (Note 5)
    
    
    (3,359,216
    )
    
    
    (3,197,014
    )Trust corpus, end of period
    
    $
    11,561,023
    
    
    $
    14,016,203Distributions per unit
(9,700,000 units) (Note 5)
    
    $
    .35
    
    
    $
    .33
 The accompanying notes are an integral part of these financial statements. See accountants review
report.   6




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WILLIAMS COAL SEAM GAS ROYALTY TRUST NOTES TO FINANCIAL STATEMENTS (UNAUDITED)   1. TRUST ORGANIZATION AND PROVISIONS Williams Coal Seam Gas Royalty Trust (the Trust) was formed as a Delaware business trust
pursuant to the terms of the Trust Agreement of Williams Coal Seam Gas Royalty Trust (as amended,
the Trust Agreement) entered into effective as of December 1, 1992, by and among Williams
Production Company, a Delaware corporation (WPC), as trustor; The Williams Companies, Inc., a
Delaware corporation (Williams), as sponsor; Bank of America, N.A. (as successor to NationsBank
of Texas, N.A.), a national banking association (the Trustee) and Chemical Bank Delaware, a
Delaware banking corporation (the Delaware Trustee). The trustees are independent financial
institutions. The Trust was formed to acquire and hold certain net profits interests (the Royalty
Interests) in proved natural gas properties located in the San Juan Basin of New Mexico and
Colorado (the Underlying Properties) owned by WPC. The Trust was initially created effective as
of December 1, 1992, with a $100 contribution by WPC. On January 21, 1993, the Royalty Interests
were conveyed to the Trust by WPC pursuant to the Net Profits Conveyance (the Conveyance) entered
into effective as of October 1, 1992, by and among WPC, Williams, the Trustee and the Delaware
Trustee, in consideration for all the 9,700,000 authorized units of beneficial interest in the
Trust (Units). WPC transferred its Units by dividend to its parent, Williams, which sold an
aggregate of 5,980,000 Units to the public through various underwriters in January and February
1993 (the Public Offering). Subsequently, Williams sold to the public an additional 151,209
Units. During the second quarter of 1995, Williams transferred its remaining Units to Williams
Holdings of Delaware, Inc. (WHD), a separate holding company for Williams non-regulated
businesses. Effective July 31, 1999, WHD was merged into Williams, and by operation of the merger,
Williams assumed all assets, liabilities and obligations of WHD, including without limitation
ownership of WHDs Units. Effective August 11, 2000, Williams sold its Units to Quatro Finale IV
LLC, a Delaware limited liability company (QFIV), in a privately negotiated transaction.
Williams retained the voting rights and retained a call option on the transferred Units, and QFIV
was granted a put option on the Units. Through a series of exercises of its call option,
Williams reacquired an aggregate of 3,568,791 Units from December 2001 through June 2003. Williams
has informed the Trustee that it has subsequently sold 2,699,500 of these Units through May 1, 2005
and owned a remaining 869,291 Units as of such date. Effective May 1, 1997, WPC sold the Underlying Properties subject to and burdened by the
Royalty Interests to Quatro Finale LLC, an unaffiliated Delaware limited liability company.
Ownership of the Underlying Properties reverted back to WPC effective February 1, 2001, pursuant to
the terms of the May 1, 1997 transaction. Pursuant to a Purchase and Sale Agreement dated March
14, 2001 (the 2001 Transaction Agreement), and effective March 1, 2001, WPC sold the Underlying
Properties subject to and burdened by the Royalty Interests to Quatro Finale V LLC, an unaffiliated
Delaware limited liability company. The sale of the 7




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Underlying Properties is expressly permitted under the Trust Agreement. Effective January 1,
2003, ownership of the Underlying Properties once again reverted back to WPC after it exercised its
right to repurchase interests in the Underlying Properties from Quatro Finale V LLC pursuant to the
2001 Transaction Agreement. The Trustee has the power to collect and distribute the proceeds received by the Trust and to
pay Trust liabilities and expenses. The Delaware Trustee has only such powers as are set forth in
the Trust Agreement and is not empowered to otherwise manage or take part in the business of the
Trust. The Royalty Interests are passive in nature and neither the Delaware Trustee nor the
Trustee has any control over or any responsibility relating to the operation of the Underlying
Properties. The Trust will terminate no later than December 31, 2012, subject to earlier termination under
certain circumstances described in the Trust Agreement (the Termination Date). Cancellation of
the Trust will occur on or following the Termination Date when all Trust assets have been sold and
the net proceeds therefrom distributed to holders of Units in the Trust (Unitholders). The only assets of the Trust, other than cash and cash equivalents being held for the payment
of expenses and liabilities and for distribution to Unitholders, are the Royalty Interests. The
Royalty Interests consist primarily of a net profits interest (the NPI) in the Underlying
Properties. The NPI generally entitles the Trust to receive 60 percent of the NPI Net Proceeds, as
defined below, attributable to (i) gas produced and sold from WPCs net revenue interests (working
interests less lease burdens) in the properties in which WPC has a working interest (the WI
Properties) and (ii) the revenue stream received by WPC attributable to its 35 percent NPI in
5,348 gross acres in La Plata County, Colorado (the Farmout Properties). The Royalty Interests also include a 20 percent interest in WPCs Infill Net Proceeds from the
sale of production since well spacing rules have been effectively modified and additional wells
have been drilled on producing drilling blocks on the WI Properties (the Infill Wells) during the
term of the Trust. Infill Net Proceeds consists generally of the aggregate proceeds, based on
the price at the wellhead, of gas produced from WPCs net revenue interest in any Infill Wells less
certain taxes and costs. The WI
Properties contain 450 infill locations designated as proved locations according to U.S. Securities and Exchange Commission SEC
guidelines. As of March 31, 2005, 249 infill locations are proved developed producing and 201
locations are proved undeveloped. Infill drilling is expected to be substantially completed by the
end of 2006. 8




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As of March 31, 2005, the Infill Net Profit Costs exceed the Infill Net Profit Gross Proceeds
by $9,334,885. The Trust will not be liable for such excess costs, and such excess costs will
hereafter constitute Excess Infill Net Profit Costs until recovered by WPC. The Trust will not
receive its 20 percent interest in WPCs Infill Net Proceeds until such time as the Infill Net
Profits Gross Proceeds exceeds the Infill Net Profit Costs on an aggregate basis. The complete
definitions of Infill Net Proceeds, Infill Net Profit Costs, Excess Infill Net Profit Costs, and
Infill Net Profit Gross Proceeds are set forth in the Conveyance. 2. BASIS OF ACCOUNTING The financial statements of the Trust are prepared on a modified cash basis and are not
intended to present financial position and results of operations in conformity with United States
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. General and administrative expenses are recognized on an accrual basis.
    Amortization of the Royalty 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 (See
Note 5).
    Loss contingencies are recognized in the period in which amounts are paid by
the Trust. The financial statements of the Trust differ from financial statements prepared in accordance
with GAAP because royalty income is not accrued in the period of production, amortization of the
Royalty Interests is not charged against operating results, and loss contingencies are not charged
to operating results until paid. This comprehensive basis of accounting other than GAAP
corresponds to the accounting permitted for royalty trusts by the SEC,
as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty
Trusts. 3. FEDERAL INCOME TAXES The Trust is a grantor trust for Federal income tax purposes. As a grantor trust, the Trust
is not required to pay Federal income taxes. Accordingly, no provision for income taxes has been
made in these financial statements. Because the Trust is treated as a grantor trust, and because a Unitholder is treated as
directly owning an interest in the Royalty Interests, each Unitholder is taxed directly on his per
Unit pro rata share of income attributable to the Royalty Interests consistent with the
Unitholders method of accounting and without regard to the taxable year or accounting method
employed by the Trust. 9




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4. RELATED PARTY TRANSACTIONS Williams provides accounting, bookkeeping and informational services to the Trust in
accordance with an Administrative Services Agreement effective December 1, 1992. The fee is
$50,000 per quarter, escalating 3 percent each October 1 commencing October 1, 1993. Aggregate
fees incurred by the Trust to Williams at December 31, 2004 represent the fourth quarter fee, and
amounts paid by the Trust to Williams at March 31, 2005 represent the first quarter fee.
Substantially all production from the WI Properties is sold to a Williams subsidiary.
Additionally, all royalty income is received from Williams.
The Trust paid to Williams for the first quarter of 2005 $69,211 as
compared to $67,196 for the first quarter of 2004. 5. DISTRIBUTIONS TO UNITHOLDERS The Trustee determines for each quarter the amount of cash available for distribution to
Unitholders. Such amount (the Quarterly Distribution Amount) is an amount equal to the excess,
if any, of the cash received by the Trust, on or prior to the last day of the month following the
end of each calendar quarter from the Royalty Interests, plus, with certain exceptions, any other
cash receipts of the Trust during such quarter, over the liabilities of the Trust paid during such
quarter, subject to adjustments for changes made by the Trustee during such quarter in any cash
reserves established for the payment of contingent or future obligations of the Trust. The Trustee distributes the Quarterly Distribution Amount within 60 days after the end of each
calendar quarter to each person who was a Unitholder of record on the associated record date (i.e.,
the 45th day following the end of each calendar quarter or if such day is not a business day, the
next business day thereafter), together with interest estimated to be earned on such amount from
the date of receipt thereof by the Trustee to the payment date. In addition to the regular quarterly distributions, under certain circumstances specified in
the Trust Agreement (such as upon a purchase price adjustment, if any, or pursuant to the sale of a
Royalty Interest), the Trust would make a special distribution (a Special Distribution Amount).
A Special Distribution Amount would be made when amounts received by the Trust 10




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under such circumstances aggregated in excess of $9,000,000. The record date for a Special
Distribution Amount will be the 15th day following receipt of amounts aggregating a Special
Distribution Amount by the Trust (unless such day is not a business day in which case the record
date will be the next business day thereafter or unless such day is within 10 days of the record
date for a Quarterly Distribution Amount in which case the record date will be the date as is
established for the next Quarterly Distribution Amount). Distribution to Unitholders of a Special
Distribution Amount will be made no later than 15 days after the Special Distribution Amount record
date. 6. SUBSEQUENT EVENTS Subsequent to March 31, 2005, the Trust declared the following distribution: QuarterlyRecord
    
    Payment
    
    DistributionDate
    
    Date
    
    per UnitMay 16, 2005
    
    May 27, 2005
    
    $.321706
 The distribution per unit was $.346311 attributable to the fourth quarter of 2004 (paid in the
first quarter of 2005) as compared to $.321706 attributable to the first quarter of 2005 (payable
in the second quarter of 2005). The decrease in distributions is mainly the result of lower
natural gas production and increased expenses during the three month period ended March 31, 2005 as
compared to the three month period ended December 31, 2004. 7. CONTINGENCIES WPX Gas Resources Company (WPX Gas Resources, as successor in interest to Williams Gas
Marketing Company), purchases natural gas produced from the WI Properties (except for certain small
volumes) at the wellhead under the terms of a gas purchase contract dated October 1, 1992, as
amended (the Gas Purchase Contract). The Gas Purchase Contract provides for a pricing mechanism
during an initial 5-year period, which expired on December 31, 1997, and continuing for one or more
consecutive additional 1-year terms unless and until WPX Gas Resources exercises its annual option,
exercisable 15 days prior to the end of each contract year, to discontinue purchasing gas under the
pricing mechanism of the Gas Purchase Contract and instead purchase gas at a monthly market-based
price. WPX Gas Resources has not exercised this option and therefore the pricing mechanism will
continue to remain in effect through at least December 31, 2005. Under the pricing mechanism of the Gas Purchase Contract, when the market price is less than
$1.70 per MMBtu (the Minimum Purchase Price), the Trust will be paid the Minimum Purchase Price
for the gas and an account (the Price Credit Account) will be maintained to identify the accrued
and unrecouped amount of payments made to the Trust in excess of the market price. Any amounts in
the Price Credit Account are subject to future recoupment when the market price exceeds the Minimum
Purchase Price. As of March 31, 2005, there were no remaining unrecouped price credits in the
Price Credit Account. To the extent there may in the future be a balance in the Price Credit
Account, the entitlement to recoup price credits means that 11




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if and when the index price is above the Minimum Purchase Price, future royalty income paid to
the Trust would be reduced until such time as such Price Credit Account is once again reduced to
zero. Corresponding cash distributions to Unitholders would also be reduced. While the terms of the Gas Purchase Agreement pricing mechanism remain in place and no balance
exists in the Price Credit Account, when the market price for natural gas exceeds $1.94 price per
MMBtu, the Trust receives only 50 percent of the excess of the market price over the $1.94 price
per MMBtu before reduction for gathering, processing and certain other costs. For production
months in the fourth quarter of 2004, which are reported as Royalty Income in the first quarter of
2005, the index price remained above the Minimum Purchase Price. The majority of the production attributable to the Trust is within Federal units. Unit
participating areas are formed by pooling production from the participating area. Entitlement to
the pooled production is based on each partys acreage in the participating area divided by the
total participating acreage. Wells drilled outside the participating area may create an
enlargement to the participating area and a revision of the Unit ownership entitlement. The Bureau
of Land Management (BLM) must approve Unit participating area expansions. The effective date for
Unit expansions is retroactive to the date the well creating the expansion was tested.
During the first quarter 2004, similar retroactive adjustments were
processed on the San Juan 32-9 Federal Unit. The retroactive adjustments
included a favorable impact from unit expansion and an unfavorable impact from
an additional adjustment related to the payout determination of the Federal
Unit. The net effect of these two retroactive adjustments unfavorably impacted royalty
income for the quarter ended March 31, 2004 by approximately $275,000.
The revenues presented in the accompanying statements of
distributable income are on an entitlement basis and reflect the most
recent BLM participating area approvals at March 31, 2005 and 2004 respectively. There are pending or anticipated applications or approvals for
additional participating area enlargements that could impact future operating results. On January 5, 2001, the State of New Mexico, acting under authority of the Minerals Management
Service (MMS), a subagency of the United States Department of the Interior, presented WPC with an
Audit Issue Letter for the alleged underpayment of royalties in the amount of $948,501, on gas
produced from the Underlying Properties due to Federal royalty owners during the time period from
January 1992 through December 1996. MMS regulations permit a lessee to deduct from its gross
proceeds its reasonable actual costs of transportation and processing to transport the gas from the
lease to the point of sale in calculating the market value of its production. The State of New
Mexico claims that certain costs of removing and transporting carbon dioxide gas are not
deductible. On March 22, 2001, WPC responded to the Audit Issue Letter and contested the State of
New Mexicos claim for additional royalties as being contrary to law. In early November 2001, WPC
received from the MMS an Order to Report and Pay Additional Royalties and Perform Restructured
Accounting on subsequent periods. The order was dated October 30, 2001. The order requires WPC
(1) to pay additional royalties of $943,964 on production related to the audit period of January 1,
1992 through December 31, 1996; (2) to pay an estimated incremental royalty amount of $991,549 for
production covering January 1, 1997 through March 31, 2001; and (3) to perform a restructured
accounting and pay an additional royalty for months after March 2001. On January 30, 2002, WPC
filed its Statement of Reasons in support of its earlier appeal of the Audit Issue Letter. Applying
the MMS methodology asserted by the State of New Mexico could potentially result in negative
adjustments to amounts previously paid to the Trust of approximately $4,000,000, plus interest. On
November 1, 2004, WPC received notice that its appeal was denied in part by the MMS. WPC is
currently evaluating the necessary course of action to defend against the claims 12




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asserted by the MMS. A separate but similar matter is currently under appeal by another major
oil and gas producer in the D.C. circuit court. If the D.C. circuit court upholds the lower court
ruling, the Trustee has been advised that it is likely that WPC would not appeal the MMS decision.
This would result in an adjustment to royalty income otherwise payable from WPC to the Trust and a
corresponding decrease in distributions to Unitholders, which could eliminate entirely such
distributions for one or more future quarterly periods. 
  Item 2.
    Trustees Discussion and Analysis of Financial Condition and Results of Operations. The Trust makes quarterly cash distributions to Unitholders. The only assets of the Trust,
other than cash and cash equivalents being held for the payment of expenses and liabilities and for
distribution to Unitholders, are the Royalty Interests. The Royalty Interests owned by the Trust
burden the Underlying Properties, which are owned by WPC and not the Trust. Distributable income of the Trust generally consists of the excess of royalty income plus
interest income over the general and administrative expenses of the Trust. Upon receipt by the
Trust, royalty income is invested in short-term investments in accordance with the Trust Agreement
until its subsequent distribution to Unitholders. The amount of distributable income of the Trust for any quarter may differ from the amount of
cash available for distribution to Unitholders in such quarter due to differences in the treatment
of the expenses of the Trust in the determination of those amounts. The financial statements of
the Trust are prepared on a modified cash basis pursuant to which the expenses of the Trust are
recognized when incurred whereas royalty income is recognized when received. Consequently, the
reported distributable income of the Trust for any quarter is determined by deducting from the
income received by the Trust the amount of expenses incurred by the Trust during such quarter. The
amount of cash available for distribution to Unitholders, however, is determined in accordance with
the provisions of the Trust Agreement and reflects the deduction from the income actually received
by the Trust of the amount of expenses actually paid by the Trust and adjustments for changes in
reserves for unpaid liabilities. See Note 5 to the financial statements of the Trust appearing
elsewhere in this Form 10-Q for additional information regarding the determination of the amount of
cash available for distribution to Unitholders. Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004 For the quarter ended March 31, 2005, royalty income received by the Trust amounted to
$3,533,871 as compared to $3,330,572 received for the same quarter in 2004. The increase in
royalty income is primarily due to higher natural gas prices. Production related to the royalty
income received by the Trust in the first quarter of 2005 was
2,269,160 MMBtu as compared to
2,073,334 MMBtu which was reduced by significant prior period adjustments for the same quarter in 2004.
See Note 7 to the financial statements of the Trust
appearing elsewhere in this Form 10-Q for additional information regarding retroactive adjustments
resulting from unit expansions on certain Federal Units for the quarters ended March 31, 2005 and
2004. Interest income for the quarter ended March 31, 2005 was significantly higher due to higher
interest rates compared to the same quarter in 2004. General and administrative expenses for the
quarter ended March 31, 2005 were significantly higher compared to the same quarter in 2004 due to
compliance with Sarbanes-Oxley 404 Regulations. 13




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Distributable income for the quarter ended March 31, 2005 was $3,142,442 or $.32 per Unit
compared to $3,056,918 or $.32 per Unit for the same quarter in 2004. This increase was the result
of higher natural gas prices. A distribution of $.0346311 per Unit was made on March 1, 2005 to
Unitholders of record on February 14, 2005. Because the Trust incurs administrative expenses throughout a quarter but receives its royalty
income only once in a quarter, the Trustee established in the first quarter of 1993 a cash reserve
for the payment of expenses and liabilities of the Trust. The Trustee thereafter has adjusted the
amount of such reserve in certain quarters as required for the payment of the Trusts expenses and
liabilities, in accordance with the provisions of the Trust Agreement. The Trustee anticipates
that it will maintain for the foreseeable future a cash reserve that will fluctuate as expenses are
paid and royalty income is received. Royalty income to the Trust is attributable to the sale of depleting assets. All of the
Underlying Properties burdened by the Royalty Interests consist of producing properties.
Accordingly, the proved reserves attributable to WPCs interest in the Underlying Properties are
expected to decline substantially during the term of the Trust and a portion of each cash
distribution made by the Trust will, therefore, be analogous to a return of capital. Accordingly,
cash yields attributable to the Units are expected to decline over the term of the Trust. Royalty income received by the Trust in a given calendar quarter will generally reflect the
sum of (i) proceeds from the sale of gas produced from the WI Properties during the preceding
calendar quarter, plus (ii) cash received by WPC with respect to the Farmout Properties either (a)
during the preceding calendar quarter or (b) if received in sufficient time to be paid to the
Trust, in the month immediately following such calendar quarter. Accordingly, the royalty income
included in distributable income for the quarter ended March 31, 2005, was based on production
volumes and natural gas prices for the period October 2004 through December 2004, as shown in the
table below. Due to delays associated with the receipt of income related to the Farmout
Properties, the Trusts royalty income for the first quarter of 2005 reflects estimated production
volumes from the Farmout Properties for the months of September 2004 through November 2004, as
shown in the table below. The production volumes included in the table below are for production
attributable to net profits of the Underlying Properties, and not for production attributable to
the Trusts Royalty Interests. Three Months
    
    
    Three MonthsEnded
    
    
    EndedDecember 31, 2004
    
    
    December 31, 2003Production (MMBtu) (1)WI Properties
    
    
    3,452,364
    (2)
    
    
    3,424,072
    (4)Farmout Properties
    
    
    792,384
    (3)
    
    
    936,677
    (5)Blanco Hub Spot Price ($/MMBtu) (6)
    
    $
    5.77
    
    
    $
    4.05Net Wellhead Price WI Properties
($/MMBtu) (6)
    
    $
    2.64
    
    
    $
    2.25
 14




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(1)
    
    Million British Thermal Units.(2)
    
    Includes retroactive adjustments of (85,990) MMBtu.(3)
    
    Reflects volumes for September 2004 through November 2004.(4)
    
    Includes retroactive adjustments of (633,306) MMBtu.(5)
    
    Reflects volumes for September 2003 through November 2003.(6)
    
    Simple average of estimates for the months included in the period presented. Production from the WI Properties is generally sold by WPC to WPX Gas Resources pursuant to
the Gas Purchase Contract that provides certain protections for WPC and Unitholders by providing
that WPX Gas Resources will purchase gas from WPC at a minimum purchase price of $1.70 even when
the applicable index price (which is equal to 97% of the Blanco Hub Spot Price) falls below $1.70
per MMBtu, provided that WPX Gas Resources is entitled to accrue price credits in the amount of any
excess of the minimum price so paid over the applicable index price. When the applicable index
price exceeds $1.70 per MMBtu, WPX Gas Resources is entitled to recoup any price credits previously
accrued. When the applicable index price is greater than $1.94 per MMBtu, the Gas Purchase Contract
protects and benefits WPX Gas Resources by allowing it to purchase gas from WPC at a contract price
equal to $1.94 per MMBtu plus only 50 percent of the difference between the applicable index price
and $1.94 per MMBtu. The Gas Purchase Contract also provides that the price paid for gas by WPX
Gas Resources is reduced by the amount of gathering, processing and certain other costs paid by WPX
Gas Resources. See Item 2 Properties  The Royalty Interests  Gas Purchase Contract in the 2004
Annual Report for detailed information about the Gas Purchase Contract and its impact on Trust
income. The initial five-year term of the pricing provision (Primary Term) of the Gas Purchase
Contract expired on December 31, 1997. Following the expiration of the Primary Term, the pricing
provision will continue in effect for one or more consecutive additional one-year terms (each such
term a Contract Year) unless and until WPX Gas Resources exercises its annual option, exercisable
15 days prior to the end of each Contract Year, to discontinue purchasing gas from WPC under the
pricing provision of the Gas Purchase Contract and instead purchase gas at a monthly price equal to
the index price of 97% of the Blanco Hub Spot Price. WPX has not yet exercised this option and the
pricing mechanism of the Primary Term therefore has been and will continue to remain in effect
through at least December 31, 2005. For the three months ended March 31, 2005, which is based on production volumes and natural
gas prices for the three months ended December 31, 2004, the Blanco Hub Spot Price was above $2.00
per MMBtu, and therefore the applicable index price under the Gas Purchase Contract, which is equal
to 97% of the Blanco Hub Spot Price, was above $1.94 per MMBtu through such period. In general,
under the Gas Purchase Contract, the Trust only receives the benefit of 50 percent of any amount by
which the applicable index price exceeds $1.94 per MMBtu. Consequently, pursuant to the terms of
the Gas Purchase Contract, WPX Gas Resources paid WPC an amount for gas purchased equal to $1.94
per MMBtu, less the costs paid by WPX Gas Resources to gather and process such gas and deliver it
to specified delivery points plus 50 percent of the excess of the applicable index price over $1.94
per MMBtu. The Blanco Hub Spot Price remained above $2.00 per MMBtu in April 2005. 15




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The information in this Form 10-Q concerning production and prices relating to the Underlying
Properties is based on information prepared and furnished by WPC to the Trustee. The Trustee has
no control over and no responsibility relating to the operation of the Underlying Properties. Forward-Looking Statements This report on Form 10-Q includes forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the
safe harbor created thereby. All statements other than statements of historical fact included in
this Form 10-Q, including, without limitation, statements contained in this Trustees Discussion
and Analysis of Financial Condition and Results of Operations regarding the Trusts financial
position and industry conditions, are forward-looking statements. Although the Trustee believes
that the expectations reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. 
  Item 3.
    Quantitative and Qualitative Disclosures About Market Risk. The only assets of and sources of income to the Trust are the Royalty Interests, which
generally entitle the Trust to receive a share of the net profits from natural gas production from
the Underlying Properties. Consequently, the Trusts financial results can be significantly
affected by fluctuations in natural gas prices and the Trust has commodity price risk exposure
associated with the natural gas markets in the United States. The Trust does not engage in any
hedging activities to manage its price risk associated with natural gas production from the
Underlying Properties. The Royalty Interests do not entitle the Trust to control or influence the
operation of the Underlying Properties or the sale of gas produced therefrom. Natural gas produced
from the WI Properties, which comprises the majority of production attributable to the Royalty
Interests, is currently sold by WPC pursuant to the terms of the Gas Purchase Contract. Although
the Trust is not a party to the Gas Purchase Contract, the Gas Purchase Contract may significantly
impact revenues to the Trust. Although the Gas Purchase Contract mitigates the risk to the Trust
of low gas prices, it also limits the ability of the Trust to benefit from the effects of higher
gas prices, particularly to the extent a balance exists in the Price Credit Account. See Item 2
Properties  The Royalty Interests  Gas Purchase Contract in the 2004 Annual Report for detailed
information about the Gas Purchase Contract and its impact on the Trust and Unitholders. The assets of the Trust are passive in nature, and other than the Trusts ability to
periodically borrow money as necessary to pay expenses, liabilities and obligations of the Trust
that cannot be paid out of cash held by the Trust, the Trust is prohibited from engaging in
borrowing transactions. The amount of any such borrowings is unlikely to be material to the Trust.
The Trust periodically holds short-term investments acquired with funds held by the Trust pending
distribution to Unitholders and funds held in reserve for the payment of Trust expenses and
liabilities. Because of the short-term nature of these borrowings and investments and certain
limitations upon the types of such investments that may be held by the Trust, the Trustee believes
that the Trust is not subject to any material interest rate risk. The Trust does not engage in
transactions in foreign currencies that could expose the Trust or Unitholders to any foreign
currency related market risk. 16




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Item 4.
    Controls and Procedures. As of the end of the period covered by this report, the Trustee carried out an evaluation of
the effectiveness of the design and operation of the Trusts disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15 and 15d-15. Based upon that evaluation, the Trustee concluded
that the Trusts disclosure controls and procedures are effective in timely alerting the Trustee to
material information relating to the Trust required to be included in the Trusts periodic filings
with the Securities and Exchange Commission. In its evaluation of disclosure controls and
procedures, the Trustee has relied, to the extent considered reasonable, on information provided by
WPC. There has not been any change in the Trusts internal control over financial reporting during
the period covered by this report that has materially affected, or is reasonably likely to
materially affect, the Trusts internal control over financial reporting. 
 PART II  OTHER INFORMATION Items 1 through 5. Not applicable. 
  Item 6.
    Exhibits. The exhibits listed below are filed as part of this report: EXHIBITNUMBER
    
    EXHIBIT15.1 
    
    Letter regarding unaudited interim financial information
dated May 6, 2005, from the independent Registered Public Accounting Firm which
acknowledges awareness of the use in registration statement
of a report on unaudited interim financial information.31.1 
    
    Certification by Ron E. Hooper, Senior Vice President and
Administrator of Bank of America, Trustee of Williams Coal
Seam Gas Royalty Trust, dated May 10, 2005, and submitted
pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1 
    
    Certificate by Bank of America, Trustee of Williams Coal
Seam Gas Royalty Trust, dated May 10, 2005, and submitted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350).
 17




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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. WILLIAMS COAL SEAM GAS ROYALTY TRUSTBy:
    
    BANK OF AMERICA, N.A., TrusteeBy:
    
    /s/ RON E. HOOPERRon E. HooperSenior Vice President and Administrator
 (The Trust has no directors or executive officers.) Date: May 10, 2005 18




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INDEX TO EXHIBITS EXHIBIT NUMBER
    
    EXHIBIT15.1 
    
    Letter regarding unaudited interim financial information
dated May 6, 2005, from the independent Registered Public Accounting Firm which
acknowledges awareness of the use in registration statement
of a report on unaudited interim financial information.31.1 
    
    Certification by Ron E. Hooper, Senior Vice President and
Administrator of Bank of America, Trustee of Williams Coal
Seam Gas Royalty Trust, dated May 10, 2005, and submitted
pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1 
    
    Certificate by Bank of America, Trustee of Williams Coal
Seam Gas Royalty Trust, dated May 10, 2005, and submitted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350).